Transport for London Budget 2020/21
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Transport for London Budget 2020/21
Contents
3 How we measure success 36 Our services
4 Commissioner’s foreword 37 Streets, buses and other surface operations
5 Chief Finance Officer’s foreword 44 London Underground
6 Measuring success 49 Elizabeth Line
52 Rail
56 Property
7 Delivering a balanced budget 59 Media
8 Budget at a glance 61 Commercial Consulting and International Operations
9 Financial summary
12 Meeting our challenges
16 Managing our risks 63 Appendices
18 Debt and cash 64 Financial tables
19 Financial trends 67 Capital Investment
20 Efficiency trends 69 Budget Milestones
21 Assets and investment priorities
70 About Transport for London (TfL)
23 Delivering the Mayor’s Transport Strategy
24 Healthy streets and healthy people
29 A good public transport experience
33 New homes and jobs
Transport for London Budget 2020/21 2
How we measure success Our ambitious targets are measured against the three key themes of the Mayor’s Transport Strategy, which are Healthy Streets and healthy people, a good public transport experience, and new homes and jobs
Commissioner’s foreword
This year sees the 2020 Mayoral and London the Circle, District, Hammersmith & City
Assembly elections taking place. There will and Metropolitan lines, and beginning ‘We need long-term
also be a new Transport Commissioner to testing of trains on the Northern Line
oversee the running of TfL as I move on Extension to Nine Elms and Battersea
funding certainty from the
after nearly five years in the role. There Power Station. Work will continue on the Government to support a
will, however, be no let-up in what we will massive reconstruction of Bank/Monument pipeline of vital work that
deliver for London. This Budget sets out station in the heart of the City of London.
how we will maintain a safe, reliable and In addition, the north and south viaducts of will improve connectivity,
efficient transport network for London. the 4.5km London Overground extension attract business and
Building on our five-year Business Plan, to Barking Riverside will be completed,
this report is fully aligned with the Mayor’s marking a key stage in this project that will support new homes’
Transport Strategy and will continue to help unlock 10,800 new homes in the area.
encourage more people to walk, cycle and
use public transport. We will also see major progress on our
Healthy Streets agenda. We have already safety and reliability of day-to-day services,
Safety remains our top priority and we will achieved our target of tripling the amount improve connectivity, attract business and
accelerate work to achieve our Vision Zero of protected cycle lanes since 2016, months support new homes. This would also help
ambition to eliminate deaths and serious earlier than expected, and will continue to create jobs and improve skills across the
injury on London’s transport network by make major improvements to some of the country. These benefits are not a zero-sum
2041. We have recently introduced a 20mph most dangerous junctions in London, such game and central Government must invest
speed limit on all our roads within the as Old Street Roundabout. This year, work in both London and the rest of the country.
Congestion Charge zone, mirroring the to transform the roads around Waterloo The Capital will become more prosperous
Mike Brown MVO lower speed limits already in place on most will begin, making it safer for cyclists, and attractive if the economies of the rest
Commissioner borough roads in central London. improving crossings and bus interchanges, of the UK nations, regions and cities are
Transport for London and transforming the public space. enhanced, and vice versa.
We will continue to lead the way in cleaning
London’s air and making the Capital a These improvements are being I am confident that whoever leads the
greener place to live. In October 2020, we delivered despite an uncertain economic organisation through the next period
will introduce tougher Low Emission Zone environment. We receive around 40 per will continue the good progress we have
standards for heavy diesel vehicles. Those cent less overall funding than we did in made to improve safety, deliver a reliable
vehicles that fail to meet the new standards 2010/11, which is a reduction of around network and work to unlock the housing
will pay a daily charge. We will introduce £1.4bn each year. We must also bear the and sustainable growth London needs. I
more zero-emission buses, aiming for up costs of the ongoing delays to the opening am confident we are in a positive place to
to 500 in the fleet by the end of 2020/21, of the Elizabeth line, with the GLA, despite respond to the challenges ahead.
and complete the installation of 300 rapid this being a jointly sponsored project with
charging points for electric vehicles. the Government. To combat this, we have
applied control on our finances, reducing
An additional 11 London Underground our net deficit, on a like-for-like basis, by
stations will become step-free, meaning more than £1bn since 2015/16, improving
a third of the Tube network will be fully efficiency and suspending non-essential
accessible. We will also reach major work. However, we need long-term funding
milestones in projects to upgrade the Tube, certainty from the Government to support
including implementing new signalling on a pipeline of vital work that will maintain
Transport for London Budget 2020/21 4
Chief Finance Officer’s foreword
Our latest Business Plan, published in management to navigate volatility in
December 2019, set out our response to passenger demand and uncertainty in the ‘It is crucial that we secure
the challenges we face from a continued macroeconomic environment.
subdued economy, uncertainty around
long-term funding certainty
the final terms of the UK’s exit from the This Budget builds on the strong in the forthcoming
European Union and the delays to the operational performance in 2019/20. spending review’
opening of the Elizabeth line. Passenger income trends continue to be
unpredictable. Demand across all our
Our funding settlement is confirmed modes was better than anticipated in the
for 2020/21, but we have no certainty of first half of 2019/20, however we saw a than 3,000 roles. We are committed to
Government funding beyond this financial sharp deterioration in demand towards continually improving, adapting to the
year. As we explained when we published the end of 2019, which was consistent with external headwinds and building resilience
our Business Plan, it is crucial that we a poor Christmas retail performance on to weather the challenges we face.
secure long-term funding certainty in the the high street. These trends improved
forthcoming spending review. We published in January, but we still remain cautious The 2019 Business Plan took a pragmatic
our 20-year Capital Strategy alongside the and our projections for 2020/21 reflect view of our investment programme,
Business Plan, which describes London’s the lowest point of the range of possible prioritising work that is critical to
transport infrastructure requirements. We outcomes, as informed by forecasts from maintaining current levels of safety
are at the end of a 20-year funding cycle GLA Economics. and reliability, or those that are already
having completed or started upgrades contractually committed. We have also
to the Circle, District, Hammersmith & We launched the Ultra Low Emission Zone taken into account delivery realities, which
City, Jubilee, Metropolitan, Northern and in April 2019, which resulted in a fall in are sometimes subject to factors outside
Simon Kilonback Victoria lines, but have no future funding roadside nitrogen dioxide pollution by 36 of our control. As part of this budgeting
Chief Finance Officer certainty for the next round of upgrades. per cent in the zone in the first six months, round, I challenged the business to arrive at
Transport for London We are working closely with Government compared to 2017 levels. Compliance rates a financial budget that we can deliver which
and stakeholders to secure the funding are higher than we anticipated, which is takes into account historical delivery rates,
to continue investing in the transport positive for the environment. We have adjusted as appropriate for each area.
