Cuts and the £900 million Bombardier blunder put TfL in a tight spot
Transport for London faces a critical financial appraisal in the London Assembly Budget and Performance Committee Pre-Budget Report, which sets out the key issues before the Mayor publishes his draft Budget:
- Figures reveal that delayed upgrades to the Circle, District, Metropolitan and Hammersmith lines (the Sub-Surface Upgrade Programme), including the failed Bombardier contract  cost TfL £1.15 billion. Passengers face a five-year delay for these planned upgrades.
- TfL will have to manage 600 million more passenger journeys a year by 2021, and find another £4 billion to cope with its underestimate for the Sub-Surface rail upgrades and reduced funding from government.
- The resulting effect of the delays on London’s wider economy total £900 million.
- In November, the Government announced its grant to TfL for day-to-day spending (e.g. on wages) is to be cut entirely. While Government investment in transport in London reduced by 20 per cent, investment in transport across the country rose by 50 per cent.
The Pre-Budget Report also finds:
- There are “worrying signs” regarding the London Legacy Development Corporation’s performance, particularly around the rising costs of the Olympic Stadium and the Arcelormittal Orbit, and its performance must be monitored.
- While police funding appears to have been protected in the Chancellor’s Autumn Statement, the Met will still need to make significant changes and the force may lack the commercial expertise to manage its outsourcing reforms.
John Biggs AM, Chairman of the Budget and Performance Committee, said:
“The Mayor is about to set his final Budget – one he will pass on to his successor of whatever political colour. This Budget will reflect what kind of legacy he leaves behind.
TfL faces a double whammy of reduced subsidy from Government alongside rising costs of keeping London moving, but it’s made the situation even harder for itself with a scandalous waste of money on the failed Bombardier deal. Likewise, the Met will still need to make savings.
The Mayor must now get down to the detail of how he will meet the serious challenge facing key London public services.”
Notes to editors
- Bombardier was awarded the contract to upgrade the signalling of the Sub-Surface Railway in 2011 (including the Circle, District, Hammersmith & City and Metropolitan lines). However in 2013, TfL was forced into a U-Turn after it became clear Bombardier could not deliver the contract.
- £886 million of the £1.15 billion additional costs relates to the signalling work and failed contract with Bombardier and the remaining to broader changes to the scope of the programme -Modernisation of the District, Metropolitan, Circle and Hammersmith & City lines, and Automatic Train Control Contract, TfL Board paper, 1 July 2015. The £4 billion figure comprises of this £1.15 billion of extra costs plus £2.8 billion of reduced government grant funding.
- David Hughes, Director of Major Programme Sponsorship, London Underground, told the Budget Monitoring Sub-Committee that the five-year delay will cost London’s economy around £900 million (£180 million a year) in terms of longer journey times.
- John Biggs AM, Chairman of the Budget and Performance Committee is available for interview. See contact details below.
- As well as investigating issues that matter to Londoners, the London Assembly acts as a check and a balance on the Mayor.
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