Good News for Londoners, and The Truth About TfL Budgets

As readers probably know, the Mayor of London, Sadiq Khan, has run out of money with the result that Transport for London has had to be bailed out by the Government. The Mayor subsequently decided to raise the Congestion Tax by 30% and restrict usage of the Freedom Pass. That’s bad news but one consequence is that the funds provided by TfL to London boroughs for such projects as “Healthy Neighbourhoods” or “Mini-Hollands” will be curtailed.

An article in Local Transport Today (LTT) reports that in a letter to Transport Commissioner, Mike Brown, borough representatives have complained about what this will mean in terms of their operations and their ability to deliver transport projects.

Local boroughs are under great financial pressure from the Covid-19 epidemic because it has resulted in a loss of much of their parking income and PCNs. Now they may lose one of the major sources of funds for transport projects. To quote from the LTT article: “Frost and Jones say there is a risk that boroughs may “no longer be able to assist TfL in delivering the Mayor’s Transport Strategy (MTS) in any meaningful way.  This would be particularly damaging because, as the MTS acknowledges, the boroughs are a key delivery partner as the authorities, which manage the vast majority of London’s highway network. They say a “severe reduction” in borough capacity will also “hamper the opportunity for officers to work with TfL to explore how some of the positive behaviour changes observed on the network in recent weeks (improved air quality, more active travel, reduced private vehicle trips etc) can be locked-in and a ‘new normal’ forged.  This could therefore represent an historic missed opportunity in what is likely to be a very small window of time where people may be open to doing things radically differently”.

The ABD suggests that scrapping projects that involve road closures, reducing road capacity and the expenditure on more cycle lanes which are little used would be a very good idea indeed. We have been campaigning against the MTS since it was launched as it is a misconceived attempt to change travel behaviour, force people to travel as the Mayor and TfL want rather than by their choice, and has never been justified by any cost/benefit analysis.

One example of the new financial limitations was indicated in a note issued by a Lewisham councillor. It said: “Healthy Neighbourhoods – while the lockdown has highlighted how pleasant life can be without traffic, TfL’s parlous finances mean it has halted funding for HNP. The Council is looking at whether and how the plans for Lee Green and central Lewisham can be integrated into some temporary measures we have funding for as part of Covid-19 response that would encourage social distancing, walking and cycling. We expect to be able publish these within the next few weeks”.

It seems neither the Council nor central Government is giving up on wanting us all to walk and cycle everywhere to relieve the pressure on public transport and avoid the close contact and hence infection risk on buses and the underground. But the Mayor’s policy of raising the Congestion Tax and taxes such as the ULEZ will pressure people to stop using cars and move to public transport. It’s simply irrational.

A good letter was published in the Times newspaper on this subject from John Hines who lives in Loughton, Essex. This is part of what it said: “This is bound to push more travellers back on to trains, the Tube and buses, where social distancing is next to impossible. One would hope he has calculated the effect this will have on the R number. He should be held to account, particularly as many of us who travel into London do not live in London and have no say in who is elected mayor”.

The Government has made it plain that it was solely the Mayor’s decision to raise the Congestion Tax and that he should not blame them. They also said this in a note issued on the bail-out: “The settlement for TfL was needed for two reasons. Most important is the significant fall in revenue caused by COVID-19. However, an important secondary factor was the pre-existing poor condition of TfL’s financial position as a result of decisions made over the last 4 years. Combined with significant cost increases and delays to Crossrail, this left TfL in serious financial difficulty even before the public health emergency.

The Mayor has claimed a great success in achieving a reduced operating loss in TfL. But this ignores all the wasted capital expenditure on projects such as Cycle Superhighways and the interest on debt that has risen to record levels. A proper analysis of the financial position of TfL, issued before the epidemic hit, is here: https://abdlondon.wordpress.com/2020/01/17/tfl-business-plan-and-budget-for-the-next-5-years-more-of-the-same/

Is it not time for the Government to step in and take full control of TfL? It is wrong for the Mayor to pursue reckless policies such as his Transport Strategy when there is no financial justification and no democratic mandate for it.