infrastructure London needs. This is critical reduced our income projections for 2020/21
for London and also to enable our supply to reflect this. We started rolling out new In 2020/21, total investment in both
chain to plan for the future and deliver trains on the London Overground, which capital renewals and new capital will
the improvements needed to keep London is planned to complete in summer 2020. increase from £1,562m to £1,866m. This
competitive on a global stage, support These new trains will result in higher is a challenging but realistic Budget that
investment across the country and be operating costs in the short term, which maintains significant levels of investment
a place where people can travel safely, are reflected in this Budget. We completed in London. The key external risk to financial
reliably, affordably and easily. the planned changes to our bus network delivery in 2020/21 remains passenger
in central London in 2019 and continue income volatility, underpinned by a very
We have a strong track record of delivering to work hard to mitigate the impact of uncertain macroeconomic environment.
our financial strategy, having reduced our inflationary cost increases. However, we have demonstrated that
net deficit, as measured by the net cost we can successfully manage risks, while
of operations, by more than £1bn since Since late 2018/19, we have taken a decisive maintaining financial discipline and building
2015/16 on a like-for-like basis. In 2019/20, we step towards a leaner and more efficient resilience. I am confident we will continue
have seen the deficit improve for the fifth back-office organisation, having worked to deliver for the people who live and work
consecutive year, which is testament to in consultation with our trade unions in London.
our firm grip on cost and careful business to review 25 business areas and more
Transport for London Budget 2020/21 5
Measuring success
Our scorecard provides a clear line of sight
between the Mayor’s Transport Strategy, our
five-year Business Plan and annual Budget
Our scorecard is aligned to the three key investment programme. The risks around
themes of the Mayor’s Transport Strategy capital delivery are described on pages 16
– Healthy Streets and healthy people, a and 17, and we will continue to improve
good public transport experience and the accuracy of these forecasts. We have
new homes and jobs. It is balanced across started to see a reduction to the additional
four quadrants – Safety and operations, time it takes to make a step-free journey
Customer, People and Financial – with each compared to last year as a result of the
carrying a weight of 25 per cent. investment in accessibility, however, we
missed our target largely due to the delays
The TfL Board approves the measures in the Crossrail construction programme.
we use to track performance against key
priorities and outcomes, and we report the We have improved the total workforce
results at each Board meeting. engagement and inclusion index and expect
to have improved workforce diversity. We
Our forecast results for 2019/20 show also expect the percentage of people who
safety must remain our critical focus. If we agree we care about our customers to meet
are to achieve our Vision Zero objective of the target.
having nobody killed or seriously injured on
our roads by 2041, then we must meet the Our 2020/21 scorecard will be developed
target each year. In 2019, we saw a reduction based on new priorities and key metrics to
in the number of people killed or seriously measure our performance in light of recent
injured by buses beyond the trajectory unfolding events.
to achieve Vision Zero. We must now see
this across the whole transport network,
including on our roads and among our
customers and workforce.
In 2019/20, we increased the number of
Euro VI compliant buses and have seen an
improvement in bus reliability. We expect
to achieve our financial target for a net
operating surplus, but revised timings
on the delivery of projects means we
will not meet our revised target for the
We are set challenging targets to achieve our key ambitions Transport for London Budget 2020/21 6
Delivering a balanced budget This Budget is balanced against a series of factors and risks, including passenger demand, lifespan of our assets and the evolving political landscape
Budget at a glance
Keeping London moving, working and growing to make life in our city better
How we report on our business Total sources and uses of funds
Streets, buses and other surface operations
985 trains on the
TfL network
£9.7bn
Total sources of funds
Transport for London Road Network, London Buses, London
Dial-a-Ride, London River Services, London Taxi and Private Use of
borrowing,
Hire, Santander Cycles, Victoria Coach Station and Emirates working Crossrail
Air Line capital funding
and cash Other Passenger (including
Grants reserves income income borrowing)
£2.0bn £0.6bn £1.2bn £5.1bn £0.8bn
Underground
London Underground
300
rapid charging points
by the end of 2020
Elizabeth line
Currently operating as TfL Rail
755km 79%
Rail TfL-operated Rail and London
Underground routes
spent on running
and operating the
DLR, London Overground and London Trams network every day
21%
Property spent renewing
9,000+
and improving the
Our commercial and residential estate and building portfolio network through
one of the largest
capital investment
Media
buses across our
network, all of which
will meet the Euro VI
engine standard by the
£9.7bn
Total uses of funds
programmes
in Europe
Advertising estate and digital marketing infrastructure
end of 2020
Commercial consulting
and international operations
Our global consultancy operation and brand licensing
6,300
traffic signals that
New capital
investment
Capital
renewals
Operating
costs Financing
Crossrail
programme
£1.3bn £0.5bn £6.6bn £0.6bn £0.7bn
we operate
Transport for London Budget 2020/21 8
Financial summary
Despite the challenges, we are on track to
achieve operational breakeven by 2022/23
through stronger cost management
Operating account
We start 2020/21 in a challenging position compared to our 2019
Business Plan. We have seen a fall in passenger demand in the
latter part of 2019/20, which we expect to continue into 2020/21. Our
budgeted net cost of operations is now £571m, which is an increase of
£78m against the Business Plan.
2020/21
2020/21 Variance to variance
2020/21 Business Business 2019/20 to 2019/20
TfL Group (£m) Budget Plan Plan forecast forecast
Passenger income 5,063 5,123 (60) 4,952 111
Other operating income 1,006 1,045 (39) 1,020 (14)
Total operating income 6,069 6,168 (99) 5,972 97
Business Rates Retention 969 968 1 988 (19)
Other revenue grants 17 11 6 113 (96)
Total income 7,055 7,147 (92) 7,073 (18)
Operating cost (6,625) (6,618) (7) (6,344) (281)
Net operating surplus 430 529 (99) 729 (299)
Net financing costs (468) (487) 19 (448) (20)
Net surplus/(cost) of operations
(38) 42 (80) 281 (319)
before renewals
Capital renewals (533) (535) 2 (484) (49)
Net cost of operations (571) (493) (78) (203) (368)
Passenger income We saw better than expected demand in
The passenger income budget in 2020/21 the first half of 2019/20 across all modes,
is £5,063m, a decrease of £60m compared but demand fell towards the end of 2019.
to our 2019 Business Plan. This reflects the Although demand has shown some signs
volatility of passenger journey trends. of recovery since January 2020, we remain
cautious and our forecast for 2020/21
reflects this.
