In the middle of a pandemic, Londoners need support from their Mayor. But since coronavirus hit, Sadiq Khan has done nothing except raise the cost of living.
Instead of tackling waste, reforming public services and protecting family budgets, Sadiq Khan has taken the easy way out by raising taxes on Londoners.
Here’s why:
Sadiq Khan bankrupted Transport for London (TfL). Now he’s trying to leave Londoners with the bill.
It’s true that coronavirus caused a drop of £1.6 billion in fare revenue for TfL.
But over the last four years, Sadiq Khan’s mismanagement cost TfL £9.56 billion. That’s SIX TIMES the cost of coronavirus.
Between record debt, spiralling Crossrail costs and pension overpayments, Sadiq Khan left TfL extremely vulnerable to financial shocks — like the one caused by coronavirus.
That’s why the government had to bail Sadiq Khan out — twice. And while the government are willing to cover the cost of Covid, they are unwilling to cover the cost of Khan.
So TfL concessions like the Freedom Pass and the 60+ Zip Oyster Card now need to be paid for out of new revenue.
Shaun Bailey would raise new revenue by allowing corporate sponsorship of the tube. This is common in cities across the world, from Dubai to New York. And we estimate it would raise up to £490 million in new revenue — more than enough to restore the concessions that Londoners rely on.
But Sadiq Khan is taking the easy way out. Instead of raising new revenue, he’s raising the cost of living.
Here’s how:
1. Sadiq Khan is hiking council tax by 10%.
The Mayor of London levies a tax called the Mayoral Precept, which is bundled together with council tax. Every single household in London pays this tax, regardless of where they live or the size of their property.
Since becoming Mayor, Sadiq Khan has raised his share of council tax by 20.3% for the average Londoner. Now he’s raising it a further 10%.
Ministers are open to other ways of raising revenue — like Shaun Bailey’s plan to allow corporate sponsorship of the tube. So the government is NOT forcing the Mayor to raise council tax. Sadiq Khan has chosen to take the easy way out.
2. Sadiq Khan raised the congestion charge to £15 a day, seven days a week.
Last year, Sadiq Khan raised the congestion charge from £11.50 to £15 a day. And he extended it into the evenings and weekends.
This was supposed to be a temporary hike. But now he’s planning to keep it until at least October. Raising the cost of living and the cost of doing business.
Shaun Bailey will reverse the congestion charge hike on day one as Mayor.
3. Sadiq Khan is extending ULEZ to the North and South Circular roads.
The standard cost of the Ultra Low Emissions Zone is £12.50 a day. Sadiq Khan is extending this zone to cover everything between the North and South Circular roads.
This would cost drivers who don’t have ULEZ-compliant cars another £87.50 a week — or £4,550 a year.
To be clear, 33% of private-hire vehicles are not ULEZ-compliant. So the extension will hit the self-employed and those on low incomes.
ULEZ doesn’t offer exemptions for Blue Badge holders. So the extension will hit those who are already vulnerable.
And ULEZ doesn’t offer exemptions for religious services. So the extension will hit communities of every faith.
Shaun Bailey will reverse the ULEZ extension on day one as Mayor.
4. Sadiq Khan is considering a £5.50 driving tax on people and businesses based outside London.
In an attempt to cover the costs of his own mismanagement, Sadiq Khan is considering a £5.50 driving tax on vehicles registered outside London.
At a time when London’s recovery is more important than ever, a tax on driving into Greater London sends the message that London is closed.
It targets the millions of domestic tourists who visit the capital every year. It targets the businesses that travel in and out of London regularly. It targets those who want to visit family and friends in London. And it targets workers who regularly commute into London.
Shaun Bailey will reverse this driving tax on day one as Mayor.
5. Sadiq Khan is planning to extend Zone 1 to Canary Wharf.
When the vaccine is fully rolled out and offices start to reopen, workers will need to commute. That means we should help keep their cost of living down.
But Sadiq Khan is looking at plans to extend Zone 1 to Canary Wharf. This means higher fares for those travelling into this particularly vital area of London’s economy.
6. Sadiq Khan is raising fares by more than the rate of inflation.
In January, Sadiq Khan announced that fares will rise by RPI+1. This is an average fare rise of 2.6% — costing passengers an extra £60 million this year.
That's not all...
1. Transport for London’s finances
Here’s the breakdown of how Sadiq Khan racked up £9.56 billion of waste at TfL.
- In March 2020, long before coronavirus had any effect on revenues, TfL’s debt hit a record high of £11.7 billion. That’s an increase of 30% since Sadiq Khan took over.
- Union facility time has almost doubled under Sadiq Khan. This is the time spent by employees on union activities — while being paid by TfL. Union facility time has cost £11.4m more than it did under Boris Johnson.
- Sadiq Khan said he would cut the flab at TfL. But he must have a different definition of ‘flab’ to the rest of us. He spent £151m in exit payments for senior executives.
