Transport for London (TfL) has outlined a new business plan for the years ahead and says that it needs to make additional financial cuts of around £600 million per year by 2025/26.
In 2019 TfL was tasked with creating savings of £730m, but with the inflation rate and cost of materials and fuel skyrocketing, their latest business model shows they need to shave £1 billion a year moving forwards.
Part of the pressure is that the subsidy by the government has been reduced in real terms and travel is still not at the level it was pre-pandemic. Fewer passengers, especially in the central London area, where flexible working is still a viable option, has seen their revenue stream faltering. With the DLR and London Overground up to around 80 per cent of pre COVID levels, the buses have almost gone back to their original levels.
The TfL agreement with the government ends in 2024, but its business model looks at the next 20 years, as it has to plan the huge investments in replacing train and signalling equipment, including the need to start infrastructure changes well in advance.
Since 2015 when the government scrapped its operating grant from TfL, London Underground became too reliant on passenger fares – which now have to account for 72% of their income. Other global underground networks such as New York only relies on 38% of its income from passengers and Paris; Hong Kong and Singapore only 30%