Passenger number assumptions have been revised since our Business Plan Transport for London Budget 2020/21 9
Movement on net cost of operations (£m) Movement on operating costs (£m)
0 (5,000)
111
(100)
(14) (5,400)
(203)
(200)
(115) (5,800)
(300)
(6,200)
(6,344)
(400)
59 (6,625)
(6,600) (173) 193
(500)
(121)
(281) (128)
(571)
(49) (111)
(20)
(600) (7,000)
2019/20 Passenger Other Business rates Operating Capital Net financing 2020/21 2019/20 Growth and Inflation Projects Restructuring Other cost Savings 2020/21
forecast income operating and other costs renewals costs Budget forecast new initiatives and increases and Budget
income revenue grants exceptional one offs
costs
Forecast/Budget Favourable movement Adverse movement Forecast/Budget Favourable movement Adverse movement
Other operating income There is a £39m decrease in other operating Business rates and other revenue grants Operating costs
This includes the Congestion Charge, income since the 2019 Business Plan. This These decrease by £115m compared to the Budgeted operating costs for 2020/21 are
enforcement income and revenue follows a fall in the number of vehicles 2019/20 forecast. This is largely due to one- £6,625m, which is in line with the 2019
generated through commercial activities, entering the Congestion Charging zone and off funding received as part of the 2019/20 Business Plan. We are mitigating inflationary
such as advertising, property rental and our higher than expected ULEZ compliance Budget, including an additional £83m over pressures through our savings programme.
newly launched consultancy arm. In April rates, which has environmental benefits. two years from the GLA to fund Mayoral However, total year-on-year operating costs
2019, we also introduced the new Ultra Low However, year on year, we are mitigating priorities, with £60m received in 2019/20. are increasing by £281m in 2020/21 from a
Emission Zone (ULEZ). some of this by growing our commercial We also received £34m in 2019/20 to cover combination of new services, one-time
income through upgrading our estate and the initial implementation costs of the bus costs and restructuring cost increases as
opening new retail units. driver retention scheme. These receipts will explained in the graph above.
not be repeated in 2020/21.
Transport for London Budget 2020/21 10These costs feature £173m from the Capital expenditure Capital account (£m)
introduction of new services, including This Budget reflects the latest project
testing and preparations for the opening schedules, with some timing differences to
2020/21
of the Elizabeth line (£110m), new higher our Business Plan following a zero-based 2020/21 Variance to variance
capacity trains on London Overground review of our major programmes. Our new 2020/21 Business Business 2019/20 to 2019/20
and the introduction of the Direct Vision capital investment in 2020/21 is £1,333m, TfL Group Budget Plan Plan forecast forecast
Standard – to improve safety of all road which is a reduction of £213m against the
New capital investment (1,333) (1,546) 213 (1,078) (255)
users, including pedestrians, cyclists and Business Plan.
motorcyclists – from October 2020. Crossrail investment programme (725) (626) (99) (1,039) 314
We have updated our assumptions on Total capital investment (2,058) (2,172) 114 (2,117) 59
There will be a £128m increase from Crossrail capital spend and funding, in
restructuring and exceptional costs. This line with the latest profile confirmed by Funded by:
is largely driven by a higher contingency, Crossrail Limited. Mayoral business rates 910 910 - 893 17
to ensure we have an operational buffer
Property receipts and asset sales 153 172 (19) 164 (11)
against unforeseeable events, and Managing cash flow
costs to support London Underground To support our financial resilience, we must Borrowing 1,333 1,352 (19) 544 789
modernisation savings. protect our liquidity. We are maintaining Crossrail funding sources 114 112 2 1,031 (917)
a minimum cash reserve equivalent to
Inflation accounts for a cost pressure at least two months of our operating Other capital grants 123 173 (50) 205 (82)
of £121m, from contract inflation across expenses. This is a prudent cash position, Total 2,633 2,719 (86) 2,837 (204)
operators and suppliers, with approximately which enables us to respond to unexpected
Net capital account 575 547 28 720 (145)
£50m on bus operators’ contract costs, shocks, such as a recession, and any further
increased energy prices and wage inflation. risk against Crossrail timescales.
We will see a £111m increase in other spend,
including higher pension contributions, We need to build up our cash reserves
offset by lower project spend of £59m. to ensure we have the necessary funding Cash flow summary (£m)
to replace our existing assets and, where
More than one third of these costs will prudent, invest in enhancements.
2020/21
be offset by £193m of planned savings 2020/21 Variance to variance
through our cost reduction programme, The working capital movement is a result 2020/21 Business Business 2019/20 to 2019/20
encompassing supply chain savings across of the Budget having a lower level of TfL Group Budget Plan Plan forecast forecast
the Underground, bus contract savings, creditors than the Business Plan. This
Net cost of operations (571) (493) (78) (203) (368)
accommodation and back office. has been influenced by the reduction in
capital expenditure since the Business Net capital account 575 547 28 720 (145)
Plan, following a review of our major Working capital movements (264) (67) (197) (20) (244)
programmes.
Increase/(decrease) in cash balances (260) (13) (247) 497 (757)
Transport for London Budget 2020/21 11Meeting our challenges
Passenger demand has the biggest impact on our finances and we face
a series of challenges to maintain our robust financial performance
Our organisation faces a number of Like-for-like operating costs (£m) Savings programme
headwinds and tailwinds, which we must As part of our strategy to breakeven on the
adapt to. Passenger journeys are largely day-to-day costs of operations, we initiated
(5,900)
determined by economic growth and a savings programme in 2015/16, reviewing
employment, areas where the outlook all aspects of our organisation including
remains subdued. While the immediate risk 5,640 5,639 5,586 5,609 5,653 structure, accommodation, headcount,
of a no-deal departure from the European commercial contracts and our vast supply
Union has evaporated, there is still a great (5,800) (5,817) chain. The initial phase of this programme
deal of uncertainty. We are also faced with saved £747m by the end of 2018/19 and we
inflationary pressures across our cost base, will have saved a further £211m in costs by
while introducing new services, changing the end of this financial year. This means
behaviours to support walking and cycling, (5,700)
we will have removed almost £1bn over
and reducing the number of people killed four years – before inflationary pressures
or injured on our roads. and increased costs for new services – from
our cost base.
