LSE London Conference
Transport
Stephen Glaister
Professor of Transport and Infrastructure
Imperial College London
26 October 2005
Imperial College London
Centre for Transport Studies
1
Population
London’s population is projected to continue growing to 2026 at the same
rate as over the London Plan period
Projected London Population
10
9
8
Population (millions)
8
7.4
7.37
7
6.6
7.7
7.9
8.1
8.3
8.6
6.7
6
5
4
3
Actual
2
Projected
1
0
1961
1971
1981
1991
2001
2006
2011
2016
2021
2026
Source: GLA Population and Household Forecasts, SDS Technical Report Twenty-three, January 2003 and Office of National Statistics news release, 25 November 2004; TPP updated numbers (supplied by GLA 20 January 2005)
Source: TfL Business Plan October 2005
1
Travel demand
Growth in travel is predicted to continue, with at least an extra 4 million
daily trips by 2025
28
Daily trips in London (m)
27
An extra
4m daily
trips by
2025
26
25
24
23
22
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
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.
37
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
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Centre for Transport Studies
4
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!
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Centre for Transport Studies
5
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!
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Centre for Transport Studies
6
TfL Business Plan 2006/7 – 2009/10 (published today).
2005/06
P6 Forecast
£M
Operating Income
Interest income
Income
Precept
Transport Grant
Total Income
Operating Expenses
LU PPP/PFI costs
Operating Expenditure
Debt Service
Total Operating Expenditure
Surplus/Deficit (+ve good/-ve bad)
2006/07
2007/08
2008/09
Operating Plan
2009/10
Total
2,751
55
2,807
20
2,161
4,988
2,871
53
2,923
21
2,383
5,327
3,186
47
3,234
22
2,544
5,800
3,354
44
3,398
23
2,528
5,949
3,497
38
3,535
25
2,651
6,211
15,660
237
15,897
112
12,267
28,276
3,487
1,420
4,908
24
4,932
3,628
1,558
5,186
85
5,271
3,788
1,590
5,378
132
5,510
3,864
1,668
5,533
187
5,719
4,021
1,840
5,862
239
6,101
18,788
8,078
26,866
667
27,533
56
56
290
230
111
743
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Centre for Transport Studies
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TfL Business Plan 2006/7 – 2009/10.
2005/06
P6 Forecast
£M
Capital Expenditure
Contingency
Less 3rd Party Funding
Total Capital
Funded by
Operating Surplus
Borrowings
Reserves
Non-recurring Grant
Working capital movement
Total Funding
2006/07
2007/08
Capital Plan
2008/09
2009/10
Total
849
0
(195)
654
895
26
(234)
687
1,150
27
(194)
983
1,326
28
(132)
1,222
1,027
28
(123)
932
5,248
109
(878)
4,480
56
550
130
0
(82)
654
56
604
66
0
(38)
688
290
600
144
5
(55)
984
230
750
114
137
(9)
1,222
111
600
189
58
(25)
932
743
3,104
643
199
(209)
4,479
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Centre for Transport Studies
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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
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Centre for Transport Studies
9
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
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Centre for Transport Studies
10
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?
Imperial College London
Centre for Transport Studies
11
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
Imperial College London
Centre for Transport Studies
12
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 AND
how much extra tax they are willing to pay
Otherwise, we are in trouble!
Imperial College London
Centre for Transport Studies
13
Congestion Charging
Glaister and Graham: congestion & environmental charges
Gross revenues in year 2010 conditions
London £5 bn pa
UK £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!
Imperial College London
Centre for Transport Studies
14
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
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Centre for Transport Studies
15
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.
Imperial College London
Centre for Transport Studies
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