Agenda Item 3 Appendix 1

London Assembly Budget and Performance Committee – Thursday 1 October 2020 Transcript of Item 4 - 2020-21 Budget Review – Transport for London

Susan Hall AM (Chairman): This brings us to today’s main item of business, the 2020/21 Budget Review on Transport for London (TfL). I would like to welcome our guests in the Chamber, Andy Byford, who is the Commissioner of TfL, and Tony King, Group Finance Director at TfL. You are replacing Simon Kilonback [Chief Financial Officer (CFO), TfL] at the last minute. We wish him well, and thank you for attending. Attending remotely, we are pleased to welcome Heidi Alexander, the Deputy Mayor for Transport, and David Gallie, Executive Director of Resources.

I shall start off, I think, first to you, Commissioner. Can I ask you: what steps has TfL taken to support an increase in passengers?

Andy Byford (Commissioner, Transport for London): Good morning, everyone. It is my first appearance and it is an honour to be here. We are doing a lot to increase passenger numbers, albeit it is, I would say, a moving feast because obviously with COVID and the varying Government instructions which respond to the changes in the COVID threat it is a very dynamic and fluid situation. In terms of what we are doing to get customers riding again, to increase ridership, there are a number of things.

First of all, an all-out focus on cleanliness, absolutely making sure that the system is as clean as it can be. That means applying industrial-grade cleaner on all touch points across the network, it means highly visible cleaning, it means we have increased the periodicity of the cleaning and the intensity of the cleaning, and it is to the cleaning contractor’s credit that already customers are commenting on the fact that it is a lot cleaner throughout the system. Also, we are doing remote monitoring via an independent source at Imperial College [London] who are doing independent reviews to test if COVID is present. To date they have done a number of samples and cannot find any, which is good.

We are enforcing masks. We have really increased our enforcement in recent days with the British Transport Police. I believe in leading from the front. I myself stood on the gateline shoulder to shoulder with frontline colleagues the other day at Waterloo to just remind people to please pull up their masks, or in some cases to put them on or display the exemption sign. We are also providing social distancing by running something like 97% of the service to schedule across all of our modes.

In addition, a huge blitz on publicity. We have sent out pieces of correspondence to 8.5 million Londoners via email, via tweets and our various other social media, 13.2 million in the wider London area. We have developed briefing for businesses. We have sent documentation to businesses to encourage them to stagger their start times and to give them information to convey to their employees about where the busiest times are and when the quieter times are, when they can travel. That is something like 4,000 businesses. We have engaged with over 3,000 schools to, again, get the schools to vary their start times, and we have reached over 12 million people through radio adverts. I myself recorded one of those adverts to again encourage people to ride. We have also been taking steps to encourage other means of travel, such as cycling, walking and even scooting to get people to come back.

That has had some success. Where we started off at a low of around 5% of travel compared to this time last year, on the Tube we are up to around 34% now, and 57% on the buses. It has plateaued and slipped back a

Page 1 tiny bit as a result of the new restrictions but we are very much spreading the message that we are ready when you are ready, the system is safe and we encourage people to use it.

Susan Hall AM (Chairman): That is very encouraging. I am sure Londoners will be thrilled to hear that the cleaning regime has been hyped up, if you like, and definitely pleased to hear about enforcing masks. The number of people that seem to wear them around their chin is quite alarming, so pleased to hear that you are doing that.

Have you made any assessments of the impact the Streetspace programme has had on reducing the use of public transport and the number of people walking and cycling as a result?

Andy Byford (Commissioner, Transport for London): Sure. Again, we have, and what we do notice is that increases in cycling in particular, because of the changes we have made with Streetspace where we have implemented wider pavements but also where we have put in cycleways. The increases in cycling are quite remarkable, actually: weekday flows up 23% on the previous year, 97% increase on weekends. There has overall been a 34% increase in people cycling, and we have been measuring that through counters. There is one on Blackfriars Road that I have stood and watched a few times that literally counts the cyclists as they pass through. We have also been widening pavements in certain areas to make sure that we are enabling people to socially distance where the pavement would have otherwise been too narrow.

We are very mindful of the impact on buses because to me it would be counterproductive to encourage people to cycle and to walk, and inadvertently to cause problems for the buses. We very much keep this under review. Every change we make, we monitor to see, has it had the desired positive effect and has there been an unintended negative consequence? I will give you a good example. Along Bishopsgate, the bus times were 5.8 minutes pre-COVID and they are now 3.2 minutes, as recorded on 25 September [2020]. Literally, people are spending less time on buses because we prioritise public transport. I would say, as a transport professional, that is what we should be doing: we should be making the public transport alternatives - including such other modes as walking and cycling - super attractive because if we let this become a car-led recovery it will be disastrous for the environment, but also my buses, our buses, will get hopelessly mired in traffic.

I would say so far, so good. That is not to say there have not been some installations that have not worked as well as we would want. We are actively monitoring those and, in some cases, we have either taken them out of made adjustments.

Susan Hall AM (Chairman): At this point, can I make a plea, please, that if you are looking at buses, can you also look at black cabs? I know they did not feature as they should have done in the transport papers but they really should be looked at. There are people who cannot cycle or walk and are unable to get on buses, but can get in black cabs, particularly the disabled. If I can make a plea, if you are looking at how the buses are getting around, can we make sure that the black taxis can go where the buses go in order to make sure that those who are disabled are looked after by TfL?

Andy Byford (Commissioner, Transport for London): Sure. I will reinforce that to my team, but just to give you some assurance, where we, for example, have been introducing 24-hour bus lanes, the taxis can go along the bus lanes. I consider black cabs to be part of the public transport offer and there is certainly no intention to treat them in some inferior way or degrade them in terms of a mode, but I will reinforce to my team that that must be factored in in any scheme that we introduce.

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Susan Hall AM (Chairman): Absolutely. I am thrilled to hear that and I am sure the black cabbies will be very happy to hear that too. I am going to turn now to my colleague, Assembly Member Devenish, to ask the next question.

Tony Devenish AM: Thank you, Chair. Good morning, Andy.

Andy Byford (Commissioner, Transport for London): Good morning.

Tony Devenish AM: Is a return to 30% passenger volumes a realistic assumption for your projections given the current levels? What are the key risks to achieving the income in your revised budget, please?

Andy Byford (Commissioner, Transport for London): As I said in my first response, this is very much a moving feast. We do rely on modelling, we use modelling from very credible sources such as the Confederation of British Industry (CBI) and various other economic fora who give us expert advice, plus the scientists, on what they think the economic situation will be like and how that might impact upon the travelling public. We at TfL have worked on a number of scenarios in terms of what the likely recovery might be and in terms of what the impact upon ridership would be and we still think that 30% ridership is possible, but, again, we are keeping it under very close review because that ridership assumption was made before the most recent changes where we had the lockdown at 10.00pm and before we had the rule of six enforced. It is very much a dynamic, active situation that our economists and transport planners are keeping under review.

People sometimes say to me, “When do you think you will get back to full ridership?” That is a very difficult question to answer because there are so many variables. I think that 80% in two years is possible but it really is not something that you can predict with certainty. Will there be a third wave? Will there be a full lockdown imposed upon London again? We are trying to juggle a number of variables in order to come up with our predictions. But we are not completely passive to this. As I said in my earlier answer, we are doing our damnedest to make sure that the system is ready, we are ready, it is clean, enforced and socially distanced, so that we are making it as attractive as possible to future riders.

Tony Devenish AM: Thank you. I think Siân wanted to come in here.

Siân Berry AM: Thank you very much. It is really good to hear about the work you are doing with businesses and schools about retiming their journeys. That was a very successful thing that was done during the Olympics to make the most of capacity on the system.

I wanted to ask something that relates to the whole picture, really. What we know is that in outer London, traffic is up higher than it is in inner London already. We also know that if you are in outer London, if you are not on a Travelcard, there is a higher marginal cost of getting on the Tube because the rates are higher there, and we also know - as you said just now - there is a higher recovery of riders on the buses than there is on the Tube, and of course on the buses the fares are flat. Are you looking at, as well as publicity and encouraging people, putting real incentives in place for people to use the Tube maybe off-peak in outer London at a lower rate? That might possibly, if you get the rate right, bring in more revenue as well as getting people out of their cars. Are you looking at those kinds of creative ways of nudging people to use the Tube more where there is capacity off-peak and in outer London?

Andy Byford (Commissioner, Transport for London): I think the most important thing is to undertake the measures that we have taken so that we can demonstrate that you can safely ride on public transport. It is the quickest way of getting around. If you get in your car, we have already seen something like a 98% return to

Page 3 traffic levels and in some cases, in some parts of London, the traffic levels are higher than they were pre- COVID. To me that would be disastrous because we have all benefited from the increase in the air quality and to have gridlock on the streets will not help anyone.

We have launched a new app, the Go app, which, if anyone has not downloaded it, is absolutely superb. It also gives you detail on when are the busiest times, so it shows you when you can best travel in the off-peak and the less busy times both on the weekend and during the day. By keeping it clean, by keeping it a controlled environment and by making sure that we are running the maximum possible service, thereby spacing the system, I think that is the best way, rather than providing financial incentives which, to be frank, would further worsen our already desperate financial situation.

Siân Berry AM: I think not necessarily.

Andy Byford (Commissioner, Transport for London): Let us get them riding by showing them that this is, without question, a safe environment, and it remains the best, quickest and most environmentally friendly way to get around town.

Heidi Alexander (Deputy Mayor for Transport): Sorry, I just wondered whether I might add something to --

Siân Berry AM: Yes, go on.

Heidi Alexander (Deputy Mayor for Transport): -- this discussion, because actually when you look at Tube usage, it is slightly higher outside of the central area already. That is a pattern that we are seeing. The return has actually come back more quickly even on the Tube and the bus in outer London. I would question whether there is quite the need for it that you suggest around lower ticket prices when you actually break down the data on Tube usage.

I did also just want to make a point on this general issue, because I think Assembly Member Devenish asked, “What are the risks?” around having 30% ridership at the end of this year, and I think one of the risks that we have not talked about yet is if, in the discussions with Government, we do not get the money that we need to continue running normal services. That will be a risk to ridership because my sense of what has happened over the last six months is that Londoners’ tolerance for overcrowded public transport has evaporated. It has completely disappeared, and understandably so, because people want space to travel in. While, in terms of pure numbers of people using Tubes and buses, the demand is not the same as what it was in any way compared to a year ago, the demand for space on services is so much more.

It is a risk if we do not get adequate money from Government to be able to continue to run 100% of the services because that is what gives people the confidence that they will be able to socially distance on public transport. I think that is a key risk that we need to make sure we resolve, because people do need to have the confidence that they are going to have space on public transport services.

Siân Berry AM: Just to finally confirm, you have run no assessment of the potential impact on cost incentives to try to encourage people back on in times where there is space on the Tube network and trains?

Andy Byford (Commissioner, Transport for London): If people are going to travel, then I do not think necessarily a cheaper fare would be what gets them back on. I think what will get them back on is knowing that it is safe, it is clean, it is controlled. We have tossed some ideas around about how we might have a one-

Page 4 off incentive for people who maybe have not travelled yet and who may have heard lots of urban myths like, “It’s absolutely packed,” when it is not, “It is filthy”, when it is not, or, “There is hardly any service and you have to wait for ages”, when you do not.

We have looked at that. Right now it is still in the Hopper and we could still do that but obviously that comes at a cost, and as the Deputy Mayor rightly said, we need to get on - I am sure we will - to talk about the budget because the last thing that we really can afford to do is throw money at this. I would rather really get into people’s psyche that the system is clean to use and if you use it at a less busy time, you have plenty of space. It is a very pleasant environment. I used the Tube to get here myself this morning.

Siân Berry AM: Great. Just to be clear, I am not arguing that you throw money at it --

Andy Byford (Commissioner, Transport for London): Sure.

Siân Berry AM: -- I am suggesting that some price incentives might actually get more people on and potentially result in more revenue, but we probably need to move on to the next question.

Susan Hall AM (Chairman): We do.

Heidi Alexander (Deputy Mayor for Transport): Can I just say I think this is a very --

Susan Hall AM (Chairman): Briefly, Heidi, because we are coming up to budgetary things in a while.

Heidi Alexander (Deputy Mayor for Transport): OK. It is not a budget point I wanted to make; I actually wanted to make the point about travel incentives that I think it is a very difficult balance to strike when the virus spread is increasing at the moment. What you do not want to do is something that results in a wholesale or rapid return to public transport all at the same time, because what you need to do is be able to maintain social distancing on public transport. A wrongly timed incentive would be counterproductive from a public health perspective and those are the things that we will continue to consider and evaluate as we go forward.

Dr Onkar Sahota AM: Good morning. One of the issues is that of course we want to give confidence to people to travel on TfL, and I am encouraged by the cleaning regime and the disinfecting regime, but has the lack of testing being available in London had an impact on your numbers?

Andy Byford (Commissioner, Transport for London): Certainly it is a more macro point: the more testing that is done in the United Kingdom (UK) and across the city, the more we would have confidence and people would have confidence in using the system, going shopping or whatever. Certainly, I am a big fan of testing but it is not something, you will understand, that TfL can directly control.

Having said that, we have been looking into - because you will never hear me being passive, I think we should always be proactive - the possibility of providing an independent testing facility for TfL staff. It is something I would love to have. The reason that is relevant is because the other factor, going back to the very first question, that would impinge upon our ability to run maximum service is if our own employees where either having to shield or got sick themselves. I am actively pushing to see if we can have our own self-sufficiency in terms of a testing facility for TfL staff. That may or may not be possible. Certainly, to your point on the broader macro level, without question we need to increase the amount of testing across the whole country.

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Dr Onkar Sahota AM: The second thing is of course people want to go travelling in safe numbers and have social distancing, even on the Tube. With this 10.00pm lockdown in London where the pubs and bars close at 10.00pm, what impact is the sudden closure of clubs, nightclubs and other social venues having on the safety of numbers traveling on TfL after 10.00pm?

Andy Byford (Commissioner, Transport for London): We have seen some adverse impacts. We have seen sudden clusters of people heading to the Tube, local bus stop, Docklands Light Railway (DLR) or whatever it may be. It is certainly not ideal, having a sudden exodus of people all at the same time where previously they were more spread out. That is factor number one.

Factor number two is also there has definitely been evidence that people have left the pub at 10.00pm because they have to, gone straight to Tesco’s, Sainsburys or wherever, loaded up with booze and then either drunk it or headed straight onto the transport system. That is an additional challenge for us. We are on top of it. We are talking to the British Transport Police about it to help us make sure that we stagger people’s entry in and out of systems where there are real problems. We are very focused on providing that safe social distancing, but certainly that is an added complication.

Dr Onkar Sahota AM: I know that there are perverse incentives working on TfL, but I will come on to this. I was recently asked this very question on a radio station and I recognise the impact this is having on the safety of numbers travelling when such perverse incentives are at work on TfL. Thank you very much.

Susan Hall AM (Chairman): Thank you. Maybe we could look at other countries because there are many countries that have that 10.00pm deadline, it is not just us and certainly not just London. Let us go back to Assembly Member Devenish for the rest of the questions, thank you.

Tony Devenish AM: Thank you, Chair, and thank you, Andy, for your comment particularly on potentially having your own test facility. I hope you are looking at doing that with other Greater London Authority (GLA) family organisations, including the Metropolitan Police Service (MPS).

My question, though, is: your revenue assumptions, I believe, are based on local lockdowns at the moment but of course as the number of cases are rising, have you considered a second national lockdown and how that would impact your finances?

Andy Byford (Commissioner, Transport for London): Just very quickly on the first point, I was on a call the other day and the Commissioner of the Metropolitan Police was on the call where I made reference to having our own facility, and she immediately said, “I would like to be part of that discussion too”. We are on the case, Assembly Member. We are looking into that.

Caroline Pidgeon MBE AM: Great minds, yes.

Andy Byford (Commissioner, Transport for London): We have modelled a second lockdown. Effectively we are almost in that, not quite, but we have looked at what the impact of a second lockdown would be across London and also we have modelled what the impact would be of local lockdowns in clusters around the city, and we have plans to address those. We would have to make operational plans to selectively, potentially, close Tube stations or take other operational measures, but certainly that would add to our financial woes were that to happen again. We are beginning to see - or we were beginning to see - that steady increase in ridership and that has aided our bottom line, but certainly a sudden reintroduction of a blanket lockdown or local lockdowns would further add to our financial problems.

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Tony Devenish AM: Now I am turning to give the next question to what was Simon [Kilonback, CFO, TfL] but is now Tony King. Tony, welcome, to my namesake. My question to you, please, sir, is a bit more detail on what the Commissioner has just said. With cases sadly on the rise, and the Government and indeed the Mayor advising to get back to working from home if you can, how robust are your predictions and the plan, in your view? Indeed at the [London Assembly] Plenary last month your colleague, Simon, explained that you had predicted the second wave to be in the winter, and obviously now we are not actually in the winter quite yet, we are still in the autumn, although today it feels a bit like winter. How does your model react to that, please?

Tony King (Group Finance Director, Transport for London): As part of our revised budget, as Andy [Byford] indicated, we looked at a number of scenarios around revenue modelling. The base case of what we included into our revised budget was based on reopening quickly and then a second spike, and the modelling of that second spike is in the winter period for 2021, so we have a period of about eight weeks of reducing down ridership to a similar level to the April/May [2020] time period. That is factored into our revised budget. Obviously, what we are seeing at the moment is that happening a little bit quicker, a little bit earlier, and that may have an impact on our finances in period 8 and 9, quicker than we had anticipated, but we have certainly looked to be conservative in our modelling in the revised budget to include a second spike and that is factored into the revised budget as published and approved on 29 July [2020].

Tony Devenish AM: Thank you, Tony. Schools have now reopened. What impact has this had on your passenger income and is this in line with your revised budget assumptions as well, please?

Andy Byford (Commissioner, Transport for London): Just a comment on schools, first of all. I think we have done a pretty good job on schools, actually. It is always a challenge in September because you get a sudden rise of schoolkids coming in, but we have taken steps to provide special school buses and that has proved to be very successful. I would just like to make a big shout out, firstly to the schoolkids for getting on the right buses but also to Londoners for getting on the alternately run buses. That has meant that we have moved the masses and we have not left people behind.

In terms of the impact of the school return, we have seen an increase in the number of journeys being made on the buses and on the Tube in the first week when schools returned, but as a result of the fact that we have had this real push on staggering school starts and, if you can, walking, cycling or scooting and not using the bus if possible, we have seen Zip card usage drop by 30% from last year. That does show that certainly while the weather has been OK the capacity matches the demand, and that was the key challenge. We did not want to leave schoolkids behind. Passenger numbers have remained stable since schools have returned. Tube journeys, as I have said earlier, are around 35% and bus journeys 60% of normal. But we do recognise that as the weather gets colder and as the nights get darker we will need to keep a very close eye on this because I suspect that some of those schoolchildren who have been using alternate modes will want to ride the buses again, so that means we have to make sure that we get that supply/demand relationship 100% correct.

Tony Devenish AM: Thank you. Is the key driver behind the decision to suspend free travel, which of course was agreed between the Government and TfL on social distancing for under-18s, less of a concern now in the light of TfL’s promotion of active travel for children and its approach to bus provision for schoolchildren? Andy?

Andy Byford (Commissioner, Transport for London): Sure. As I mentioned earlier, we have already seen the Zip card usage drop by 30% so I would argue that we have already had the desired effect on supply and demand management in terms of making sure that we can carry the numbers of schoolchildren that we know

Page 7 we have to. Having said that, the condition that was placed on TfL in the first half of the year (H1) funding round, which was to scrap free travel for under-18s, that does still remain on the table. For transparency, that is still the Government’s desire.

We are absolutely cooperating with Government, as we are bound to do, in terms of giving them information about how that would be done, but a) it cannot now be done until certainly the spring of next year because there is so much that you need to get right in terms of consultation, equality assessments and so on, and b) we still maintain that doing what we have done in terms of demand management is the real goal here. If ultimately the goal was always about providing extra capacity, then I think that what we have already done has been spectacularly successful because we have seen the Zip card’s usage go down by 30%. Removal of the under-18 concession, we believe, would only suppress demand by up to 5% or 6%, and at the moment, from a purely logistical perspective, we do not need to do that. Having said that, that is still a requirement on us, we are still working with Government and we are waiting for responses back from them on that point.

Tony Devenish AM: Thank you.

Heidi Alexander (Deputy Mayor for Transport): Sorry, Chair, I just wondered whether I might make a very brief comment on this. It is my view that the Government have never been clear about what the key driver for this condition was. Initially --

Tony Devenish AM: [The Rt. Hon] Grant Shapps [MP, Secretary of State for Transport] wrote to you, Heidi.

Heidi Alexander (Deputy Mayor for Transport): Sorry?

Tony Devenish AM: I thought Grant Shapps wrote to you on this. It is about social distancing, is it not? It is that simple.

Heidi Alexander (Deputy Mayor for Transport): If you actually look at what Ministers have said on the floor of the House of Commons, they have talked about equalising concessionary fares across the country and indeed that is what has been said to me in repeated meetings over the last couple of months. They have also talked about raising revenue. Those are comments that have been made by Conservative Ministers in the House of Commons and so I think we need to get to a point where there is a bit of honesty here from Government about why they really want this to happen. Andy [Byford] has set out the impact of the travel demand work that we have been doing and the fact that we have seen a 30% reduction in Zip card usage. I think we have made quite a lot of progress in encouraging more children to walk and cycle to school. If the Government are still intent upon pursuing this, then I think it becomes pretty transparent that it is more about equalising concessionary fares across the country and raising revenue.

Susan Hall AM (Chairman): Right, let us go back to TfL’s budget, if we may. Do you want to continue?

Tony Devenish AM: Yes. Thank you, Chair. I will just ask my final question and then I will hand it back to you. Has any analysis been conducted on the take-up capacity of the extra 200 school buses you started running in early September and what does it show, please, Andy?

Andy Byford (Commissioner, Transport for London): The buses are being well used. We run some of them as hot standbys but the majority are being used anyway to provide the additional capacity that we knew that we would need and which has been very successful, because we are being careful to monitor if we are leaving anyone behind. Obviously, we do not want to do that. The buses have been assigned to those routes

Page 8 where they were needed, we have run alternate school specials and regular buses, and on certain routes we have deployed those additional 200 buses to provide the capacity. So far, so good. As I said, it is a bit of a moving feast because we want to be very careful that when the nights draw in and it gets colder, or the weather deteriorates and it rains a lot, that we do not suddenly get overwhelmed.

We have spotters out there on the system. We have deployed furloughed staff, in some cases. We have asked colleagues to go out to literally stand at bus stops and give us live intel on if we are coping. We ask the drivers to report back. I myself went to Canada Water, if I remember rightly - North Greenwich as well; I have been to both - to watch how the system is going, and so far, so good.

Tony Devenish AM: Thank you, Chair, hand back to you.

Susan Hall AM (Chairman): Thank you. Assembly Member Moore.

Dr Alison Moore AM: You said that the Zip card use was down by 30%. Do we know how many Zip cards are being used on the school buses versus buses available to other passengers? I wonder if you could confirm whether, if the Zip card were to be removed, children would be paying on those school buses.

Andy Byford (Commissioner, Transport for London): I would have to check on the exact number but certainly people are using Zip cards on the buses. Some undoubtedly would pay, there is no question - maybe because their parents are better able to pay, maybe also their parents would just not want the children to find some alternate means of getting there - but my fear would be that some parents may not be able to pay the fare and that the child would be forced to find other means. I feel a real concern about that, actually. Having said that, there are safeguards and in the discussions that we have had with Government around the potential removal of under-18s there would still be safeguards in terms of distance and equity. That is one of the reasons it is a very complex thing to do and that is why it is taking so long.

Dr Alison Moore AM: One of the eligibility criteria, as I understand it, is not eligibility for free school meals, so in a sense that --

Andy Byford (Commissioner, Transport for London): Sure. There are safeguards, you are absolutely right.

Dr Alison Moore AM: That socioeconomic issue is a real concern.

Andy Byford (Commissioner, Transport for London): Absolutely, and rightly so.

Dr Alison Moore AM: Yes.

Susan Hall AM (Chairman): OK, we will go on to Assembly Member Pidgeon.

Caroline Pidgeon MBE AM: I want to pick up to try to understand the financial issues around this idea of removing travel for under-18s. The Deputy Mayor [Heidi Alexander] has already touched on it but I am wondering what assessment TfL has done on potential income gains from suspending free travel and perhaps where that is in your revised budget, and whether you agree with the figures that London Councils have pulled together. They have done some extensive modelling - I do not know if you have been part of that - and they estimate it will cost the boroughs £27 million a year just to implement this removal of free travel, and it is going to cost parents an additional £83 million a year, which is staggering. I am wondering whether that has

Page 9 been factored in and whether, as officers, you want to comment on that, and Heidi [Alexander], from your discussions from Government. It seems to me that if there is no capacity issue, this is about money. It is also about politics, I am afraid, in all of this.