(5,660)
Like-for-like costs (5,640) (5,639)
Through our savings programme and a (5,600) Our 2019 Business Plan set out plans for
(5,609)
tight grip on costs, we have reduced our further savings of almost £600m, from
(5,586)
like-for-like operating costs, adjusted for 2020/21 to 2024/25, with £133m of these in
new services, restructuring and other one- 2020/21. To mitigate income pressures from
off costs, each year from 2015/16 to 2018/19. (5,500)
lower journeys, we are now increasing our
Costs in 2020/21 will be around £150m lower savings this year to £193m.
than they were when we began the savings
programme in 2015/16. We expect to see London Underground change plan
an increase in 2020/21, driven mainly by The London Underground change plan is
higher pension contributions following an (5,400) critical to our future viability, to ensure
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21
agreement with the Pensions trustees. Actual forecast Budget
the Tube can cover its own costs and the
ongoing costs of renewing the network.
The focus in 2020/21 is supply chain savings,
Operating costs
and extensive planning for future savings
over the Business Plan period.
Transport for London Budget 2020/21 12Key savings this year include the Connect We are consolidating our head office Passenger journeys (millions) We now expect Tube journeys to be 1,403
London Underground network radio accommodation by co-locating staff across million (0.8 per cent lower) in 2019/20, when
infrastructure, which was originally three main office hubs. In September 2019, compared to the Business Plan, with bus
contracted under a 20-year private finance we sold our Broadway head office as part journeys to be 2,193 million (0.6 per cent
4,500
initiative. This contract ended in November of a long-term estate management strategy 4,053 4,010 4,022 4,019 4,024 lower). For 2019/20, this means there will
2019, with a new contract set to reduce to reduce accommodation costs, and be an underlying impact of £38m on our
24 23 23 22 23
costs by almost 50 per cent. This is driven generate income to support investment 4,000 income against our 2019 Business Plan.
by ending loan repayments and rationalising and housing development programmes. We 341 338 340 341 342
operational and maintenance costs. will see full-year savings of £5m in 2020/21 Latest economic indicators suggest this
3,500 2,262 2,171
from accommodation programmes. 2,247 2,220 2,193 decline in growth will continue into next
We will also make maintenance savings year. The forecast for economic growth and
across the Underground by re-tendering Our accommodation strategy is supported 3,000 employment trends have been downgraded
contracts, improving forecasting and by a smart working programme, which will to reflect continued uncertainty. Latest
planning, making specification changes, and reduce the demand for desks by 30 per forecasts also suggest household income
2,500
other in-contract mechanisms. cent. It will also make us a more attractive will decline in 2020/21, before returning to
employer and improve the work-life growth. These headwinds are expected to
Bus operators’ contracts balance for our people. We will also achieve 2,000 reduce passenger income by £60m from
We have reduced tender prices, contract efficiency savings through smarter working our 2019 Business Plan.
costs and bus performance payments, and better technology.
1,500 48 45 55 60 75
by maintaining a competitive market and We now expect the overall number of
expect to save a further £20m in 2020/21. Lower journey demand 1,378 1,357 1,384 1,403 1,413 passenger journeys to increase from 4,019
Our 2019 Business Plan was based on 1,000 million in 2019/20 to 4,024 million in 2020/21.
We will continue to adapt the bus network increasing passenger income – through
to more closely match capacity to demand, higher demand on the Tube – and bearing The following graphs on pages 14 and 15
500
including increasing bus services in growth down on our day-to-day costs, all while show the forecast range of passenger
areas in outer London maintaining safety, frontline services and journeys, factoring in economic scenarios,
investment. However, we have since seen 0 as informed by forecasts from GLA
Transformation and office slower growth in Tube demand, as well as 2016/17 2017/18 2018/19 2019/20 2020/21 economics. Favourable economic
Actual forecast Budget
accommodation a higher rate of decline in bus journeys. performance is reflected by the highest
In late 2018/19, we began a three-year point, while poorer economic conditions
London Underground Elizabeth line
programme to reduce back- and middle- result in the lowest point.
office costs by 30 per cent. We have worked Buses Rail
with our trade unions to review 25 business
areas and more than 3,000 roles. We have Other operations
already saved almost £20m from this
initiative, with a further £5m expected to be
saved in 2020/21.
Transport for London Budget 2020/21 13Buses Rail
Passenger journeys (millions) Passenger journeys (millions)
2,400 360
Economic growth, bus operated kilometres Internal factors that affect rail demand
and speeds are the main drivers of demand. include planned engineering closures, new
2,350 The year-to-date figures to December 2019 355 train deployments and changes to the
showed bus speeds were flat compared to frequency of services.
2018/19, while bus operated kilometres were
2,300 about 1.5 per cent lower. This is in line with 350 In 2019/20, we expect DLR demand to
the central London bus service review, as remain static, while we will see a small
we reshape services in central and inner increase in London Overground journeys,
2,250 London to deliver a more efficient network 345 owing to an increase in the number of
ahead of increases in the outer London bus services and the introduction of new trains
network. We expect bus journeys to decline between Gospel Oak and Barking.
2,200 340
by 1.2 per cent in 2019/20, owing to relatively
low economic growth, the fifth consecutive In 2020/21, the further delay in the
year of falling bus demand. opening of the Elizabeth line has been
2,150 335
reflected in the DLR budget, with a slightly
In 2020/21, budgeted journeys are expected stronger demand uplift mostly offset by
2,100 to decline by 1.0 per cent year on year, with 330
weaker economic growth next year. The
fare payer demand declining by 0.9 per cent introduction of new trains and better peak
and non-fare payer journeys 1.2 per cent and off-peak timetables on the London
2,050 lower. This represents an improvement in 325 Overground in north and east London will
the trend we have seen since December boost journeys by two million in 2020/21,
2019, as operated kilometres start to after allowing for more planned engineering
2,000 stabilise following the redistribution of 320 closures in east London.
