Wednesday, 20 October 2010

CSR and Transport for London

Setting our future direction – Outcome of the Comprehensive Spending Review

I am writing to brief you on the outcome of the Comprehensive Spending Review (CSR), which was announced by the Chancellor in Parliament this afternoon, as it affects Transport for London (TfL).

The headlines are that vital investment in London’s transport infrastructure and frontline services have been secured during one of the most turbulent economic times in living memory. Crossrail will go ahead, the Tube will be upgraded and we will be able to maintain our existing bus services.

However, as I said in my previous messages, we are facing a significant cut in our funding due to the steps the Government is taking to reduce the budget deficit.

Our funding settlement
After negotiations, the overall funding provided to us by the Department for Transport (DfT) is to be reduced by £2.17 billion over the four years to 2014/15.

This represents a 21 per cent real terms reduction in our DfT funding in 2014/15 compared with the current year.

This reduction has, in part, been covered by higher than anticipated fare revenue from ridership on the Tube, bus and rail network, which has recovered more strongly than we assumed last year. Our funding also comes from fares, borrowing and other sources such as advertising and commercial partnerships, but the reduction in grant from the DfT still represents a significant eight per cent reduction in our overall budget.

So while the settlement represents a very good outcome for us in protecting all of our top transport priorities, it also means that we must take further action to absorb the impact of this cut.

Implications for TfL
A high level summary of what our new funding position enables us to continue to deliver and how we intend to deal with the funding cut is attached. Given that the settlement has only just been confirmed, we now need to work through the implications for our activities in detail as part of our business planning.

I understand, of course, that you will be concerned about what this means for jobs and the projects you are working on.

All of this needs careful assessment as part of that business planning process and will be influenced by the outcome of Project Horizon, which is taking a root and branch look at how TfL operates and is structured. Our aim remains to complete Horizon by April 2011, including a detailed plan for implementation.

However, it is already clear that we will be doing less in a number of areas as a result of absorbing these cuts and that, in any case, we must deliver efficiencies to protect investment and our frontline services. This means that further reductions in the number of jobs at TfL are likely to predominantly affect management, administrative and support functions while we protect Tube and bus mileage and the quality of our frontline services.

I will, of course, communicate more details as we work through the detailed business plan and as the outcomes of Project Horizon emerge.

The Chief Officers and I are committed to ensuring that staff and trades unions are consulted and change is implemented fairly.

Looking forward
Today's announcements are the culmination of months of hard negotiations and it is good news that we have been able to secure funding for our top transport priorities. We have an enormous programme of delivery ahead of us, and we need to continue to ensure that every penny is well spent and that we deliver value for money for fare and tax payers.

Thank you for all your hard work and commitment.

Peter Hendy


TfL’s funding settlement

Delivering a 21st century transport system
Transport for London (TfL)’s funding settlement means that the Mayor and TfL can continue to deliver our top transport priorities, including:

  • The upgrade of the Tube, including major congestion relief schemes at Victoria, Bond Street, Tottenham Court Road, Paddington and Bank, and building Crossrail. Together these will add 30 per cent additional capacity to the transport network, boosting the UK economy and improving the reliability of services. Funding beyond 2014/15 has been guaranteed for Tube upgrades and Crossrail.
  • London’s extensive and accessible bus network, of such social and economic importance particularly in outer London, is protected.
  • TfL’s commitments for the London 2012 Games will be delivered.
  • Barclays Cycle Hire will be extended before the 2012 Games and all 12 Barclays Cycle Superhighways will be delivered by 2015.
  • The Western Extension of the Congestion Charging zone will be removed by Christmas.
  • The East London Line extension to Clapham Junction will go ahead and will be delivered by the end of 2012.
  • Fare increases for 2011 will be maintained at the level announced last year – RPI plus two per cent – while free travel and concessions for Londoners are protected.
Meeting the challenges of the new funding settlement
We already have a massive programme of savings and efficiencies of over £5bn, but further measures to deliver savings and efficiencies are required. TfL will meet the challenge of this new funding settlement in broad terms as follows:

