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PLANS by Transport for London to cut billions of pounds from its budget in "efficiency savings" are in jeopardy, the Evening Standard can reveal.
An internal report seen by the Standard shows that Transport Commissioner Peter Hendy has expressed confidence that only £1.8billion of savings can be achieved - compared with a £2.4billion target. Today there were warnings that the £600million shortfall would have to be made up by increases in Tube and bus fares.
Mr Hendy announced four months ago he had "identified £2.4billion in savings and efficiencies", saying he recognised "the need to deliver clear value for money for London's taxpayers and farepayers, enabling fares to be kept affordable".
The savings - over a nine-year period - were criticised by transport unions as draconian. But Mr Hendy himself said the £2.4billion figure was "not enough" and there needed to be "a continuous effort to drive down costs in every part of TfL".
But in a report to the most recent meeting of the TfL board, seen by the Standard, Mr Hendy announced that the £2.4billion saving was proving "challenging" and said: "At present there is only high confidence on [achieving] £1.8billion of [savings] initiatives." One board member told the Standard: "This is ludicrous. Over the nine-year period TfL will be spending not far off £100billion and they are saying they can only be confident of saving less than two per cent of it."
If it cannot be found elsewhere, the board member said, it may have to come from higher-than-expected fare increases. The £600million which may no longer be saved is roughly equal to the amount raised by the last seven years' fare increases on the bus network. A TfL spokesman insisted the organisation was "totally committed" to achieving the £2.4billion cuts. "We are making excellent progress and are completely confident of delivering at least the full amount," he said.
Asked to explain the difference between this and Mr Hendy's statement, he said the accountants had asked for "more detail" of the cuts before they were prepared to endorse TfL's £2.4billion figure. TfL faces financial difficulties in the next few years as bills for Crossrail, the Tube PPP, the East London Line extension and other major projects become due - while passenger numbers and revenues seem likely to fall in the recession.
TfL has planned for fare rises of at least one per cent above inflation over the next few years, along with the efficiency drive, which was expected to cost more than 1,000 back-office jobs.
However, there has been growing resistance inside the organisation to the cost-cutting programme, with unions threatening strike action and claiming that the "real number" of job losses may be as high as 3,500.
The likely drop in the rate of inflation may also affect the organisation's finances. By this July, the month which is taken as the inflation baseline for the following January's fare rise, inflation is likely to be very low or even negative. This would limit the fare rise the Mayor was able to impose, or might prevent him imposing an increase at all.
TfL has recently come under fire for its relatively high costs. As the Standard revealed, it has 123 top managers earning more than £100,000 a year each - a number which has grown more than six-fold since 2000.
Statistics from the Department for Transport show that operating the London bus network costs £2.51 per vehicle kilometre - more than twice as high as the average outside London.
TfL is also concerned at the prospect of a critical report by the public spending watchdog, the National Audit Office, into its stewardship of the Underground. Sources close to the report say Mr Hendy's organisation has been trying to have the document watered down.
Reader views (20)
Boris has never revealed the true cost of replacing bendy buses, for good reason.
There are around 400 bendy buses in London with a total capacity (including standing) or around 150. Boris wants to replace them with double deckers, with a total capacity or around 90. If he intends to maintain the current capacity level, he will need to provide around 670 double deckers. If a double decker bus costs £150,000 the replacement cost alone will be £100 million.
The extra 270 buses will need 270 extra drivers per shift plus cover, say 1,000 extra. Even at £20,000 per year, this would increase running costs by £20 million per year. There is also the cost of maintaining these additional buses, which will cost several millionb extra per year. No wonder Arriva are saying that their charge will increase by 24%.
With figures such as these, there is little wonder that TfL are unable to make the efficiency savings demanded of them.
Once again one of Boris' populist policies has been found out. We can't afford to pay these additional costs and shouldn't have to.
- Andrew, London W1, 18/03/2009 22:09
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The best way to save money would be to rtain existing artics and buy another 200! That should help to convert buses on Londons buisest corridors to Artic operation and save millions of pounds given the number of passengers each bus can transport. Fare evasion would be dealt with with more roving inspectors with a £5 fare for anyone who has not paid.
I have also noticed that the Roadside Ticket Machines (RTMs) some of which were only recently installed are being removed no doubt on instructions from Boris. This means that Bus companies need to maintain seperate offices at its garages to handle a diminishing amount of fares paid using cash, and as a recent incident showed leaves drivers and passengers open to armed robberies for what may be a few pounds. - More Boris Waste.
As for complaining about £4 tube fares get yourself an Oyster ticket! Or Travelcard etc...Cash fares are for those foolish enough to pay them...Perhaps thats why Boris is removing RTMs as you cant then buy a day bus ticket given that London is one of the few places in the world that drivers dont sell day tickets!!
- Melvyn Windebank, Canvey Island, Essex, 18/03/2009 19:24
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Why the hell are tube fares in London alreasdy the highest in the World and still they need more ?
London is one of the most important cities in the World and its transport should be supported by the national taxpayer. The council taxpayer is contributing to the national Olympic farce and London taxes contribute to the whole country, including Scotland. No transport system anywhere can be self supporting.