Andy Byford (Commissioner, Transport for London): I will let the Deputy Mayor deal with the politics - I am just a public servant - but there are two elements here: there is cost and there is revenue.

There is definitely a cost to implementing the change to the under-18 provision and that is the cost of changing systems and the cost of replacing photocards, which by the way we think will run into the millions. I cannot give you an exact figure but it is no small undertaking. It is a huge administrative exercise. There are potentially additional costs associated with supporting customers as well, so there is definitely cost to this.

Conversely, then, you look at what the revenue generation might be because you always have to look at both sides of the equation. It is actually very difficult to say what the revenue impact will be until we are absolutely crystal clear on what we are being asked to do. Because of the complexity of this the debate has moved backwards and forwards, the date has moved backwards and forwards, and the actual exclusions - or inclusions, if you look at it the other way - keep changing. Which exemptions are we talking about? Children age 10 and under, children aged 11 to 17 who live more than 2 miles away, kids with social workers as well as education, health and care plans? There are a lot of exemptions. Plus, we have this success in suppressing demand but then again, the weather might change. It is very difficult to model what the revenue impact will be.

To a certain extent, Assembly Member, I am looking at this not through a political lens because that is not my place as a public servant, I am taking it at face value that this is about providing additional capacity for social distancing purposes, and I would argue we do not need to do it because we have already succeeded in providing the social distancing because of the demand management that we have applied. If there is ultimately a political objective, that is for others to comment upon.

Caroline Pidgeon MBE AM: Tony, do you have any figures for what you have budgeted for in terms of an assessment of this?

Tony King (Group Finance Director, Transport for London): In terms of our revised budget, there is no additional revenue in there for the under-18s for the reasons that Andy indicated, that trying to assess what that would be with so many variables is not possible at this point in time.

Caroline Pidgeon MBE AM: Deputy Mayor, do you want to comment on the points I made earlier? Also, picking up the Commissioner’s point, it may not even come in until next spring now.

Heidi Alexander (Deputy Mayor for Transport): Over the last couple of months we have had so many conversations with Government about what it is that they want to achieve, and they have said to us that they would want to see free travel retained for primary school aged children and for there to be exemptions for children that live more than 2 miles away from their place of education between the ages of 12 and 18, and then the other exemptions that Andy referred to when he talked through the list. It is very slowly becoming clear what the Government actually want to do.

Repeatedly, though, it has been said to me that we cannot have a situation where children in London get one thing and children in Barnsley get something else, and so it is my view that this is about equalising concessionary fares across the whole of the country. It is my view that this is, in essence, about levelling down.

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Government talk about levelling up but this is levelling down to the lowest common denominator. The other point I would make is that in London we are a lot more heavily dependent upon the public transport system than elsewhere in the country. Our levels of car ownership are lower than even other big conurbations. The importance of the public transport system for children and young people getting to school and getting around to do other things is absolutely critical. We are still making these points to Government, “Be honest what you are trying to do here and why you are trying to do it”.

There is still a lot of detail that needs to be worked through and I think the key issue is around who determines eligibility for free school travel because in London, because there has been an all-encompassing arrangement for free travel for children and young people in the last 20 years, local authorities do not have the systems in place to determine who is eligible and who is not. That is partly to do with the distance criteria but it is also partly to do with saying whether a child has a safe walking route to school or not.

Caroline Pidgeon MBE AM: Define “safe”, yes.

Heidi Alexander (Deputy Mayor for Transport): There is a huge number of issues that still need to be worked through.

Caroline Pidgeon MBE AM: Lovely. Thank you for that. If I can while I just have the floor, the other side of fares in terms of Congestion Charge. I know you brought in a reimbursement scheme for people working in National Health Service (NHS) Trust Charities and others doing coronavirus roles. Can you give us figures on how many people have qualified for that reimbursement and what the figures are around that?

Andy Byford (Commissioner, Transport for London): Unless, Heidi, you have it, I would have to come back to you on that, if I may.

Caroline Pidgeon MBE AM: That is fine, I am happy for you to write.

Andy Byford (Commissioner, Transport for London): We will write to you on that.

Caroline Pidgeon MBE AM: It is just a figure that I am quite keen to understand, the numbers there. Thank you.

Susan Hall AM (Chairman): OK. Assembly Member Sahota.

Dr Onkar Sahota AM: Thank you, Chair. Deputy Mayor, is the Government aware that 60% of children captured by this policy of taking away free travel are from black and minority ethnic (BAME) communities? 60% are from the BAME community. Has the Government published its inequalities assessment on the impact of this policy and how this will impact on those very people who are already suffering and have suffered under COVID-19, but also are at the lower end of the socioeconomic structures of society and whose families will now have to pay the extra cost of travel? First, is the Government aware that BAME communities are affected disproportionately, and have we had any assessment of the equality impact of this policy?

Heidi Alexander (Deputy Mayor for Transport): The Government is aware because the Mayor of London wrote to the Secretary of State [for Transport] and set out the fact that nearly 60% of children and young people under the age of 18 in London are from a BAME background and I have made that point verbally in the meetings that I have attended as well. I know there has been some incredible campaigning done by organisations like the Child Poverty Action Group, and a number of colleges as well have come out and said,

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“We are really concerned about this”. The Government should be aware because they have been told what the impact will be on some of the poorest people in London.

They have not yet published their equality impact assessment. As I think you probably will have deduced from the comments from myself and Andy [Byford] today, we still do not have clarity on exactly what the scheme is that the Government want to implement, and until such time as you have clarity on what your proposal is, it is hard to do a fully-fledged equality impact assessment. Before any decisions are taken about this, I know that the Mayor would want to see a very robust piece of work being done on that. It is certainly an issue that we have brought to the Government’s attention on multiple occasions.

Dr Onkar Sahota AM: Thank you.

Susan Hall AM (Chairman): We are now going to our second section, emergency Government funding, and these questions are being taken by Assembly Member Moore.

Dr Alison Moore AM: Thank you very much, Chair. There is quite a set. We are very much on budget here.

To all of you, the revised budget identifies a funding gap of over £1.8 billion in the second half of 2021. That is needed to keep TfL operating. How much of this have you secured in your negotiation with the Mayor, which was said to be needed to finish yesterday?

Andy Byford (Commissioner, Transport for London): It is a very timely question, Assembly Member, because we are right on deadline, as you have just indicated. The simple answer is: nothing, as yet. We are still awaiting a letter from the Department for Transport (DfT), which we are told is imminent and we have been waiting for for the past few days, which will set out both the quantum and the conditions of the H2 settlement, H2 being the second half of the year. We are seeking £2 billion for the second half of the year and £2.9 billion for the 2020/21 year.

Let us deal with H2 first. We have made it very clear that we really need to be talking right now. I am very pleased to say the one positive note was that I accompanied the Mayor to go see the Secretary of State for Transport, [The Rt. Hon] Grant Shapps MP, on 23 September [2020], and the good news is the Secretary of State made a very clear statement. He said, “We will be funding TfL”. There is assurance that the money will be forthcoming but what we still do not know is the quantum or the conditions.

My plea still to DfT is: we are right on the wire. We have said - yesterday we had the Finance Committee - we really need to be talking turkey now. We have to be getting into those hardnosed negotiations. We are not expecting a blank cheque, I accept that there will be conditions, but the sooner we get talking about the conditions the sooner we can come to an amicable or agreeable settlement. It might not be amicable but an agreeable settlement. I need sight of what those conditions are, even if they are difficult - that is the purpose of negotiation - but as of right now, we still have not received the letter. We are right at the point where this is really serious because we are not far off the point at which we would need to, from a fiduciary perspective, say we cannot now in good conscience -- and these are legal obligations upon my colleague, the CFO, Simon Kilonback. This is not a game. We have to be able to confirm that we are a going concern and we are right on deadline for that.

Again, back to my earlier point, we are not passive to this. We have been taking cost out of the organisation and Simon [Kilonback] and I have put very, very tight controls on spend so that we are stemming the haemorrhage, but ultimately we have to get this letter and we are pressing for it right now.

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Dr Alison Moore AM: As a local councillor I am very much aware of that fiduciary duty, and in a sense, you are back where you were in May [2020], unfortunately. What options have you considered if you do not get the full level of funding? What would the implications be of that?

Andy Byford (Commissioner, Transport for London): We are pretty clear that we need the full amount of funding. It is not a number that we have just plucked out of the air, there is science behind it. We have worked out, back to the earlier discussion we were having, the impact of COVID, we know what the cost of our operations will be and we have factored in the various belt-tightening that we have done. We are very confident in that £2 billion figure.

The doomsday scenario is if we do not get the money we will absolutely have to invoke Section 114 [of the Local Government Finance Act 1988], which is the place that no transit professional wants to go, which is to absolutely shut down services to the point where you only run what you are statutorily obliged to do: the Woolwich ferry, certain bus routes and a number of other very minor services. We just do not want to go there. I do not believe that we will. The Secretary of State, again, to reiterate, made it very clear that funding would be forthcoming. My plea is: give us enough time to have proper negotiation. Let us not leave it to the very last minute. The bad news is we are almost at the last minute.

Dr Alison Moore AM: Absolutely. I appreciate that these are uncertain times but just trying to understand where you are financially, from April to July 2020, the time between the emergency budget and your revised budget, the funding gap increased by 23% from £1.3 billion to £1.6 billion, with £0.4 billion being rephased between H1 and H2. I wondered if we can expect the same degree of variability over the next six months, or do you now have a stronger handle?

Andy Byford (Commissioner, Transport for London): That variability is still a factor because of the uncertainties that we were talking about in response to the earlier question. The fact is that we have made certain assumptions around social distancing and there are assumptions around what the impact of COVID might be. Are we going to have a lockdown? Are we not going to have a lockdown? We could see passenger income vary within a range of anywhere from plus £500 million to minus £235 million. That is certainly not an ideal position to be in. I am running a £10 billion organisation. To not know with days to go, really, what your budget is, is suboptimal to say the least.

Dr Alison Moore AM: That is putting it very subtly.

Andy Byford (Commissioner, Transport for London): British understatement. It is an awful situation to be in. Because there is already uncertainty because of COVID, I really do not need the further uncertainty of literally not knowing what we are going to get and what the conditions are. I need that letter. One of the things Simon [Kilonback] is doing in his absence today, I said to him, “Please, while I am in front of the Chamber, press DfT and get me that letter”. Even if I do not like the content, at least we get the negotiations started.

Dr Alison Moore AM: Of course. I have a question that is on that borderline between political and not, so whichever of you it is most appropriate for. What impact has the loss of that £700 million operating grant that was removed by the former Mayor and now Prime Minister, Boris Johnson [MP], had on TfL’s finances?

Andy Byford (Commissioner, Transport for London): The Deputy Mayor may wish to comment as well but let me give you my kind of global perspective because, as you know, I have followed an international

Page 13 career. It is very, very unusual for a capital city or a very large city’s transport organisation to not receive Government grant but it is to the credit of my predecessor, Mike Brown, that this organisation, TfL, took £1 billion off its cost base over four years. That is quite remarkable, actually, to the point that we almost got to breakeven. In fact, we were on track to make a small surplus. Again, the only comparator I can think of is Hong Kong, with a very different operating model. That is remarkable.

Had it not been for COVID we would have reached that breakeven situation, but what COVID exposed was the inherent vulnerability and riskiness of a 72% fare box recovery model. In other words, 72% of our income comes through the fare box. Contrast that to where I used to work not that long ago, New York City Transit, Metropolitan Transit Authority [MTA], which has a 38% reliance on the fare box. Madrid is 49%. The norm is around 30% or 40%. Because we do not have that Government grant, we are dangerously exposed at 72%. My big push, after we have done the H2 settlement, is to sit down with Government. I want to do this. We need to get to a situation where we have, ideally, a five-year funding settlement that gives us affordable, predictable, sufficient, sustainable funding income from a much wider base.

Dr Alison Moore AM: Yes, given the importance of London’s transport network to London’s economy and also because London is so important in the UK’s economy.

Andy Byford (Commissioner, Transport for London): Absolutely.

Dr Alison Moore AM: You will be exploring those longer-term funding solutions. One of those, and I --

Heidi Alexander (Deputy Mayor for Transport): Could I add something here? Sorry.

Dr Alison Moore AM: Of course.

Heidi Alexander (Deputy Mayor for Transport): It is quite difficult to interject when you are not in the room, but I did just want to make one or two comments in relation to the questions that Assembly Member Moore has been putting.

I do think that the impact of withdrawing the operating grant for TfL has been felt over the last few years. If Assembly Members think about our approach to the bus network, last year we reduced frequency and withdrew some services that operate through central London, and we did that in order to be able to invest more in outer London services where we knew that demand was increasing. Now, if we want to get people out of their cars and onto public transport, we need to give them good, reliable services in the areas where they live. We could have done more of that had the operating grant not been withdrawn, and so I think in terms of people’s experience of the public transport network, there are things that we could have done that we have not been able to do because that money has not been there. We were looking at a programme of investing in the Jubilee line fleet and the Northern line fleet, and that has not been possible. We have not been able to do some of the capital investments that we would have liked to have done as well.

The one thing I would just say, to echo what Andy [Byford] has been talking about with respect to the importance of getting to the business end of the discussions around H2 funding, is that we do run the risk of this becoming less of a negotiation and more of an exchange of information that then just results in an imposition from Government of a whole series of conditions. I want to avoid that because I think we can have a grownup conversation to try to get the best outcome for London, but to call these “negotiations” at the moment -- I can say this, perhaps Andy cannot say it and would not want to say it in quite the same way as I do, but Government here are the ones with the deeper pockets. Our fare income has been decimated as a

Page 14 result of COVID. We need Government to stand behind us and we need to get clarity on how much money the organisation is going to have for the next six months very, very quickly.

My fear is also that we will only get a six-month deal, not an 18-month deal, and Andy is right when he talks about running an organisation of £10 billion. The idea that you only have sight of the money that you have coming in for the next six months is not good enough when you need to be placing very significant contracts, planning investments, and this does have a direct knock-on impact to the health of the UK economy. I would just mention one quick example.

Susan Hall AM (Chairman): If you could be quick, please.

Heidi Alexander (Deputy Mayor for Transport): At the moment we are not able to let new bus contracts so we are extending bus contracts, which means the bus operators are not able to place orders for new buses. The companies that supply our new buses in London, based in places like Falkirk and Guildford, are coming to us and saying, “We need certainty over what the bus network is going to look like in London”. I cannot give them that certainty at the moment because I do not have any clarity on what funding we are going to be getting from Government. These discussions are now urgent and they need to be resolved, not just for the health of London but for the health of the British economy.

Dr Alison Moore AM: It is having a direct impact on the economy elsewhere, not just in London.

Heidi Alexander (Deputy Mayor for Transport): Exactly.

Dr Alison Moore AM: Coming back to one of the potential routes going forward, London’s share of Vehicle Excise Duty (VED) is collected and retained nationally, with the excise duty ringfenced for road maintenance outside London. Allocating London its share would give the city around £500 million extra per annum. The Assembly recently passed a motion supporting devolving London’s share of VED to the GLA. What conversations have you had with Government about that issue? Members of the public may not be aware but part of TfL’s role is funding some of the highways works on TfL roads in London and yet the VED is going elsewhere.

Andy Byford (Commissioner, Transport for London): My personal view - and professional view, for that matter, in the job that I hold - is that it is inherently unfair that Londoners pay VED and yet they do not see the benefits of any of it, it all goes into the general Government coffers and presumably gets spent elsewhere. We have made that point to Government. It was made as recently as two weeks ago in a meeting that I had with Government. We will continue to press that point. Again, I will be interested to see, when we do get the letter to which I keep referring, if that is reflected in the letter, but certainly we are very alive to the fact that that is an anomaly for London, it does not seem fair to me and it would provide a very obvious source of income.

Dr Alison Moore AM: Absolutely, and a common-sense one as well. You touched a little on this earlier but I just want to ask the question and see if there is anything else that needs to be added. Next year, 2021/22, you expect passenger volumes potentially to stabilise at 80%. Just run by us again the assumptions that figure is based on. Balancing it again, how is that consistent with asking for a further £2.9 billion of Government funding?

Tony King (Group Finance Director, Transport for London): Maybe if I take that one. Obviously, I spoke earlier about the modelling that we have been doing, looking at five different scenarios, picking a base

Page 15 case. Again, these are really uncertain predictions and we are looking at information from DfT, the Office for Budget Responsibility (OBR), the Bank of England and Public Health England, trying to pull together a picture and therefore scenarios for the rest of this year but also into 2021/22. The further out that we look, the more uncertain it is.

The approach that we are trying to take in the negotiations with Government is to retain some flexibility in there. If you look at the H1 funding deal, it was a base of £1.6 billion with some contingency of £0.3 billion, and I think we would certainty look into 2021/22 to retain a level of contingency around the revenues and passenger income. As well, the second thing is this year’s Business Plan is likely to be more of a flexible scenario-based plan than a point plan just because of the level of uncertainty that we have. We will focus very strongly on our costs for this year and into 2021/22, and then build a flexible model so that we can then run some scenarios around our funding, either from passenger income or Government grant, to allow us to continue to be fiscally responsible and balance our budget, which is one of our legal obligations.

Dr Alison Moore AM: And a huge challenge. There is only a modest increase in your projections for business rate retention. How confident are you that you will be receiving the almost £900 million this year, given the economic situation?

Tony King (Group Finance Director, Transport for London): The Mayor’s budget guidance has come out this year reasonably confident. Into next year there are a number of scenarios in the budget guidance. We are looking at scenario 3 that we think best reflects and we incorporated that into the revised budget for next year. We are in constant conversation with the GLA finance team. We talk to them periodically about our results and we will keep very much in close contact with them around the business rates reserve (BRR) and how that may unwind as we come to finalise the GLA budget submission for November.

Dr Alison Moore AM: Then finally, if I may, Chairman, one of those challenging areas: in 2019/20 you had £117 million income in revenue grants and this was projected to be down by £17 million this year even before COVID.

What were you doing last year to generate the additional £100 million in revenue and have you explored options to maintain this level of contribution?

Tony King (Group Finance Director, Transport for London): Last year there was a number of one-off revenue grants that were awarded to us in terms of vehicle scrappage, air quality schemes and enhanced taxi delicensing schemes. We also had last year the last of the London Overground - about £27 million - grant for 2019/20. Those items were either one-off or coming to an end and that is why you see the reduction in our numbers this year in terms of that line of revenue grant.

Dr Alison Moore AM: All right. As you go forward, there will be occasions in the future, but in a sense, it was not an inflated but an unusual coalition of things?

Tony King (Group Finance Director, Transport for London): Last year was unusual for two reasons: one, the ad hoc but, also, the ending of the London Overground grant.

Dr Alison Moore AM: Presumably if you have greater certainty in your funding going forward, you are able to also think about those projects that you might be drawing external funding for?

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Andy Byford (Commissioner, Transport for London): Budget certainty allows you to place contracts with confidence. I would argue it enables you to leverage better deals from suppliers. If you have uncertainties, in my experience, suppliers factor in additional costs for uncertainty because they have to protect themselves and they are not sure if you are suddenly going to pull the plug.

I want to change that dynamic. I want to get to a point where we have a five-year deal and we know what we have and then go really hard with suppliers to leverage the best deal for the taxpayer. You are only able to do that if you have the confidence that you know exactly what you have to play with.

Dr Alison Moore AM: It is about good project management and I am sure we will come back to that later.

Andy Byford (Commissioner, Transport for London): Absolutely.

Dr Alison Moore AM: Thank you, Chairman. I am finished with questions. Thank you.

Susan Hall AM (Chairman): Thank you very much. Assembly Member Pidgeon, did you want to come in?

Caroline Pidgeon MBE AM: I would like to pick up some of the discussion. I am not sure whether the Deputy Mayor or the Commissioner would want to answer this. We were talking about the certainty and the funding going forward. Back in June [2020] it was announced that the Government had approved £3.5 billion of additional expenditure for the rail services across the country. We saw in the last couple of weeks the UK Government saying that it is ending rail franchising with a multibillion-pound rescue deal to keep those private train operating companies (TOCs) going for the next 18 months. They are going to be getting at least £500 million a month. It has been £700 million.

When you compare that to the numbers that we carry in London across the transport network, do you feel that TfL is being treated differently to the rest of the country’s rail network? It should be treated the same because it is vital we keep the trains, buses and Tubes running across the country.

Andy Byford (Commissioner, Transport for London): I am sure the Deputy Mayor will want to comment as well. I am not privy to absolutely all the detail, Assembly Member, that the Government has incorporated into the letting of the emergency contracts with TOCs. Some of that is commercially sensitive. We have not been made privy to all of the detail.

However, I get your point. At face value, it does not seem fair. Rest assured I have made that point. I have said that I am not expecting a blank cheque. I do expect there to be some conditions. That does not seem unreasonable, but I have made the point that there does seem to be a two-tier approach to this. Equally, we have made the point that if London’s transport system works well, which it has to, it is the engine that drives the economic engine that is London. The ripple effect of an efficient and a rapidly recovering city will be felt across the whole country. To me, yes, I get the point about levelling up, but it is simplistic to suggest that London has had its share and it is now time to focus on everywhere else. We have to do both. We must come up with a fair deal for London and we must keep this transport system operating.

There are two worst things that we could do and, again, we are making this point really robustly to the DfT. As our number one, do not even countenance mass service cuts. It is a slippery slope. You might do it quickly but you regret it at leisure and it takes a long time to get the service levels back. As our number two, whatever you do, do not impose a budget upon us that forces us to cut core investment in state of good repair, in other

Page 17 words the existing system. If you let it decline, you are impacting potentially safety but you are definitely impacting reliability and it takes a long time to recover from that.

We have made all of these points and I have deliberately contrasted that with what, at face value, to your point, seems to be an inequitable situation as a compared to the TOCs. Maybe the Deputy Mayor would like to add to that.

Heidi Alexander (Deputy Mayor for Transport): Yes, I do feel that TfL has been seen as a problem to be dealt with as opposed to a partner in economic recovery and a partner in tackling the pandemic. We have done everything that the Government has asked of us. We returned our services to normal levels more quickly than the TOCs. The Government moved quickly to support the TOCs and kept TfL waiting for the best part of two months before giving us emergency funding back in May [2020]. There were many conditions attached to the TfL funding that do not appear to have been attached to the TOC deals in the same way.

Also, if you look at the numbers of people and journeys that have been facilitated on the TfL network, the taxpayer has had good bang for its buck compared to the number of journeys and passengers that will have been facilitated by the Government’s support to the TOCs.

That goes back to the point that I have made previously about the extent to which life in London is so dependent upon the public transport network. Even in the height of the pandemic, 15% of normal bus ridership was happening and that was because the people who were stocking the shelves in our supermarkets, the nurses who were going to care for people in hospital and the teachers that kept schools open for children of key workers rely on our buses and our Tubes to get to work. We have enabled that to continue through the pandemic. I hope in this next funding settlement that we get, there is consideration given to the really important role that TfL has played and will continue to play in ensuring that the city and the country get through this.

Caroline Pidgeon MBE AM: Thank you very much.

Susan Hall AM (Chairman): OK. Thanks very much. Mr Byford, you said conditions are certainly not unreasonable. No, they are not, not when you are looking for billions of pounds from the Government. After all, it is taxpayers’ money.

You talked about negotiations. Have you or the Government set out or established any red lines as part of the negotiations in terms of options to be considered or not?

Andy Byford (Commissioner, Transport for London): First off, I agree with you around taxpayers’ pounds. I have always believed in my life that it is not our money. It is taxpayers’ money.

Susan Hall AM (Chairman): That is right.

Andy Byford (Commissioner, Transport for London): I am crystal clear on that.

Susan Hall AM (Chairman): Good.

Andy Byford (Commissioner, Transport for London): That is why I said earlier I am not expecting a blank cheque. I do recognise that the country itself has real problems and that the Government itself has tough choices to make. I do accept that.

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For me, two of the red lines would be really the items I just mentioned. It has been proven time and time again. Mass cuts to service and mass cutting back on core infrastructure and state of good repair for me would be two examples of red lines. The reason they would be red lines is, firstly, on the former, you would at a stroke drive a cart and horses, if you like, through the need to provide service, to maintain social distancing and to make it an attractive proposition for riders to come back to public transit.

On the latter, core investment in infrastructure, the example I always cite is the Washington Metropolitan Area Transport Authority (WMATA), a nice modern system at face value, built in 1976. It is falling apart and it is not that old. They have shut down swathes of it for safety reasons while they repair it. To me, that would be a red line. It would be madness to cut back on core investment.

