TfL faces operating deficit of nearly £1bn

Transport for London could record an operating deficit of £968 million, as passenger numbers fall and fares are frozen until 2020.

TfL Surface Transport Division Finance Director Patrick Doig sent an internal email (seen by the Financial Times) which said the deficit was “clearly not a sustainable position to be in as an organisation”.

The organisation will lose its revenue grant from the UK government in 2019. It recorded an operating deficit of £458m in 2016-17 and expects it to reach almost £800m in 2018-19. The fares freeze is expected to cost TfL up to £640m over four years.

Predictions of fares revenue have also been revised, from the original forecast of £5.58bn in 2018-19 to £4.79bn. However, operating costs fell by £153m in 2016-17, and are expected to fall by another £194m in 2017-18.

A drop in passenger numbers has been blamed on more people working from home and competition from companies such as Uber. Former TfL Director David Begg said TfL is “starting to creak”, and that he was “worried about TfL and its ability to deliver against this financial background”.

In a recently agreed business plan, TfL expects to reach an operating surplus of £78m by 2021, helped by projects such as Crossrail opening and generating revenue. It is also seeking to raise money from property development, and plans to raise more than £800m by creating housing and office space near some of its stations.

“London is leading the way in showing how you can keep fares affordable, while still investing record amounts in creating worldclass infrastructure,” said a TfL spokesman.

“Although overall ridership is currently slightly lower than originally budgeted, ridership on the bus, Tube and rail services regularly outperforms that elsewhere across the country - helped by the fares freeze, the Hopper fare and improved reliability.”