- Nearly £1 million pounds was spent on first- and business-class flights and hotels for TfL staff. With TfL facing bankruptcy, is this a good use of TfL’s funds?
- Under Sadiq Khan, friends and flatmates of TfL staff get free travel — thanks to the Nominee Pass. This has cost £159 million over Sadiq Khan’s four-year term.
- Under Sadiq Khan, TfL spent £1.4 billion on gold-plated pensions. These are 50% more generous than pensions for NHS staff. If TfL’s pensions had been brought into line with other public-sector pensions, TfL would have saved £828 million over the last four years.
- The amount TfL spends on executive pay has ballooned. Under Sadiq Khan, 557 TfL employees are earning over £100,000 — compared to 458 when Boris Johnson left office. This is a £58 million increase in executive pay under Sadiq Khan.
- Under Sadiq Khan, TfL spent £1.59 billion on debt interest as a result of rapidly increasing debt.
- Under Sadiq Khan, TfL spent £45 million on taxis for TfL staff, polling, vending machines and watercoolers.
- When Sadiq Khan took over, Crossrail was on time and on budget. Now Crossrail is overbudget with no end in sight. These delays have cost £5.2 billion in lost revenue and increased costs.
- TfL spent £640 million on a fare subsidy that mainly benefitted tourists. And TfL has lost £400 million on fare dodging since May 2016 because Sadiq Khan failed to clamp down on it.
- There is £450 million on Oyster Cards that haven’t been used for over twelve months. This money could help restore order to TfL’s finances.
- TfL spent £12.3 million on the Rotherhithe crossing, which was later scrapped, and £20 million on Woolwich Ferries, which Sadiq Khan admitted were plagued by faults.
Item - Cost
Debt interest - £1.59 billion over 4 years
Increase in Executive Pay - £58 million over 4 years
TFL Pensions – Overpayment - £828 million over 4 years
Nominee Passes - £159 million over 4 years
Business class flights and hotels - £750,000 over 4 years
Vending Machines, Water Coolers, Taxis - £45 million over 4 years
Exit payoff payments to senior executives - £151 million over 4 years
Union Facility Time - increase - £11.3 million over 4 years
Unused Oyster Cards - £450 million to date
Crossrail - £3.9 billion overbudget + £1.35 billion lost revenue = £5.2 billion
Fares Freeze - £640 million over 4 years
Fare dodging - £400 million over 4 years
Woolwich Ferries plagued by faults - £20 million
Scrapped Rotherhithe Crossing - £12.3 million
Total £9.56 billion
2. Sadiq Khan’s council tax hike
It was Sadiq Khan’s suggestion to raise council tax, not the government’s.
Here is the relevant excerpt from the Transport for London Settlement Letter, in relation to the 2020 TfL bailouts:
If the Mayor and TfL wish Londoners to continue to benefit from travel concessions and/or other benefits above those typically available elsewhere in England (specifically free travel for all Londoners aged under 18 and 60-65, excluding statutory entitlements including under the Education Act 1996) then TfL/the Mayor recognises that the costs of these additional benefits will not be met by HMG funding; and commits to meeting the costs of these additional benefits over the Financial Year 2021/22, without recourse to additional borrowing, savings, service changes or deferrals.
TfL and the Mayor have proposed that this could potentially include proposals to maintain the Congestion Charging changes implemented in June 2020, subject to consultation and due process; and / or by an increase to the existing TfL element of the GLA council tax precept from 1 April 2021 provided HMG will take all the necessary steps to enable such a precept, subject to approval of the House of Commons. TfL/the Mayor will submit their proposals, by 11 January 2021, alongside the financial sustainability plan.
3. Sadiq Khan’s congestion charge hike
Not only did Sadiq Khan increase the congestion charge hike. He also increased its scope significantly.
- He removed the Auto Pay discount and Fleet Auto Pay discount
- He increased the charge level for delayed payment to £17.50 and the time available to make a delayed payment
- He extended the charging hours to 22:00; and extended the operating hours of the scheme on a Saturday and Sunday 07:00 to 22:00
- He ensured the scheme operates every day of the year (excluding Christmas Day)
- He closed the residents’ discount to new applicants (from 1 August 2020)
4. Sadiq Khan’s ULEZ extension
Here is the breakdown of the cost of Sadiq Khan’s ULEZ extension to drivers.
Cars
The cost of drivers upgrading their vehicles is estimated to be between £137 million and £244 million.
The portion was estimated to be 22 percent of cars that upgrade.
LGVs
An estimate of the financial cost in the first year to LGVs is £81,500,000. This cost, however, is estimated on the total LGV fleet observed in the ANPR data for the central and inner zones. From the TfL compliancy response tool, it was possible to estimate what portion of these vehicles would have already upgraded due to the impact of the ULEZ central zone introduced in 2019. This portion was estimated to be 7% of LGV vehicles.
Assuming these vehicles are evenly distributed across all of the non-compliant demand responses with the associated costs listed above, the cost of the expanded emissions standards to the inner zone to LGVs is £75.8 million.