But the Government is actually recklessly encouraging local Councils to “embed new social norms” for travel by restricting vehicle use and encouraging walking and cycling. They want to change the way you wish to travel and to live without consultation and with no justification. That’s not democracy.

Roger Lawson

Twitter: https://twitter.com/Drivers_London

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More Taxes on Car Drivers, and Londoners in General

I covered the TfL bail-out deal that Sadiq Khan agreed with the Government in a previous blog post. As usual the Mayor blames the Government. So he says today: “The Government is, in effect, making ordinary Londoners pay the cost for doing the right thing on Covid-19”. He also said: “This deal is a sticking plaster. The old model for funding public transport in London simply does not work in this new reality – fares income will not cover the cost of running services while so few people can safely use public transport. Over the next few months we will have to negotiate a new funding model with Government – which will involve either permanent funding from Government or giving London more control over key taxes so we can pay for it ourselves – or a combination of both”. Yes it looks like the Mayor wants to take more from you in taxes!

See the link to the full announcement below.

To help raise more revenue, the Congestion Charge and ULEZ taxes are being immediately reinstated and the Congestion Charge is to go up a whopping 30% from the 22nd June and the times will be extended to between 07:00 and 22:00, seven days a week. It is suggested this might be a temporary change, but don’t bet on it!

In addition there will be road closures and Heidi Alexander has said “One of the world’s largest car free zones will be created in central London as part of our response to Covid-19”.

This is what Black-cab driver and general secretary of the London Taxi Drivers’ Association (LTDA) Steve McNamara said to the BBC: “ It’s an absolute disgrace –  no one had been consulted about plans to change the use of some roads. Usually you have to consult with the public and businesses – they are using a health emergency to get around the laws to consult people before you do these things. London will grind to a halt even with reduced people. It’s a land grab to exclude Londoners from their roads and to widen pavements for more cycling”.

The ABD certainly agrees with those comments and we have pointed out that the Covid-19 epidemic is being used to introduce an agenda that penalises private travel and reduces your freedom. See the link to the ABD’s press release below.

But it’s not just vehicle users who are going to be penalised. The BBC has said this about the Freedom Pass: “Under the new conditions, children will no longer have free travel across London and restrictions on travel passes for people with a disability or over the age of 60 will also be imposed during peak hours”, although no formal announcement has yet to be made. The Freedom Pass might have been overdue for reform but the Mayor will no doubt blame this on the Government also rather than his own financial mismanagement.

Roger Lawson

Mayor’s Announcement: https://www.london.gov.uk/press-releases/mayoral/statement-from-the-mayor-of-london-regarding-tfl

ABD Press Release: https://www.abd.org.uk/press-release-shapps-announces-2-billion-war-on-drivers/

You can see more details of the proposals from TfL to change London here:  https://tfl.gov.uk/travel-information/improvements-and-projects/streetspace-for-london

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Vehicle Excise Duty Reform – HM Treasury Consultation

The Government has announced a public consultation on reforming Vehicle Excise Duty – the tax you pay each year to the Government just for owning a car. If you read the consultation document (see link below), you will find that it is indeed very irrational at present. Rates vary depending on the age of the vehicle, the fuel type and on its CO2 emissions. But vehicles whose initial retail cost was over £40,000 pay more for the first 5 years, and all vehicles pay more for the first year of registration. A summary of the rates is present here: https://tinyurl.com/yawr3vz7

You can see it is exceedingly complex and it’s very difficult to quickly work out what the cost of VED will be on either a new or second-hand car. It is not at all clear what the Government was trying to achieve with the present structure so it is certainly ripe for reform.

There are hints that the objective was to encourage the purchase of those vehicles that produce lower emissions, but then why should one discourage the purchase of new vehicles, which generally emit lower emissions, by having a very high first-year rate? The existing structure also encourages drivers to keep their old vehicles, unless they are registered before 2017. And why impose a higher “first-year” rate when surely very few people will keep a vehicle for just one year from new if they have any sense.

The attempt to reduce carbon emissions by having higher VED rates for higher CO2 emission vehicles is also apparently failing as the average emissions of new cars has been rising.

