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Ex-Mayor Livingstone

A billion here, a billion there …

Mayors Question Time.jpgI could not attend Mayor’s Question Time this Wednesday but I have been reviewing the webcast this morning.

Roger Evans, the Tory transport spokesman on the GLA, challenged the Mayor on the cost implication of his announcement on Monday regarding Congestion Charge banding. Follow the link above and move the slider control to 1:45:00. The Mayor would not give a direct answer to the question but essentially said that if people traded down it would be a good thing and it did not really matter if income was lost. He said:

The TfL budget this year is over £5 billion. The income from the congestion charge is I think about £120 million. Therefore a variation of £2-3 million within the congestion charge has no overall impact on the totality of the budget.

There are a couple of problems with this statement. Firstly, the Mayor has taken £677 million off Londoners in charges and fines and spent every penny of the money, and more, on set up and running costs. He needs to make a surplus of £60 million this year before he starts to generate cash. At the end of this financial year it is likely that the Mayor will have taken over £900 million since the scheme started and made a net income in the order of £10 millions. If this is green taxation then we will all be very poor in the future. Secondly, the average net income from the charge (which ignores the capital costs of the scheme) for the first three full years of operation has only been £83 million so even excluding set up costs the Mayor is being wildly over-optimistic about income from his silly scheme.

This statement reveals the wishful thinking that has led to financial disaster that is the congestion charge. The City Hall idiots think “this scheme will make money therefore I do not really have to control costs”. It follows that they sign contracts that are overly expensive, they make arbitrary deadlines and do not consider the cost implications of meeting them, in their haste they do not fully consider all the costs they will be liable for, when they run into problems they throw more money at the thing and they don’t do any proper analysis before they make changes that will undermine the viability of the scheme. In this way all the income to-date has been squandered in costs and there is little prospect of any net cash being returned to Londoners to spend on useful things like policemen say.

Beware though. If you think that wasting £100 millions on Congestion Charging is a trivial matter then consider the effect of taking billions off Londoners and wasting most of that too. This week the Mayor also talked about London moving to road pricing before the rest of the country. This will cost us billions, not hundreds of millions.

Remember the quote (Evening Standard 27th January) from Michele Dix, director of congestion charging at TfL: “It would generate £3 billion gross and net revenue of between £1 billion and £2 billion.” This silly woman, typical of TfL management, can’t refine her cost estimates more accurately than to the nearest £1 billion. She seems to think that it acceptable to tax people to this extent and then lose anywhere from a third to two thirds of the money in collection costs. If the Congestion Charge is a model for road pricing then the scheme will cost us £3 billion and every penny will disappear in costs until the scheme has run for at least 5 years.

One reply on “A billion here, a billion there …”

I was surprised by the line the Mayor took on this issue, not least because TfL spin has always talked up the money that C Charge made as a significant contribution to public transport. This was an admission that it raises so little that it is insignificant in terms of TfL’s overall budget, so any loss can be hidden in the roundings. Now we are seeing a U turn to the position that ‘it is a good thing regardless of whether it makes money’. Pity this was never explained during the original consultation on the charge.

Ken has invented a new type of tax – one that loses money…

On a separate, but important matter, I’m inviting comment over at http://www.city-hall.blogspot.com on whether the Conservative candidate should be advocating abolition of the GLA – an important debate which we need to have sooner rather than later.

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