  • Project Horizon will ensure the organisation is as efficient as possible and fit for the challenges of managing and operating London’s transport for the next ten years.
  • Following a review undertaken by Crossrail management, over £1bn in savings to Crossrail construction will be delivered. A more efficient construction timetable will mean the Crossrail central section now being completed in 2018 and a phased introduction of the other sections and stations.
  • For many months now, London Underground (LU) has been looking to make significant savings as it focuses on the core priorities of a reliable service, the line upgrades and schemes to relieve congestion at major stations. The end of the PPP means LU can look for synergies across the line upgrades to deliver them more efficiently and with less disruption to Londoners, for example, between the planned Piccadilly and Metropolitan, Circle, District and Hammersmith & City line upgrades. Through a combination of these measures and of further paring back cosmetic works at stations and deferral of non-essential civil works, over £300 million will be saved over the period.
  • Some areas of expenditure will be reduced, and we will focus on core priorities. TfL must also look at ways of increasing revenue and delivering further efficiencies. The following measures will therefore be introduced, resulting in over £300 million over the period:
  • The funding provided to boroughs for small scale projects will be reduced to reflect the new profile of the general grant we receive from the DfT.
  • As less funding will be available, some areas such as walking and road safety campaigns and smarter travel initiatives will be scaled back. For those that remain, we will deliver in a more efficient way and will be seeking to partner with other organisations to seek sponsorships and other funding for such initiatives.
  • TfL will reduce road maintenance spend and investment on the TfL road network, but seek to preserve the state of good repair of the roads through greater operational efficiency.
  • It remains the Mayor’s vision that London is Europe’s leading city for electric vehicles, but we will seek to replace a TfL funding reduction with partnerships and alliances with manufacturers and others.
  • Charging for parking on the Transport for London Road Network, currently generally free
  • TfL has been working hard to realise savings and efficiencies and, at the same time, the London economy has proved to be remarkably resilient to the economic downturn. Ridership on Tube, rail and bus services has bounced back with much greater strength than was originally assumed. This demonstrates that it is London that is leading the UK back into growth, and this must be harnessed for the benefit of the country as a whole. The combination of these efficiencies, which have already been identified and are being implemented, as well as stronger fare revenue, means that TfL’s Business Plan will be boosted by an additional £800 million over the period.This accounts for well over a third of the reduction in our DfT funding.
  • As previously proposed and now consulted upon, the Congestion Charge will also increase to £10, or £9 if paid through Auto Pay, from 4 January 2011. The Mayor will also keep under review the effectiveness of the charge on congestion in central London.

CSR and new trains (or lack there of)

This from the DfT Transport Spending Review Press Notice...

The Government is currently considering revised proposals from Agility trains for the Intercity Express Programme. An announcement will be made in due course.

Because aspects of Thameslink and HLOS rolling stock programmes, as well as projects to electrify the Great Western Mainline, and the rail routes around Manchester and Liverpool, are interdependent with the IEP decision, a full announcement on all these programmes will be made at the same time.


This is the only mention of Thameslink in this document.

Meanwhile HM Treasury's Spending Review document makes no mention of Thameslink at all.

And whilst in DfT's Press Notice there is a vague reference to a project to 'electrify the Great Western Main Line' the Spending Review document refers only to 'supporting investment to improve journey reliability on Great Western Main Line services to Wales'.

So with both Thameslink and the electrification of the GWML in question new rolling stock on either route must seriously be in doubt.

Eye suspects that there are some very worried people in Derby and Tokyo tonight.

UPDATE: This from Our Man at 222 Marylebone Road...

This sounds as though DfT Rail's very own Mr Sisyphus has been awoken and told it's time to start pushing the Rolling Stock Plan back up the hill.

CSR - reading between the lines

Telegrammed by Our International Correspondent
So that was interesting!

£6 billion for “capital maintenance” of LUL?