There are other factors that we share with the Government but you will appreciate that some of these are somewhat sensitive because we are in negotiation or we want to get into negotiation. My job is to get the best possible deal for TfL to the benefit of Londoners and that is what I intend to do.

Susan Hall AM (Chairman): Good. OK. Can you confirm to me how much you are sitting on in reserves?

Andy Byford (Commissioner, Transport for London): We maintain two months’ worth of reserves, which is £1.2 billion.

Susan Hall AM (Chairman): You are sitting on £1.2 billion?

Tony King (Group Finance Director, Transport for London): Currently, at the end of period 5, that was about £1.5 billion, but we have, as Andy was saying, a minimum cash of £1.2 billion. What the H1 funding deal with the Government was predicated on is gradually throughout the period reducing down by the end of period 7 to being at all very close to the £1.2 billion.

Susan Hall AM (Chairman): OK, which is a hefty sum of money and I have been told used for rainy days. I would suggest that it is pouring at the moment, but I will leave that particular discussion. We have discussed income --

Heidi Alexander (Deputy Mayor for Transport): Sorry, Chairman. It is really important to make the point about that £1.2 billion figure that effectively it is already spent. This is about two months’ worth of paying our staff, our suppliers and our lenders --

Susan Hall AM (Chairman): No, I know that. Thank you. I know that. I just --

Heidi Alexander (Deputy Mayor for Transport): -- and so it should not be treated flippantly.

Susan Hall AM (Chairman): I would not treat £1.2 billion flippantly at all, I can assure you. Going back to what I was saying, we have discussed income generation with the other functional bodies we have met. What are the projections in this respect for TfL?

Andy Byford (Commissioner, Transport for London): By income projections, just for clarity, do you mean in the H2 submission?

Susan Hall AM (Chairman): When you get income from other areas, advertising as an example.

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Andy Byford (Commissioner, Transport for London): Advertising has collapsed to a large extent.

Susan Hall AM (Chairman): That was an example. Your 2019/20 statement of council is £154 million of income from media, which, as I say, I suspect is just the advertising revenue. Is there any other revenue stream or anything else you can tell us about?

Tony King (Group Finance Director, Transport for London): We do have as part of our commercial development rental incomes, both commercial and residential. As you can imagine, a lot of the commercial income is sitting with small and medium enterprises (SMEs) that have struggled greatly in the first six months of the pandemic. We have worked closely with them. We have talked to some of our peer organisations such as Network Rail on how they treated some of the SMEs and the rental income from those SMEs. We followed in alignment with them for the first three periods of the pandemic with some rent-free periods for them. We are gradually on an escalation with them as the recovery starts to give them a gradually escalating rental charge that will allow them to stay in business as small businesses and also to start picking up and generating the revenue that we need in our current situation. That commercial income is another component, but in the scale of the passenger income relatively small.

In terms of the media income, the media income has been hit tremendously. A lack of passengers on our networks means much lower footfall and much less appeal for the advertising companies, both for advertising on the Tube but also for the bus shelter contracts as well. There are significant reductions in both of those areas.

Susan Hall AM (Chairman): OK. Do you have any figures that you can share?

Tony King (Group Finance Director, Transport for London): I can come back with the figures around both of those --

Susan Hall AM (Chairman): Would you send them to us? That would be really --

Tony King (Group Finance Director, Transport for London): -- in terms of our prediction for our revised budget, both on media and on rentals.

Andy Byford (Commissioner, Transport for London): Sure, I will get you the up-to-date figures. That is one of the problems of this coronavirus: it impacts everything. We will get you the figures that you have asked for.

Susan Hall AM (Chairman): That is very interesting. Thank you. I did see a hand up from Assembly Member Devenish. Did you want to come in at this or --

Tony Devenish AM: Very briefly if I could, Chairman. I do not know if Andy saw the editorial in the Evening Standard on Monday, “Save the Tube and buses with a new deal”. It says everything that both Andy and Heidi have said apart from one thing. There is a line in it that says, “It should also ask TfL to address its high, heavily unionised costs on the Tube.” Would you like to comment on that, Andy?

Andy Byford (Commissioner, Transport for London): Sure. It is incumbent on any management of any large organisation, including transport organisations, to always look to be as efficient as possible. The fact that on my predecessor’s watch £1 billion was taken off the cost base would show that we are serious about

Page 20 doing just that. There are always more ways to be efficient. We are exploring those. We do have plans within our business planning process to further modernise the way we do things and that certainly will be a focus of mine in my tenure as your Commissioner.

Tony Devenish AM: Good luck. Thank you, Chairman.

Susan Hall AM (Chairman): We are going on to another section now, operational costs. I will see who wants to answer this. Did TfL consider reducing the capacity of services more during the height of the pandemic to reduce operational costs further?

Andy Byford (Commissioner, Transport for London): No, we did not because that would have been false economy. The fixed costs are generally fixed, as the name suggests, but also the absolute imperative was to keep running as high service levels as possible to maintain social distancing. The more trains you run, the more buses you run, the more spread out the ridership is and therefore you start to at least stem again the haemorrhaging of the dropping customer numbers. You keep customers confident so that you can rebuild customers’ confidence and you can start to attract people back.

The only circumstance in which fewer services ran was literally because our own staff were getting sick. Right now the Waterloo & City is not running. The reason for that is that we are using the operators to run the Central line and at the moment we are not running the Night Tube, as you know, but by and large we have focused on maximising service provision.

Susan Hall AM (Chairman): OK. Fine. Can you tell me what the logic is behind TfL furloughing staff when it is so reliant on the Government for financial support?

Andy Byford (Commissioner, Transport for London): Ultimately, it did save us money. The Government’s [Coronavirus] Job Retention Scheme, as it is known, saves TfL around £15 million every four weeks. It contributed to us cutting back on our cost base. We have been in the past asked why we did not just let staff go. We cannot just do that. We would have to negotiate via people’s terms and conditions in their contracts. It would have actually cost us more money to just let people go over time than it would to have got the income that the Government encouraged us to take. The Government did encourage us. The Permanent Secretary [for the DfT] in fact wrote to us on 12 April [2020] reminding us that the scheme is available and encouraging us to take use of it. By getting people onto furlough, we reduced our cost base quite substantially. We brought in something like £50 million, Tony, if I remember rightly.

Susan Hall AM (Chairman): It is £50 million.

Tony King (Group Finance Director, Transport for London): Over three periods it was about £28 million for the April-May-June period.

Andy Byford (Commissioner, Transport for London): We otherwise would not have done that. To me, it was both a pragmatic and a financially sensible thing to do and it concurred with Government advice.

Susan Hall AM (Chairman): It seems odd really, though, that the Government is paying for the furlough scheme and the Government is bailing you out and all these people put on furlough then did not work. What difference if they would have continued to work? Because it is bailing you out, the Government would still have been paying for them and they would have been working.

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Heidi Alexander (Deputy Mayor for Transport): Perhaps I can answer that, given that this did predate Andy’s arrival here. Would that be OK?

Andy Byford (Commissioner, Transport for London): In some cases, they could not work because they were sheltering.

Susan Hall AM (Chairman): Seven thousand of them?

Andy Byford (Commissioner, Transport for London): I said in some cases, not all.

Tony King (Group Finance Director, Transport for London): As you are aware, the safe stop on the investment programme meant that there were a significant number of project delivery and associated support staff from across the business. Those projects were not being undertaken and therefore we utilised the furlough scheme to recover costs for those individuals who were not able to work in that time period from April through to when we started safe-starting projects in the early part of July.

Andy Byford (Commissioner, Transport for London): Bear in mind that for those people on the safe stop, ultimately it was not that they were redundant or we wanted to make them redundant. We still needed them because when the projects upon which they were previously working resumed we would need them. That is why you use furlough.

The figure I was looking for is to date we have already saved around £50 million. Had we not used the furlough scheme, we would have spent around £81 million.

Susan Hall AM (Chairman): My point is that the Government is holding your finances up. The Government pays for people to be in furlough. I accept that you still need those 7,000 people. The Government is paying for them on furlough. Taxpayers are. They are on furlough and they are not working at all. Since the Government is funding TfL, surely it would have been better if it had funded them through the funds that it is giving to TfL and they could have carried on working.

Andy Byford (Commissioner, Transport for London): I cannot speak for what the Government chose to do at the time. The Government itself came up with the furlough scheme and we applied it.

Heidi Alexander (Deputy Mayor for Transport): Can I just say because I was actually involved in the discussions around this back in April? The Government was clear with us that it wanted us to make use of the furlough scheme. This was prior to any agreement being made with the Government about emergency funding. In some respects I have sympathy with what Assembly Member Hall is saying here.

The truth of the matter is, though, as Tony and Andy have alluded to, there were a whole range of changes to the activities that were being undertaken by TfL during the height of the pandemic. The safe stop on a lot of the construction projects was one of those things. Equally, when you think about all the other services that TfL provides like the dial-a-ride services, older people were asked to shield and so dial-a-ride services were not happening. The riverboat service was not happening and so the people that we employ to control the piers were not needed for that period of time. The Victoria Coach Station closed and so the people who were employed there were not needed whilst the Victoria Coach Station was closed.

Susan Hall AM (Chairman): I am just trying to understand the finances, actually.

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Heidi Alexander (Deputy Mayor for Transport): The Government said to us that it was keen for us to make use of the furlough programme. Since that time, many of those people have come back.

Tony King (Group Finance Director, Transport for London): I was just going to make a point that the emergency budget that we negotiated the H1 funding deal on had the furloughing revenue in it. We had said to the DfT as part of the discussion around the value that we would include what we knew, which was the furlough scheme running to the end of June, and we had something like £30 million of revenue coming in for that. Our ask to the DfT was therefore reduced by that amount and so it balanced indirectly.

Susan Hall AM (Chairman): OK. Can you tell me then why you topped the furlough money up?

Andy Byford (Commissioner, Transport for London): I alluded to it earlier. Personally, I do not think it is fair that people should be victims of something not of their own making, namely the coronavirus. They did not want to go on furlough. They are going to be brought back because of the earlier points that we made. TfL is not unique in that respect. I have a figure here that says something like 42% of businesses across the UK provided top-ups to furloughed workers’ pay on top of the Coronavirus Job Retention Scheme.

In addition, there really is a practical element to this, again, with trying to be fiscally responsible. It was the point that I touched upon earlier, namely that you cannot just not pay people their full contractual salaries. We would have to, in order to pay them less, amend their contracts of employment, which cannot just be done on a whim. It cannot just be done overnight. It can only be done with the agreement of the employee. Not surprisingly, most employees would not voluntarily agree to a cut in their pay. They want the full 100%. That triggers, if they do not agree, a period of statutory consultation and that depends on the numbers of employees involved. We assumed the majority would take up that facility and there would be a 90-day consultation period, by which point we would not have been able to access the Job Retention Scheme.

This was a fiscally driven decision. It was partly a morally driven decision but also a fiscally informed decision. By the time we had undertaken that 90-day consultation, we would have lost out on income that the Government was advising us to take advantage of. That is how we ended up saving around £50 million rather than spending £81 million. We very much had taxpayers’ pounds and the wellbeing of our employees to the fore.

Susan Hall AM (Chairman): OK. I would say, though, that I do not think there are any employers out there in the private or the public sector that would have wanted to have done any differently. 58% could not top up because they just could not afford to and that would have made those employers very unhappy. I wonder if it is 58% as opposed to 42% that represents private and public because it seems so much better. You say about the consultation --

Heidi Alexander (Deputy Mayor for Transport): That 42% refers to private companies.

Susan Hall AM (Chairman): You say about the consultation. Can you direct me to the policy that actually says that, bearing in mind you have said that you had no intention of getting rid of them?

Andy Byford (Commissioner, Transport for London): Sure. Within our negotiated terms and conditions, if we are to make a change to someone’s terms and conditions, of which salary is a key part, we cannot just do that. There has to be a consultation and that is set out. That, I would respectfully suggest, is one of the reasons why some companies probably did not choose to go down the top-up route because maybe they did not have such complex arrangements akin to what we have.

Page 23

Susan Hall AM (Chairman): OK. The documents that I have a hold of do not indicate that consultation was necessary. I fully accept what you say to be correct. Can you send me a copy of whatever document says that that is the case specifically if there is no intention of getting rid of them? I do appreciate then there has to be a consultation. That would be awfully helpful if you could send that to me. Thank you.

With TfL delivering close to a full service then, what has been the impact of the 7,000 furloughed staff not undertaking their day-to-day employment responsibilities?

Andy Byford (Commissioner, Transport for London): As the Deputy Mayor mentioned, most of those 7,000 employees have in fact come back, but there was an impact. We did not, for example, run the river bus service because we were not staffing the piers. It also had an impact upon dial-a-ride because the numbers of people using dial-a-ride had dropped away and therefore the dial-a-ride service itself was impacted.

We are now progressively getting people back to work. They are happy to do so and we are glad to have them back.

Susan Hall AM (Chairman): Yes, I am sure. It is just that there are 7,000 staff, which is about a third of your workforce, is it not?

Andy Byford (Commissioner, Transport for London): It is about a quarter, actually.

Susan Hall AM (Chairman): OK. A quarter of your workforce was not there. I get that the river bus was not working and the dial-a-ride was not. Where were the significant areas that people were not working anymore?

Andy Byford (Commissioner, Transport for London): They were spread out. I am just looking at where they are now, actually. They are spread out across the company. In some cases, as Tony mentioned, quite a large number were on work sites on projects where we undertook the safe stop because of the impact and the risk of people working on sites with coronavirus. Some were within our customer communications and technology area. Some were in, as I have said, major projects. Some were in engineering.

One of the impacts has been that those people who have remained behind - because people like key frontline workers stayed behind but also we still had to run the organisation - have been under tremendous pressure because they are effectively doing two jobs. Again, it is to the credit of those people who have carried on that they have done that. It is not tenable in the long term. We need to supplement --

Susan Hall AM (Chairman): Sorry. Some people were doing two people’s jobs?

Andy Byford (Commissioner, Transport for London): Effectively, if some people are on furlough, then the work still needs to be done in some cases and so --

Susan Hall AM (Chairman): In those cases, why were they furloughed?

Andy Byford (Commissioner, Transport for London): The point I make is, rather than a specific job, the pressure on the people that remain behind was tough, but --

Susan Hall AM (Chairman): Then why furlough them if you are going to give extra pressure to those people who are left?

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Andy Byford (Commissioner, Transport for London): Again, it is more that specific people were furloughed and, in some cases, there was no direct substitution. If, for example, we furlough people who have been working in the customer communications and technology area because we need to save money and take advantage of the scheme that was on offer, then there is a knock-on impact to those people who remain.

Susan Hall AM (Chairman): I would have thought then that perhaps you may well have furloughed too many.

Andy Byford (Commissioner, Transport for London): It was a judgement call and on balance probably a quarter was about the right number. Again, we were very much encouraged by the Government to take advantage of the scheme as happened across the whole of the UK.

Susan Hall AM (Chairman): OK. Basically, other than some members of staff being slightly overworked, it went smoothly with a quarter of your workforce being furloughed?

Andy Byford (Commissioner, Transport for London): It has been tough. No, I would not say it has gone smoothly. I would say it has been really tough. I am very proud of TfL and the employees because in the face of huge adversity we have kept London moving. We have been building a recovery in customer numbers and that is testimony to the professionalism of TfL staff, for which they should be acknowledged.

Susan Hall AM (Chairman): I think most people in the country should be acknowledged. There are a lot of people who have worked hard and through no fault of their own been furloughed and that has been shocking for very many people.

Andy Byford (Commissioner, Transport for London): Sure.

Susan Hall AM (Chairman): I am sure we will all agree with that. To what extent would the bus operators’ contracts allow TfL to make savings if that required a reduced bus service level?

Andy Byford (Commissioner, Transport for London): I would have to come back to you on the specifics. We cannot just turn the bus service on and off and, also, we do not want to reduce service because, to my earlier point, we want to maintain social distancing. If we start to reduce service, then, de facto, the service becomes more crowded. That will likely put people off and we would see an impact upon our income just when we really need that income. There is provision over time to make variations to the contracts but that is not something that you can do just overnight.

Susan Hall AM (Chairman): OK. You could not change them now if you wanted to?

Andy Byford (Commissioner, Transport for London): We can make changes but not just immediately because a contract is a contract and, if we were to start reducing service, that would be counterproductive.

Susan Hall AM (Chairman): I did not know if there was anything within the contract that would allow you to do that.

Tony King (Group Finance Director, Transport for London): There is an ability to negotiate midterm with the contracts, but what we have typically found is if we do that, it is not a full recovery of the cost. It is only the marginal costs of potentially the driver pay and diesel that would be the areas we would be able to

Page 25 recover as part of that negotiation. We would end up paying a fixed cost and no service, which we have viewed as being not strong value for money.

Andy Byford (Commissioner, Transport for London): It is a false economy because you would make public transport less attractive. If unilateral imposition of a service cut on a bus operator meant ultimately it felt that it would have to let bus operators go, it would take some time to build the service back up. That is why I mentioned earlier that I would support maybe some tweaks here and there but I would not support a mass reduction in service. We would live to regret that.

Susan Hall AM (Chairman): I can understand why you would say that but, equally, we are looking at massive black holes here. I do understand the problems you have. What other options have you considered in reducing nonessential or noncore services to reduce your operational deficit?

Andy Byford (Commissioner, Transport for London): We have put controls in. The CFO [Simon Kilonback] and I agreed controls just a few days ago where there is anything that could be seen as less than absolutely critical spend. “Critical spend” I would define as necessary to maintain the safety or the integrity of the network, things for which we are already financially committed and so therefore not continuing with them with probably invoke extra cost, and things where the cost of completion means that it makes more sense to finish off a particular project. Where we can turn off discretionary spend or where spend is not absolutely critical to be incurred here and now, we have taken measures to impose that. We have introduced what I generally call a “star chamber”, which is basically financial controls, whereby, unless it has the authority of myself and my CFO, people are not allowed to incur cost. That includes things like an ongoing freeze on nonessential recruitment.

Susan Hall AM (Chairman): OK. That is interesting. Thank you. One of the things I constantly talk about are nominee passes. The Mayor was quite clear at the [London Assembly] Plenary meeting that he had no intention of abolishing the scheme, which allows housemates and live-in family members of TfL staff to travel for free.

Simon [Kilonback, CFO, TfL] told me at the meeting that he would write to me with the exact figures but that there were only a very small amount of people who used nominee passes. That information has not come to me yet. Can you give me a ballpark number for the sort of people who use this?

Andy Byford (Commissioner, Transport for London): I am sorry that you have not had that response yet. I will chase that for you.

Susan Hall AM (Chairman): OK. Do you have a rough idea in the meantime? I did ask for it at the Plenary.

Andy Byford (Commissioner, Transport for London): No. We will come back to you on that. Apologies again that that has not been sent to you. To be fair to the CFO, he has been up to his neck in it, to be honest, but I will get you that detail.

Susan Hall AM (Chairman): Yes. I do not expect him to do it, but if you could ask somebody that --

Andy Byford (Commissioner, Transport for London): No, he was the accountable person and so we will make sure his team sends you that information.

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Susan Hall AM (Chairman): OK. How would you be able to clarify that information? Do they use different passes at the ticket barriers? Is it logged that way?

Andy Byford (Commissioner, Transport for London): Employees have a staff pass and then there is, as you know, the nominee part. That still gets used. It is effectively an Oyster-enabled pass and so it works in the same way as an Oyster. You touch the gate or you touch the reader on a bus. It enables you to get onto the bus or to go through the gate but it does not deduct a fare.

Susan Hall AM (Chairman): How do you know that that is a nominee pass? How is it logged or registered?

Andy Byford (Commissioner, Transport for London): The system logs non-fare-paying passes. I would have to check whether it differentiates between a staff pass and a nominee pass, but I think the system does know that. I would have to check that, to be honest.

Susan Hall AM (Chairman): I would hope so because, if not, you cannot get me any of the information that I would need.

Andy Byford (Commissioner, Transport for London): Sure. We will follow that up. We will make sure that is covered in the response to you.

Susan Hall AM (Chairman): OK. You need to understand where there are potential income savings and that would --

Andy Byford (Commissioner, Transport for London): It is not so much an income saving. It is revenue foregone.

Susan Hall AM (Chairman): OK. We can split the difference there, but we both know it is exactly the same thing. OK. Onkar Sahota, did you want to come in on this?

Dr Onkar Sahota AM: Yes. Thank you, Chairman. You had been asked a question about reducing nonessential or noncore services but let me turn this on its head. We had been told previously by Simon [Kilonback, CFO, TfL] that TfL’s minimum statutory obligations are, I quote:

“... running a minimal bus service for children living more than two miles away from their school. It requires us to run the Woolwich Ferry, and it requires us to regulate and license the taxi and private hire trade, and it has some obligations on highways maintenance.”

What effect if any would there be if TfL decided to provide only these four key services?

Andy Byford (Commissioner, Transport for London): It would be devastating. If we only provided core services - and you have just listed the things that we are statutorily obliged to provide such as the Woolwich Ferry - London would grind to halt. It is as simple as that. What would happen is those people who have access to a car will then use them and we would see gridlock across the whole city because more people than ever would be getting into cars. We would see an absolute degradation in the quality of the air that we all breathe. Those people who do not have access to a car would be effectively trapped in their homes. It would be disastrous, in a word.

Dr Onkar Sahota AM: Thank you, Commissioner, for that. Thank you.

Page 27

Caroline Pidgeon MBE AM: One way you have probably made some operational savings and since COVID is that you have taken out cash from some of your Underground stations. You did an initial number and then you have rolled that out across the whole network. I do not know if that also applies to London Overground. Perhaps you can clarify that.

Can you give me a figure of what that has saved? Alongside that, have you also looked at the issue of an increase in fare evasion, people turning up at a station, not being able to pay by cash and being able to use the transport network? If you are looking at potentially rolling this out - I had your letter through last night, Commissioner - will you consider a full consultation and also an equality impact assessment? I have serious concerns that whilst this is a COVID measure and it will save you money, there are many Londoners who do not have bank accounts and who may for whatever reason get cash in hand for some jobs and pay for their transport through cash. You are taking away that option, particularly later in the evening when some of the newsagents and other places will not be open for them to be able to top up their cards.

Andy Byford (Commissioner, Transport for London): I will try to unpack that and, Tony [King], if I miss anything particularly on the figures, you will help me out here.

Yes, as I said, the primary driver for this and the motivator for doing this was part of our mitigation against COVID and we did that with the support, it has to be said, of the union, the RMT, which was very supportive of it. Less cash handling means there is less opportunity to transmit the virus. That is certainly something that has been successful. It has meant that we have seen quite an uplift in terms of people using cashless, using Oyster cards and using other cards to undertake their transactions. It also has had the benefit of the less cash you handle, the less money you expend on counting the cash, reconciling the cash and having security trucks come and pick up the cash. There are lots of arguments to go cashless.

Having said that, we are very mindful of the impacts that you rightly raised in your letter. There are people out there who do not have bank accounts. There are people who prefer to use cash and for whom maybe a credit card is not really an option. How are we mitigating that? Number one: we have a network around the system of shops where you can buy an Oyster card and top it up by using cash at a third party such as a newsagent.

Secondly, we do have an arrangement if people come along and say, “Look, I did not realise and I only have cash on me”, then they can be allowed to pay at a later time. That does introduce a revenue risk. We are alive to that. That is not something that we would take lightly if it became very prevalent. If we saw this happening across the whole system, then we might have to review that policy.

To your point about equality assessments, yes, that is a factor and, secondly, consultation, although we would like to extend this out. There are something like only 68 stations left. We would like to extend that. We do intend to properly consult and do the appropriate assessments because we are mindful that not everyone has a credit card.

Caroline Pidgeon MBE AM: Then a different area of operating costs is running the Congestion Charge Zone. The [TfL] Finance Committee papers yesterday said that Congestion Charge volumes continue to increase. The language was actually slightly clumsy. It said, “The Congestion Charge saw volume peaks 32% higher than last year”.

If you are seeing such an increase in volumes of vehicles going through the Congestion Charge Zone and having to be charged, is there an increase in your costs with your contractor for processing this? Presumably,

Page 28 they would have assumed a certain level of vehicles going through when you put out to tender. If it is up by a third, that might increase your costs.

Tony King (Group Finance Director, Transport for London): I do not know the answer to the volumetric within the contract but I would imagine that most of that contract would be on a fixed basis with potentially some level of variability that we can confirm to you.

Caroline Pidgeon MBE AM: Perhaps you could write with that detail. Thank you.

