You might imagine that Livingstone’s congestion charge is making a surplus. Er, no.
In their 4th annual monitoring report published on 29th June they claimed “£122m being raised, in the financial year 2005/06, to invest back into London’s transport system”. This is highly misleading as it does not consider the capital costs of the scheme, which are currently being doubled by the Western Extension. The numbers also show just how poor their cost control is.
The scheme started in February 2003 and has appeared in the last four TfL annual reports as a note to the accounts. These figures are tabulated below (click to enlarge):
The first observation to make is that their management control/monitoring systems must be pretty weak if they can publish a document in June saying that the surplus will be £122 million and then publish figures 3 months later that are significantly worse at £106 million. Where did £16 million go? Uncontrolled costs?
On these numbers Livingstone has taken £677 million off Londoners in charges and wasted 72% of it in costs whilst returning 28% for spending elsewhere. The real figures are much worse.
In an answer to a question raised on 13th September by Conservative AM Andrew Pelling the Mayor gave some background on the capital costs of the scheme. The original scheme cost £161.7 million to set up. The Western Extension is costing £123.1 million – this cost is already committed and can be considered sunk.
Of the figures in the table above the “Financial assistance/deferred charges” and “Depreciation” lines are accountants’ adjustments so we can discount these for the purpose of this analysis. As at the end of the last financial year the Mayor had collected £677 million from Londoners, £452 million had been spent collecting the revenue leaving a surplus of £225 million which is less than the committed capital costs of the scheme (£285 million). The Mayor still needs to make a surplus of at least £60 million in the current year just to break even. The Mayor has simply spent the whole lot in costs. NO SURPLUS has been created yet.
Will things get better in the future now we have got over the initial period (over three years!)? No.
In another question Pelling has found out that costs are increasing steeply. Expenditure for 2004-05 in the area of toll facilities was £120.8 million. Expenditure for 2005-06 was £143.5 million and projected expenditure for 2006/07 is £155.1 million. In other words a 19% increase last year and another 8% projected for this. Most commentators agree that the Western Extension will not result in a large increase in revenue – it may even reduce revenue as those in the Western area are able to avoid the charge.
This is not the worst of it though. Yet another answer to a question from Conservative AM Angie Bray reveals a major risk to revenue. 30% of it comes from penalty charges. In other words if Londoners smarten up and stop incurring fines this whole stupid scheme will never wash its face. Aaaaaaaagh.