One funding agreement and one resignation at Transport for London
An 18-month funding deal for TfL was finally agreed at the same time as the organisation revealed it is to lose a key figurehead.
THE announcement of a long-term funding settlement at the end of August came just too late for the last issue of Rail Express. The agreement provides
TfL with Government funding that lasts up until March 31, 2024, with £598m for the 2022/23 financial year, and £565m for 2023/24. This covers the projected loss of passenger income as a direct consequence of changes in passenger numbers due to the Covid pandemic.
Day-to-day operation of TfL and London Underground will change little. The deal will, in the short term, settle the financial uncertainty that has dogged the organisation since the catastrophic drop of income.
However, in the medium to long term, the increase in a need to find additional savings, and service its additional debts, along with terms and conditions that came with the previous bailouts, will be challenging. TfL now needs to find additional savings of £90m in 2022/23 and £140m in 2023/24. This is on top of the £730m annual savings programme it has already committed to. The organisation clearly knows that its back is up against the wall, as it has stated: “We are now working through what combination of levers enable us to deliver this, including additional potential sources of funding if the savings cannot be met.”
The new settlement allows major capital programme projects to continue to completion. LU examples of these works include:
■ new Piccadilly Line 24 Tube Stock trains, which will no longer be obtained on a sale and buyback option to reduce the overall costs
■ completion of Sub Surface Railway (SSR) Four Line Modernisation (4LM) project, which includes Grade of Automation 3 (GoA3) technology
■ stage 1 rebuilding of Elephant & Castle station.
Yet there are still demands that are likely to prove challenging to deliver.
DRIVERLESS TRAINS AND PENSIONS
The settlement demands that TfL investigates the introduction of
GoA4 driverless train technologies on lines where a business case can be demonstrated. The challenges of implementing such technology have been covered twice in RE – see October 2020 and October 2022 issues.
A report prepared by TfL in 2020 estimated the cost of imposing full GoA4 driverless train technology, which would still need a staff member to be on board, to be around £7 billion. Interestingly, the agreement letter sent to Sadiq Khan states that the Government will provide resources to support that particular programme.
Separately, the persistence in forcing TfL to commit to changing its pension scheme is viewed by some as being a deliberate ploy to provoke industrial action. An independent review of the TfL pension scheme, published during spring 2022 by former trade union official Sir Brendan Barber, found that the current scheme is “well run and highly valued”. It also flagged that any changes to the scheme for new staff, such as senior managers, would make TfL less competitive when hiring talent. The independent review also highlighted that some senior staff are already renumerated 20% less than the market average. The latest agreement letter threatens TfL that grant payments may be changed if it does not satisfy Government demands.
BRAIN DRAIN
LU insiders maintain that the working culture has changed from a flexible to a more rigid environment, which has impacted on the goodwill that previously
existed between management and train staff.
A process of constant restructuring and ambivalence has resulted in some experienced, often lifelong and experienced railway staff, leaving LU sooner than they might have planned. While this may look good in the short term on a balance sheet, those that have joined more recently might lack valuable knowledge of operating a world-class railway.
The announcement of the resignation of TfL’s commissioner, Andy Byford, during September, “to spend more time with his family” shortly after the settlement was agreed was not linked in the way some commentators have suggested, as Byford gave six months’ notice, handing in his resignation back in May. Yet, Byford has since admitted that the funding negotiations have taken their toll, using terms such as “exhausting”, “protracted” and “consuming” to describe the regular TfL bailout processes.