Andy Byford (Commissioner, Transport for London): We will. I am sorry I do not know that off the top of my head. It is something like week 12. I am rapidly coming up to speed with these things.

Caroline Pidgeon MBE AM: I would not expect you to know every micro detail.

Andy Byford (Commissioner, Transport for London): I suspect a lot of it is fixed because of course, for a contractor, sometimes you might get more and sometimes you might get less. There may be variable element and we will come back to you on that.

Caroline Pidgeon MBE AM: I am worried that it is such a jump. OK. Thank you.

Susan Hall AM (Chairman): The Mayor has repeatedly said that TfL needs to maintain £1.2 billion in cash reserves in case of unknown financial shocks. I mentioned it before. I would have thought that COVID-19 was a bit of a financial shock and I would have thought that some of the reserves were built in for that. How bad would the situation need to be for TfL to use its cash reserves?

Andy Byford (Commissioner, Transport for London): The cash reserves are there for a reason and certainly COVID - you are absolutely right, Assembly Member - was a massive financial shock and it is good that TfL had built up more than the £1.2 billion. It had built up something like £2 billion or £2.2 billion in reserves, which saw us through the first six weeks without recourse to the Government. Again, it is credit to my predecessor that very fiscally prudent and sensible management had built up enough reserves such that we were able to see ourselves through for the first six months. We now find ourselves at just over £1.2 million. As Tony said, we are at around £1.5 billion.

However, as the Deputy Mayor said, first up, £1.2 billion effectively provides two months’ worth of running costs. It costs around £600 million a month to run the huge services that TfL provides. Effectively, that money is already committed and so it is not a rainy-day fund. It is a prudent level of minimum cash balance. It is also linked to give confidence to our supply chain that we remain a going concern. Were we to not have any money on hand, we would find we would soon get into big trouble with our supply chain, who would probably call in their bonding arrangements because they would be nervous that we would not be able to service our debt. It is standard practice for organisations and particularly transport organisations to maintain a minimum level of cash and I am confident that the £1.2 million does in fact represent a sensible and reasonable amount.

Susan Hall AM (Chairman): Do you think they really would be nervous given that the Mayor and the Deputy Mayor go and demand money from the Government and the Government has been paying out and the Government has told you it will give you that money? Do you think they would be nervous on the fact that the Government is backing you?

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Andy Byford (Commissioner, Transport for London): In this right now, I could not say with certainty that people would not be nervous because we are in such uncharted waters and these are such uncertain times. I understand your point that at the end of the day the Government is not going to let something as important as TfL go under but, having said that, every organisation and every business - and that includes the ones with whom we deal - is under huge pressure and so they will be watching closely. Are we able to service our debts? Yes or no. It is one of the reasons I am so keen to get this H2 settlement done and why I am practically begging to have the letter so that we can get the negotiation going and we can get settled. Then the whole issue of our financial liquidity becomes moot because we know we are good for at least H2.

Susan Hall AM (Chairman): OK. Assembly Member Moore wanted to come in.

Dr Alison Moore AM: Yes, if I might, just a couple of questions about the reserves. Are you legally obligated to maintain a specific number of days’ reserves or is it required to be financially prudent?

Tony King (Group Finance Director, Transport for London): We are required by the Local Government Act [1972]. Our liquidity policy requires us to maintain cash reserves equivalent to at least 60 days’ worth of forecast annual operating expenditure, effectively to demonstrate that we remain a going concern.

Dr Alison Moore AM: Extending that a little, you have talked about suppliers but, hypothetically, if you were to cut your reserve back to 30 days, what would happen? For example, if it resulted in the TfL credit rating dropping, how would that affect the cost of any future loans that you might be seeking or future borrowing?

Andy Byford (Commissioner, Transport for London): I will let Tony [King] deal with the detail. I am not an expert in the credit rating arrangements in this country, but I do know that if you drop in your credit rating, typically the cost of loans and borrowing becomes more expensive because of the additional risk that you present to the bodies that have provided you with those loans.

Tony King (Group Finance Director, Transport for London): Back in April [2020] as we were negotiating the H1 funding agreement, our credit rating was dropped at that point in time. That does have implications on a number of our contracts and potentially, as Andy said, the financial assurance that they would want from us. There are implications.

We have also said to our rating agencies and to our debt funders that we will keep the £1.2 billion. The £1.2 billion originally came from rating methodologies that said that that is a reasonable value - two months’ worth of cash - to hold for a mass transit organisation. Therefore, that component is what we have gone with and what our borrowers and our rating agencies are expecting us to hold. They consider that as the minimum, as we do. It is important to make that point.

The other component is, as part of the Local Government Act, we have usable reserves. Usable reserves are effectively cashback reserves. If we start moving that level of cashback reserve down, then our usable reserves will reduce as well. We are already seeing that with the impact of utilising about £800 million to £900 million of our own cash in the first six to eight weeks, we are predicting our usable reserves will drop from about £1.6 billion at the end of 2019/20 down to about £700 million at the end of 2020/21, a significant reduction.

One of the points I would like to make is about the forward look for H2. We have no further agreement into 2021/22 and my obligation under section 114 is to adhere to a balanced budget over the medium term. It is not just about the year. This year we will utilise a significant chunk of our usable reserves but we will still be left with a chunk. If I cannot see that that can be stabilised and rebuilt - and that is the point that we need to

Page 30 look into 2021/22 for the balanced budget - then that is a really serious concern for us. The cash and the usable reserves have an interlinkage and, therefore, utilisation of that £1.2 billion is not something we would want to do. It already is our minimum cash. If you add in the levels of uncertainty around Government funding and around revenue - we have largely a fixed cost base, particularly for the near term, and an ability in the circumstances that we are to borrow further incrementally at this stage, which we have said to the Government is not prudent and we are not willing to do - then £1.2 billion is a reasonable level that we should commit to in order to keep our finances as they are with anything with the uncertainty that we know is going on.

Andy touched on it as well. Some of the contractual commitments we have already made dwarf the £1.2 billion. For our bus contracts, there are somewhere around £7 billion of contractually committed contracts out there. On the Siemens Piccadilly line trains, we have contracted somewhere around £1.8 billion. We will maybe touch on this later but we are holding £12 billion of debt. Our monthly or periodic payroll cost is a significant amount of commitment in the billions for our employees. We have employee obligations; we have supplier obligations and we also have our debt holder obligations as well.

Dr Alison Moore AM: In terms of reserves, it is effectively the equivalent of a local council and the primacy of your medium-term financial strategy and the need to be balancing and demonstrating that you have the funds.

Tony King (Group Finance Director, Transport for London): It is part of the local authority, which is what TfL is.

Andy Byford (Commissioner, Transport for London): It is about that fiscal responsibility. As Tony [King] says, we cannot just turn off those debts. They still exist. That is one of the myriad reasons why we have to have this minimum balance.

Dr Alison Moore AM: OK. Thank you very much. Thank you, Chairman.

Susan Hall AM (Chairman): Can you clarify for me? The 60-day requirement was put in in December 2019. It was previously 30. The Act just requires you to have a reasonable level, does it not? You are the ones who make up the amount it is. Is that right?

Tony King (Group Finance Director, Transport for London): The 1.2 billion was discussed at our Finance Committee. The amount was raised. Having had discussions and conversations about our rating and our rating methodology, not only for us but wider for mass transit organisations, that is the point that we made. We made the decision that £1.2 billion is at two months - with the scale of organisation that TfL is, as Andy said earlier, a £10 billion organisation - a minimum level for a requirement for cash.

Susan Hall AM (Chairman): OK. It was you who came up with that figure. I was interested because it was changed in 2019. OK.

Tony Devenish AM: Before I ask the next question, the bit at the end of the brief fits in with what you have been discussing. This is to Heidi. On 22 April [2020] the Mayor said that TfL was going to run out of money by the end of the month. He said and I quote:

“What we can’t afford to do is have to make a decision to cut more services because we can’t pay people.”

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He said that the state of play at the time was only sustainable until “the end of the month”. Note that what was actually going to happen was they were about to hit the minimum cash balance we discussed of £1.2 billion and an internal limit set by TfL. Mr Khan’s own spokesperson had to clarify to the media that that is what he meant.

Do you have any comment on this? From that perspective, Heidi, when you say you are down to your last £1.2 billion, do you think most people feel sorry for you?

Heidi Alexander (Deputy Mayor for Transport): What the Mayor was making clear was that we were approaching a very critical juncture with regard to TfL’s finances. For all the reasons that we have discussed, it is sensible and prudent to keep two months’ worth of cash balances, especially when you consider that we are contractually obliged along the lines that Tony and Andy have set out, whether it is £7 billion for the bus contracts that you have or £1.8 billion for the Siemens Piccadilly line contract.

I would like to make a point that that over the last four years, in increasing our cash balances by 13%, which is what we have done, we were acting responsibly. If you think about it, thank God we had £2 billion in the bank in the middle of March [2020] because that meant that we had six weeks where we could work through some of that money keeping the public transport network running. That gave us time to have those discussions with the Government. The fact that we have built up our cash balances over the last four years and the fact that we have reduced our operating deficit by 71% as we went into the end of March are signs of how disciplined we have been financially over the last four years. I for one am really pleased that we had that amount of money in the bank when we entered into this crisis.

One of the reasons why we had built up that level of cash balances was that we were very worried about a disorderly Brexit. We entered into the transition period but that risk has not gone away again given that the Government has not concluded a free-trade agreement yet. Let us not forget that the pandemic is not the only risk that we are dealing with here. It is prudent and it is sensible to keep that amount of money in the bank.

Tony Devenish AM: The Mayor will be very pleased with the last bit of your statement, Heidi, anyway, but I will move on.

Andy, can I ask you this question? How will you be looking to achieve your contribution to the Mayor’s £493 million savings target, please?

Andy Byford (Commissioner, Transport for London): I had better understand the context. When you say his £493 million savings target, can you explain the context to me?

Tony King (Group Finance Director, Transport for London): Perhaps I can pick up on that because the announcement around that came in before you joined, Andy [Byford]. The GLA has set a target of savings. They are talking through their finance teams to each of the GLA bodies around how we will help contribute to that as the distribution of funds occurs.

What is our contribution? There is a GLA collaboration where we are looking at and working with - I have just seen David Gallie [Executive Director of Resources, GLA] pop up - David and his team around how we can look to drive costs out across the GLA and what TfL’s contribution would be to that. David and I recently in the last three weeks have been talking about how we support that with some of the services we provide to the GLA

Page 32 both around procurement and legal services and what other opportunities there are around some of the support services and how we may leverage that across the GLA family.

Andy Byford (Commissioner, Transport for London): My apologies. I misunderstood. I just did not understand the question.

Tony Devenish AM: I probably did not ask it well, Andy. Can I put it another way? At the moment, you probably would agree that TfL and the other parts of the GLA do work almost in silos. How are you going to make sure that changes?

Andy Byford (Commissioner, Transport for London): I am very supportive of the concept of the GLA family making use of common services. I know that some of that is already being done. At the end of the day, TfL is by far the big beast in the GLA family. If we can provide, as we do, legal service or procurement service to much smaller agencies, that makes absolute sense. In answer to your question, I would expect that to continue. We should make sure that those areas that have already migrated to that common service model work well. We should look to see which others can also migrate.

Tony Devenish AM: Thank you. I will leave it there other than to say I would appreciate it if you could actually look into this a bit more. For our previous meeting, it was quite clear that the pace in terms of shared services -- the cross-party consensus is that it has been glacial over the years across the GLA family. If you could put your elbow to the wheel on that, I know you have plenty else on at the moment as well, but I would appreciate it. Thank you, Chairman.

Susan Hall AM (Chairman): OK. Thank you. We are now going on to a section on the Elizabeth line or Crossrail. There is a section on this but it has just been press-released that Crossrail is now coming inhouse to TfL. I will just give notice of that to my colleague Caroline Pidgeon, who is going to be asking these questions.

Caroline Pidgeon MBE AM: Lovely. Thank you very much indeed. One of my favourite topics is Crossrail.

In January [2020], Andy, your predecessor Mike Brown assured the Committee that Crossrail would not be seeking any more funding, but then we saw on 21 August that Crossrail issued a statement about further delays to the project. It said the latest cost estimate that was presented to the Crossrail Board showed that to complete Crossrail it could be up to £1.1 billion above the financing package that was agreed in December 2018, £450 million more than the upper range that was announced in November 2019. We get every six months a new announcement, new delays and a new budget.

When do you think you are going to be able to understand the final cost of Crossrail? The delays and the budget increases are not just down to COVID. That was in the statement in August. What is the final cost going to be to TfL and ultimately to Londoners because it comes through the GLA as well? What assurances have you had around that budget as, I presume as of today, you are now fully in charge of Crossrail?

Andy Byford (Commissioner, Transport for London): It is, as of midnight last night. Let me just preface my comments by saying that we had an introductory chat and we share a common passion. One of the attractions for me of this job was the huge challenge - but I like a challenge - of getting Crossrail finished and the Elizabeth line open. It might seem perverse to some people but I absolutely want that accountability. Where others may shy away from it and may have thought, “This is great. It is managed at arm’s length by a subsidiary body or an associate body in the Crossrail Board”, since the day I got here I have said that if ultimately I am to be held accountable, I need the levers of power and the levers of control to get this thing

Page 33 finished in the shortest possible time for the least additional money. Since day one, I have advocated for control of Crossrail. That control happened, as I said, literally 12 hours and 4 minutes ago. That is good. TfL now overseas Crossrail and the CEO of Crossrail Mark Wild and his team report to me. Going forward, I am sticking my hand up. I am sticking my head above the parapet and I have said I am prepared to be held accountable. There is some risk in many ways to me and my reputation but I am prepared to take on that risk because someone has to get this thing finished. I just thought I would say that by way of introduction.

I do not do that lightly. I have done due diligence on this. I have looked into this. I do believe that my intention certainly would be - absolute intention and you can hold me accountable for this - no further slippage and no further call on funding. I say that because I have looked into the project and I have various people giving me advice on where opportunities might lie such that we can achieve that earliest possible finish for the least amount of additional money.

What that effectively means is we will still have a governance structure. The governance structure took effect at midnight last night. There will be two parts to it. There will be an Elizabeth Line Committee, which will be chaired by the Deputy Mayor [for Transport] and which will include some executive directors being migrated across from the old structure, Mark Wild and his CFO, plus some non-exec directors who are coming across again from the old structure. Then, where the rubber hits the road, there will be a new group that I will chair, the Elizabeth Line Delivery Group, which will be the body that gets things done. Mark Wild will report directly to me and you will see that it will be a very direct, directive approach to get this project finished.

Caroline Pidgeon MBE AM: OK. That is fantastic and that excites me as a Transport Committee member, but I am here with my Budget [and Performance Committee] hat on. You have assured yourself. You have done due diligence. No further slippage: we will hold you to that. No further funding above, presumably, the additional £1.1 billion that they have already said that they need.

How are your negotiations going with the DfT to fund that £1.1 billion gap we currently have?

Andy Byford (Commissioner, Transport for London): It is important to note what did and what did not happen at midnight last night. What has happened is that there has been a transition of ownership governance of the project. That is what has happened. What has not yet happened is a financial settlement with the DfT and that is complementary to the H2 settlement discussions that we are still having.

Caroline Pidgeon MBE AM: All right, complementary.

Andy Byford (Commissioner, Transport for London): That is still key. I did make it clear that in assuming accountability for this project, the money needs to be sorted out. I like a challenge but I am not suicidal. That absolutely has to be resolved. In the exchange of documentation that preceded the transfer of accountability and the transfer of governance, we did receive a comfort letter from the DfT acknowledging the fact that that does need to be sorted out. That gave me enough comfort, literally, and assurance that we could sensibly transfer to the new model. We have done that in good faith on the understanding with the Government that the finances would follow in due course.

It needs to happen very quickly because for the Crossrail project, while it is funded through to March of next year and we have enough cash through to next year, the financial authority in other words, the authority to still let further contracts, will expire in mid-October [2020]. The DfT knows that. It focuses everyone’s minds.

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The reason I was so keen to get my hands on this and not necessarily wait for all the detail to be finessed was because every day counts now. Every week and every month counts. I need every single day to drive this thing across the line. The good news is most of the construction is done. We are doing systems integration testing by December [2020] and trial running by March of next year. That is why I make the assertion that you can hold me accountable for the date.

Caroline Pidgeon MBE AM: OK. The £1.1 billion is going to be complementary to the discussions about the main TfL funding?

Andy Byford (Commissioner, Transport for London): That is correct.

Caroline Pidgeon MBE AM: It is very clearly there?

Andy Byford (Commissioner, Transport for London): Yes.

Caroline Pidgeon MBE AM: You see, only back in the summer, Tony Meggs, who was the Chair of Crossrail, said at TfL’s Board on 2 June [2020] - we knew about COVID then - that their aim was to meet or beat the summer 2021 deadline for opening. OK? That was at that point when you knew you had COVID and when you knew there were still issues.

Are you absolutely clear that there are not more hidden costs and delays that will come up on this project? Someone who seemed to be very on top of the project - and we had a lot of time for Tony [Meggs]- said that, to which I thought at the time, “Gosh, that is a bold thing to say on this”, and has been proved wrong.

Andy Byford (Commissioner, Transport for London): I can only speak for myself. I am as confident as I can be. Again, you do your due diligence. I have looked into the remaining risks as I see them, and I do say this from the perspective of someone who also took accountability for delivering a major subway extension in Toronto, which we promised would be in by the end of 2017 and it duly was.

There are still pressures on the project. We do not know that there will not be suddenly another calamitous outbreak of COVID. That is a risk and, effectively, that is the only caveat I would put on this. If there was suddenly an absolutely catastrophic outbreak of COVID and the Government said, “That is it. Everything must shut down for the next two months” - and I am just plucking a number - then that would really impact us.

Having said that, we are in a better place because, when Tony Meggs made that statement, we were still in fairly uncharted territory in terms of COVID. Since then a lot of controls have been put in on the worksites. You get your temperature checked. There is segregation of the workforce. There are one-way systems. There are segregated canteens. I have visited most of the Crossrail stations already. We are in a better place and so we would not necessarily have to immediately shut down.

I can do two things. I can look back and undertake a post-mortem. My advice to you for what it is worth is to let me look forward, let us get this thing done and then let us do the post-mortem.

Caroline Pidgeon MBE AM: OK. You have assured yourself and we will look to see how the project develops.

What steps are being taken now to compensate for the lost revenue from these delays, which must be considerable? Maybe that is one for you, Tony. What are you having to do to try to recover or how are you

Page 35 mitigating that in your finances? That was a huge revenue stream and of course that was linked at the time to the withdrawal of the £700 million from the Government.

Tony King (Group Finance Director, Transport for London): In our business plan last year we had some revenue protection in terms of some contingency around this and so some of that loss of revenue has been covered. We are now looking at post-COVID what that ridership is likely to be on the Elizabeth line, particularly that it runs through the Central Activity Zone. We are really starting to look at and model what we think the longer-term ridership will be on the Elizabeth line.

As I said earlier, we are in the process of our business plan. We are looking very clearly this year and next year but part of that revenue modelling for the Elizabeth line will be one of those key sensitivities for us in terms of what we expect to get from the Elizabeth line and therefore what that fits into in terms of the overall funding envelope for TfL as a whole. It is work that is ongoing at the moment and trying to assess - and, again, it is similar to the other revenue streams - what we return to as the long-term normal for any of our major infrastructure lines and what will develop, particularly the ones going through the Central Activity Zone. A lot of work in terms of that modelling will form part of some of the scenarios or sensitivities that will come as part of the business plan at the end of November [2020].

Caroline Pidgeon MBE AM: That will be published at the end of November [2020] for us to look at. Will it have that detail in it?

Tony King (Group Finance Director, Transport for London): I cannot say that at the moment. We need to model it as TfL but we will be as transparent around what that looks like and what the options of that look like as we can.

Caroline Pidgeon MBE AM: Fantastic. In terms of transparency, you have this new governance structure. You are, as you say, 12 hours or so into that. Are you committed to complete transparency, both financial in some of the detail but also in terms of some of the other reports associated with Crossrail? I particularly reference the Jacobs [Engineering] consultant reports, which are heavily redacted, frustratingly. They are months and months late. As of last week, we had not got anything more recent since May [2020] online. What will you be doing to speed those up to make sure there is real transparency around this project now that it is in TfL? Your committees are going to be in public, which is a first compared to the Crossrail Board.

Andy Byford (Commissioner, Transport for London): I am committed to transparency on it. I am aware of some of the controversies that have gone on before. I commit to being fully transparent on getting this thing across the line and getting the job done.

I do not underestimate the challenge. It is going to take some very focused attention. Having one controlling mind directing what was previously a bit of a disparate situation and to have TfL, Rail for London (RfL), the MTR Elizabeth line train operating contractor and all of the key players under one controlling mind, namely me, directing the team will render huge benefit.

Part of the transition agreement we have reached with the DfT last night is absolutely specific on maintenance of the Jacobs project representative (PRep) reports. I will have to go before the Public Accounts Committee (PAC) and various other bodies. I am prepared to do that. I intend to be open book about this.

I am already following up, by the way, as a result of our earlier discussion why it is that there is such a lag in those reports and so I would hope to effect an improvement on that soon.

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Caroline Pidgeon MBE AM: Wonderful. Thank you very much.

Susan Hall AM (Chairman): Thank you. All right. Now we are moving on to the joy that is capital prioritisation. We all fought for this one. When I went into local government, dealing with capital, et cetera, was one of the most complex things, as opposed to dealing with revenue. Is TfL under the same financial regulations as local government? It is?

Tony King (Group Finance Director, Transport for London): Yes.

Susan Hall AM (Chairman): OK. Can you tell me what the sense is of agreeing to an additional loan facility with the Government when capital expenditure is being reduced?

Tony King (Group Finance Director, Transport for London): For the H1 funding agreement and for our budget for 2020/21 we have agreed to borrow £600 million. That will form part of our H1 funding agreement. We can borrow to cover capital expenditure. We are looking to expend somewhere around £1.4 billion this year and so that £600 million will be allocated against capital expenditure, which is allowable as part of local government rules.

We pushed hard that we did not borrow as part of H1 funding for all the reasons that we spoke about earlier around cash reserves and liquidity, but it was originally in our budget for this year to borrow pre-COVID. Part of the funding agreement for H1 was that we had to continue to borrow in line with our budget, which was the £600 million. It is allocated against capital expenditure and there is sufficient capital expenditure in 2020/21 to absorb the borrowing against that.

Susan Hall AM (Chairman): Borrowing goes to capital?

Tony King (Group Finance Director, Transport for London): The borrowing is allocated against the capital expenditure.

Susan Hall AM (Chairman): OK. The reserves are all revenue reserves?

Tony King (Group Finance Director, Transport for London): They are the usable reserves, yes. We allocate grant and borrowings appropriate to cover the capital and what is left falls into the usable reserves.

Susan Hall AM (Chairman): OK. Good. I am clear on that. The Mayor, though, claimed borrowed money will be used to fund operations. He actually said this in either a Mayor’s Question Time (MQT) or a [London Assembly] Plenary. How is that right?

Tony King (Group Finance Director, Transport for London): I had not heard that comment, but I would refer back to the answer I have just given. The £600 million will be used and utilised against capital projects for the year.

Susan Hall AM (Chairman): He actually said it. He said that the loan was, “Basically for running TfL”. He said it - I have it down here - at a Budget and Performance [Committee] in July [2020]. Clearly, I was concerned at that because that does not fit in with my knowledge of capital and revenue and how they have to be kept aside. Why would he have said that?

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Andy Byford (Commissioner, Transport for London): Let me take that and then maybe the Deputy Mayor might want to say. I cannot speak for the Mayor and I was not here to hear him say that.

Susan Hall AM (Chairman): Fair enough. Let us ask Heidi.

Andy Byford (Commissioner, Transport for London): That question is best placed to him. As a general point, it is correct that under the local government rules you cannot use borrowing for operating costs, but my understanding is that you can for liquidity purposes on a purely temporary basis.

Susan Hall AM (Chairman): OK. That is why I asked whether it is on the same regulations as local government. Heidi, do you want to comment on that?

Heidi Alexander (Deputy Mayor for Transport): What Andy has just said is right. As long as it is temporary, perhaps it might be within year, there are some occasions on which that can be done. It cannot be the long-term solution. That is my understanding of the situation.

Susan Hall AM (Chairman): Could you clarify? It struck me as incorrect.

Tony King (Group Finance Director, Transport for London): The point I would make is that we receive two elements of business rate retention from the GLA. One is a capital element and one is a revenue element. The capital element of that business rate retention can be allocated in agreement with the GLA to the operating account. I am not sure whether that was where the source of it came from, but I am reiterating that external borrowings have to be allocated to capital.

