Ken Livingstone pledges to knock seven per cent off fares at a time when TfL’s debt interest payments are £400m a year. Absurd, says Conservative London Assembly member James Cleverly
Ken Livingstone’s campaign team spent the first working day of 2012 handing out leaflets at tube stations across the Capital attacking Transport for London’s inflation-plus-1 per cent fare rise and trying to blame Boris for the increase.
It was an effective attack: no-one likes increased costs and those commuters who had just queued up in the cold for their new season ticket were ripe for the picking.
Naturally, we need to conveniently forget Livingstone’s history of increasing fares faster than inflation for the magic to really work, but that’s not what I’m planning to write about here.
I want to talk about the basic maths behind Ken’s policy.
Livingstone is claiming that he will cut TfL fares by 7 per cent if elected and then freeze them for the rest of his term. Estimates of the cost of this pledge vary but are in the £800m to £1bn mark.
This will be paid for, he claims, by using “the excess money that is sitting idle in Transport for London’s budget” and/or “using the surplus in the transport network to cut the fares”. Compelling arguments!
Except for one small point.
Rather than sitting on a big pile of gold like some Tolkien dragon with a train driver’s hat on, TfL actually has a rather large debt that needs to be serviced.
Many of you will have noticed the major upgrade and improvement works that have been going on over the last few years. Sorry about the disruption, by the way.
The building of Crossrail and the upgrade of the Tube network, extension of London Overground will bring London’s rail infrastructure kicking and screaming into the 21st century after decades of under-investment.
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These improvements are essential to keeping London at the cutting edge of international business. But they cost money. Lots of money.
The costs of Crossrail and the disastrous Tube PPP we inherited from Labour mean that rather than having money burning a hole in our pocket as Livingstone claims, TfL actually has debts of around £6 billion and annual interest repayments of £400 million a year.
I don’t claim to be an expert on public finances but even I can see that there is a difference between “lots of spare money” and “£6 billion in debt”. One would have thought that Livingstone’s running mate Val Shawcross AM, former Chair of the London Assembly Transport Committee (pictured above), would have taken the time to explain the numbers to him.
She knows TfL’s balance sheet well enough because she recently criticised the Mayor for not increasing debt to £7 billion (the current borrowing limit) but rather reducing debt by £487 million or, as she described it, “putting cash back into the hands of the bankers”.
Perhaps neither Livingstone nor Shawcross understand the concept of interest charges, or perhaps they are just happier for us all to pay much more in the long term to get a good set of headlines in the short term.
Who can tell?