Capital Maintenance is a very specific term – it means spending to maintain the value of the asset at a steady state. This just means keeping LUL as it is – doing proper running repairs to prevent decay. It isn’t investment in enhancements. It is rather less than Baroness Vadera promised over the first 7 years of the Metrodebt and Tubelines fiasco, and hopefully more deliverable.

On London’s cross-city white-elephant, it is odd that there is no actual number attached to the Treasury's commitment to Crossrail, given that bits of it are already being built.

The Crossrail website, in its helpful FAQ section says DaFT will be paying £5 billion, which seems clear enough. The less helpful press statement about driving down costs, dated 27 September
does not give a revised headline number, and merely says £30 million has been taken out of the cost of the new station at Whitechapel.

So more details please.

Perhaps the most illuminating line in the CSR Spending Review document is: "investment to improve journey reliability on Great Western Main Line services to Wales".

If you type this into the Babelfish translation engine and select 'Weasel to English' it says “Electrification not required, refresh HSTs”

UPDATE: This from @AdamBienkov, via Twitter...

Boris says that Crossrail will be delayed a further year #csr

Chancellor's speech and Transport

Mr Speaker, after our defence requirements are met, the Department for Transport will receive the largest capital settlement.

Over the next four years we will invest over £30 billion in transport projects, more than was invested during the past four years.

£14 billion of that will fund maintenance and investment on our railways.

Direct bus subsidies will be reduced, but statutory concessionary fares will remain.

The cap on regulated rail fares will rise to RPI +3% for the three years from 2012, but that will help this country afford new rolling stock as well and improve passenger conditions.

The Secretary of State will set out how more of the transport money will be allocated next week.
But I want to tell the House today about some of the projects that will go ahead.

For let’s remember that even after these tough spending settlements the country is still going to be spending over £700 billion a year.

So in Yorkshire and Humber, capacity on the M62 will be expanded, £90 million will be spent to improve rail platforms across various towns and cities and we will also improve line speeds across the Pennines.

In the North East, £500 million will be spent refurbishing the Tyne & Wear metro and Tees Valley bus network.

In the North West, we will invest in rail electrification between Manchester, Liverpool, Preston and Blackpool and we will provide funding for a new suspension bridge over the Mersey at Runcorn.

Rail and roads are devolved to the Scottish executive, as are roads in Wales – but I can tell the House that major rail investments around Cardiff, Barry and Newport will go ahead.

In the East Midlands the M1 and A46 will be improved.

In the West Midlands, we will extend the Midland Metro and completely redevelop Birmingham New Street station.

In the South West, we will fund improvements on the M5 and M4, and the new transport scheme for Weymouth.

In the East of England, colleagues will be delighted to know that the A11 to Norwich will be upgraded.

Around London, we will widen the M25 between ten different junctions and complete the improvement to the A3 at Hindhead.

And in London, on top of the Olympics, a major investment in our capital city’s transport infrastructure will take place.

Crossrail will go ahead and key Tube lines will be upgraded for the twenty first century.
This is nothing like the complete list.

So yes, we are saving money and putting the state on a more sustainable footing, but even then we will still be spending tens of billions of pounds on Britain’s future infrastructure.

Next week we will also set out our national infrastructure plan – so that private money is also put to work in building for this country the economic infrastructure our businesses need.

Comprehensive spending review and Transport

This from the just published HM Treasury Spending Review document

The Spending Review:

  • protects high value transport maintenance and investment, including over £10 billion over the Spending Review period on road, regional and local transport schemes, including construction of the Mersey Gateway bridge; £14 billion for Network Rail, including major improvements to the East and West Coast Main Lines; £6 billion for upgrades and capital maintenance on the London Underground network; and funding to enable Crossrail to go ahead;
Transport infrastructure

1.32 High quality transport links are essential to underpin a successful economy. In 2014-15, transport capital investment will be higher in real terms than 2005-06 levels.

