Much of the blame for Sadiq Khan’s tax hikes lays in Whitehall

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Sadiq Khan has announced a raft of tax hikes but they are mostly out of his hands
Sadiq Khan has announced a raft of tax hikes but they are mostly out of his hands

Sadiq Khan is unlikely to be flavour of the month in too many London households this morning. Yesterday he announced a combination of top-up charges to Council Tax and an across-the-board increase in transport costs across London. The London Conservatives are, unsurprisingly, up in arms. But much of the blame lies not at City Hall’s door, but in Whitehall. 

A potted history: Transport for London, pre-pandemic, was heading for financial sustainability. This was important, as it was almost uniquely amongst global cities reliant on farebox revenues as opposed to central or local funding to keep moving. Once Covid-19 struck and the government introduced draconian lockdowns – which we can now assume were too harsh and lasted too long, particularly the second iteration – those fares collapsed, but TfL had to keep much of the service running. This created a financial black hole of a not insignificant size. 

Sadiq Khan had little option but to go cap in hand to central government – where he was told to come back with a series of efficiency savings on the transport network.

The Department for Transport gave London not one but four emergency bailouts before it gave the capital a longer-term funding plan, but one that required fares to increase at the same rate as national train fares (a government decision) as well as £500m-worth of additional revenues or savings. The Mayor could and should have been more constructive with Whitehall, and bitten his tongue on the many occasions Boris drew him into a media spat. 

But how’s this for a counter-factual. What if the government had given TfL a lump sum, no strings attached, sufficient to fill the funding vacuum caused by lockdown – recognising that a global city and the (only) engine of the UK economy needs a working transport system. It could even, frankly, have been a decades-long loan. 

Instead, the government and City Hall bickered for years – and the ‘long-term’ settlement finally reached only lasts for three years. Londoners will feel the pain of a failure of government.