There is some rationality in having VED relate to fuel consumption, at least if you ignore electric vehicles, because it enables the tax to relate to how wealthy the drivers are. If they can afford to run larger vehicles and pay high fuel costs, then they can probably afford higher VED tax. That’s a sound economic principle where one charges more to those who can afford to pay.

The Government now proposes a granular system based on carbon emissions. That might apply to both older and new vehicles. That makes a lot of sense. But why base it on CO2 emissions rather than the initial price of the vehicle? The Government could raise a lot more money from VED by such a structure. In the current epidemic and economic crisis they are going to need all they can get.

But the Government has this paranoia about reducing transport carbon emissions to zero by 2050, if not sooner. Many people think this is just hysteria, and it leaves the problem unsolved of how to tax electric vehicles. These have just as high total emissions over their lifetime, if not higher, than petrol or diesel vehicles, but the emissions are very high during construction, and lower when being operated – assuming the electricity they consume is mainly generated by renewable resources.

The current VED rate for pure electric vehicles is zero, but hybrid vehicles are another cause for complexity. Some may have very low emissions if only driven short distances whereas others may be more like conventional petrol vehicles.

There is also the problem that continual changes to VED rates baffle consumers and raise objections that one might buy a vehicle based on current rates to later find the tax rate has changed. Retaining current rates for vehicles already registered might be preferred by some but that would result in more complexity for purchasers of second hand vehicles when it is surely time to simplify the whole structure. The solution to the concerns of drivers of older vehicles that they might face an abrupt increase in VED, making such vehicles unsaleable or cause them to be scrapped when they are otherwise perfectly useable, is to ensure that any new rates do not impose an abrupt change on any existing vehicles and that plenty of notice is given of the change.

In summary, this writer would support the reform of VED so that a more graduated rate of tax applies. But the graduation should be based on the initial list price of the vehicle when new. That would be simple to apply and remove any discrimination between different vehicle types. Alternatively it could be based on the weight of the vehicle which would be even simpler to apply and would directly relate to the energy needed to propel the vehicle.

The VED Consultation Note is here (readers are encouraged to submit their own comments): https://www.gov.uk/government/publications/vehicle-excise-duty-call-for-evidence

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Sadiq Khan Asks for £1 Billion Bail-Out

Sadiq Khan may be asking for as much as £1 billion to bail-out Transport for London (TfL). He did not deny it when interviewed on BBC television. The organisation is haemorrhaging cash as most of its income comes from bus and tube fares and usage of those has severely declined. It may be unable to pay its staff very shortly without some Government support and has already “furloughed” 7,000 staff from today. TfL will be able to access funding from the Government’s Job Retention Scheme for those staff, saving the organisation millions of pounds every week, but that’s only a short-term and temporary solution to the Mayor’s financial problems.

How did the Mayor get TfL into the position where it cannot survive the problems caused by the coronavirus epidemic? In essence because the Mayor is financially inept and has allowed TfL to run up massive deficits so it has minimal reserves to cope with such an event. We have commented on this issue repeatedly – for example here on the TfL budget in January: https://abdlondon.wordpress.com/2020/01/17/tfl-business-plan-and-budget-for-the-next-5-years-more-of-the-same/

Total borrowing was forecast to reach £12.3 billion within 2 years because of delays to Crossrail and other issues, and that was before the impact of the coronavirus. A lot of the problem is caused by the Mayor spending money on programmes such as cycle schemes, Active Travel, Healthy Streets, Vision Zero road safety, the ULEZ and other policies for which there was no cost/benefit justification provided in this Mayor’s Transport Strategy (MTS). Now we are seeing the result of this financial incompetence and inability to manage the budget.

The ABD suggests that before the Government hands the Mayor any cash, they should lay down some conditions on how it will be used and insist on some changes to the MTS. Scrapping the expansion of the ULEZ would be a good starting point.

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ULEZ – The Latest Information Including Poor Financial Outcome

The London Ultra Low Emission Zone (ULEZ) is currently suspended due to the coronavirus epidemic. This enables key workers to get to work without taking the risk of taking the still crowded public transport. This is a wise move by Sadiq Khan but it will create yet another hole in his TfL budget.