1.33 The Spending Review prioritises capital spending on transport projects which can offer high economic returns when compared to investment projects in other sectors. By focusing on projects that deliver greater benefits in return for their costs, the positive impact of capital spending on the wider economy can be maximised:
  • over £10 billion will be invested over the Spending Review period on maintenance and investment in new high value road, regional and local transport schemes, while seeking significant cost reductions across the programme. This includes:
  • widening the remaining section of the A11 to provide a continuous dual carriageway link between Norwich and the M11;
  • improving the junction between the M4 and M5;
  • easing congestion on the M1 between junctions 28 and 31;
  • extending the route and increasing capacity on the Midland Metro;
  • constructing a new suspension bridge over the River Mersey; and
  • upgrades to the Tyne and Wear Metro.
  • over £14 billion will be provided for Network Rail, supporting maintenance and investment to continue to enhance the capacity and speed of services across the country. In addition, the Government is supporting investment to improve journey reliability on Great Western Main Line services to Wales; and
  • funding will be made available to enable Crossrail to go ahead, providing an additional 10 per cent capacity to London’s rail network, while continuing to seek efficiency savings to maximise value for money from the scheme. In addition, £6 billion will be spent on upgrades and capital maintenance on the London Underground network, supporting growth by improving reliability and reducing journey times.
1.34 The Government is also proceeding with its plans to deliver a new high speed rail network from London to Birmingham, and then to both Manchester and Leeds, and will bring forward legislation during this Parliament that would allow the project to proceed.

Supporting long term growth

2.18 Investments of high economic value are protected across all types of transport. The capital allocation has been relatively protected; in 2014-15 DfT capital investment will be higher in real terms than in 2005-06. This includes over £10 billion over the Spending Review period for maintenance and investment in key road and local transport schemes, including widening the remaining section of the A11 to provide a continuous dual carriageway link between Norwich and the M11, improving the junction between the M4 and M5, easing congestion on the M1 between junctions 28 and 31, route extension and capacity increases on the Midland Metro, upgrades to the Tyne and Wear Metro and constructing a new suspension bridge over the River Mersey (the Mersey Gateway) while seeking significant cost reductions across the programme.

2.19 The settlement also includes £14 billion of funding over the Spending Review period to Network Rail to support maintenance and investment, including major improvements to the East Coast Mainline, station upgrades at Birmingham New Street and network improvements in Yorkshire, around Manchester and the Barry to Cardiff corridor. Funding is also confirmed for Network Rail to invest in delivering faster journey times in the North West. In addition, the Government is supporting investment to improve journey reliability on Great Western Main Line services to Wales. Final decisions will be made by DfT after the Spending Review on the replacement of the UK’s inter-city high speed trains.

2.20 Funding will be made available to enable Crossrail to go ahead, providing an additional 10 per cent capacity to London’s rail network while continuing to seek efficiency savings to maximise value for money. £6 billion over the Spending Review period will be spent on maintaining and upgrading the London Underground network, supporting growth by improving reliability and reducing travel times.

2.21 The Government is proceeding with its plans to deliver a new high speed rail network, and will bring forward legislation during this Parliament to allow construction to proceed.

2.22 Key projects that support the Government’s climate change commitment are also protected. This includes an incentive scheme offering up to £5,000 towards the cost of a new ultra-low emission vehicle from January 2011 and supporting electric car charging infrastructure.

2.23 The Government’s intention is to proceed with PFI projects which will deliver sustained improvements in highways maintenance in Sheffield, Hounslow and the Isle of Wight and extend the Nottingham tram network with two new lines. As resources are tight, the Government needs to ensure that every pound is spent to the maximum benefit. The Government will therefore be urgently working with the four local authorities to establish how these projects can be delivered affordably, in order to deliver the much needed benefits.

The Devil is, of course, in the detail which should emerge next week.

DB announces the Exodus Express!

How very appropriate that DB invited a Railway Padre to its 'unveiling' event at St Pancras yesterday.

Eye wonders whether DB made a point of mentioning that the ICE set originated from the home of both Charlemagne and Benedict XVIth?

If so is canny DB planning to target disaffected Anglican's keen to 'Row across the Tiber' with discounted group fares to Rome?