Mike Brown hits out at ‘bonkers’ TfL borrowing limits
Transport for London (TfL) boss Mike Brown has criticised the government for imposing “bonkers” limits on its borrowing and for failing to provide it with long-term certainty over its funding.
The TfL commissioner told City PM that the organisation’s borrowing caps, which are set by government, were based on “no logic other than discussions within government as to what they should be”. TfL has reached its borrowing limits for this financial year, making it difficult to finance transport upgrades, several of which have been temporarily shelved.
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“In any conventional business, your borrowing would be based on your existing asset base and how you could capitalise and get some revenue from that,” Brown said, citing the central tunnel of Crossrail. “There isn’t that mechanism to do that at the moment because it all sits under government. It’s clearly bonkers.”
Brown said “times are tough” for TfL, which is struggling with a £500m deficit, a reduction in fare income, the removal of the government’s £700m operational grant and Sadiq Khan’s fares freeze.
The TfL boss also said he had also received “no certainty beyond next year” from the Department for Transport (DfT) or the Treasury as to how the travel body would be funded, and that this was preventing him from signing crucial business contracts.
TfL is currently funded through a variety of sources, including a capital grant which is financed from a proportion of local business rates and which it receives through the Greater London Authority. However, the recent spending review announced by Sajid Javid only covered the years 2020/21.
“I’m not asking for special treatment for London compared to other cities in the country or other regions in the country; I’m just asking for equal treatment,” Brown said.
“I can’t sign contracts when I’ve got no stream of certainty of how I’m going to pay for it,” he added. “It’s questionable from a fiscal prudence perspective – the board wouldn’t let me do it and the mayor wouldn’t let me do it.”
Over the past year TfL has pressed pause on a number of transport upgrades, including the Bakerloo line extension and a signalling upgrade on the Piccadilly line, while the Northern line extension to Battersea has been delayed by a year. Brown said it was “unbelievable” that TfL was running the oldest trains in the UK on the Bakerloo line, which were built in 1972.
“The reason I hark back to 1980s is not to frighten people, but I just want people to remember that it is actually quite a short step from things going well and progress being made, to things not going well and progress not being made – and that would be a travesty,” Brown said.
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A Treasury spokesperson said: “This month’s spending round was a fast-tracked, one-year event to give departments their budgets so we can get on with Brexit. A multi-year spending review will take place next year.”
Main image credit: Getty