However, the plans for the expansion of the ULEZ to the North/South Circular in October 2021 are still proceeding. One of our supporters has recently submitted a Freedom of Information Act request and obtained some more useful information. I highlight the interesting points:

  1. The scheme is likely to be enforced in the same way as the existing ULEZ and Congestion Charge, i.e. via cameras, both fixed and mobile ones. A map showing where the boundary will be is present here: http://lruc.content.tfl.gov.uk/ulez-boundary-2021-map-local-detail.pdf
  1. But one concession is that vehicles parked, but which don’t move within the zone, and which are non-compliant won’t incur any penalty. However, there are very large numbers of cars parked on roads within the enlarged zone that are only used occasionally. But as the current ULEZ operates all day, every day, their owners will find themselves paying £12.50 for virtually every vehicle movement (the daily charge).
  1. The expected operating income of the expanded ULEZ for 2021/2022 is £160-£170 million with operating costs of £100-£110 million, i.e. a profit of perhaps £60 million. But the infrastructure set-up costs are forecast to be up to £120 million so it will be at least two years before those costs are even recovered, i.e. by 2024.

Note: in reality by 2024 the vehicle fleet will have changed considerably so the level of emissions will by then have reduced very significantly and few vehicles will be non-compliant thus substantially reducing the income from the scheme. For example the chart below shows the NOX emissions that were originally forecast by TfL, with and without the ULEZ. By 2030 there is no benefit from the ULEZ at all.  This means that this is yet another financial mistake the Mayor is going to make if the scheme is implemented as planned.

ULEZ NOx reduction-web

However, it seems that more detailed design of the scheme is still being undertaken so perhaps Mayor Sadiq Khan and TfL management are having second thoughts. They would be wise to do so as TfL are already running a massive deficit with debts rising. That was before the decline in public transport income from bus and underground fares that will have been badly hit by the epidemic plus the suspension of the ULEZ, LEZ and Congestion Charge.

It would be simply madness to proceed with the ULEZ expansion based on what we now know. But the Mayor is now so desperate for money that he might increase the proposed charge, expand the zone even further, or class even more vehicles as “non-compliant”.  That should go down well in the 2021 election year!

Note that the above financial figures are much worse than the last numbers we reported in January 2019 on our blog. There will be a very substantial amount of cash taken out of the London economy from the ULEZ taxes. This  will hardly help the economic health of the city, when it might still be recovering from the severe recession that is predicted from the virus epidemic. In addition, there may be a cost to Londoners of over £200 million from having to upgrade to compliant vehicles.

In conclusion, the expansion of the ULEZ makes no sense. A very expensive project that will not have much impact on air pollution.

See this page of our web site for more information: https://www.freedomfordrivers.org/environment.htm

Roger Lawson

Twitter: https://twitter.com/Drivers_London

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Decarbonising Transport – A Costly Exercise in Limiting Personal Freedom

Decarbonising Transport Cover

Grant Shapps, Government Transport Minister, has recently published a document entitled “Decarbonising Transport” (see Reference 1 below). From the cover photograph (see above), it suggests that the Government expects us all to travel by electric buses in future with not a private car in sight.

That is actually the agenda spelled out in the document. It follows from the adopted Government policy of achieving net zero greenhouse gases (GHG) by 2050, despite that fact that many people think this is financial lunacy and simply unaffordable. That’s even if you believe that removing all CO2 emissions is essential to stop global warming which is a very dubious proposition anyway.

The document spells out that “Public transport and active travel will be the natural first choice for our daily activities. We will use our cars less and be able to rely on a convenient, cost-effective and coherent public transport network”. If only the latter were true!

Public transport is inherently inconvenient. It never arrives at your doorstep and if it is raining you will get wet walking to the nearest bus stop or train station. You will also get cold in winter waiting for the next bus or train, and may be uncertain when or if it will arrive – public transport is never as reliable as your own vehicle. But the Government is intending to “persuade” you to change your lifestyle.