Susan Hall AM (Chairman): You can absolutely confirm, then, that there has been no capital used without specific permission to use it as a revenue expenditure when it should be for a capital expenditure?

Tony King (Group Finance Director, Transport for London): For borrowings, correct.

Susan Hall AM (Chairman): OK. Good. I am glad I have that confirmed. How does TfL’s emphasis on walking and cycling and indeed this Streetspace scheme sit alongside reducing proactive road maintenance to ensure that surfaces stay safe? Specifically, if you look at the state of good repair on the TfL roads, it was expected to fall to 87% in 2020/21 even before the decision to pause proactive road maintenance again. Previously, TfL has said that a state of good repair of 94% would be needed to support an increase in cycling in London. Are your roads now expected to fall below the standard of repair? That is inconsistent with supporting an increase in cycling and you have said how much you believe it has gone up.

Andy Byford (Commissioner, Transport for London): No, it is not just that I believe. I know that cycling has gone up. We have stats to show that the take-up of cycling has in fact increased, which is a good thing.

I do not see these things as mutually exclusive and they certainly should not be binary. It should not be the case that you cut back on road maintenance in order to fund something else. I stand by my earlier comment that state of good repair is all important and that we cannot let the road - or bridge, for that matter - network fall into disrepair because we will always be playing catchup. I do not see them as mutually exclusive. This is why this H2 settlement is so important. We have to get sufficient funding to allow us to maintain everything in a state of good repair while still at the same time expanding sensible alternatives such as cycling, walking and scooting for the benefits that they bring.

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Susan Hall AM (Chairman): I totally understand what you mean. I am not a cyclist but I do feel for cyclists with the state of some of the roads. My point is, if you are trying to encourage people to cycle as you are and clearly you are being successful on that, are you going to be putting more of your capital spend - or revenue for potholes; I know that - into road maintenance in order that we will not have a deluge of claims against TfL for poor road surfaces?

Andy Byford (Commissioner, Transport for London): Again, it is hard to answer because at the moment I do not know what my H2 settlement looks like, but that is why we are pushing for the amount that we believe is sufficient to see TfL through the second half of this year, namely the H2 funding request. That contains funding to address matters such as potholes and maintenance of the road network. It is hard to give you an absolute assurance when I literally have no idea what we are going to get by way of Government funding, hence my plea to please send me that letter. That way then I know what we will have to play with.

Susan Hall AM (Chairman): Yes, I hear what you say, but within the funding package that you are looking for, how much of that will go into road maintenance and what percentage do you expect the state of good repair of roads to get to within the package that you are asking for?

Tony King (Group Finance Director, Transport for London): I can answer it at a renewals level. As part of the emergency budget, we looked very carefully at the renewals budget and targeted it to be very much looking at safety and ensuring safety is there. In line with what we were asked to do to minimise our cash burn our cash requirements for H1, we did that. Somewhere around £400 million of capital cost was reduced out of that H1 funding budget.

Our plan as part of the revised budget is in H2 to increase capital renewals and then in 2021/22 we have upped our capital renewals again to ensure that we get our funding to the level that it needs to be not only for the roads but for all of the structures across the TfL estate. Yes, we came off a two-year period of reduced renewals. It was our absolute aim for 2019/20 to ramp that up pre-COVID. We reduced our funding for H1 in line with what we were requested to do but we have built in our revised budget for both the second half of this year and into next year as part of our funding ask the renewals increasing back to a renewal level that we feel is acceptable.

Susan Hall AM (Chairman): OK. One of the issues, I have to say from a local government position and for colleagues who have worked in local government, is the fact that you can only use revenue to deal with potholes unless you take out a large portion of that road. I do not know who one would have to look at to see if that could be addressed at some point because it is certainly the bane of everybody’s life within councils because very often they can deal with a capital issue but cannot deal so easily with a revenue issue. It is potholes that cause so many problems for all of you who cycle.

I will leave that at that. Thank you.

Dr Onkar Sahota AM: I hope this is a question in the right section. I am concerned about step-free access. Has there been any impact on the schemes that were under progress to get step-free access to stations or has there been any revision of that, please?

Heidi Alexander (Deputy Mayor for Transport): Perhaps I can answer this because it is an area that I take a lot of interest in because it is a mayoral priority to increase the number of stations across London that have step-free access. There are eight stations where work is currently underway, which we hope to complete within the course of the next year. On three of the schemes where some minimal work had started - that was

Page 39 hoardings being put up - we have had to pause the work that we had intended to do on those schemes. There were also a number of schemes that we had identified for completion later in our business plan period where we have had to say we are not sure that we are going to be able to do those.

The good news is though that when the Mayor came to office in 2016 there were 67 stations that had step- free access, which constituted 25% of the network. In May of this year we had increased that to 79. By the end of 2021/22, on the basis of the projects that are ongoing and should we get the money that we have asked for in our revised budget, that will increase to 93, which would be 34% of the network. There has been an impact but we are continuing many of the projects that are already onsite.

Dr Onkar Sahota AM: Deputy Mayor, my inbox is full of these concerns. Perhaps you could write to me about which ones are being completed --

Heidi Alexander (Deputy Mayor for Transport): Of course.

Dr Onkar Sahota AM: -- which ones have been suspended and which ones will come later on in your programmes. Thank you.

Heidi Alexander (Deputy Mayor for Transport): Yes, no problem.

Susan Hall AM (Chairman): OK. We are on to our last section now: the future. Assembly Member Siân Berry is going to start the questions, please.

Siân Berry AM: Thank you, Chairman. Yes, we are onto the future and thank goodness we have quite a lot of time left in the meeting to tackle that.

As I start, I wanted to bring in the document that was published alongside the papers for the TfL Finance Committee meeting yesterday, which is the investment plan that has been sent to the Government, I assume, for the Comprehensive Spending Review. That is longer term. It is over 10 years. It is asking for £3 billion a year in a longer-term settlement from the Government via different income sources there.

Within that, in the sections where it talks about modal shift, you are still making the same assumptions as are in the Transport Strategy of an 80% shift to sustainable modes of travel by 2041. In this meeting, we have been discussing repeatedly how, potentially, we are not going to get the same capacity on public transport, people are going to be unwilling to get back on to the very crowded rush-hour trains and Tubes that we were used to and, potentially, Crossrail will not have the maximum capacity that we assumed.

Is it still valid for you to be talking about that? Are your long-term mode and travel assumptions really very up in the air now such that you could not provide a new number or any adjustments within that document and you have just kept to the previous numbers that you had?

Heidi Alexander (Deputy Mayor for Transport): If I can answer this question. The modal share target of 80% of journeys being done by public transport, walking and cycling by 2041 is a key element of the Mayor’s Transport Strategy. I think it is right to retain that level of ambition. You would have been very disappointed if you had seen a reduction in that figure, and whilst none of us know how quickly the city or the country is going to come through this pandemic, what we do know is that we cannot have a car-led recovery, because all of the problems that affected our city before COVID hit are still there. They are not going away, whether that is problems to do with inactivity and obesity, whether it is problems around air quality or carbon emissions, we

Page 40 are still going to need a city where people can move around. They may be moving around for slightly different purposes at slightly different times of the day, but I think it is right to retain that level of ambition.

What you will see in that document that has been published as part of the Comprehensive Spending Review (CSR) submission is that we have set out the amount of money that we would like from the CSR period, and that is not insignificant, but also set out what you would need to do over the longer term. Part of that is about investing in new rolling stock on the Tube. Part of it is about signalling upgrades. I go back to the point I made earlier that if people are going to have confidence to return to public transport in the future, they are going to want to be safe, they want to feel safe, and they want to be able to travel comfortably. All of that investment in the public transport network is critical. Equally, you need to find ways to enable more people to walk and cycle more often, so that they are less dependent on the car.

We know there are a huge number of journeys in London that could be walked or cycled in ten or 20 minutes. Our investment through the Streetspace programme, and previously the Healthy Streets agenda, is all about enabling us to make that shift, and to ensure that the roads can be used by people who need to make journeys. Not every journey can be made by public transport, walking and cycling. People will still need to use vehicles, deliveries will still need to be made, but we need to find a way to have that really positive public transport offer, and enable people to still be able to move around the capital.

What this document does a good job of doing is being rightly ambitious still, but we are being realistic. Some of those really big infrastructure projects, like Crossrail 2 and the Bakerloo line extension, which have multibillion-pound price tags attached to them, realistically are we going to be able to deliver those over the next ten years? The answer is probably no. Therefore, we need to be honest in our discussions with Government about how they can invest in schemes in the next few years that are going to create the sort of transport system that London needs, but are also going to support the wider UK economy in terms of the manufacturing base, etc.

Siân Berry AM: OK. That is really helpful. Yes, to clarify, I am not suggesting you reduce your ambitions. However, I do want to ask you a bit more about the measures you might take to get there. Because like you have just said, you are maintaining most of the public transport investment but not all of it, like you say with the Bakerloo line extension. If you are going to achieve the modal shift that you want, if you are going to reduce traffic the way that you want there, you would expect more public transport investment to be signalled within this document, which is a ten-year document. You would expect more things like light rail and new projects to be reinserted into this plan in order to increase the capacity on public transport, and you would expect - and this is in the Transport Strategy overall - something about the long-term goal of having wider road charging schemes, like even a wider Ultra Low Emission Zone (ULEZ) that covers the whole of London, or smarter, fairer, distance/emission-based, privacy-friendly road pricing, which obviously we have pushed you on the Assembly about a number of times.

Now, in the sections, for example, on technology, there is on page 17 of the document a really modest bit of investment in technology, but you would hope that this document was at least signalling the need for investment in technology to support wider road charging options, like a wider ULEZ or road charging. Why is this not in there, and why is road charging not even in the visions section of the actions you might take in the future? Why has this been left out again?

Heidi Alexander (Deputy Mayor for Transport): Let me pick up on a number of the things that you have said there. You mentioned light rail and suggested light rail schemes should be in there. Actually, one of the proposals that is set out there is a DLR extension to Thamesmead calling at Beckton to include connectivity

Page 41 and give people public transport options in parts of London that have been historically less well served by public transport. I would take a little bit of issue with some of the things you have said there.

On the wider issue of road user charging, of course, we have a number of road user charging schemes that are already in operation at the moment, with respect to the Congestion Charge and the central London ULEZ. We have made some temporary changes to the Congestion Charge, which, as Members will know, has been the source of some controversy, but that we were asked to bring forward proposals to do that by the Government. The priority for us at the moment is the expansion of the ULEZ next October [2021] to the North and South Circular.

You referred to technology. There is work going on at the moment to install the camera infrastructure at both the boundary and within the zone to enable that. Previously the Mayor has confirmed that actually that technology is future proofed. I know that has been a question from people like yourself, and Assembly Member Pidgeon before. Any changes to road user charging schemes need to be subject to very full public consultation when you are talking about significant changes. I do not think anyone would disagree with that. You also need to ensure that the design of any scheme is going to be effective, both in terms of the environmental objectives that you might wish to meet, and it needs to be economically sound as well in terms of protecting the economic vitality of the city. However, I think also it needs to be politically viable, let me put it that way.

You need to take people with you on this journey. We have a lot of work to do to successfully land the expansion of the ULEZ next year, and that is our priority. We did incredibly well when the central London zone went live in April. That has had a really significant impact upon the number of vehicles that are driving in central London that are the most polluting. We actually think that when the ULEZ is extended out to the North and South Circular next October that four in ten vehicles will comply with that standard.

Siân Berry AM: Yes. I know we said we had lots of time.

Heidi Alexander (Deputy Mayor for Transport): Sorry.

Siân Berry AM: If we could possibly stick to the high-level questions here. This is a high-level, ten-year investment programme that you are putting to the Government. If you are talking about what is politically something to talk about, yes, introducing a much wider ULEZ, or a new, smarter road charging scheme would involve significant investment, and you could be asking Government for that. However, it could also be something that made your revenue streams much more resilient. You would be less reliant on public transport fare income. Surely that would be a useful negotiating stance to take with Government to generate some of your own new income streams in addition to how it would have an effect on air pollution and how it would have an effect on your goal of achieving that mode share.

I cannot see that there are enough measures in here that would actually enable you to achieve that mode- share goal without something like this as well. Should it not be signalled and should it not be part of your ten- year proposal, high-level to the Government that you should be starting to develop something like this? Politically it is already in your Transport Strategy that you intend to develop this in the long to medium term.

Heidi Alexander (Deputy Mayor for Transport): What you would find in the Mayor’s Transport Strategy is that it says that we will keep the various schemes that we have in place under review and that we will explore over the longer term what the options might be. What this CSR document is, the CSR period, as you will know, runs for the next three to four years. We have focused in that on the things that we could do in the next three

Page 42 or four years that are important to maintaining service levels. Coming back to the point I have made previously around giving people confidence to use the public transport network, we have also looked at schemes where we could be investing quickly in public transport to make it an attractive option. You will see in that CSR document proposals around renewing the Bakerloo line fleet, which is older than I am. I think it came onstream back in 1973.

Siân Berry AM: 1973, yes.

Heidi Alexander (Deputy Mayor for Transport): I think I have enough grey hair to prove how old the Bakerloo trains are. These sorts of trains on the Tube network. We cannot just keep patching them up, because they will stop working at some point. That is why those key building blocks of that document are about investment in the existing public transport network to ensure reliability and to ensure that people see it as an attractive option. I do not disagree with you, actually, that there should be a more diversified set of income streams for Transport for London, because what this pandemic has shown us is that we were very exposed to this type of shock, given that 80% of our income comes from either fares or other commercial income that is linked to footfall, things like advertising.

I would like the Government to consider what taxes that are currently raised in London we could be given more control of. We have talked about VED; could we be given a slice of VED levied in London, for example? I would also like the Government to consider how we might fund future specific infrastructure projects. If you think about the funding package that was put together for the Northern line extension, the GLA was allowed to borrow against future business rates growth. Now, if we want to do something really ambitious, like the Bakerloo line extension in the future, could we borrow against future stamp duty on sales of all properties in the area that would be served by it?

Siân Berry AM: Again, you are just slightly away from the point, I am afraid. The Chair is not interrupting, but I do want to stick to this. At the beginning of that answer there, I was very disappointed to hear it, you were sort of saying that in the spending review period you are not going to be proposing to take any steps towards a wider road charging scheme of any kind.

Heidi Alexander (Deputy Mayor for Transport): No, I did not say that. With respect to Assembly Member Berry, I did not say that, because I actually pointed out that in October of next year the ULEZ is due to expand to the North and South Circular.

Siân Berry AM: Anything in addition to that, is my question. Like I say, it is in your Transport Strategy that you will look at ways of going further. You are saying this will not happen --

Heidi Alexander (Deputy Mayor for Transport): It is a Transport Strategy that spans two decades.

Siân Berry AM: OK. I better move on to the next question. There are considerable uncertainties, I think, in road traffic forecasts. On the one hand we have seen a big reduction in traffic. We know that people are probably long-term going to be working more from home. There may be slightly less demand for travel overall, by whatever mode, in the weekday peaks. This is very, very uncertain, and there are signs now that traffic is going up again. In terms of this, how is this impacting on your investment decisions, that uncertainty about traffic forecasts and uncertainty about travel overall and fares? I particularly ask about the Silvertown Tunnel because that depends specifically on tolling income from vehicles using that tunnel. Have you looked at the viability of that scheme?

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Heidi Alexander (Deputy Mayor for Transport): On Silvertown, you will know that the costs of construction are covered by a user charge that will be tolled on both the new tunnel and the existing tunnel at Blackwall. One of the areas where, in the height of the pandemic, we saw traffic jams was at the Blackwall Tunnel, and so even when traffic had died down to a minimal level across the whole of London and we looked out and those streets were broadly deserted, one of the places where we still routinely saw problems was at the Blackwall Tunnel with cars back to back, often idling.

My own view and the Mayor’s view is that we need to tackle the problem of river crossings in the east of London. That is why the plan is to proceed with the Silvertown Tunnel because we need to tackle the problems of congestion there, because the problems of congestion, as you know, exacerbate air quality. You know that when there is a problem in the tunnel, which happens hundreds of times in a normal year, the tailback goes as far as Kidbrooke and Eltham within a couple of minutes on the south side of the river.

Therefore, I think there is a strong case for addressing the problems there. We know that the tunnel, when it is built, will lead to no overall net increase in traffic because of the user charges there and will lead to an overall improvement in air quality.

Siân Berry AM: Sorry, I asked if you had done a re-evaluation of the viability of the project and what you have given me there is basically anecdotal evidence and you restated the case that you previously had. Is it right that you have not been looking at the potential variability now in traffic forecasts and examining that impact on the ability to pay for the tunnel using the user charge?

Andy Byford (Commissioner, Transport for London): I will need to check that out. I will ask my modellers. Absolutely, at the end of the day, this is a really strange time that we are living in and everything that we probably assumed for the future, it appears that everything in life is up in the air. On the one hand I think good transport planning is dynamic and we should always keep things under review, but equally there are some things for which the lead time is so long that it is easy to just say we will not need that in the future. But try turning it back on again; that is not quick and easy. Therefore I think there is a danger equally that you assume that the present weird reality is the new normal and it might not be. If it proves not to be and things do go back to what was the normal, you will regret having taken what might appear retrospectively to have been a short-term decision. But I do agree that transport planning generally should be dynamic to take account of changing and prevailing circumstances. I will ask the specifics for you.

Siân Berry AM: Yes. Earlier on, Andy, you mentioned you were modelling fares and the expectations of fare income against various scenarios, so are you doing the same about the Silvertown Tunnel’s viability and could we see those scenarios?

Andy Byford (Commissioner, Transport for London): Again, I will take that on notice and I will ask my transport planners.

Siân Berry AM: OK, thank you very much.

Susan Hall AM (Chairman): I will go then to Assembly Member Devenish, and if you ask anything of Heidi Alexander, can you be a little bit more concise in your answers?

Tony Devenish AM: I am going to go back to the Commissioner. No disrespect to the Deputy Mayor.

Susan Hall AM (Chairman): OK, thank you.

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Tony Devenish AM: Andy, I am rather concerned - and we have had this discussion previously - that you, TfL, the Mayor and indeed much of the public sector are almost saying, yes, we have had this terrible difficulty, as you put it earlier, but the world in probably about two years will go back to normal. In many ways, I, as a central London Assembly Member, would love to agree with you because my patch has been hit probably harder than any other part of London. However, when I talk to most people outside of the GLA family, they do not believe that the world is ever going to go back to normal.

While you have given us a lot of optimism, almost some best-case scenarios of how you are going to improve the network and the Green Party’s wish list for the future in ten years, and everybody else, I worry that we should really be seeing London as London in the southeast and London as the whole country. When you are looking at best-case scenarios, could you also perhaps acknowledge the worst-case scenarios and what you are going to do if we do not go back to millions of people coming into London every day, we do not go back to the Tube going back within, I think you said earlier, two years? Could you address that first? Then I have some specific points to follow on from that, please.

Andy Byford (Commissioner, Transport for London): Rather than optimistic we are trying to be realistic, but inherently, as someone else who lives in central London, I cannot believe that London will be like this forever. I genuinely cannot. I think it is a very vibrant capital city that, over time, may well look somewhat different, but I believe in London and I think that London will recover, albeit that the full recovery will take some time, which is why I made reference to maybe 80% in a few years’ time.

Certainly with the plan we have put together, it is with a view on the whole country because, although there are some people who have this view that London is just this greedy beneficiary of all the funds, as I made the point in an earlier answer, a vibrant London is the economic powerhouse of the whole country. There are others - the Northern powerhouse, etc - but what we put into this plan is meant to whet the appetite of Government because it achieves a lot of Government’s objectives. Government wants shovel-ready projects. We can help with that; we have plenty of them. Government wants a construction-led recovery, in other words to have tangible things to build and to make that will provide economic prosperity. We can help with that. Government wants levelling up. Again, we can help with that. We buy steel in Scunthorpe. We buy buses in Falkirk and Guildford. We buy trains in Goole in East Yorkshire, so again we can help with that. Government wants to see environmental improvements. We can help with that by building or migrating to an electrified bus fleet.

Tony Devenish AM: Andy, I agree with all that, and thank you for using the Prime Minister’s soundbites on steel from Scunthorpe. He used that as Mayor. We all agree with those large macro points. The point I am making is: do you really believe that your fee income, your tickets on the buses and your travel passes and everything on the Tube are going to go back in two years or in five years to the normal level? Or are you just asking, effectively, the taxpayer to come up with the money to fill the gap?

Andy Byford (Commissioner, Transport for London): No, we do not have a crystal ball any more than, respectfully, anyone else in this room does, but what we do have is the best available information that we can lay our hands on to date with the likes of the Bank of England, the various financial institutes, the various people that model on a macro level across the country, plus our own in-house modellers. With the best information we have available now, we have put together what we think will be the demand in the currency of that document and we have assigned schemes to address that demand. Is it perfect? Is it absolutely 100% bound to be correct? I cannot say that. But it is done by clever people with good modelling and time will tell if we have been proven to be correct.

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Tony Devenish AM: I will go back to the specific questions; I will get told off by the Chair otherwise. To what extent have you modelled future service provision, even perhaps the more dramatic scenario such as significant and perpetual drop in passenger numbers? Perhaps you could send us what you have modelled; that would be quite helpful.

Andy Byford (Commissioner, Transport for London): Yes, we have modelled five scenario models, Assembly Member, and we can give you some more information on that. We have looked at the most optimistic being a sort of a V-shaped recovery where there is only one spike of coronavirus and the company rapidly goes back to normal. It is clear that is not going to happen. We have modelled another scenario where there would be a second wave, which does appear to be happening, and we have modelled scenarios wherein life does not go back to normal and people tend to shop and work much more locally. We have modelled scenarios in which London’s population grows at a slower rate. Again, it is not an exact science because obviously this thing is a fast-moving entity, and it is the same, for that matter, for central Government. They have to use the same assumptions as we do. But we do have sophisticated modelling and over time we can revise and refine our modelling as predictions become reality.

Tony Devenish AM: I look forward to seeing those models. Leaving aside talk of additional funding - I know everybody in the public sector loves talking about additional funding, let us leave that aside for one moment - what is perhaps the tipping point in terms of when any public transport system in London would remain viable?

Andy Byford (Commissioner, Transport for London): That is a difficult question to answer. At the end of the day, I guess the tipping point is if your ridership collapsed to the point that you would never be able to make up the cost of running that transport system in the long term. However, I would argue that there is such a strong case still for funding public transport because the alternative is so grim. Namely, that you would effectively condemn some people to never leaving their home, or everyone piles into their cars and gridlock would ensue and there would be a catastrophic impact on the economy of the capital because it would literally grind to a halt. I would argue that there is a long way to go between a viable transport system and the doomsday scenario that you have asked me to comment upon. You would be a brave politician to say, “That is it, we are not going to fund transport anymore because it has reached the nadir of its ridership”.

Tony Devenish AM: For the record, nobody is saying the latter point, Commissioner.

Andy Byford (Commissioner, Transport for London): I am very pleased to hear that.

Tony Devenish AM: My next question. The Committee has found your comparison of fare income reliance across major metropolitan transport systems useful. Do you have a similar analysis looking at the cost side, please?

Andy Byford (Commissioner, Transport for London): We do, in that we do benchmark with other major transport undertakings. TfL, or the Underground, is a member of the Community of Metros (CoMET) group. We also participate and benchmark with other agencies via Union Internationale des Transports Publics (UITP) and that does give us insight into what the cost base is on a like-for-like basis. The reason I make that point is there are so many variables that it is quite the science to do a like-for-like comparison, so we do have that data. It is anonymised. There may be a way that we can share that with you but we are absolutely bound by the terms of our membership of these organisations. The data is deliberately anonymised but you can see where you are against the median in terms of cost per train mile of operations, cost per bus mile, a range of indicators. We have very sophisticated data on that.

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Tony Devenish AM: My next question is slightly similar and you may have almost answered it by saying you have to show confidentiality, but I am going to ask it anyway because I think it is important that we get this across. Your comparisons are based on percentage comparisons. Can you please provide the financial figures which sit behind these percentages, otherwise it is not possible to get a true sense of the scale of the sums involved from the other networks?

Andy Byford (Commissioner, Transport for London): As long as we do not breach the confidentiality rules, because literally you have to sign up to those, but you can see on an anonymised basis where you are up against good comparators. I am talking for the Tube the likes of New York, Paris, Moscow, a whole bunch of major undertakings. We are also members of a bus benchmarking group as well. I am reasonably familiar with that data because in the past, in other organisations that I have headed up, such as New York City Transit and the Toronto Transit Commission, I have seen that data and I can tell you from memory London Underground, and for that matter TfL, sits well against a lot, not all, but a lot of the indicators. One of the factors that works to our advantage is, in terms of efficiency, we of course do not benefit from the central grant that nearly every other undertaking does. But we will look into providing anonymised data that will hopefully answer your question.