2017/18 2018/19 2019/20 2020/21 2021/22 2017/18 2018/19 2019/20 2020/21 2021/22
Actual forecast Budget forecast
services to better match demand, which
Actual forecast Budget forecast
includes increasing bus kilometres in outer Trams demand is forecast to be lower in
Historic actuals and forecast used London. In 2020/21, our assumptions about Historic actuals and forecast used
2019/20 reflecting the poor high street retail
operated kilometres and bus speeds remain activity, impacting areas such as Croydon
Range of forecast unchanged from the 2019 Business Plan, Range of forecast town centre.
while economic growth is predicted to be
weaker based on the GLA’s latest forecasts
for the UK economy.
Transport for London Budget 2020/21 14London Underground Growing non-fare revenue new opportunities in Canary Wharf and
Passenger journeys (millions) We are uniquely placed to use our assets other stations.
and skills, as well as our property and
advertising estates, to generate long-term Our advertising estate is one of the most
1,460
Underground journeys are expected to revenues to reinvest back into our network. valuable in the world, accounting for 20
be more than one per cent higher than A more diverse range of income also per cent of the UK’s and 40 per cent of
1,440 the previous year. Underlying growth supports our financial security, as we will London’s outdoor advertising value. We
was moderate for most of 2019 but this be less dependent on the economies of the have introduced innovative high-tech
stalled from the end of October, with UK and London. advertising platforms and are finding new
1,420 early indications of declining growth. ways to collaborate more creatively with
The number of journeys outside Zone As one of London’s largest landowners, brands and advertisers.
1 has been in decline over the last two our landholdings play an important role in
1,400 years, which likely reflects a reduction in meeting the Mayor’s priorities to deliver We continue to develop our transport
discretionary journeys, probably caused the thousands of homes and jobs that authority consultancy work, partnering
by a continued squeeze on household the Capital needs. We have an extensive with cities, regions, consultancies and
1,380
incomes. Continued employment growth is pipeline of sites and a target to deliver transport operators around the world to
contributing to robust commuter demand. 10,000 homes. We are working with our deploy our unique, specialist expertise. We
partners to achieve our target of making 50 will focus on three key work streams of
1,360
The most significant factors affecting per cent of homes affordable. We will also advisory services, intellectual property, and
London Underground demand that continue to develop sites that will deliver operations and maintenance to generate
1,340 are within our control include service two million square feet of commercial revenue that can be reinvested into our
improvements, reliability and asset floor space. transport system.
upgrades. The assumptions built into this
1,320 Budget include a small number of service We continue to invest in our commercial Maximising these opportunities and
improvements and station upgrades that estate, which consists of more than 2,000 building our commercial reputation will
increase demand. commercial units, expanding opportunities diversify our income base and improve our
1,300 to make the most of our unique asset financial resilience.
2017/18 2018/19 2019/20 2020/21 2021/22
Actual forecast Budget forecast
base and increase revenue. We continue to
upgrade our arch estate, are refurbishing
Historic actuals and forecast used the listed Victoria Arcade to create new
modern retail units, and we are creating
Range of forecast
Transport for London Budget 2020/21 15Managing our risks
We face a range of risks, including economic
uncertainty and the delay to the opening of the
Elizabeth line
Delivering this Budget requires balancing Economic uncertainty also affects our
risks and opportunities, identifying what other income. This creates risk against our
we can and can’t control, and taking planned growth in retail leases, and the
an informed view of our organisational sub-letting of office floorspace.
tolerance to them based on their impact.
We regularly monitor the validity of our The income we receive from schemes
assumptions and use data from external such as the ULEZ and Congestion Charge,
independent bodies, so we can manage is also subject to variation. If higher than
risks and capitalise on opportunities. Safety anticipated compliance rates continue,
is the top priority in any decision we make. as they did in 2019/20, this has a positive
impact on the transport network and the
Key risks in the 2020/21 Budget still include environment, but reduces the income we
economic uncertainty, given the political receive from these schemes.
and economic situation in London and
the UK, which is a key driver of passenger While income is often subject to factors
journeys and income. They also include the outside our control, we have more
opening of the Elizabeth line, and delivering influence to manage our costs. In 2020/21,
investment projects on time and budget, we plan to save £193m in operating costs,
ensuring associated income is received as described on page 12. These changes
in line with our plans. This Budget also represent a significant management
includes an ambitious savings target of challenge, which we monitor and will act
£193m this year, with a risk that not all of on as required.
this will be delivered to schedule.
We operate a work bank of renewals.
Passenger income is budgeted to contribute Additional scrutiny has been placed on this
around 50 per cent of our overall £9.7bn Budget to ensure it accurately reflects the
funding in 2020/21. The health of the interventions required to maintain asset
economy and employment are the main condition and the volume of work we can
drivers of changes in demand for our deliver. However, planned work can be
services, and our forecasts are built from delayed, for example due to unforeseen
prudent economic forecasts, using data events and resource constraints.
from GLA economics. However, continued
economic volatility makes these forecasts
less certain. For example, this Budget
assumes bus passenger demand will
stabilise, with a 1.0 per cent reduction
in journeys, the smallest reduction
since 2017/18. It also assumes continued
passenger growth on the Underground.
This Budget assumes bus passenger demand will stabilise Transport for London Budget 2020/21 16Our expenditure on new capital investment
Crossrail is harder to predict as this is a collection
of individual projects at different stages
Preparing for the UK outside of the European Union
The delay to the opening of the of their lifecycle. The main financial risk
Elizabeth line, announced in August relates to increased costs, such as higher
2018, continues to have a major tender prices or unplanned requirements
impact on our capital funding and on existing projects. Our projects are often
revenue generation. Elizabeth line complex and there is risk that timings can
services through central London are slip, often due to approval delays or to
now expected to start in summer accommodate stakeholder requirements.
2021. However, as the programme This results in lower in-year costs. We seek
is currently at a challenging phase, to avoid delays as this ultimately delays
with systems integration and testing improvements to our services.
to complete, there will remain a risk
over the costs, which we will be Our capital funding sources consist of
monitoring closely. Mayoral business rates, property receipts
and asset sales, borrowing, Crossrail
funding sources, and other capital grants.
