04TfL is a model for transport investment and management in other UK cities

The governance model under which TfL operates and the powers that it holds enable it to have much greater control over London’s transport system compared to other UK cities. These features represent some of the main reasons behind the capital’s efficient and high quality transport system, characterised by a higher usage of public transport and lower carbon emissions compared to other areas. For example:

• High Rate of public transport usage. 44 per cent of people in London commute to work by public transport compared to only 16 per cent in England and Wales.⁶⁴
• Bucking the trend with buses. Since 2000, the number bus journeys increased by 60 percent compared to a decrease in cities up and down the country.⁶⁵

Convenient, user-friendly Oyster cards. London benefits from an integrated ticketing system whereby a single card can be used on all transport services across London. This system also allows the generation of commuting data used to model the impact of delays on congestion and commuting patterns and better inform investment decisions.⁶⁶

The TfL model is characterised by five main features which address many of the challenges that hinder transport policy in other parts of the UK.

1. Control over the provision of bus services
2. The ability to negotiate for long-term funding settlements
3. Ability to raise local funds
4. A governance structure characterised by the single management of most public transport
5. A transport strategy that is integrated with other policy areas

These features, although imperfect, provide the framework for devolving powers and funding to Greater Manchester and the newly formed combined authorities. Offering them the long-term certainty and flexibility to strategically invest in their transport systems will help them increase the take up of public transport, cut carbon emissions and promote economic development in the city region.

1. Control over the provision of bus services.

London is the only city in the UK that regulates its bus services. TfL has the powers to:

• Sign up to seven year contracts with bus operators. These contracts provide the bus operators a set income dependent on performance and encourage certainty, which in turn encourages investment in quality buses and bus services by the bus companies.
• Control of the fare box to set prices. This creates an income stream, which TfL can borrow against and fund future investment.
• Set the bus routes before tendering them individually to private sector operators.

2. The ability to negotiate long-term funding settlement.

By submitting the yearly capital spending plan for transport, the Mayor was successful in negotiating with the Government for a six-year funding settlement in 2013. This success was mainly due to the integrated, strategic, and long-term plans the Mayor provided which made the case for long-term funding. This settlement also helps TfL exploit other sources of funding, mainly by reducing risk and supporting prudential borrowing to leverage government grants.⁶⁷

3. Ability to raise local funds to reinvest in transport.

TfL has additional revenue raising powers (such as in the case of congestion charging) and has been the first to use some schemes (such as business rate supplements).

• Congestion Charging. London is the only large city to introduce congestion charging in the UK. In 2011/2012, TfL reported a net income of £136 million from Congestion Charging, which was reused in transport investment. This initiative also helped reduce traffic by almost 20 percent between 2000 and 2009, improve the reliability of journey times for users, improve the efficiency of distribution of goods and services, encourage people to use public transport and reduce carbon emissions.⁶⁸
• Tax Increment Finance. In April 2013, the Greater London Authority (GLA) announced that it will borrow £1 billion to fund the Nine Elms regeneration scheme. TIF will be used to repay £660 million of the total over 25 years while the rest will be funded using Community Infrastructure Levies and cash provided by the GLA.⁶⁹
• Business rates supplement (BRS). In 2010, the GLA introduced a business rates supplement to raise £4.1 billion for the Crossrail project estimated to cost £14.5 billion in total.⁷⁰

4. A governance structure characterised by the single management of most public transport.

TfL is part of the Greater London Authority, is chaired by the Mayor of London and manages most of the transport modes in the city region (including Underground, Overground, bus services, cycle lanes and other transport infrastructure).⁷¹ This multi-modal integration enables planning and investment at scale and gives strategic influence on transport investment across all authorities in Greater London.

5. A transport strategy that is integrated with other policy areas.

The Mayor of London sets out London’s economic growth policy in three documents; the Mayor’s Transport Strategy, the Economic Development Strategy and the London Plan. The transport strategy is coordinated and integrated within the wider economic strategy for the city region, which allows TfL to consider the impact of transport investment on other areas of public provision. To use health as an example, TfL produced the world’s first transport action plan for health which sets out plans to promote walking and cycling, improve health and reduce costs for the NHS in London.⁷²

What next for London?

As it stands, TfL provides the model for devolving powers to Greater Manchester and the newly established combined authorities. Other elements, such as greater control over buses, ability to negotiate long-term funding settlements and the ability to raise local money can be implemented in smaller and medium sized cities.

However, TfL could also benefit from more power over its transport system, including:

• Longer-term funding certainty over capital investment would provide TfL and private investors with greater certainty over future investment and help unlock land value to fund infrastructure in the capital.
• More control over commuter rail and franchising of lines that link nearby places and cities with London would help TfL integrate planning of rail services with the overall system and improve links between the capital and other cities.
• Additional tax raising powers such as more control over local taxation (retention or supplements) and the removal or reduction in borrowing limits would help TfL fund new investment and unlock new development in cities for housing and regeneration.