The whole country benefits from London and its business and tourists.
- Michael Waugh, South Kensington, 18/03/2009 18:53
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there are a few benefits to turning sixty and the freedom pass is one of them. however for those that have yet to attain their three score the pain increases, whilst the services appears to be in terminal decline.
- M.O'Brien, london.uk, 18/03/2009 18:18
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Too many chiefs costing too much need to be cut and the rest should have to reply apply for jobs at a far lower rate of pay. The staff on the underground are paid too much for unskilled work and should be brought in line with the private sector.
- Maggie, London UK, 18/03/2009 17:53
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Sack the useless middle managers brought in from outside the industry and leave the running of the system to those who know it best.
- Colin, barking essex, 18/03/2009 17:08
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Expensive fares getting more expensive. The service getting more and more over-crowded with stations having to be temporarily closed and trains having to miss stops with over-crowded platforms. Well done Boris.
- Mick, London, England, 18/03/2009 16:51
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Staff salaries should be open to supply and demand. For the work they do which lets face it, not skilled at all (aside from drivers who need a nominal amount). Many of the station staff are paid far too much for what they do.
- Sukh, london, 18/03/2009 16:21
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Well said Bethany London W5,
Offices at The Shard of Glass, they could do their jobs from an industrial estate anywhere in London.
They don't need flash offices, but then again thats the public sector mentality isn't it.
- P Staker, London, SW8, 18/03/2009 15:52
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London will only get the transport system it pay for, so these cuts will mean less efficency, more delays, and less staff on stations with all the problems that causes with muggings etc, so if we want to save a few pence on the fares lets go for it , but lets not complain when we get a third world network.
- Brian, Wiltshire, 18/03/2009 15:41
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Cant they get rid of "those people" shouting mind the doors?. What a clownish comment. A more intelligent solution as the Standard points out is to tackle the 123 on over 100k per year.They are hardly pioneers or captains of industry, make the cull there. All jobs for the boys anyway!
- Tony ,Essex, Harlow,UK, 18/03/2009 15:33
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Paying more for a rubbish service, that sounds about right nowadays. Make the public pay for their failings.
Malc
- Malc, London,England, 18/03/2009 13:41
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Cancel Crossrail, it's no longer needed now most people in the City and Canary Wharf have been made redundant. That will save a few billion. Also cancel all transport projects associated with the Olympics, East London will always be the run down part of town no matter how much is spent on it and therefore doesn't deserve our hard earned tax. Boris should take a few buses off the roads as well which will not only save money but reduce congestion as well.
- Kimberley, London, 18/03/2009 12:59
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So is this shortfall caused by the abolition of the Congestion Charge? Given that the £600m is over 9 years (so about £65m per annum), I reckon quite a fair chunk of the money comes from there.
I've also suggest that Boris ditches his plans to scrap bendies, which Arriva revealed would increase the fees TfL pays them by 24%. And while he's at it, stop spending money developing 'new' Routemasters that will require two members of staff (and therefore much more expensive to operate).
There you go. £600m found.
- Mark Lee, Vauxhall, 18/03/2009 12:55
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Im confused? TFL have enough money to squirrel away in foreign accounts (icelandic bank is only what they admit to) and yet now they plead poverty?
£4 for a single tube ticket it absolutely outrageous, as are the manafers earning 4 of 5 times what the Prime Minister or Mayor himself earns!?
cant they just get rid of those people on the platform shouting 'mind the doors' what use are they!? probably all on around 30k a year and no one listens to them anyway. SUCH wastage at a private company would not be tolerated and it would have gone bust several times by now.
- Alanj, London, 18/03/2009 12:34
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How about scrapping the free travel for under-16s? The gangs use it as their own personal transport system, making those of us who have to pay for our journeys feel uncomfortable and at times, intimated.
Why is it always us who has to suffer?
- Scott, London, 18/03/2009 11:48
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Lets be honest.When you say efficiency savings you really mean jobs cuts. Why should commuters pay £600 million in redundancy pay and benefits.
- Rupert, London, 18/03/2009 11:09
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Don't be ridiculous. London's tube fares are already the highest in Europe. How about losing some of TfL's totally unnecessary and ineffective middle management instead?
- Marianne, SW France, 18/03/2009 10:39
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At least 50% of non-operational staff in in TfL could be got rid of, without adversely affecting it's effective output. On top of that a 100% cull of consultants would have little effect outside of IT. The IT department itself is by a long chalk the most inefficient I have ever come across and needs a massive cull, and its responsibilities redefined.
TfL is close to being a kleptocracy, such is its culture. Quite why the new Mayor hasn't got rid of Hendy is unclear to me, there is something very murky continuing to happen around this dreadful behemoth which is TfL.
- Oscillator, London, UK, 18/03/2009 10:18
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Massive savings can be made at Transport for London if the stupid plan to lease expensive office space in the new Shard Building are scrapped. TfL are always willing to employ admin staff on very large salaries and put them in luxurious offices whilst our roads and public transport system becomes unreliable and even more expensive.
- Bethany, London W5, 18/03/2009 09:36
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