Most of these sources have a low degree
of in-year risk. However, income for
property receipts and asset sales is a risk,
determined by the economy, property
market, local planning administration and
commercial negotiations. Beyond 2020/21,
the certainty of our funding arrangements
and borrowing are unknown and will
be discussed with the Government as
part of the 2020 Spending Review. This
certainty is vital for making investment Since the UK began the process of demand for our services towards the end
decisions that will drive the future growth leaving the European Union, we have of this financial year.
and enhancement of London’s transport been monitoring and managing the
network. risks associated with this change, and We remain confident that our operations
supporting our people who are affected. will continue in all scenarios. However,
This work will continue as we await our financial position is closely related
details of the long-term arrangements to the strength of the London and
that will follow on from the current UK economy, and any outcome that
transition period, which is due to expire weakens this will have implications for
on 31 December 2020. Any significant our finances. Throughout this year we
change to trading and mobility at that will continue to carefully manage the
52%
of our overall funding to
1.0%
reduction in bus journeys
time would have a significant impact
on our long-term financial position, as
well as potential short-term impacts on
risks and maintain a strong cash position
so that we can deal with any potential
negative outcomes.
come from passenger income assumed, the smallest reduction
in 2020/21 since 2017/18
Transport for London Budget 2020/21 17Debt and cash
We control the level of our debt and maintain prudent levels of cash
Total value of debt (£m) Cash balances (£m)
18,000 2,500
The total value of our debt, which includes 2,379 We maintain a prudent minimum level
15,917 borrowing and finance leases, must 119 of cash, in line with the liquidity policy
16,000 always remain within our Authorised 2,119
approved by the TfL Board. This ensures
14,599 2,438 Limit for external debt set by the Mayor. 2,260 61 we are always able to meet our payment
Affordability is linked to both recurring 2,000 1,961
XXX XXX
1,932 XXX obligations and will help us deal with
14,000 2,397 1,882 2,058
428 annual income and cash available to pay 566
unexpected external events if they arise.
671
financing costs. 211
11,726 483 13,051
12,000
551 We will close 2019/20 higher than 2018/19, as
10,935
10,386 488 By 31 March 2021, borrowing is expected to 1,671 we experienced higher passenger income,
11,719 1,500
558 11,175 grow by £1,332m, within the limits agreed new income from the introduction of
10,000
10,447 with the Government. This includes an the ULEZ, lower capital spend and more
9,828 1,395
assumption of £750m borrowing under the property and capital receipts from the sale
1,261
8,000 Crossrail loan facility from Government. of assets, including Broadway.
Our borrowing will finance capital 1,000
investment, including Tube and rail line Cash balances are expected to close at
6,000
upgrades, and new DLR trains. £2.1bn at the end of 2020/21, excluding the
cash we hold for the Crossrail project,
4,000 The new accounting standard IFRS 16, which London Transport Museum and London
500
supersedes IAS 17, means we will now Transport Insurance Guernsey. Our cash
recognise additional finance lease liabilities balances will reduce in 2020/21, as we
2,000
of £2.4bn in 2020/21. These are existing continue to fund our asset programme.
contracts and were previously classified
0 as operating leases. We are in consultation 0
2016/17 2017/18 2018/19 2019/20 2020/21 2016/17 2017/18 2018/19 2019/20 2020/21
on the eventual impact, if any, that the Actual forecast Budget
Actual forecast Budget
application of IFRS 16 will have on the
Credit ratings
Borrowing Finance leases and other borrowing limits currently agreed with TfL cash balances
financing liabilities the Government. Moody’s Aa3 stable outlook
Crossrail project, London Transport Museum
IFRS 16 Finance leases liabilities and London Transport Insurance Guernsey Standard & Poor’s AA- negative outlook
cash balances
Fitch AA- stable outlook
Strong credit ratings reflect our strategic
importance as London’s main public
transport provider, strong demand for our
services and our institutional framework.
Our ratings also reflect our strong link to
the Government.
Transport for London Budget 2020/21 18Financial trends
We use forecasts from costs and income streams to
make decisions on our finances and priorities
Total income (£m) Total cost (£m) Total capital expenditure (£m)
8,000 8,000 4,000
7,073 7,055 7,093
3,453 3,487
6,768 6,716 6,749 6,792
7,000 6,570 7,000
6,553 6,642 468 3,500
1,020 1,006 538
454 448 615
726 812 413 428 3,023
759 6,625
6,000 6,000 6,295 6,344 3,000
6,140 6,214
1,348 1,101 986 388
1,168 1,050 1,419 2,601 2,591
1,245
5,000 5,000 2,500 1,246 484 533
4,952 5,063
4,854
4,694 4,643
4,000 4,000 2,000
1,078
1,333
3,000 3,000 1,500
1,593
1,530
1,389
2,000 2,000 1,000
1,039
1,000 1,000 500 725
0 0 0
2016/17 2017/18 2018/19 2019/20 2020/21 2016/17 2017/18 2018/19 2019/20 2020/21 2016/17 2017/18 2018/19 2019/20 2020/21
Actual forecast Budget Actual forecast Budget Actual forecast Budget
Passenger income Business rate Operating costs Net financing costs Crossrail programme
retention and
Other income other revenue grants New capital investment Capital renewals
Despite an increase in passenger income, The increase in operating costs relates Overall capital expenditure remains broadly
overall income decreases by £18m in to the introduction of new trains on in line with last year. An increase in our
2020/21, largely because of one-off grants London Overground, and preparation for investment programme is offset by a
we received in 2019/20 that will not be the opening of the Elizabeth line. It also reduction in Crossrail capital expenditure.
repeated, as well as a reduction in income includes inflation. These increases are
from the ULEZ and Congestion Charge. partly offset by savings.