Tony Devenish AM: Chair, should I let Unmesh in before I ask my last two questions, which are slightly different?

Susan Hall AM (Chairman): OK. Assembly Member Desai, do you want to come in now?

Unmesh Desai AM: My question is both to Heidi from a political perspective, the Commissioner from a personal perspective. Commissioner, welcome, you have talked about a construction-led recovery and, Heidi, you are realistic as well on some of the long-term projects for the next ten years, implications and so on, but they may not happen or possibly will not happen. But I think we have to be optimistic and look to the future. Obviously look at a worst-case scenario, but I would rather look at a positive scenario, best-case scenario.

There are two projects, Commissioner, that I want to talk to you about, one in particular, although they are both tied together, the vision that many us have are for the east London, but projects that would connect east London to southeast London and the east of England. Are you aware of the vision that Barking and Dagenham Council just released this week of tunnelling the A13, which causes massive blocks and traffic jams all the way from central London out to Essex? This tunnelling is vital for London, indeed the whole of the country, I would say. The economy would benefit from this significant infrastructure project, opening up links to 80% of the world economy. As well as that, this move would improve air quality in the area and open up potential for 30,000 new much-needed homes for London. You have some funds being announced by Barking and Dagenham Council.

Tied in with that - and I know what Heidi will say, the answer is probably no - we have to keep alive the argument for a river crossing much further out east. It is scandalous if we do not have a bridge from Tower Bridge all the way out to the Dartford Bridge. I know there are plans for a Lower Thames bridge but we have to keep the argument alive for a river crossing, a bridge, somewhere near Beckton or further out. I would urge you to keep both these scenarios on board and not just give up because of COVID. I understand there are implications in terms of getting institutional finance and so on.

Heidi Alexander (Deputy Mayor for Transport): If I can answer that very briefly, the priority has to be Silvertown. That is a big construction project. So I am afraid you probably are right in your anticipation,

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Unmesh, of me saying to you I am not sure in the short term another road river crossing in the east of London is realistic. What I am interested in looking at is public transport connectivity across the river in east of London, such as the DLR to Thamesmead.

On your point about Barking and Dagenham and the very ambitious proposals from the Council about tunnelling, there are a number of options that are being considered with regard to the A13 including the replacement or renovation of the flyover that is currently there. I think we probably need to look at what offers the best value for money and also ensures that we can keep vehicles moving in that part of London, because there is a need to do some maintenance work on the existing flyover. I know it is very ambitious, what Barking and Dagenham are wanting to do, and we have spent some time in the last few years talking to Councillor Darren Rodwell [Leader of Barking and Dagenham Council] about this. It is not a simple thing to get right and so I am not sure, as of today, I am in a position to give you a commitment to that, but we will be looking at all the options.

Unmesh Desai AM: To be fair, Deputy Mayor, I would not expect you to give a commitment here and now, but I am glad you are certainly thinking along those lines. I think the important thing is to be positive. Look, no one had experience of COVID at this time last year, God knows what the scenario will be next year, but just like Barking and Dagenham Council have plans - not concrete plans - it is about having a positive vision to inspire people. Thank you.

Tony Devenish AM: Thank you very much. My last two questions, Chair, unless anybody else wants to come in, are back to Andy. We were expecting, Andy, to have an update or indeed the findings of the Mayor’s Independent Review into TfL’s finances at yesterday’s Board meeting. I understand that did not happen. Can you tell me why and when we do expect them, please, and give us any titbits in advance of what you are expecting?

Andy Byford (Commissioner, Transport for London): The panel are just completing their work, the independent panel, and I am very grateful to them for doing the work because they have done it for free for us and it is a panel that has gravitas. They are four very impressive people who know what they are talking about.

I am happy to say that they conclude that having an integrated transport structure such as that we have enjoyed at TfL for the last 20 years, they absolutely back that as something that we should retain and cherish going forward. I would certainly say that, having lived elsewhere, TfL is very well regarded internationally. It is seen as something that is a model that makes sense to have this cradle to grave approach to transport planning, an integrated approach to transport planning.

I should not speculate, or I cannot really speculate, any further in terms of the content. I am waiting, the same as you are, to see the final panel review, the report. I am very keen to see it. I am very keen to see the KPMG report that the Government has commissioned. I have only seen a third of it, the other two-thirds was redacted. But it is not long now, we should soon have our hands on both of those reports and I am certainly on tenterhooks, same as you, Assembly Member.

Len Duvall AM (Deputy Chair): Chair, can we just seek clarification of that? You are saying that you have not seen the Government report on KPMG into the future operations of TfL, you have only seen part of it?

Andy Byford (Commissioner, Transport for London): I have seen one-third of it. It was sent through to us and two-thirds of the document was redacted. I have asked to see the remaining two-thirds. As yet that request has gone unheard.

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Len Duvall AM (Deputy Chair): Had you clearly offered, in asking for the remaining two-thirds, confidentiality to Government around that if there needs to be? I am not sure why. You, as a professional, should have access to that information about the service to see if it is accurate, never mind what the remaining two-thirds have said. So you have offered confidentiality to that? You have?

Andy Byford (Commissioner, Transport for London): I have offered. Clearly there has to be a level of trust if we are to come to a satisfactory funding agreement and I get that the KPMG report is a key input to Government’s thinking. I might have expected the odd redaction here and there. I was taken aback when I realised that, looking at the page numbers, two-thirds of it was missing. I have challenged my colleagues over at the DfT and I have said that I will be prepared to be bound by confidentiality rules, but to date that request has gone unheard.

Len Duvall AM (Deputy Chair): Chair, this may need to be picked up by other Committees on the Assembly because both these documents -- we are expecting to receive full access to the Mayor’s independent document, we would not allow that to be redacted and we would have something to say about that. They are both going to be important to scrutiny and the future issues that we may want to take a view on about the future of TfL, in terms of London. We may wish to pick this up elsewhere.

Caroline Pidgeon MBE AM: We can write to Government asking for them.

Susan Hall AM (Chairman): We may do. There may be a good reason for it and I am sure, in the fullness of time, you will be told that first, Commissioner.

Dr Alison Moore AM: It is like trying to negotiate with your hand tied behind your back.

Susan Hall AM (Chairman): Yes, but they are holding all the cards because they are the ones with all the money. Sorry, you were interrupted, Assembly Member Devenish.

Tony Devenish AM: I was interrupted, but I do not disagree with Len’s point. All I would say is I think there is clearly, from a lot of things that have been said today, some mistrust on both sides. I faced it in a similar way where people, including TfL, would not give us the Hammersmith Bridge information earlier on, which Hammersmith Council had. So I do think we all have to work closer together and not hide documents from each other, so I hope my Government will do that as I hoped the London Borough of Hammersmith and Fulham and TfL would do that in the past. I think we are all agreeing that when information comes through to people like the Commissioner as soon as possible, we can then get the services we wish to be improved further. I do not think there is any party-political view in this Chamber about that today. I just thank the Commissioner and finally ask him: do you have a date when you expect to be able to give us the findings of this review?

Andy Byford (Commissioner, Transport for London): Not a specific date, Assembly Member, but I think it is very soon. I would like to think so for the KPMG report as well. The last time we spoke to the panel they were putting the finishing touches to their report so we are certainly not talking months, but it may be just a week or so, maybe a couple of weeks. They are just finalising that report now.

Tony Devenish AM: Thank you, Chair, I will leave it there.

Susan Hall AM (Chairman): Thank you. Assembly Member Berry, did you want to come back on anything?

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Siân Berry AM: Yes, sorry. Members in the Chamber were talking at the same time as each other and I wanted clarification on whether we just agreed to write to the Government to ask for the full document of the review that we were talking about.

Susan Hall AM (Chairman): We have just heard that it is not finished. When it is finished that is a different matter.

Siân Berry AM: The KPMG review appears to be existing but redacted.

Susan Hall AM (Chairman): Is it redacted?

Andy Byford (Commissioner, Transport for London): The independent review is not redacted. The KPMG is.

Siân Berry AM: The KPMG review, the Government’s one.

Andy Byford (Commissioner, Transport for London): My understanding, to be fair, because I am trying to give straight honest answers, is the KPMG review is also not finished. The document that was sent to us was not the finalised document. My understanding is it is still being finalised. My point was, because I was asked if I had I seen it, that I have seen some of it. I have seen a third of it.

Susan Hall AM (Chairman): When it is finished, then absolutely we have a right to see it. To be fair, if it is not finished, they may have names in there and they have to clear it with those people before they put it, we do not know. If it is going to be very soon, I assume there will not be an issue. If we do not get it soon then we will all be asking because, at the end of the day, the commuters are the most important people there. We must look after them.

Did you want to come back very briefly?

Caroline Pidgeon MBE AM: Just to clarify, the TfL independent review that has been done, that is about to be published, that will be published in public so we can all see it?

Andy Byford (Commissioner, Transport for London): The Deputy Mayor may need to correct me. My understanding is that will be a matter for the Mayor to decide. He commissioned the independent panel.

Caroline Pidgeon MBE AM: Will the Mayor be publishing that, Heidi, or will we have to use our power of summons?

Heidi Alexander (Deputy Mayor for Transport): The intention is to publish it when it is completed, but, as Andy said, the panel are putting the finishing touches to it and so there is not a finished document. It is not that I have seen a document, which is the review, and so I think the intention is to publish it.

Caroline Pidgeon MBE AM: Great, and if not, with that one we at least have the power of summons, whereas we do not with the other.

Susan Hall AM (Chairman): Exactly, but we need to wait for these things to be finished and then we can take a view.

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OK, Commissioner, could you provide the various possible futures of London transport modelling that you mentioned earlier? Would that be possible? Thank you. Also, Commissioner, I have not heard you speak before and I am very pleased to hear your passion regarding maintenance and keeping the transport safe, because that has to be in everybody’s interests.

I think we all accept that life has changed and it is absolutely vital that TfL and the Mayor embrace that and look at areas where we can make efficiencies because constantly demanding money from the Government going forward is not a desirable place for anybody to be in. Hopefully, that will be sorted soon.

I would like to thank all our guests for attending today and for their answers to our questions.

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Page 52 Appendix 1

QUEEN ELIZABETH OLYMPIC PARK T +44 (0) 20 3288 1800 Level 10, 1 Stratford Place, F +44 (0) 20 3288 1801 Montfichet Road, London, E20 1EJ www.QueenElizabethOlympicPark.co.uk

8 October 2020

By email

Susan Hall AM Chair of the Budget and Performance Committee

Len Duvall AM Chair of the Budget and Performance Committee

Dear Susan and Len

We are writing to you before our meeting at Budget and Performance committee next week to update you on our budget position for the year (2020/21).

LLDC has repurposed this year’s revenue budget to deliver in-year savings of £7.4m. An update on this was published as part of the LLDC Corporate Performance Report (Q1 2020) in July 2020.

Following the request we received from Len as chair of the Oversight Committee we wrote back on 4 September committing to set out further detail ahead of the publication of the Q2 2020 Corporate Performance Report in November (which is currently in the early stages of drafting).

Savings and Efficiencies LLDC has delivered significant revenue savings in recent years and a further £2.0m of savings and efficiencies were already incorporated into the approved budget for the year.

However, in response to the Mayor’s Budget Guidance published in June, LLDC has undertaken extensive work to identify an additional £7.4m of savings in 2020/21 as required by the Mayor.

LLDC’s savings target is profiled to deliver more in 2020/21 than in the following years due to the impact of lockdown on London Stadium events this summer and the cancellation of the summer event programme and associated seat moves.

The table below sets out the resulting adjustments to LLDC’s budgets to deliver the required savings in 2020/21:

Page 53 QUEEN ELIZABETH OLYMPIC PARK T +44 (0) 20 3288 1800 Level 10, 1 Stratford Place, F +44 (0) 20 3288 1801 Montfichet Road, London, E20 1EJ www.QueenElizabethOlympicPark.co.uk

The £7.4m of savings are being targeted from the following areas:

• London Stadium: Due to the pandemic, the London Stadium has been closed to spectators and its summer events, which included Major League Baseball, international athletics and the Mega Hella tour, have been cancelled or postponed. As a result, the Stadium is expected to incur significantly lower operating costs in 2020/21, particularly relating to the cost of moving the seating between football and summer events mode (c£4m). Net savings of c£0.7m are also expected from lower event costs (including West Ham matchday costs) offset by a loss of income from cancelled/postponed events and other commercial and sponsorship income. Finally, there will be savings from lower utilities, insurance and other overhead costs (c£0.5m).

• Discretionary spend: LLDC’s discretionary cost base is very limited, largely due to savings delivered over previous years. However, a bottom-up review and challenge of all budgets has identified c£1.6m of discretionary spend that can be reduced in 2020/21 including from

Page 54 QUEEN ELIZABETH OLYMPIC PARK T +44 (0) 20 3288 1800 Level 10, 1 Stratford Place, F +44 (0) 20 3288 1801 Montfichet Road, London, E20 1EJ www.QueenElizabethOlympicPark.co.uk

budget rolled-forward from 2019/20. These costs include professional fees, IT costs, repairs and maintenance and marketing and communications. We are reviewing all staff vacancies on a case by case basis and redeploying staff to other duties where appropriate. • Income opportunities: These are expected to be challenging in the current climate but LLDC has identified c£0.5m of additional income that includes the increased use of its car parking spaces, some additional filming on the Park and other planning-related income.

COVID-19 related costs/loss of income LLDC has identified that it will incur c£3-4m of additional costs and/or loss of budgeted income as a result of the COVID-19 pandemic (noting this does not assume a second national or local lockdown). Although we will need to demonstrate how the net impact has been minimised, the Mayor has agreed to fund these separately, as confirmed in his Budget Guidance.

These costs will appear within our forecast figures in the Q2 Corporate Performance Report and, therefore, as a variance against the above revised budget figures; LLDC’s funding from the GLA will be increased by a corresponding amount.

Hopefully this provides you with confidence that LLDC has reacted quickly and decisively to meet the significant challenge posed by the Mayor. Despite committing to delivering the additional savings, we strongly believe that LLDC and Queen Elizabeth Olympic Park are well-placed to support the recovery from COVID-19. The investment in infrastructure, homes and jobs will play an important role in supporting London’s social and economic recovery.

Please let us know if you need any further information and we look forward to meeting you at Budget and Performance Committee next week.

Yours sincerely

Lyn Garner Gerry Murphy Chief Executive Deputy Chief Executive

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Appendix 2

London Assembly Budget and Performance Committee – Wednesday 14 October 2020 Transcript of Item 5 - 2020-21 Budget Review – LLDC and OPDC

Susan Hall AM (Chairman): I would like to welcome our guests in the Chamber: Lyn Garner, Chief Executive of the London Legacy Development Corporation (LLDC), and Gerry Murphy, Executive Director of Financial, Commercial and Corporate Services. Welcome to you both. David Gallie is also here online. He is the Executive Director of Resources [for the Greater London Authority (GLA)]. Good morning, David.

All right. That leads us straight on to our questions and I am going to start them today. If I ask you, Lyn, if we start with you, what are you doing to support businesses in the area to get through the downturn brought on by the COVID-19 pandemic?

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes, thank you, Chairman. We have faced significant difficulties this year like everybody else, but I am pleased to say that we have managed to support businesses. If it is OK with you, I will go through a list of things that we have been able to do during this period.

Following the lockdown, all of our venues were closed to begin with. Many of the events that we had planned on the Park and in the venues were cancelled and construction was halted on sites that were in control of the Mayor of London in accordance with his wishes. Strict measures were imposed on construction sites around the Park that remained open and do not belong directly to the LLDC in terms of control of those.

The first thing we did with regard to local businesses and our own income-generating businesses was that we instigated a three-month rent holiday for all of those businesses. In the second quarter we have allowed a 50% rent relief. These things are consistently under review as we go forward to see the impact of COVID in the round.

We also provided some assistance to Greenwich Leisure Ltd (GLL), which runs our venues, the Copper Box Arena and the London Aquatics Centre. Effectively, that was about bringing forward a payment to GLL that we would have made anyway at the end of the year.

All in all, for 2021 alone we are looking at losses of somewhere between £3 million and £4 million in income that would have been generated. That is for the Park alone. It is nothing to do with the Stadium, which we can come on to later in one of your questions. That is not assuming any national lockdown, any breaker that we are hearing about or any further measures for the current year. It is our projection as we currently stand.

We worked closely with some local social enterprises that we fund to repurpose their businesses, like Badu Sports, for example, which we fund through our regeneration programme. We helped them switch to online exercise classes for young people. They do a lot of work in the community with young people. Bikeworks, which normally, as the title suggests, does “come and fix your bike” sessions, brought forward a fantastic service in east London, moving meals around for vulnerable people during the initial lockdown period and medicines for hard-to-reach groups. That was really good.

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We commissioned a piece of research to have a look at the impact of COVID across local businesses. We have many small enterprises in the east London region around the circumference of the Park. We were then able to use the East Works programme to support a vast number of businesses in that area - we included in that the Sustainable Fashion Accelerator that runs in Hackney Wick and Fish Island - providing COVID-specific support to local businesses.

We have also worked with the whole of the Creative Enterprise Zone in Hackney Wick and Fish Island to help lots of small businesses in there that are really suffering in the face of COVID. It was very obvious we were going to have to step in with some business support, building business resilience for them and providing some bits of support financially here and there to individual businesses and to freelancers. To give you a flavour of that, 1831 businesses have felt that support in the Creative Enterprise Zone. We established a project called Wick Together and we funded four local cultural organisations through that. We helped 20 freelancers get redeployment and 70 local residents have engaged out of the project and gained some new skills working with us through that project. It has been reasonably extensive there in terms of those efforts.

In the Park, we helped with local COVID responses, particularly with the London Borough of Hackney, providing space for mobile testing units and for food and personal protective equipment (PPE) distribution hubs using the multi-storey carpark on the Park that is next to Here East and providing parking for key workers who needed to get access and would normally come by Tube and so on.

Throughout the lockdown, we have kept the Park open. This has proved to be really critical and has been a bit of a lifeline, particularly during those three months when people were hardly ever leaving their homes and were only allowed to come out for an hour’s exercise. The Park was packed with people. We had extra staff on duty to help with social distancing provisions and so on but, having surveyed local people afterwards, we found that it has made a tremendous difference having the Park there. As you imagine, in that part of east London there is an awful lot of flatted development where families are living and that provided a real lifeline during that period. We were really happy with that.

I hope that gives you a bit of a flavour, Chairman, for the local business support.

Susan Hall AM (Chairman): It does. Thank you very much. I am sure at some point we will come back to some of that.

What are the biggest challenges, do you think, coming up with savings and efficiencies in the remainder of the financial year?

Lyn Garner (Chief Executive, London Legacy Development Corporation): The biggest challenges are really those normal income streams, the commercial income that we might have derived in and around the Park whether from events and through the Stadium or from our tenants, essentially, on the Park.

A bit of good news is that in 3 Mills Studios we have been able to restart filming. That is one of our larger income generators and so it has helped us stem the flow of income, but in other areas we are finding it quite tricky. Particularly, food and beverage operators are really struggling in these times.

On other significant things that are challenging, Gerry, would you add anything?

1 Following the meeting, the LLDC clarified that 182 businesses had been supported through the Creative Enterprise Zone

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Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): I am thinking of the uncertainty, given the large proportion of our income that comes from, as Lyn talked about, revenue from venues and rentals. We are considering where we are now, as Lyn said, assuming no second spike and no second lockdown, but the inherent uncertainty given the amount of third-party income that helps us balance our books makes it very difficult for us to be really sure about our forecasts in these uncertain times. That troubles all of us, particularly now we are trying to put together our budgets for next year. We have had a savings target for this year and we have a savings target for next year, but thereafter as well there are long-term impacts. We are looking at our capital strategies and understanding what house price inflation (HPI) might be. There is just a very uncertain situation.

Susan Hall AM (Chairman): Yes. Sadly, we are all finding ourselves, through nobody’s fault, in that situation.

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): Absolutely.

Susan Hall AM (Chairman): Going back to what you said earlier, you said that you have been spending quite a bit of money on various things in the Park, et cetera. If you are running at a loss, you cannot do that again. Did you think about that?

Lyn Garner (Chief Executive, London Legacy Development Corporation): Essentially, where we had already budgeted for regeneration and socioeconomic activity, instead of pulling that away from those organisations, we have repurposed it into different things. The sorts of things that I was describing there have been from existing budgeted funds for socioeconomic activity that are already allocated in various areas and just flexing them into different areas so that they can focus on COVID responses and so on.

Susan Hall AM (Chairman): OK, but you will not be able to continue to do that if you are running at a loss.

Lyn Garner (Chief Executive, London Legacy Development Corporation): If those budgets are cut as we go forward and, indeed, in the regeneration budgets, there was already a gradual reduction in the amount we were going to be able to put into socioeconomic activity.

Susan Hall AM (Chairman): That is right because --

Lyn Garner (Chief Executive, London Legacy Development Corporation): Chairman, to come up with the current revenue savings target, Gerry and I have had to conduct an absolute line-by-line examination of everything we spend money on and nobody in the organisation has been free from that. The savings we have come up with have affected everybody, including the socioeconomic budgets.

Susan Hall AM (Chairman): Everybody is having to do that.

Lyn Garner (Chief Executive, London Legacy Development Corporation): Absolutely.

Susan Hall AM (Chairman): Should we go into a partial lockdown or anything else, you will not be able to spend that money again on the basis that you are making with losses anyway.

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Lyn Garner (Chief Executive, London Legacy Development Corporation): It will depend on what has been allocated and what flexibility there is but it will certainly be under a tremendous pressure, yes.

Susan Hall AM (Chairman): There will not be flexibility if you are running at a loss, will there?

Lyn Garner (Chief Executive, London Legacy Development Corporation): In bringing the savings target forward, there are still some allocations of budgets for 2020/21 and 2021/22 in the socioeconomic piece. If organisations cannot operate during lockdown doing the normal things they would do, we would still look at flexing that income in a different way. What we are not being asked to do by the Mayor at the moment is to strip all of that income out completely but to meet the targets that we have been set, which is what we have done.

Susan Hall AM (Chairman): OK. You mentioned 3 Mills Studios earlier. When we last met in December [2019] - I cannot believe it was so long ago - it was noted that 3 Mills Studios was a real success story in terms of trading income, even balancing to some degree the venues that struggled to wash their faces, which now I appreciate will be even worse.

Can you set out the current financial position and future projections for those studios?

Lyn Garner (Chief Executive, London Legacy Development Corporation): I do have something on this but just bear with me.

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): The closure of 3 Mills has been one of the significant elements of the cost of COVID in our books this year, not only the lost revenue but also the additional costs of having to ensure that the business could operate safely in a COVID environment. Of the estimated £3.2 million costs directly associated with COVID on our revenue book, £700,000 of that is a result of reduced income and increased cost in 3 Mills. The studios have opened. They opened in June [2020] and bookings are good. The creative industries are really looking to ramp up and restock their programme base now.

Susan Hall AM (Chairman): That is good. I note that in quarter 1 there were issues with the roof repairs. Is that hindering what you are doing there?

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): The roof repairs were less intrusive than we thought but there was a period where we did capitalise on the shutdown to do some remedial work on 3 Mills. We have an additional grant to refurbish and open up additional areas in 3 Mills over the next year. There has been a number of different construction projects, one of which is shoring up the river wall. That is substantially complete and the roof works are substantially complete.

Susan Hall AM (Chairman): All right. It is difficult to anticipate the direction of the impact COVID-19 is going to have on expenditure over the remainder of 2020/21, I assume.

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): When Lyn and I did the savings target for this year, as Lyn said, we looked at every single bit of the business. What we have done is we have tried to identify all of those savings and build those savings into the budget. The majority of our savings come from the Stadium, which we can come to, but just over £2 million of it comes from the rest of our revenue book. That really is a hotchpotch of taking

Page 60 discretionary budgets from all over the place, from marketing, from information technology (IT), from professional services.

We have a number of vacancies and we are asking the business to make sure that the business case is very robust if vacancies are being filled. I will not call it a vacancy freeze but we are putting a lot of pressure on the business to ensure that we are absolutely watching every penny. There is quite a high degree of scrutiny now by the executive for any additional spend.

When we identified the savings that we could deliver this year, we have now built them into the budget. If there is a second spike, then that will be difficult, but the GLA has agreed that we can identify COVID impact costs separately and be funded for them separately.

Susan Hall AM (Chairman): OK. You mentioned the Stadium. We are going to come on to a section on the Stadium shortly, but are you not somewhat concerned that literally more than half of your savings total is coming from the Stadium?

