imperial college london 1 centre for transport studies lse london conference transport stephen...

Imperial College London 1Centre for Transport Studies

LSE London Conference

Transport

Stephen Glaister

Professor of Transport and InfrastructureImperial College London

26 October 2005

1

London’s population is projected to continue growing to 2026 at the same rate as over the London Plan period

8.68.3

8.17.97.7

7.4

6.76.6

7.37

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1

2

3

4

5

6

7

8

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1961 1971 1981 1991 2001 2006 2011 2016 2021 2026

Po

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Projected London Population

Source: GLA Population and Household Forecasts, SDS Technical Report Tw enty-three, January 2003 and Office of National Statistics news release, 25 November 2004; TPP updated numbers (supplied by GLA 20 January 2005)

Actual

Projected

Population

Source: TfL Business Plan October 2005

37

22

23

24

25

26

27

28

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Dai

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in L

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An extra 4m daily trips by 2025

Growth in travel is predicted to continue, with at least an extra 4 million daily trips by 2025

Note: The historic trend has been fuelled by a number of trends including strong employment growth, lower fares, increase in capacity on underground (JLE) and latterly sharply increasing bus use.Daily trips for main mode of transport used, Includes all walking trips.

Travel demand

Source: TfL Business Plan October 2005


The problem

There is an acute shortage of peak capacity and poor reliability on

Rail

Underground

Roads (especially suburbs)

Nb: in London 54% of mechanised trips are by car

Population and demand are growing

Almost all the plans are directed towards repair and maintenance of existing systems


The commuter railway

London is the core of the national railway

Funds are very short for the railway:

Network Rail’s debt is £16 billion and rising

They have to deliver 30% efficiency saving

Very little money is budgeted for enhancements

The Mayor/Transport for London would like to become responsible for more of the London network (Railways Act 2005)

But only if sufficient grant comes with it!


Bus and Underground (Transport for London)

Government made a helpful settlement 2005/6 to 2009/10

Including agreement to £3 billion of Prudential Borrowing

- a much better way than the PPP!


TfL Business Plan 2006/7 – 2009/10 (published today). Operating Plan

£M

2005/06 P6 Forecast

2006/07 2007/08 2008/09 2009/10 Total

Operating Income 2,751 2,871 3,186 3,354 3,497 15,660Interest income 55 53 47 44 38 237Income 2,807 2,923 3,234 3,398 3,535 15,897Precept 20 21 22 23 25 112Transport Grant 2,161 2,383 2,544 2,528 2,651 12,267Total Income 4,988 5,327 5,800 5,949 6,211 28,276

Operating Expenses 3,487 3,628 3,788 3,864 4,021 18,788LU PPP/PFI costs 1,420 1,558 1,590 1,668 1,840 8,078Operating Expenditure 4,908 5,186 5,378 5,533 5,862 26,866Debt Service 24 85 132 187 239 667Total Operating Expenditure 4,932 5,271 5,510 5,719 6,101 27,533

Surplus/Deficit (+ve good/-ve bad) 56 56 290 230 111 743


TfL Business Plan 2006/7 – 2009/10. Capital Plan

£M

2005/06 P6 Forecast

2006/07 2007/08 2008/09 2009/10 Total

Capital Expenditure 849 895 1,150 1,326 1,027 5,248Contingency 0 26 27 28 28 109Less 3rd Party Funding (195) (234) (194) (132) (123) (878)Total Capital 654 687 983 1,222 932 4,480

Funded byOperating Surplus 56 56 290 230 111 743Borrowings 550 604 600 750 600 3,104Reserves 130 66 144 114 189 643Non-recurring Grant 0 0 5 137 58 199Working capital movement (82) (38) (55) (9) (25) (209)Total Funding 654 688 984 1,222 932 4,479


TfL Business Plan

TfL can make ends meet until 2009/10

But note:

• A substantial increase in fares

• A pathetic contribution from local domestic tax payers

• Increased grant consumed by £420 m pa increase in LUL PPP/PFI charges

• £600m pa new borrowing

• By 2009/10 £239 pa debt service charges


But what happens after the Plan?

The Business Plan is “Prudent”

But beyond the Plan, compared with current year:

We will lose £600m pa borrowing

We will have to service £3 bn of new debt

Bus excess waiting time will have deteriorated from 1.2 to 1.3 mins.

(more crowding)

Underground excess waiting time will improve from 3.25 to 3.21 mins.

Road congestion index will have deteriorated from 102 to108

Plan does little for road conditions in suburbs


There is little provision for building schemes for new capacity e.g.

New road capacity

No West London Tram

No Crossrail (£15 billion?)

The easiest way to obtain significant new rail capacity

Nb: TfL fares cannot be raised much further to fund Crossrail

TfL has no capacity to take on more debt to fund Crossrail

Central govt. unlikely to make several £ bn of new borrowing?


Government grant is the biggest single item of revenue

And almost all expenditure at the margin is central govt. controlled

This situation leaves central govt. in full control of all major decisions:

things happen if and only if govt. approves


Could London fund its own infrastructure?

Yes. Easily

E. g. London Gross Value Added is £160 bn pa

1% of this could service £16 bn to £24 bn of capital over 30 years

(equivalent to raising London VAT from 17.5% to 20%)

BUT it will only happen if the governance of London changes

We must establish an explicit link between improvements local electorate want ANDhow much extra tax they are willing to pay

Otherwise, we are in trouble!


Congestion Charging

Glaister and Graham: congestion & environmental charges

Gross revenues in year 2010 conditions

London £5 bn paUK £19 bn pa

But this is gross of all capital and operating costs

If costs can be kept reasonable (as they must be) London congestion charging would service substantial capital debt:

Conservatively 0.5 x 5 = £2.5 bn pa to service £25 bn to £40 bn

This must be pursued actively!


There must be NEW, local taxation

In most other major cities in the world a crucial element of success is local taxation

New York has over 20 local taxes

French cities have local employment tax

Canadian (and US) cities have local road fuel taxes

In London we only have the Congestion Charge


Conclusion

London’s infrastructure problems are likely to continue so long as we rely so heavily on grant from Central Government.

London-wide road charging would help

But essential is to give new powers to London Government

to levy taxes on the local economy

to be held accountable for their size and how the money is spent

So far devolution to the GLA has been successful if weak

Proper devolution of fiscal power is a necessary next step– and a much bigger one.

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