Tube and bus passengers will be paying a record £6bn a year in fares to Transport for London under its new plans to break even, it can been revealed.
TfL finance chiefs expect annual fares income to increase by £1.7bn or 40 per cent over the next three-and-a-half years, driven in part by more passengers and in part by annual price hikes.
The Government, under TfL’s final bailout deal last August, expects TfL fares to rise by at least four per cent next March, in line with national rail fares, and by the same amount again in January or March 2024.
In the 2024/25 and 2025/26 financial years, TfL’s planning assumption is for an annual hike one percentage point above the RPI rate of interest – though Mayor Sadiq Khan has the final say on each annual fares review and can set his own figure.
The £6bn fares projection is set out in TfL’s new business plan, which outlines its expected spending and income until 2025/26.
Other key elements include:
- A reality check that Tube and Overground rail journeys will only reach 86 per cent of pre-pandemic levels by March 2026, and bus journeys 91 per cent.
- No date for TfL journeys to hit 100 per cent of “normal”.
- The need for a further £600m a year in savings – but no mention of any cuts to staff pensions.
- Cutting car journeys in central London from 1.4m to 1.1m by 2030.
- Increasing from 35 per cent to 52 per cent the proportion of Londoners who undertake at least 20 minutes of “active travel” such as walking and cycling a day.
- New trains on the Piccadilly line and DLR and the opening of the Silvertown tunnel in 2025.
The business plan, the first since 2019, seeks to position TfL as the “green heartbeat of London” by prioritising schemes to improve the environment and reduce pollution.
The expansion of the ultra-low emission zone to the Greater London boundary next August is set to generate £200m in income in its first 12 months.
However this is expected to fall sharply in the following years as drivers switch vehicles to avoid the £12.50 levy.
About £150m a year will be spent on walking and cycling schemes, with the aim of reducing car dependency and increasing the proportion of journeys walked, cycled or made by public transport from 62 per cent to 68 per cent by the end of the decade.
TfL commissioner Andy Lord told the Standard the business plan should reassure Tube unions on staff pensions.
“We have not assumed any savings from any changes to pensions at all in the period of this business plan,” he said.
However the removal of up to 600 Tube station posts has begun – another issue behind the six RMT Tube strikes this year - though without redundancies.
The business plan envisages TfL breaking even during 2023/24 but still requiring Government help for “big ticket” projects such as the Bakerloo line extension. TfL’s borrowing is expected to increase to £14 billion.
Mr Lord said there were “four clear priorities”: winning back passengers, making TfL a “simpler and more effective organisation”, rebuilding its finances and taking a lead on tackling the climate crisis.
Passenger numbers are currently at 80 per cent of normal but Tube travel on Mondays and Fridays is lagging due to changed work habits.
TfL says it has made a “relatively prudent set of projections” on future demand because of the cost of living crisis, uncertainty about the state of the economy, the impact of Brexit and the war in Ukraine.
It plans to invest £8.1bn in improving the capital’s road, Tube and rail network over the lifetime of the plan.
New air-conditioned trains will start arriving on the Piccadilly line from 2025. New longer DLR trains will be introduced from 2024.
“Active discussions” are being held with Government on the long-term ambition of replacing the ageing trains on the Bakerloo line and Central line and extending the DLR to Thamesmead.
Mr Khan said: “The past two years have been the most challenging in TfL’s history and the pandemic’s impact on TfL’s finances was devastating.
“It is clear there are many challenges ahead, but TfL’s business plan sets out how London’s world-class public transport network will continue to contribute to a better, greener and fairer city for all Londoners.”
However the main Tube drivers’ union gave no indication that the “olive branch” on pensions would prevent more strikes.
Finn Brennan, Aslef’s organiser on the London Underground, said: “This demonstrates again that the insistence by the government that TfL change its pension scheme is driven entirely by political vindictiveness. The TfL pension fund is extremely healthy, well managed, and in surplus. There is no justification for detrimental changes and Aslef will oppose them by all possible means.
“We have started the proceed of re balloting our members across London Underground for industrial action in the New Year if there is an attempt to push changes to pension or working practices through without agreement.”
The RMT has been approached for comment.