Transport for London Budget 2020/21 19Efficiency trends
The costs of running our wide range of transport services
London Underground Buses Streets Rail
Direct operating cost per operated km (£) Direct operating cost per operated km (£) Direct operating cost per operated km (£) Direct operating cost per operated km (£)
30 4.8 1.1 30
25
28 4.6 1.0
20
26 4.4 0.9
15
24 4.2 0.8
10
22 4.0 0.7
5
20 3.8 0.6 0
2016/17 2017/18 2018/19 2019/20 2020/21 2016/17 2017/18 2018/19 2019/20 2020/21 2016/17 2017/18 2018/19 2019/20 2020/21 2014/15 2015/16 2016/17 2017/18 2018/19
Actual forecast Budget Actual forecast Budget Actual forecast Budget Actual
London Underground Buses Streets London Overground
Trams DLR
These costs increase slightly in 2020/21, Over recent years, these costs have risen Operating costs have reduced as a result Costs have generally fallen, with variation
but these increases are minimised as broadly in line with inflation. We are of pausing proactive road maintenance for reflecting operating conditions. London
our ongoing modernisation programme working with our operators and improving two years, owing to a lack of dedicated Overground operating costs increased
substantially mitigates inflation. how we tender contracts to control costs funding. These costs will rise again as we in 2018/19, largely due to new train leases
while improving the fleet. return closer to previous levels of activity. under the LOTRAIN agreement.
Transport for London Budget 2020/21 20Assets and investment priorities
We are investing to maintain our assets, but with additional
funding we could unlock new capacity
Our 2019 Business Plan set out our Signalling support the delivery of tens of thousands
investment programme for the next five ‘We are beginning a The Four Lines Modernisation programme of new homes across the Piccadilly line
years and was accompanied by a 20- crucial programme of will see us replace analogue signalling corridor and boost productivity and access
year Capital Strategy that described our with automatic train operation across to jobs. We will only be able to commit to
longer-term investment priorities and modernisation for our the Circle, District, Hammersmith & City this transformational scheme if we secure
funding requirements. Certainty of funding Central line trains’ and Metropolitan lines. Once completed long-term funding support from central
is essential if we are to commit to the by 2023, customers will benefit from a Government. We will continue to make the
projects required to maintain reliability and 33 per cent increase in capacity across case for that this year.
support growth over this timeframe. the four lines. We have already delivered
the first sections of signalling between Track, power, lifts and escalators
Renewing and replacing our assets is our Hammersmith and Paddington to Euston We will continue our track renewal
required baseline to simply maintain our Square, and Finchley Road to Euston Square. programme, including replacing 7.3km
current performance in terms of safety, In 2020/21, we will continue to work towards of life-expired track. This is critical to
reliability, capacity and asset condition. transitioning the entire Circle line onto the supporting service reliability, and increased
Additional enhancements can unlock new new signalling system. train speeds and frequencies. As part of
capacity and enable us to use our existing our ongoing maintenance, we will continue
network more intensively. This supports We will continue to extend the life of the rail grinding to remove defects, helping to
London’s growing population and economy, signalling system on the Central line and reduce noise and vibration for passengers,
enhances the quality of life for Londoners will re-signal Northumberland Park Depot, staff and people living and working near the
and creates jobs and improves skills Through our renewal programme, we will which serves the Victoria line. These works lines.
across the UK. This year, we will maintain work on the Victoria and Metropolitan line are essential to maintain the performance
reliability on our Tube and rail modes, while fleets, both of which are now 10 years old. of these systems to deliver a reliable We will upgrade power supplies to enable
restoring our renewals programme on our We will complete the preliminary design service and meet capacity requirements. an additional train to run each hour during
streets assets. We will continue to lobby of the new trains we have ordered for the the peak on the Morden branch of the
the Government for sustained funding Piccadilly line, which will enter service Replacing the signalling system on the Northern line. We will also refurbish or
support to enable us to be much more between 2024 and 2026, and complete work Piccadilly line, parts of which date back to replace 20 escalators and four lifts in our
ambitious in later years. on the existing fleet to ensure reliability the 1950s, is one of our highest priorities. stations to ensure reliability.
until then. Replacing this system with a modern digital
Rolling stock network would provide faster and more Major highways structures
We are beginning a crucial programme of Design will continue for the new fleet frequent trains, with a train arriving every Our investment will maintain the safety of
modernisation for our Central line trains, of DLR trains, which will be introduced 100 seconds in central London. This would bridges and tunnels to enable goods and
one of our poorest-performing fleets. from 2023. We will also run new trains
Through the Central Line Improvement on London Overground services to and
Programme, we will replace all traction from Liverpool Street and our reliability
motors, create more space for wheelchair improvement programme will continue on
users, improve audio and visual the existing fleet. We will start design and
information, and install CCTV. The first
upgraded train will return to service in early
2021, and the whole programme will be
market engagement activities to replace the
oldest trams on our network, and maintain
the condition of the vehicles while they
7.3km
of life-expired track will be replaced
20
escalators and four lifts will be
completed by 2024. remain in service. refurbished or replaced across
our Tube stations
Transport for London Budget 2020/21 21people to move throughout the Capital. temporary bridge while the main structure We will continue to improve the energy can receive accurate and timely information to
The Rotherhithe Tunnel was built in 1908 is being repaired. efficiency of street lighting. More than half help them plan their journey.
and was not designed to cope with modern of our 33,900 street lighting columns will be
levels of traffic. This year we will start We are also starting a programme of installed with greener LED luminaires, with We are also taking steps to further protect
detailed design on restoration works, and renewal works on the Westway (A40) and 3,000 more set to be converted before the our staff and revenue. Body-worn video
we will seek approval for concept design by will seek approval for concept design end of 2020. equipment is currently being piloted as part of
October 2020. by March 2021. We are working with the a strategy to stop violence against our people,
Department for Transport to progress Buses and we have a strategy in place to reduce lost
We are working with and supporting our Major Road Network funding bids to Maintaining, renewing and refurbishing revenue. This will ensure our colleagues have
local authorities to confirm a plan for the refurbish key bridges on our network. bus infrastructure will provide a safe, the tools they need to work effectively and
refurbishment of Hammersmith Bridge. These include the Brent Cross structures, comfortable and appealing environment safely.