Going forward, the cost will relate only to those drivers who decide to stay and pay the charge, and this cost will decline over time as the LGV fleet is renewed.
This total cost is not the overall financial impact on owners of LGVs, as some of this spending would have occurred in the future at some point. In particular, for business users of LGVs, what is occurring is that the costs of vehicles being renewed are being brought forward. This still will have a financial cost to any business, but without more detailed data on the split of LGV use by business and purpose, it’s impossible to estimate what this impact may be.
HGV & Coaches
HGV operators face total financial costs in year one of the scheme of £236 million; and
Coach operators face total financial costs in year one of the scheme of £114 million.
5. Sadiq Khan’s £5.50 driving tax
According to TfL’s financial sustainability plan, drivers would pay £1.1 billion a year in levies and penalty charges for the boundary charge, generating a ‘profit’ of between £200 million and £550 million a year once operating costs and bad debts are subtracted.
This proposal could not be further from the Mayor’s slogan, London is Open.
Outer London
This charge will hit outer London particularly hard. Every weekday 1.3 million vehicle trips are made from outside London into the capital. Around one million of these trips are into outer London alone and the majority of these journeys are made by vehicles registered to addresses outside of the Greater London boundary.
The Mayor knows outer London would be hit hard by this charge, especially struggling high streets and businesses. Yet Sadiq Khan does not seem to care, perhaps because Labour voters predominantly live in inner London.
Inner London
London is one of the most visited cities in the world. A significant number of people who come into London from the rest of the country are domestic tourists. They will often spend time and money in central London.
Sadiq Khan’s proposal will damage the industries that cater to domestic tourists. In 2017, 32 million tourists visited the capital for more than one day, generating almost £26 billion for the capital’s economy. Of these, 19.8 million were international tourists, while 12.2 million were from England, Scotland and Wales. Tourism supports approximately 700,000 jobs in the capital.
Domestic Tourism
Sadiq Khan’s proposal will not only damage the tourism industry in London. It will also damage the industries that rely on tourism.
City Hall data shows the important contributions domestic tourists make to the London economy, with visitors from elsewhere in the UK contributing a total of 327 million day visits, spending over £12.6 billion and supporting 266,875 jobs. All of which Sadiq Khan’s charge puts at risk.
These jobs include:
- Cultural sector: theatres, museums, galleries
- Retail
- Hospitality
- Restaurants
- Hotels
- Events
Family life
Aside from the significant economic impact of this charge, it may also hurt families that live on opposite sides of the boundary. They will be forced to pay an additional £5.50 to visit their relatives. This will be a particular problem for families with small children, because these families often find it easier to travel by car.
Public services
If someone ends up on the wrong side of the boundary in relation to a hospital or GP surgery, this will increase the cost of healthcare. The same could also happen for schooling, where parents may be forced to pay an additional £5.50 per day to take their children to school.
Logistics
Huge amounts of goods are transported into London by trucks and lorries. This charge could increase the cost of these deliveries, which could lead to higher prices in shops.
6. Sadiq Khan’s fare hike
On 15 January 2021, Sadiq Khan announced a rise in fares by RPI+1. These rises will cost passengers an extra £60 million this year.
Bus and tram single fares have increased by 5p to £1.55 and the daily bus and tram cap is raised by 3% to £4.65. The Bus & Tram Pass season price increased to £21.90 for a 7 Day ticket. The Hopper fare, which was introduced in September 2016, will remain in place, permitting multiple free bus and tram transfers within an hour.
On the Tube in Zones 1-6 and other rail services in London where Tube fares apply PAYG fares will typically increase by 10p or 20p. A number of fares, including PAYG fares for children, remain unchanged.
Travelcard prices and the associated PAYG caps will increase from 1 March by RPI+1 per cent. As a result, Travelcard season ticket prices and the associated all day PAYG Travelcard caps increase by 2.6 per cent overall.
TfL summarises the revenue yields for TfL based on 2019 demand assuming that all fares and prices rise by 2.6 per cent overall and taking into account the impact this increase will have on demand. This gives an annualised total revenue yield of £123 million.
If instead the yield calculation is based on the revenue scenario TfL is using in its budget submitted to the GLA on 30 November 2020, the annualised revenue yield from a 2.6% overall fares increase is projected to be £74 million. This comprises £31 million on buses, £34 million on the tube and £9 million on TfL’s other rail services.
7. Sadiq Khan’s extension of Zone 1 to Canary Wharf
The document submitted by Sadiq Khan to the government suggests extending Zone 1 to Canary Wharf in order to ‘reflect changes in London geography’ and raise an additional £25 million a year.
Incoming commuters would have to pay higher fares if the station – and potentially the busy interchange at Canada Water - were moved out of Zone 2.
TfL said the move could generate around £25 million beyond 2021/22 because fares in Zone 1 are more expensive than outer London travel areas.