Lyn Garner (Chief Executive, London Legacy Development Corporation): When we look at these revenue budgets for the LLDC, just to remind the Members here today, the core revenue contribution from the GLA for the LLDC is £16 million currently per annum. In the past, we have made significant revenue efficiencies and so these budgets, when I personally examined them with Gerry, are very tight in terms of what the organisation does. We had already identified £2 million worth of savings in those budgets going forward when the new target came in for us to achieve around £9 million over two years.

What was very obvious was, because they are quite tight at that £16 million per annum envelope, the savings that we will achieve over this period will mean that that contribution will drop to £14 million. This is in the LLDC envelope alone. We were able to bring forward quite significant Stadium savings because of no events in the summer, not having to do seat moves, behind-closed-doors action for football and so on. Really speaking, we feel that we have put a lot of pressure on the revenue budget at LLDC at the moment and, as I say, basically reducing the contribution to around £14 million per annum going forward.

For the GLA the foot is not off the accelerator pedal at all on this because there is uncertainty about the grant that it will receive in February [2021] and we are very aware of that. We are alive to that. There will be, inevitably, revenue savings requirements in future years as well beyond 2021/22. It is work in progress, really, Chairman.

Susan Hall AM (Chairman): Yes. It does seem quite concerning that a major contributor to your savings is the slightly bizarre reality that you operate a loss-making major stadium.

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes.

Susan Hall AM (Chairman): It is quite bizarre. What are the key risks to the timing and the scale of capital receipts from the LLDC developments?

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): In terms of our capital development plans, they are ongoing. We have been working with partners. I will start with the developments that are in contract.

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Chobham [Manor] is now well advanced and we expect that to conclude by 2022. We have been seeing those income streams coming from Chobham and we will see more income coming in in the year.

East Wick and Sweetwater phase 1 is coming in. It is going to conclude over the next probably six months to nine months. That is the first phase of East Wick and Sweetwater.

On the remaining phases, there is a lot of planning activity. Some of the zones have masterplan approval and further detailed approvals are coming forward and in the next few months. There will be a slight gap between phase 1 and the future phases and but that is now factored into our forecasts.

On the various other sites, at Stratford Waterfront we are going out today to launch the procurement for a joint venture partner for the Stratford Waterfront. This is the residential associated with East Bank. There is also a tranche of Pudding Mill called Bridgewater that is going to be packaged with that. In terms of Pudding Mill, there has been a huge amount of design work and that is coming up towards planning.

On Rick Roberts Way, we have been working with Newham on our plans to deliver about 450 units or --

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes, 450. In terms of timing, East Wick and Sweetwater is definitely delayed in terms of capital receipts but, as you say, that is built into the budget.

I would say our primary concern, given the uncertainty at the moment and looking forward not only from COVID but also from Brexit, is HPI because that is going to directly affect the capital receipts that come into us. We have started to rework our HPI estimates, but we are going to see some of that potentially come through into our budget submission in the next period. Again, because of COVID, social distancing and Brexit, there is no doubt that we will see some increases in construction costs as well.

These are the two variables that are in the most uncertain boxes, if you see what I mean, as to what we face going forward in the next six to 12 months.

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): Yes. It is quite difficult to get a real read on what is going to happen with HPI, but we have had to retrench on our current forecasts and take a view about our later forecasts. We are looking at that for the budget submission and that will come through in the capital strategy that we present. Already we recognise that there is a reduction in receipts because of lower HPI currently.

Susan Hall AM (Chairman): Have your assumptions around housing demand changed as a response, really, to the pandemic?

Lyn Garner (Chief Executive, London Legacy Development Corporation): Apart from HPI, we have not revised our assumptions around demand. It is a really interesting question because we have just put certainly over 100 units to the private rented sector (PRS) market for East Wick and Sweetwater. They have built a new marketing centre on the site for phase 1. In the new year we will be releasing the affordable units and the units for sale. It will be very interesting to see how the market responds to those units because they are the most recent units we are seeing going out to the market.

My take on housing demand is that probably certain sectors will be affected. For example, in shared ownership, we are going to see some real reductions in demand. For home ownership, it remains to be seen,

Page 62 really. It rather depends on that sector of the population and how their income is generated in terms of how they are responding to the products. In London, my belief is that housing demand is still high in general, but we have to test the market, Chairman, and see how that goes. It is very interesting at the moment to see how phase one will go in East Wick and Sweetwater

Susan Hall AM (Chairman): No doubt you have worked on best- and worst-case scenario along with the finances.

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes.

Susan Hall AM (Chairman): OK. I will not pursue that now because of time. When can we expect to see your transition plan, which you discussed with your Board in February [2020]?

Lyn Garner (Chief Executive, London Legacy Development Corporation): We are transitioning over the next five years. The Board has already made a decision that the planning powers will return to the boroughs by December 2024. That is a fixed date. The Mayor is about to write to the Ministry for Housing, Communities and Local Government (MHCLG) to confirm that date and so that everybody is aligned in that direction.

We will be looking in our November [2020] Board away day at the specifics of that. What we have done is we have worked out, taking into account COVID, a plan as to what LLDC will prioritise its activity on between now and handover. That plan is being fed into our November Board away day so that everybody can get a handle on that, ask some questions and move that around.

There are a number of significant infrastructure projects that we are wanting to concentrate on to finish off, in particular connectivity into the Park from the boroughs, and make sure that that works well. There will be some improvements to roads and cycling on the infrastructure list. There are a number of activities related to the developments we have just been speaking about in housing. We have to complete East Bank. We have a target to reduce the financial pressures in the Stadium. We have a five-year plan to get to savings across the Stadium and so on. That discussion will take place at the November away day and we will go in for a Board decision at the end of November or early January [2021].

We will also be discussing what sort of successor body might be required once we have folded the Development Corporation. We have something here akin to a great estate. We will need to hold that together in terms of the venues, the facilities management, keeping the Park sparkling, looking after local businesses and so on. We will need some sort of successor body. We are taking detailed commercial and tax advice at the moment on what that might look like - who might own the assets, for example - and we will also be discussing that at the November away day. As I say, the planning aspects are essentially in the bag. We will be handing that over at the end of 2024.

Susan Hall AM (Chairman): OK. When will we have sight of that plan?

Lyn Garner (Chief Executive, London Legacy Development Corporation): I would imagine early next year because it will go into the Board for a decision.

Susan Hall AM (Chairman): Let us hope it comes before our next meeting, which will be the budget rounds later this year and early next.

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes.

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Susan Hall AM (Chairman): I hope so. No doubt I will be asking --

Lyn Garner (Chief Executive, London Legacy Development Corporation): We can certainly show you what that plan looks like, yes.

Susan Hall AM (Chairman): We are very interested to see it. Thank you very much. Assembly Member Berry, did you want to come in at this point?

Siân Berry AM: If that is OK, Chairman. Thank you. I will be as brief as I can. I have just a couple of questions.

Lyn, you mentioned some research that you have done to look at the impact of coronavirus across the businesses not only within your area but around the periphery. Would we be able to see that and get a copy of it or the summary information from that?

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes, of course. It was conducted by one of our Shared Training and Employment Programme (STEP) partners, A New Direction. Yes, we will pull that forward and send it over.

Siân Berry AM: That would be really interesting. Obviously, you could not have predicted that this exact thing would happen, but have you been looking at for the long term the potential over-reliance of the LLDC area on a number of visitor attractions? There is a logic to that being the plan because it has very good legacy transport connections and all of that, but it does seem to be not a diverse ecology of businesses in a way that might make it more resilient to a shock like this. Are you looking at maybe in the short to medium term doing something more to diversify the number of businesses inside the Park, talking to the boroughs about services that local people might need to find in the area, trying to create some meanwhile uses for some of the attractions? Are you doing that kind of transition work in the short to medium term to cope with the change in what people are able to do?

Lyn Garner (Chief Executive, London Legacy Development Corporation): We have quite a wide variety of different businesses in the Park. We derive income, as we have said, from 3 Mills. That is quite chunky in terms of filming. We have been fortunate because, as you will know if you watch this sort of thing, MasterChef is filming again. That uses 3 Mills and that generates a lot of income for us. There has been quite a growth in the film industry over this last period and we have been able to capitalise on that because there is actually quite a lot of demand for studio space at the moment and particularly studio space that has been adapted for social distancing. We are starting to see higher demand in the 3 Mills area.

We are just about to invest around £3 million in 3 Mills. There has been a grant that has come from the Government through the GLA. That will see us expand the provision there into new workspaces as well as the filming piece, putting in some new office space and so on and generating more income over time. That is a bit of a positive news story there in the last period.

There are quite a lot of other businesses in the portfolio that are basically food and beverage and you are quite right to flag that up because we have seen a massive falloff there. Indeed, one of our key providers at the Timber Lodge [Café] has not managed to get back into their premises. The Timber Lodge is near Chobham Manor. It is a lovely café area and we have had a great provider in there, but, unfortunately, they are really struggling. They have been able to open their shop in East Village but have not been able to open in the Park.

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We are seeing that replicated in some other areas across the Park. One of the other cafés up near the Stadium, the Podium Café, is open and is generating business but it is slow in that food and beverage piece, notwithstanding the fact that we have seen quite a lot of people coming into the Park and using the Park. We wanted to get some coffee units open and toilets open so that people can have a decent experience.

In the other venues, the likes of the [London] Aquatics Centre and the Copper Box [Arena], as you know from previous Assembly meetings, both of these venues require a subsidy in any case, in particular the swimming pool because the swimming pool is open to local people and the price for a swim is set at the local pool average. We have about a third of the normal visitors going through the [London] Aquatics Centre at the moment and so we are expecting continued pressures in that venue as we go forward that we will need to sort out with the venue operator.

One of the things that we have also been working on hard for around the last 12 months has been meanwhile uses. We have one of these pop-up hotels in Pudding Mill Lane. It is called Snoozebox. It is a fantastic facility. During COVID some of our staff who have been coming in and out have been using it. It costs £39 to stay at Snoozebox - I am doing a bit of advertising now, I suppose - which is really good for the east London piece there and it is right next to Pudding Mill Lane Station.

We have a couple of other things coming forward. A live music venue, which is going to take some time to come to fruition by the time it is built, is clearly looking beyond COVID in terms of income generation. That has had planning and will be onsite shortly. We have used a number of other short-term things like parking, for example, which has generated us quite a lot of income during this period. We are finding that a number of people are wanting to travel in by car as opposed to taking public transport now. We have to keep a close eye on that because what we do not want is London to become a carpark and so we have been quite careful about what we allow what we do not allow, but there have been a small amount of income receipts in the last period through carparking.

Siân Berry AM: That did not quite get to the heart of my question, Chairman, but we may need to move on.

Susan Hall AM (Chairman): Yes, we do. Assembly Member Desai, a very quick question on this one?

Unmesh Desai AM: Thank you, Chairman. Either of you could answer this or it might be for you, Lyn, as Chief Executive. Where are we with the Madison Square Garden (MSG) development plans?

Lyn Garner (Chief Executive, London Legacy Development Corporation): MSG has submitted a planning application. It has been with us for some time. There has been a lot of backwards and forwards on finalising some details around the application. We do expect it to come to the Planning Committee in January [2021] and that is what we are targeting at the moment.

We are in consultation right now through this month and for at least half of November with local people on the latest amendments to the application that has been lodged. They include some controversial items that were coming out of the consultation around advertising, illumination and improvements to Stratford Station. That is out at consultation right now and is worth taking a look at, but we are heading to January, hopefully, for a determination.

Susan Hall AM (Chairman): OK. Is that OK, Assembly Member Desai?

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Unmesh Desai AM: For the time being. I am particularly concerned about the transport implications and I know there has been a lot of local opposition centred around that particular aspect of the development. Also, I was thinking about what is going on around us in the world today with COVID and all that and the implications this would have. Clearly, this is a major development if approved in terms of your financial planning for the future.

Lyn Garner (Chief Executive, London Legacy Development Corporation): It is worth saying that we do anticipate, if this development gets planning permission, it will bring around 4,000 new jobs to the Newham area at a time probably when they are desperately needed. It does have a really important economic impact.

However, we must make sure that the impacts from building the thing and the residents’ concerns are properly addressed. We cannot simply say, “This is great economically. Let us go with this”. It has to be taken in the round, clearly.

Susan Hall AM (Chairman): OK. Lovely. Thank you very much.

Unmesh Desai AM: I will leave it there, Chairman. Thank you, Lyn.

Susan Hall AM (Chairman): Thank you very much. All right. We are now going to talk about the Stadium. Colleagues, we are going to have to pick up speed here a bit, I am afraid. Assembly Member Devenish, you are going to take us through these questions.

Tony Devenish AM: Thank you, Chairman. I will try to be a little bit quicker. Good morning to the panel. On the scale of the Stadium losses, despite the extent of the event activity at the Stadium since reopening, it does remain clearly loss-making. Can you quickly and clearly set out, please, what further options you can pursue to reduce the cost of the Stadium?

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes. In terms of the losses, notwithstanding the behind-closed-doors events and no summer events, this is a building that costs an awful lot to run in overheads and so we need to bear that in mind. For behind-closed-doors football, we do have to have the Stadium open and operating and fully serviced so that it is a safe venue, despite the fact that we do not have people coming to it. We are still holding events even though we do not have 50,000 crowds.

We have a five-year plan for improvement of the revenue costs of running the Stadium that aims to achieve a £7 million reduction over those five years. Within that £7 million we assume a Stadium naming rights income of around £2 million and we are hoping that we will considerably exceed that when the time comes.

During this year, Assembly Member, we have initiated a number of what we call invest-to-save projects. We have procured a new seating solution that brings fans closer to the pitch. That will save £1 million per year going forward in revenue costs. We are also investing in light-emitting diode (LED) lighting to reduce energy use. That will save £450,000 a year in energy costs.

We are undergoing a project at the moment and taking advantage of the COVID period to have a look at insourcing the stewarding facility. Stewarding costs us a lot of money in the Stadium. It is all externally provided by external companies. We are going to insource the stewarding facility so that we have more control and there is less risk and fewer costs in that area.

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We have just rolled out a wi-fi project in the Stadium. We are not making any money out of that at the moment because there are no fans in the Stadium, but it is ready to go and derive some commercial income when the time comes. We have recently appointed a new Chief Commercial Officer, who will be driving towards the Stadium naming rights and maximising commercial opportunities, pulling a strategy together for when fans come back into the Stadium.

I hope that gives you a flavour but I am happy to answer any additional questions.

Tony Devenish AM: Thank you. Can I give you some context? You will recall from when we had the last financial crisis from 2008 and then again now with COVID that this is taxpayers’ money and most public entities have really revisited exactly how they do things.

Do you think you have really gone far enough in looking at these cost savings? To be clear, you are not talking about being a profitable organisation at the end of this, are you?

Lyn Garner (Chief Executive, London Legacy Development Corporation): No, we are not talking about being a profitable organisation at the end of it. To be frank, the contracts that we have on the Stadium as they currently stand will continue to be onerous and they are listed as such on the accounts of the E20 company. On the face of it, the best we could hope for over time with the current multiuse stadium with football and summer events would be in the area of £8 million to £10 million of losses per annum. That is what we are projecting in our five-year plan. Of course, we are hoping to bear down on that over the next period, but you are right on that. We will continue to see losses in this venue going forward.

Tony Devenish AM: Before I go to my specific questions - and I apologise to the Chairman for going off- piste slightly - most people would see you, probably rightly, as a quango. When I talk to people about this organisation, I always feel that it is like bits of the public sector used to be: quite relaxed about how it spends money.

How can you convince us that you are going to do better than a recurring £8 million to £10 million loss year after year, please? There surely must be something you can do in terms of a complete cultural step change.

Lyn Garner (Chief Executive, London Legacy Development Corporation): I am happy to share the numbers on the operating costs and the breakdown for the Stadium facility. What you will find when we do share them is that many of those are fixed costs, for example, in facilities management, utilities, business rates, insurance and so on for the overheads of such a building and the life cycle upkeep of that building on an annual basis. Those fixed costs and overheads will not change unless we fundamentally change the use of the Stadium, close it, for example, which is also not an option because we have signed a 99-year lease with West Ham United to allow football there. Unfortunately, we are rather stuck.

Of course, we can re-procure facilities management and really drive down costs there. I will give you one example. At the moment we have three individual contracts for facilities management across the Park. One is for the parks and gardens. One is for the venues, the Aquatics Centre and the Copper Box Arena. A further one is for the Stadium. We have entered into three separate facilities management contracts. One of the things that we are looking into at the moment is the future procurement strategy for facilities management, how we chunk it up, join it together and take out various elements where we can get them more cheaply. We are currently bringing forward a procurement strategy for those elements because, certainly in terms of the parks and the other venues outside the Stadium, the contract is up for renewal in 2024 before the organisation transitions.

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You are right that there are some areas that we really need to, where we can, bear down on costs and that will be through new procurement exercises.

Tony Devenish AM: OK. I will leave that particular point there, Chairman. When the whole of the GLA family, of which you are a part, is trying to save over £500 million a year and we have this great period of reflection for those in business during COVID, it is a great time to look at these things. I would urge you to be looking at costs, not just for you but with the rest of the GLA family, and - dare I say it - try something new. Frankly, reoccurring cost of this level, to me, is shocking. I will move on anyway, Chairman.

For my next specific question, were the 2019/20 seating reconfiguration costs lower than the previous year of 2018/19, please?

Lyn Garner (Chief Executive, London Legacy Development Corporation): They were not lower in 2019/20 but that was specifically because we had Major League Baseball in 2019/20 and for Major League Baseball we needed to do an extra element of seat moves in moving part of the West Stand back. However, the income that we received from Major League Baseball covered the extra cost of moving those seats and made a small surplus.

Tony Devenish AM: Perhaps you could just send us the figures and the breakdown to confirm that.

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes, we can.

Tony Devenish AM: That is great. Thank you.

Lyn Garner (Chief Executive, London Legacy Development Corporation): Assembly Member, on the costs, you make some very good points about driving the costs down in the Stadium. What I will say is that one of the opportunities that is open to us that we have not really discussed here is income.

Tony Devenish AM: We will be coming on to that.

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes, fine.

Tony Devenish AM: Sorry, I had better go through the questions because others may be asking some of the other things that you have just mentioned. I am moving on now.

How will the new seat configuration completed this summer save future seat move costs?

Lyn Garner (Chief Executive, London Legacy Development Corporation): There are two things to say. We have saved £4 million this year in not moving the seats at all. That is included in the £7.4 million in savings that we are pulling forward for the revenue this year. The new seating that we have just put in will generate £1 million a year in revenue savings for the seat costs.

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): The original cost of moving the North and South Stands out and back before we implemented the new seat stands was £2 million a year and that cost will reduce to £1 million a year.

Tony Devenish AM: There is a £1 million a year saving going forward on that, then?

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Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes.

Tony Devenish AM: OK. Moving on to naming rights, clearly, I have done this myself with my councillor hat on. There is, as I am sure you are aware, in London the ability to drive long-term recurring revenue with naming rights. Can you tell me how that is progressing, please?

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes. With COVID, we are in a terrifically difficult year for commercial and marketing opportunities. Many businesses are really struggling and we have lost a lot of income from commercial partners in the Stadium during 2020/21.

Nevertheless, looking forward there continues to be a Stadium naming rights opportunity. We have recently filled the post of Chief Commercial Officer - which was occupied by Jo Adams, who went off to UK Athletics (UKA) in March [2020] - with Nathan Homer, who is very experienced in this area. He has come to us from Sky TV. Nathan is hitting the ground running and is looking at commercial income all over the Stadium together with the current operator, London Stadium 185 Ltd (LS185), and specifically with the naming rights.

He will also though - and this is quite important - look at opportunities across the Park for deriving income. This is where we really hope to make an impact on the losses that you mentioned earlier that are associated with the costs of running the Stadium and the venues in the Park. We do have high hopes that we will be able to drive significant commercial income over the next few years through this appointment and through establishing a commercial team that will be more than self-financing over time.

Tony Devenish AM: Thank you. My notes say that we have not had an update on this particular area since the last Budget and Performance Committee [meeting] in December last year. I will not push you too hard on this, although I note there is a report from advisers Duff & Phelps that suggests the naming rights may be worth £5.5 million a year. I appreciate the points you have made about COVID.

When do you think you will be able to write to us though with a more updated view from your new team in terms of this area? Clearly, this is going to be key to your finances going forward.

Lyn Garner (Chief Executive, London Legacy Development Corporation): Taking COVID into account, I would hope to be able to give a more detailed update in the spring. If we could earmark spring for a letter to tell you how things are going, it gives Nathan a chance to come in and get his feet under the table. He has been with us two weeks. He is doing really well. We can get Nathan to summarise the activity that is underway and how far we have managed to progress at that time.

On the valuation for the Stadium naming rights, we anticipated some years back that we were sitting at about £4 million. We do not have a valuation for £5.5 million and so the £4 million ballpark remains our target at the moment. If we can achieve more, we will do. We will be looking at naming rights around other venues in the Park as well as the Stadium, which we hope might derive some income.

Tony Devenish AM: OK. I will move on from that other than to note for the record that a previous failed bid in terms of finding a sponsor, admittedly in 2017/18, did cost over £500,000. I really want to make sure that this time your new team - and you are totally accountable at the end of it - does come up with the goods this time. I will move on.

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What were your considerations in March of this year when deciding not to make alterations to the loss- making contract with West Ham United and UKA?

Lyn Garner (Chief Executive, London Legacy Development Corporation): We did make alterations to the UKA contract last year in a deed of variation to the original contract. Those alterations --

Tony Devenish AM: Can you send us the specifics? I do not have that in my notes. Apologies.

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes. The highlights from that are that we have fixed a weekend for athletics, which is the third weekend in July, contractually instead of allowing UKA to have the whole of July at its disposal.

Caroline Pidgeon MBE AM: Good grief.

Lyn Garner (Chief Executive, London Legacy Development Corporation): That means that it gives London Stadium more flexibility to be able to hold events nearer the beginning of July - for example, an extra concert weekend - and therefore to derive more income. We have pushed athletics towards the end of the July window, which has helped us, and we made an adjustment to the contract to reflect that.

As far as the West Ham contract is concerned, there have been some small amendments over the year up to last March [2020], including amendments reflecting numbers of seats and so on that derived extra income on the usage fee and some small amendments inside the Stadium. You will remember we laid a special carpet across the athletics track and so on. That also derives a small increase in the usage fee for us.

Fundamentally, we do not have the ability within the concession agreement to revisit the core terms of that agreement. The agreement was signed for 99 years. It has 95 years to run or something akin to that. There are no break clauses in that agreement and no opportunities to reset the rent. Essentially, West Ham is a tenant that pays a rent for us. The amendments that we are able to make we make hand-in-glove with the football club. We agree things and we are able to bring them forward. That is what has happened with the seating and the dressing of the Stadium recently.

Tony Devenish AM: OK. I will make no comment on that at this stage. While the decision to buy LS185 appeared sound at the time, you are now left with a loss-making subsidiary on your books and a limited Stadium reconfiguration. Given the substantial decline in events this year and next - and I appreciate that is COVID-driven - what will be the impact on this on the 2020/21 and indeed the 2021/22 budgets?

Lyn Garner (Chief Executive, London Legacy Development Corporation): The impact on the budget for the Stadium is contained in our savings for this year. Ultimately because of the behind-closed-doors [football] and the lack of summer events, we were able to drive something in the order of £5.3 million saving from the Stadium alone in 2020/21. That saving assumes behind-closed-doors football until December 2020. If that changes in the early part of 2021, then the number will change accordingly. It is a net figure. It includes the savings from not having to move the seats in the summer as well as savings from not having 50,000 football supporters in the Stadium because, clearly, we save on matchday costs, but it takes into account having to have the Stadium ready for use for football, as I mentioned earlier.

In terms of buying LS185, the key reason for doing that was to see behind the contract because LS185 was operating, if you like, in a non-transparent way for us. We were paying a fixed price for the operation without being able to do a line-by-line examination of the costs. In buying the company in, that is what has allowed us

Page 70 to put in place a five-year improvement plan to the lines of its expenditure because, previously, we were blind to that. I would say that buying the company in was a good move because it allows us to really hold that business accountable for its costs and to drive improvements in its costs and commercial income. That allows the likes of my Commercial Officer to probe into those commercial areas and really push income as far as possible. Previously, the company was not motivated to do that because it was receiving a fixed price for running the Stadium.

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): Essentially, it was about control.

Tony Devenish AM: I have a final question and I have one comment and I will be quick.

Susan Hall AM (Chairman): As quick as you can, Assembly Member.

Tony Devenish AM: What would be the financial impact on the LLDC if West Ham United were relegated from the Premier League?