We are also investigating options to build a Croydon Flyover, Hope & Anchor Flyover that will encourage people to use public
and Kew Bridge. transport. In our 2019 Business Plan we We continue to drive forward our digital
increased investment in maintaining bus workplace, with regular software updates,
The condition of our smaller assets has shelters and stations to boost passenger eradicating the need for large upgrade
‘In spring 2020, five new declined slightly due to the two-year pause numbers. This year we will replace 325 programmes. We will spend a further £1.25m
on renewal work, which means additional bus shelters and refurbish a further 25, on end-user computing, which will support
docking stations will safety measures are required. This year, we alongside ongoing repairs. flexible working. We are also researching
open along Cycleway 4 in will carry out additional inspections and infrastructure technology and investing in
Southwark and we plan to interim measures on 43 bridges. Cycle hire cloud-based assets to reduce operational cost
In spring 2020, five new docking stations and enhance security against cyber-attacks.
expand docking stations on Highways assets will open along Cycleway 4 in Southwark
our Cycleways network’ We are responsible for London’s most and we plan to expand docking stations
strategically important roads. These elsewhere along our Cycleways network.
comprise many types of assets including We will also renew 3,700 Santander Cycles
580km of carriageway, 6,300 traffic signals, bicycles this year. ‘We will award the wider
and 1,238 pedestrian countdown locations concession to enable mobile
This year, we plan to resurface more than Technology
30km of road, modernise around 50 traffic Technology investments will ensure we connectivity to be brought
signal sites, replace 800 lighting columns continue to improve safety, customer to the whole Tube network’
and 600 trees. service and operational reliability.
Providing easy access to information
ensures a smoother journey experience.
Following the introduction of 4G services
on the Underground, with a pilot launching
on a section of the Jubilee line, we will
award the wider concession to enable
mobile connectivity to be brought to
325
bus shelters will
3,000
street lights will be replaced
the whole Tube network. Through our
Bus Technology Programme, we will
refresh service planning assets, real-time
be replaced with LED luminaires by the information, ticketing and performance
end of 2020
management. This will ensure customers
Transport for London Budget 2020/21 22Delivering the Mayor’s Transport Strategy We will align our work to the Mayor’s Transport Strategy, which emphasises support for Healthy Streets and healthy people, a good public transport experience and new homes and jobs
Healthy Streets
and healthy
people
The Mayor’s Transport Strategy makes a
commitment to Vision Zero – eliminating
all deaths and serious injuries on London’s
transport network by 2041. We will work
towards this by delivering ambitious schemes
to reduce road danger.
Our Healthy Streets Approach aims to create
far-reaching improvements on London’s
roads, in collaboration with our borough
partners. This includes improving safety,
increasing sustainable transport use, and
creating pleasant environments.
By creating places that feel safe to use, we
will encourage people to get out of their cars
and use more sustainable modes of travel.
We can only achieve this through steady and
sustained long-term funding.
Transport for London Budget 2020/21 24Safe buses
Safe streets Greener buses Rolling out our
Direct Vision
We will continue to We will use a combination of training and
work alongside the technology to improve safety for bus passengers Standard scheme
Metropolitan Police’s and other road users
Roads and Transport Lorries account for just
Policing Command to We want to reduce the number of people killed or seriously four per cent of the
identify and target the injured on, or by, a bus by 70 per cent by 2022 (against 2005- overall miles driven
root causes of road 09 levels), with all deaths on or by a bus eliminated by 2030. in the Capital, but
danger at a number between 2015 and 2017,
of high-priority Our world-leading Bus Safety Standard will continue to heavy goods vehicles
locations. We will be rolled out, having been incorporated into new bus (HGVs) were involved
use a combination of operator contracts last year. This sets out design features in 63 per cent of fatal
enforcement, education and technologies required of new buses, to minimise the collisions involving
and engineering risk of injuries. We now have 129 buses that meet the Bus cyclists and 25 per cent
measures. We will continue to upgrade the entire bus fleet to Safety Standard and 1,229 (13 per cent) that are enabled involving pedestrians.
meet the ultra-low Euro VI standard or better by with intelligent speed assistance to prevent vehicles from
We will significantly retrofitting mid-life buses with enhanced exhaust exceeding the speed limit. By October 2020, we will have Our new HGV Safety
increase our camera systems and replacing older buses with new vehicles. started retrofitting buses. An acoustic vehicle alerting system Permit scheme, which
and on-street speed So far, around 90 per cent of the fleet meets or betters – to make quiet running buses identifiable to vulnerable road comes into force in
enforcement activity to this standard. users – will be required on all new buses. October 2020, will
reduce the risk speeding require all HGVs more
motorists continue to By autumn 2020, the entire fleet will meet a Euro VI As part of our continued work on fatigue management, than 12 tonnes to hold a
pose on our streets. standard. We are already working on the next steps we will ensure all bus operators have robust fatigue risk Safety Permit to operate
to ensure our fleet is even cleaner, by converting the management systems in place and that all managers receive in Greater London.
We will also continue to entire fleet to zero-emission at tailpipe by 2037 at specific fatigue training. We will also launch a £500,000
enforce decriminalised the latest. We have a good starting point with more fatigue innovation fund to encourage development and Our Direct Vision
offences – such as than 280 zero-emission buses already and expect the trial of new measures aimed at preventing fatigue. Our new Standard (DVS) rates
parking contraventions – number to climb to up to 500 zero-emission buses, Destination Zero safety training for all London bus drivers, how much an HGV
to improve compliance including single and double decks by 31 March 2021. which uses virtual reality headsets, will continue until the driver can see directly
with the rules of the end of 2020. from their cab in
road, reduce road relation to other road
danger and improve the users and assigns a star
Increasing the amount of green space
70%
reliability of our buses. rating from zero to five.
Working closely with Those vehicles that do
reduction in the number of
the local boroughs, We will upgrade the environment across 90 high streets people killed or injured on or not meet a minimum
law enforcement and through our Bees, Trees and Meadows programme. This by a bus by 2022, compared to DVS star rating of one
security agencies, will see 1,000 trees planted across our street network and 2005-2009 levels star will be required to
we will continue to a further roll out of the grass verge meadows programme, have additional safety
design and implement following a successful trial on the A40 and A406 last year. equipment fitted.
protective security
measures on London’s
roads. This work is
In the spring, we will be creating five green roofs on bus
shelters in Lewisham, which have been specially selected to
£500k
funding to develop and trial
Permits will be
electronic and enforced
designed to reduce the encourage more honeybees. schemes that prevent bus
by automatic number
risk from terrorism driver fatigue plate recognition
and further help us to We will also introduce a rain garden at Joe Strummer subway cameras and non-
achieve our Healthy in Westminster, which will help create more sustainable compliant HGVs will be
Streets ambitions. urban drainage. We will continue planting along West issued with a penalty
Cromwell Road and identify new locations for ‘pocket parks’ charge of £550 per day.
across London.
Transport for London Budget 2020/21 25You can also read
