City Hall finances means no happy ending for trams fairy story

There was a time, not so long ago, when London had a well-funded, well-thought-out public transport network. Or was it just a fairy story?
Following yesterday’s exclusive Inside Croydon report about how capital works on the tram network are to be axed, JEREMY CLACKSON, our transport correspondent, explains  what’s gone wrong with TfL finances. Now, are you sitting comfortably..?

Once upon a time, not-so-long-ago, in a not-so-far-away land there lived a king, of sorts. We’ll call him Ken.

And Ken ruled all he surveyed in a great silver city.

In his city, Ken had a little railway set, with little trains which ran backwards and forwards, forwards and backwards, all day long. The people liked the train set, and Ken liked his train line so much, he saved up extra money ready to go to the shops and buy some more track so that his trains could trundle all the way up the hill to the great flashing tower.

But one day, along came a baron who did not like Ken. Let’s call him Boris. And Baron Boris kicked old Ken out of his shiny castle, and took over.

Baron Boris told all his people that he really liked the idea of the train set going up the hill to the great flashing tower. But when he found the money that Ken had saved, hidden under his bed, Baron Boris didn’t spend it on the train set, but instead went out and bought a fairy garden bridge which was magic, because it was neither a bridge nor a garden.

Boris Johnson (here with Assembly Member Silent Steve O’Connell) only ever used the trams for photo opportunities

And then one day, the fairy garden bridge vanished, and with it went all of the money Baron Boris had paid for it.

And no one lived happily ever after.

It is 10 years now since London was getting used to its first Tory Mayor, a time when people in this part of the capital were demonstrating by using the tram, how east-west public transport infrastructure was so necessary and much in demand, as Tramlink provides a cheap, efficient and relatively environmentally friendly way to travel between Wimbledon, Beckenham and all points in between, including Croydon.

But it is almost 20 years since the tram network was opened, since when the system has remained largely unchanged, without any significant extensions to the lines. In any transport masterplan where a key objective is to get cars off the roads and reduce air pollution, a functioning, affordable light rail system would usually be a priority, and something worth investing in.

Yet when Ken Livingstone left City Hall for the final time in 2008, his administration’s plans for the tram extension to Crystal Palace, fully costed and funded, were left to gather dust, and eventually turn to dust. It is a object lesson of where the public interest has been ill-served by our politicians and their own quests for power.

The Mayor’s and the Greater London Authority budgets are a highly geared play on the fare box.

Strong public transport was key to Ken Livingstone at the GLC, and later when he was Mayor

That’s because when Tony Blair set up the GLA, he did not want to see a “GLC 2.0”, strong enough to challenge the authority of  government, as Livingstone had done in the days of Thatcher.

The GLA was deliberately made to be financially weak from its start in 2000. The new GLA family of City Hall, Transport for London, LFEPA (the fire authority), MPA (police authority) and the LDA (London Development Agency) was set up on a very limited tax base, sharing a minority of the Council Tax raised by the capital’s 32 boroughs and the City of London.

By contrast, in America, city mayors in New York, Boston, Chicago, all have access to property, sales, income and lodging taxes.

Access to money means real power.

Livingstone secured the congestion charge, but this was small beer in revenue terms compared to the GLA budget. Limited planning gain monies and share of business rates came along.

Thus, as London’s third Mayor, Sadiq Khan, is discovering, running London government’s finances is a risky business. For every £1 needed in the budget, £13 needs adding to local authorities’ Council Tax, such is the appalling gearing of the structure of the GLA’s funding.

Mayor Sadiq Khan’s fares policy has created problems for TfL

Fortunately for Livingstone during his time as Mayor between 2000 and 2008, London was booming and fare box receipts prospered along with it.

Under Johnson, his Bullingdon Club ties kept London’s government grants buoyant.

But if things turn – the global economy, the City and banking, Brexit – the budget at City Hall very quickly gets into trouble because of its high gearing. With net spending of more than £11.3billion backed by only £866million in rates, that’s a ridiculous 13x gearing.

By far the biggest amount of money for the GLA comes from government grants. And this is one fairy godmother who has not been waving her magic wand and granting any wishes lately.

If you are a Labour Mayor under an unsympathetic Tory government, you soon get into difficulties. That’s the context of this week’s TfL report which listed so many capital projects to be “deprioritised”, including major tram improvement schemes.

TfL’s running government subsidy has been cut by £700million a year. Different working patterns and traffic congestion has hurt public transport demand, with bus fare income falling by £21million and London Underground fare income failing by £67million in the last financial year.

The Dingwall junction might need some investment, but nothing’s coming from TfL for some time

Delays in the delivery of the £14billion CrossRail, and an estimated £2billion in cost overruns on that project, have also had an impact.

So something has had to give. That’s why bus routes are being axed or, in Croydon, shortened, at considerable inconvenience to passengers. Thankfully, for those who saw the Dingwall Road tram loop as a costly exercise in making it easier for car drivers to park at Westfield, it has seen that £28million tram scheme binned, probably permanently.

But other light-rail projects in south London have also fallen by the wayside, possibly permanently, just as the Crystal Palace extension did.

The sixth ever London Assembly elections are due to take place in 15 months’ time. If Tooting-born Mayor Khan wants to ensure a happy ending, or new beginning in 2020, he needs to make sure that he doesn’t come over as disinterested to the needs and concerns of his fellow south Londoners.

About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email
This entry was posted in Boris Johnson, Ken Livingstone, London Assembly, London-wide issues, Mayor of London, Sadiq Khan, TfL, Tramlink, Transport and tagged , , , , , , , , , . Bookmark the permalink.

5 Responses to City Hall finances means no happy ending for trams fairy story

  1. David Wickens says:

    Any news on progress with the Fiveways proposals?If that is shelved together with the loop that will be a real vote of no confidence in Westfield despite both schemes having (very) limited traffic benefits for Westfield.

    • TfL are in talks with property owners, David.
      Unless or until there is significant reductions in road traffic, some remodelling of the junction at Fiveways is required.
      Work is due to start in 2022.

  2. The analysis in this is right. The Tory Government is deliberately restricting funds for the Mayor and councils. This is not only on account of the Tories’ doctrinal commitment to austerity, but also in the hope that voters will blame the Labour Mayor and (mainly Labour) London boroughs for the cuts and reduced services.
    Sadiq would be well advised not to try to maintain that he’s achieving all that’s required. Rather he should explain to voters that he’s heavily restricted in what he can do. We need a change of Government and new policies at a national level if that’s to be changed.

  3. You missed out Khan’s fare freeze which was a late curveball TfL hadn’t anticipated. The loss of the government subsidy was phased and had a significant lead in period, whereas Khan’s ‘free lunch’ offer to voters effectively meant tearing up the carefully planned budget which had been modeled to accommodated that loss of income. Then there’s the whole Crossrail farce which is hitting TfL budgets, and which Khan has claimed, not entirely plausibly, ignorance of.

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