It also contains this wonderful sentence “Clean, place-based solutions will meet the needs of local people. Changes and leadership at a local level will make an important contribution to reducing national GHG emissions”. What exactly does that mean and what practical measures is it suggesting. This writer has no idea.

It also states that “all road vehicles will be zero emission” and also says “technological advances, including new modes of transport and mobility innovation, will change the way vehicles are used”. Is it suggesting we will all be using electric scooters in future or what?

The Government is developing a Transport Decarbonisation Plan (TDP) which will set out in detail what will need to be done and will be published in Autumn 2020 – the Government is clearly rushing ahead on this policy. The document already published does give a lot of information on the sources of GHG emissions in the UK and the trends in size.

Transport has remained remarkably stubborn to change whereas many other sources such as energy production have fallen in the last few years. Transport is now the largest contributor at 28% of emissions. But cars/taxis emissions have fallen while HGVs and Vans have increased – the latter have grown by 67% since 1990 on more than double mileage. Emissions from cars are projected to fall by 52% by 2050 due to the increased use of electric vehicles. The private motorist is doing what the Government requires however misconceived and expensive it may be.

Meanwhile emissions from international aviation have more than doubled since 1990 and were still increasing prior to the virus epidemic. They might soon exceed emissions from cars. There is no short-term way of cutting aircraft emissions so they are allowed to buy “indulgences” just like in medieval times for their sins. In this case that means purchasing carbon offsets or planting trees under the CORSIA scheme.

The Government is spending billions of pounds on encouraging us to walk and cycle, mainly via local authority schemes. You can see the impact of this in London which had had similar policies and lots of funding since the current Mayor was elected. It has been a very negative outcome with modal shift hardly perceptible except where people are forced to comply by closing roads, restricting parking and other similar measures.

The document highlights that 79% of domestic freight is carried by roads, 13% by water and 9% by rail – the latter two mainly carrying heavy, bulk cargoes. But GHG emissions from HGVs have been rising driven partly by decreasing fuel efficiency. New lower emission targets for HGVs have been set to tackle this problem but the future projections do not indicate a rapid fall. The Government suggests that electric cargo bikes are the answer for local deliveries.

In summary the Government is keen to promote modal shift in the public, whether you like it or not. This is yet another attack on the private car which the ABD has consistently opposed because it is in essence irrational and unnecessary.

You can share your views on decarbonising transport, register for regular updates on the progress of the Transport Decarbonisation Plan and register your interest for the workshops by emailing TDP@dft.gov.uk as well as by following @transportgovuk on twitter.

Please send the Government your views before this nonsense goes too far.

Reference 1: Decarbonising Transport: https://tinyurl.com/s2ohyd9

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Mayoral Election Postponed and Transport Price Freeze Unfrozen

Among last weeks epidemic news and financial turmoil, two important items of news for Londoners sneaked out. First the election for Mayor of London has been postponed – possibly for a year, along with other local Government elections due in May. With Sadiq Khan well in the lead in the polls, that might be welcome news for other candidates as it will give them more time to gather supporters.

One of the current Mayor’s vote winning policies at the last election was his promise to freeze public transport fares. That proved popular with many Londoners despite the fact that it was financially rash and has resulted in a big deficit in Transport for London (TfL) finances and limited investment in new transport services. The Mayor has now decided to drop that commitment but he is committing to limit rises in Underground fares to inflation and continuing to freeze bus fares – if he gets re-elected of course.

Is that wise? One thing he appears to have overlooked is that TfL finances depend to a great extent on fare-paying passengers. Bus trips have been falling and the coronavirus impact will undoubtedly reduce the numbers travelling on London buses and the underground substantially as more people work from home and events in London are cancelled. Nobody is going to be travelling on crowded public transport if they can possibly avoid it by walking, cycling or getting taxis instead.

This might have a very severe short-term impact on TfL’s finances as a lot of TfL’s costs are fixed so any hit to revenue results in big financial losses. But TfL is already loaded with debt due to the fares freeze so may no longer be credit-worthy. That will be a real problem for the new Mayor whoever it is.

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