Lyn Garner (Chief Executive, London Legacy Development Corporation): It is somewhere in the order of £1.5 million to £2 million per annum when you take into account the contractual reduction in the rent, which would be set at 50% of the current rent, and the lost commercial income from Premier League television rights that we gain from the commercial income.

Tony Devenish AM: Thank you. My final question, which is not on the list, is really for you, Lyn. Do you feel that you should at this stage really at least talk to, if not hire, a turnaround specialist? Having a business that has a recurring £8 million to £10 million [loss], even before the unusual events that nobody can blame you and the team for with COVID, seems crazy a time when we have to spend our public taxpayers’ money on core services including police, housing and transport. Have you thought about getting turnaround specialist advice to drive down those unacceptable costs?

Lyn Garner (Chief Executive, London Legacy Development Corporation): What I would say is that the costs of the Stadium have been under considerable scrutiny since 2016, including in the Moore Stephens report back in the day, which it examined the contracts that were entered into. It has been under constant scrutiny at the LLDC and there have been numerous turnaround consultants employed, including Deloitte, KPMG and individual consultants like Alan Ford, whom we have spoken about before at this meeting.

We know an awful lot now about where the fixed costs lie and what we ought to have done. One of those things we have done by taking control of the operating company so that we have clear visibility of what is going on. The next stage, which we are over, is making sure that we really push the income side of the business now that we think that we have borne down considerably on the overheads and the operating costs.

As I said earlier, we are happy to share in a transparent way those fixed operating costs if that helps to give the Assembly Members some explanations in that area.

Tony Devenish AM: OK. I will leave it there, Chairman. Thank you.

Susan Hall AM (Chairman): Thank you very much. We will come back to naming rights as well because it is something that has been reoccurring. We are running very late now. I will take Assembly Member Desai at the end. For the next section we have Assembly Member Pidgeon.

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Caroline Pidgeon MBE AM: Before I go on to East Bank, because it is something that is really relevant, I am going to condense my East Bank questions. It has been reported that you have launched professional negligence legal action over the concession agreement entered into with West Ham. What is that action going to cost and what saving or increasing income are you hoping comes out of it?

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): For the action, we filed a claim at court against Allen & Overy, who were the legal advisers on the concession agreement that we put in place with West Ham. We have been in discussion with them. There is a period of time after which claims lapse and we had a stay agreement with them to do that but could not resolve any resolution on that.

All this will be a breach of contract and professional negligence claim, which is capped. The potential for damages is capped within the original contract. We are hoping to get some relief but it will not cover the ongoing costs of running the Stadium. It would be a one-off.

Lyn Garner (Chief Executive, London Legacy Development Corporation): It is more about those legal costs that we incurred when we went through the seating dispute with West Ham United.

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): That is the predominant cost that we are seeking to recover.

Caroline Pidgeon MBE AM: Thank you very much. I want to talk to you about East Bank. You received an additional £88.4 million to the capital programme from the Mayor in response to unconfirmed costs from COVID-19. Can we expect more costs in the next financial year or even beyond that as a result of the pandemic? How have you arrived at this figure and when do you anticipate this cost being incurred?

Lyn Garner (Chief Executive, London Legacy Development Corporation): The £88.4 million is an additional cost into the GLA’s capital reserve for the LLDC’s capital programme. It does include an increase in the East Bank costs but it is an amalgam against our existing borrowing provision of a number of movements. East Bank is one of them but also the investment in the Stratford Waterfront residential joint venture is in there. We have talked a lot about recognising reductions in HPI on our developments and that is included in that. I talked previously about Pudding Mill Lane and Bridgewater Triangle. As we are developing the plans further for that, our land values and returns on those are changing.

There is a number of moving parts on that both in quantum but also in timing. That overall £88.4 million, if you like, falls out of the bottom of a number of movements. Predominantly, we would expect to see those costs in 2022/23 and 2023/24.

Caroline Pidgeon MBE AM: It is some way off.

Lyn Garner (Chief Executive, London Legacy Development Corporation): They are some way off. The one thing I would say is that when we put those costs together in June [2020], we had a much more uncertain position on COVID. We still have a very uncertain position on COVID but the impact on the East Bank programme of the existing social distancing measures was very much more high-level. We have a more robust forecast of that but our assumptions on East Bank are that social distancing will end at the end of December this year, which of course now is very unlikely. One of the things that we have to do with East Bank is to look

Page 72 at what the most realistic likely scenario is and what those costs and extension to the programme would be. That is what we have been doing.

Caroline Pidgeon MBE AM: OK. In the Mayor’s Comprehensive Spending Review (CSR) submission, he requested £62.7 million to meet the escalating East Bank development costs linked to COVID. Is that included in that £88.4 million or is it in addition?

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): The full extent of that is not included in the £88.4 million because at that point we were assuming December 2020 for the end of social distancing. What we are doing is updating all of the lines of the plan and there will most definitely be additional COVID costs because, in our current anticipated final cost (AFC), the ballpark for a December 2020 end of social distancing is about £37 million and that goes to the £62 million if we assume an extra year of social distancing.

However, I would caveat that by saying two things. One is that some of those costs are reasonably high-level the further out you get. Secondly, we are working very closely with Mace, our project management partner, to try to drive that cost down because we want to finish the building sooner and that reflects probably a little longer than a year’s delay on the programme and all of the consequential costs. We are working very hard with Mace to try to improve that position. That was the submission into the CSR with the Government based on probably the most realistic COVID scenario in terms of timing.

Caroline Pidgeon MBE AM: In terms of the East Bank overspend, you said you are working with Mace. How you set it up is that you are responsible for the shell and core. Time is money in building. We have seen that with Crossrail. The longer you are onsite - you are saying there is potentially a year’s delay - you are going to have to cover that cost, not your future tenants.

Do you regret perhaps that you set up your contracts that way? What else are you doing to try to bring down the costs and the time to develop these great institutional buildings?

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): I will just say one thing. With one of the partners substantially we share the cost. With the University of the Arts London (UAL), there is a cost-sharing arrangement.

In terms of covering the cost and taking cost risk on the other institutions that are coming, that was the deal that was required to secure those institutions. They then take the ongoing operating risk of those buildings thereafter. That was baked into the original prospectus for bringing those institutions to the Park and for releasing then the economic benefits that they will bring. In hindsight, COVID has made us think differently.

Lyn Garner (Chief Executive, London Legacy Development Corporation): Hindsight is a great thing.

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): We entered into fixed-price contracts because we wanted to secure fixed prices with our contractors, but something like COVID completely blows a hole in that. That is very difficult.

Caroline Pidgeon MBE AM: OK. Have any of your partners reconsidered their involvement in the East Bank due to COVID? They are also looking at their finances going forward and that might put them at risk where they are in partnership with you. You had not signed the remaining leases with the BBC and Sadler’s Wells. Are they now signed? Are they now secure for the Park?

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Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): All of the partners have agreements for lease. There are contractual arrangements in place. We executed the UAL lease on or around the turn of the financial year. The BBC lease is coming forward very shortly for execution. The Sadler’s Wells and Victoria and Albert Museum (V&A) leases will be executed at the end of practical completion at the end of the building programme. There is a difference in arrangement for those.

Caroline Pidgeon MBE AM: They are committed?

Lyn Garner (Chief Executive, London Legacy Development Corporation): All of the partners are committed at the moment. They are all suffering as a result of COVID, including University College London (UCL). They are not part of Stratford Waterfront. They are building their own building. They all have different sorts of financial problems because they are different sorts of institutions, but each partner is committed at the moment. Probably the one that is suffering the most, we would say, is Sadler’s Wells. They have not been able to open their theatre at all, although they are planning some performances in the run-up to Christmas.

Caroline Pidgeon MBE AM: Thank you. Are you confident - we are in this strange world now and it has a different skillset - that you have the right oversight and assurance processes in place and skillset to respond to these emerging challenges around managing these highly specialised construction sites and how you are going to be able to procure the remaining construction works given what is going on?

Gerry Murphy (Executive Director of Financial, Commercial and Corporate Services, London Legacy Development Corporation): In terms of assurance, we set this up to have a degree of independence in the assurance. We have a Risk and Assurance Board with an independent chair. There is a third-line assurer. We have also brought in Arcadis as our second-line commercial assurance function. That reflected that we did not have the skills inhouse and so we contracted with Arcadis to do that. Indeed, they have been very helpful in terms of check and challenge over the last period during this. They have been a good challenge to Mace, both in ongoing process arrangements and looking at the cost of the COVID impacts and looking at revised programmes but also in any commercial agreements that are then settled as a result of those disruptions to the programme.

In terms of assurance, we are looking at bolstering our design assurance currently and that is in train. We are now looking at the next phase. By the end of the financial year we will be substantially procured on this project. Actually, by the end of the calendar year we will be substantially procured. There are a few specialist packages in the first quarter of 2021. Procurement has been ongoing and we have really wanted to do that so that we could get the maximum design integration between all of the contract packages on the Park.

Caroline Pidgeon MBE AM: Are you reconsidering some of your construction plans in light of the uncertainty, particularly around people’s commuting, working, lifestyle habits and so on?

Lyn Garner (Chief Executive, London Legacy Development Corporation): Not really, not in relation to East Bank. What we have had to do as a result of cost pressures is to run more value-engineering exercises around the existing development.

What we are not doing as the builder of the thing, if you like, because we are not the end user, is thinking about how those buildings will be used, but each of the individual organisations absolutely are. We know that in the academic world there is some very serious thinking going into online provisions and so on. Nevertheless,

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UCL is still confident in the building of student accommodation, which is going to be on the Park. We know that the V&A and the BBC are involved in how they can exhibit some of their pieces more often through online means and so on, but they are thinking of that in addition to visitors still coming post-COVID.

Notwithstanding the fact that we have had COVID with us for about eight to 10 months, it is still early days in thinking in transformative ways about how behaviour may change in the longer term. There are still a lot of people who feel that things will simply return to normal after another year or 18 months of this, but it remains to be seen. It is one of those uncertain things.

Caroline Pidgeon MBE AM: Very much. It would be nice to go back to normal. Having heating in this building, for example, would be a novelty.

Lyn Garner (Chief Executive, London Legacy Development Corporation): We did hold an online summer school this year. We do a summer school every year with the partners, which is a socioeconomic thing for local children. It was fantastically well received and 250 children signed up for this online summer school. It went tremendously well. We partnered with the BBC and the V&A in the usual way and we held it online. It was terrifically successful. That was a good move.

Caroline Pidgeon MBE AM: Thank you very much.

Susan Hall AM (Chairman): OK. Thank you. One of the things we would like to know, which perhaps you will put in writing for us, is how many of the 2,500 East Bank-enabled jobs will be for local people. Will you provide a breakdown of this and what sectors and skill levels they will be in? We would be really grateful for that in writing.

I have one very quick thing from me. Our Quarter 1 report shows that the only target that you have not yet met with regard to the construction workforce is 3% of this being comprised of people with disabilities. Will you write to me about that as well?

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes.

Susan Hall AM (Chairman): We must absolutely always look after those with disabilities. The next section we really have to speed through and so I will ask you for short answers.

Despite London’s clear need for affordable housing, only 22% of homes delivered to date have been affordable. What is the LLDC going to do to secure higher levels of affordable housing in the future? What are you doing about that?

Lyn Garner (Chief Executive, London Legacy Development Corporation): We are doing really well in terms of the planning determinations that have been made this year. Very many of them are at the 35% and above 35% level. Basically, there is a lag in terms of decisions that were made under the previous administration and decisions made under the new Mayor’s policies. We are seeing that coming forward in the applications that are being determined now, which is really good to see.

Of course, in 2019, East Bank itself went to a planning decision and within that we had a portfolio approach to the remaining housing sites on the Park. This was when the Mayor committed to 50% affordable housing over the remaining sites in Queen Elizabeth Olympic Park (QEOP) and we are doing well in those areas. Gerry has already spoken about how housing construction is doing well on the Park. We are progressing on masterplans

Page 75 and so on. We would expect to see those sites in planning in early 2022 and with committed partners shortly afterwards. We have already committed to the 50% and we will start to see that being delivered on the ground in the early 2020s.

Susan Hall AM (Chairman): When? How long will it take to reach an entire amount of 50%? When do you hope to be completed on that?

Lyn Garner (Chief Executive, London Legacy Development Corporation): We will never reach 50% across all of our sites in the Park because some of them have been governed in the previous political regime.

Susan Hall AM (Chairman): OK. What is left?

Lyn Garner (Chief Executive, London Legacy Development Corporation): Yes, it is what is left. It is the remaining sites, yes. They will be in contract in the early 2020s.

Susan Hall AM (Chairman): OK. I have a couple more questions. If I can ask them, Gino [Brand, Senior Policy Advisor, GLA] will send them to you so that you do not have to take notes only because it has been so interesting but we are really running over.

We would like to know what the average salary in the area is. Will intermediate housing still be accessible to local workers in the area? Are you expecting capital receipts from housing sales to decline due to COVID - we touched on that earlier - including changes to the market? That needs to be seen. If so, how much and what are your best- and worst-case assumptions? If capital receipts are lower than anticipated, what implications will this have for your ability to complete the housing development plans as intended? Will it impact on your affordable housing commitments? Given the strong likelihood of cost increases caused by construction delay, what is a conservative estimate for the subsidy required to sustain these developments going forward?

We will put those in writing to you and, if we could have an answer, we would be very grateful for that. Assembly Member Pidgeon?

Caroline Pidgeon MBE AM: Could I just add to that maybe in writing? There is this huge issue with cladding that has gone up on buildings. I know you have done an audit and you have one such property. Are you carrying out further audits? Also, is there a potential cost to you as the LLDC for amending and changing this cladding? Perhaps that could be added in.

Lyn Garner (Chief Executive, London Legacy Development Corporation): There is no cost to us but we will give you a full answer on where we are with cladding in writing.

Caroline Pidgeon MBE AM: Thank you.

Susan Hall AM (Chairman): Thank you for that. Thank you, Assembly Member Pidgeon. Some people are living there and it is absolutely hellish for all of them. We must all do all we can to deal with that.

Can I thank you very much for attending today and for the answers to our questions? We look forward to the answers to the written ones. Thank you very much. I hope you are not too cold having sat here. Thank you very much indeed.

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Appendix 3

London Assembly Budget and Performance Committee – Wednesday 14 October 2020 Transcript of Item 5 - 2020-21 Budget Review – LLDC and OPDC

Susan Hall AM (Chairman): Now we go on to our next session with the Old Oak and Park Royal Development Corporation (OPDC). Can I invite our guests who are all attending online to formally join the meeting and turn their mics and cameras on? I would like to welcome Liz Peace CBE, Chair of the OPDC; David Lunts, Interim Chief Executive Officer; Fiona Marsh, Interim Chief Finance Officer; and David Gallie, Executive Director of Resources [Greater London Authority (GLA)], who is still on the line. Welcome, all of you.

All right. We will go straight into our questions. I do not know who will want to answer this one. What has been the biggest impact of COVID-19 on your spending plans for the remainder of 2020/21? Who would like to answer that? Liz?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): We will let David do that as the Chief Executive.

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): Thank you, Chairman, and good morning, everybody. Yes, COVID has had a major impact on all of us and the OPDC is no exception to that. The best way to answer that question really is to reflect on some of the impacts in and around our local community in Old Oak and Park Royal. Certainly, some of the communities in some of the wards and neighbourhoods within our area have been amongst the worst affected in terms of the health outcomes and the health issues that COVID has caused. Of course, the Park Royal Industrial Estate, which is the largest industrial estate not just in London but also in the United Kingdom (UK), has suffered very considerably not least because so much of its business activity is built around hospitality and food.

Our major impact I suppose on the OPDC was initially at least to turn our staff and resources to trying to support both the communities and the businesses in our area. We redeployed quite a number of our staff to frontline duties on business support lines. We worked very closely with the GLA response and recovery team and we redeployed people there. We made donations to local foodbanks in the three boroughs that we serve. For the first couple of months or so after the COVID pandemic broke, I would say that a lot of our activity was focused on redeployment and refocusing our efforts to support business and communities.

More recently we have been turning our attention much more to long-term recovery issues. We have been giving a lot of thought to what more we can do to support and sustain a more adaptable and more resilient economy in Park Royal and of course we have been working very hard to develop our proposals for bringing forward strategic regeneration in the Old Oak area. We also, like most organisations, have been very keen indeed to provide the necessary support to colleagues in the OPDC, all of whom have had to work remotely for virtually the entirety of time since March [2020]. We have created a series of staff networks to sustain morale and have also worked hard to make sure that colleagues have the necessary technology and support they need to do their business.

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Susan Hall AM (Chairman): OK. Do you think the long-term impact of COVID-19 on behaviour and work patterns means that the entire project needs to be revised?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): That is an interesting question. I suppose at this stage it is very difficult for any of us to predict quite what the long-term or more permanent impacts of COVID may be. We think that we went into COVID with a set of plans and ambitions that can certainly deal with some of the obvious pressures that COVID will leave us with.

Our plans have always been built around a need for high-quality redevelopment and well-designed public spaces. We have a number of programmes that are looking not just to the long term but to the short term as well in terms of providing better access and amenities to local open spaces, including the Grand Union Canal.

Clearly, we do have a mind to the long-term future, which is why we are organising our future workstreams around four very specific themes, which we have put together as a result of our reflections on COVID and what it may mean for us. The first of those four themes is about equitable regeneration. It is extremely important that our activities really focus on the need to address in quite a fundamental way some of the disadvantage and poverty in our area. We are very keen indeed to see that we have equitable regeneration.

The second theme is around locally focused centres. There has been a lot of talk during COVID about the importance of having good-quality local amenities, whether that is shops, whether that is public space, whether that is well-designed residential areas. There is the idea of what some people are calling the 15-minute city so that you have very good access to these sorts of things. Locally focused centres is the second of our themes.

The third one is really about sustainable economic recovery and what can be done to increase, as I have said already, the resilience and the strength of the Park Royal and Old Oak economies.

Then the last of our four organising themes, if you like, is the need to build back cleaner and greener. We are doing a lot of work now to understand what we can help to do to try to move to a decarbonised local economy in Old Oak and Park Royal. We have some quite interesting and exciting proposals that we are working on for things like solar power. We have probably more roof space in the Park Royal Industrial Estate in one location than almost anywhere else in London. There are a number of other plans as well that we are working on to try to build back in a greener and more sustainable way.

Susan Hall AM (Chairman): OK. You have always had good plans, but it is actually delivery that we are looking for specifically in this Committee.

Do you think it is fair to say that you have achieved the Mayor’s saving targets through underspends in 2020/21 without actually having to make any real reductions?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): We have been able to realise a lot of savings because some of our activities have inevitably slowed down because of COVID. That has certainly helped. We are confident that we can readjust our budget to realise the £1 million in budget savings.

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I am not sure I would call it an underspend. There is no question that some of our programmes have inevitably slipped. Some of our programmes were dependent on match funding from other partners whose programmes and plans have also slipped, which has meant that we have been able to make some savings. We are confident that we can reach our savings target for this year at least without any deep or unsustainable damage to our frontline activities and plans for major regeneration at Old Oak.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): If I could add a point there, in a strange sort of way the COVID crisis hit at a point when we were able to respond to it and to respond to the Mayor’s need for savings because we were at a point where we were doing a lot of rethinking about our longer-term plans. There was less imperative to get out and start delivery because we were rethinking what that delivery needed to be. We have benefited from that and that has allowed us to support the Mayor’s need to cut back during this current year.

Susan Hall AM (Chairman): An accountant would definitely call it an underspend. It has to be said if you are not doing anything, you are not going to be spending the money. I go back to what I was saying: that is where you have these underspends from. You have a recent history of underspends and under-delivery. Why do you think we should be confident that continued investment in the OPDC will deliver value for money for Londoners?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): If I may, the OPDC cannot move ahead with its major regeneration plans without two or three things. The first of that is a local plan that supports the ambitions that we have and that the Mayor has set for us and that reflect the current London Plan housing targets and other things. Our top priority this year is to ensure that we do in fact have a local plan that can support those ambitions. I do not want to give the impression at all that we have not been exceptionally busy since the COVID pandemic broke in March [2020]. We have been busy on all fronts and I have been pleased and quite proud of how colleagues have responded, working in quite stressful situations to bring it to a point where we can have a lot more confidence going forward that we will indeed find ourselves with an adopted and supportive local plan next year.

We also need other things as well. OPDC, unlike the London Legacy Development Corporation (LLDC), whom you have just been speaking with, does not enjoy the benefit of any land ownership in the area at present and neither does it enjoy any significant capital programme. Both of those things are likely to be necessary if we are going to drive the regeneration project that we have been asked to. Alongside the extensive work we have been doing to re-vision what we are doing to come forward with a viable and exciting new proposal that we will be putting to the Planning Inspector to see that our local plan hopefully gets adopted next year, we have also spent a considerable amount of time assessing the infrastructure needs, the funding requirements that we will be continuing to talk to the Government and government agencies about.

I do not want to leave the impression at all that we have been sitting around waiting for things to happen. We have been exceptionally busy and we think we are in a much, much, stronger place now than we were five or six months ago. Indeed, our Board yesterday unanimously approved our new plans and proposals and is very keen that we continue with the local consultations that are now underway on the proposed changes to our plan, with a view to submitting modifications to the Planning Inspector in the early part of next year.

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Susan Hall AM (Chairman): Yes. Mr Lunts, you talk about confidence. You have always had confidence but that has not always been backed up with delivery, which is what we are looking at again. The Mayor has spent £42.7 million on the OPDC to date. For anybody watching, £42.7 million, with the figures set to rise to £66 million by 2023/24. Given how little the OPDC has delivered with these funds to date, should the Mayor continue to allocate you with public resources and taxpayers’ money?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): As a major regeneration agency looking to lead and deliver some very major changes in what is probably the most ambitious and potentially the biggest regeneration project - certainly in London - as well as being a statutory planning authority and undertaking a whole range of community-based programmes, the case for continuing to provide core funding to OPDC is a very strong one. That case has probably been made clearer in the last few months since the Government finally confirmed its commitment to building the High Speed 2 (HS2) line and the Old Oak Common Station, the interchange with the Elizabeth line and the Great Western Line, which will be opening towards the end of this decade.

I was down onsite there just last week and the scale of this investment, this £1.3 billion new interchange, is quite incredible. It is certainly the view of the Mayor and certainly the view of my Board, that optimising the potential that that new station is going to offer - to bring jobs, to bring homes and to bring a fantastic new district in this part of what is after all perhaps the most disadvantaged part of west London - is something that justifies some core expenditure over the next few years. However, we are under no illusions, Chairman, that in order to bring these plans forward we are going to need some additional financial help on quite a significant scale. That is exactly why we have been spending a lot of time over the last few months engaging with Homes England as the national homes and regeneration agency and also colleagues in Government with a view to submitting a bid for resources in the very near future.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): If I could add, as David said, the Board considered our new plans yesterday in some detail. The Board was extremely keen on them. The Board is under no illusion, and nor am I, that this is a very difficult project, partly for the reasons David said in terms of us not actually having our hands on any land and not having a large amount of capital at our disposal. The plans we have been progressing previously we thought we had a very good chance of pushing through. Various things happened that mean we did not. We have regrouped and prepared a new set of plans. We would not be the first big regeneration project that has had to rethink halfway through or a third of the way through its programme.

Also, the money that we have spent so far - and this has essentially been operating costs; there has been very little capital in that - has not been wasted. We have been running a very effective planning system, we have granted consent for a large number of homes, we have run a number of projects on more limited spatial improvements for our residents in Old Oak and Park Royal and we have been able to progress a local plan that even though part of it needs amendment, a large part of it is still absolutely sound and is something that is essential for the area. Yes, we have had to change direction and that does mean to some extent writing off some of that expenditure, but absolutely not all of it.

Susan Hall AM (Chairman): How much expenditure would you write off?

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Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): In precise terms, it is difficult to be exact about it but we are only talking about the money we have spent on some elements of master planning in our local plan.

Susan Hall AM (Chairman): I know, but you brought it up, you said it. How much do you think approximately? I would not hold you to the exact amount but what is the ballpark figure?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): There is no doubt, as Liz has explained, that the fact that we have had to change course is something that means that there is some element of abortive work. There is no real question about that but that is not unusual when you are dealing with major development projects of this scale. However, I would not say that every piece of expenditure that was utilised on the previous plans for Old Oak North and the associated bid for housing investment funding was written off. That is the wrong term to use. As Liz has already said, the Planning Inspector agreed with most of our draft local plan proposals. He only removed two site allocations. Admittedly, one of them was a large one. However, it has taught us a great deal about the local area and it has helped us understand the infrastructure requirements, which is very relevant to our new proposals. It has also helped to shape our thinking around how we can make a change from the old approach to redevelopment at Old Oak North and shift our emphasis to land a little bit further to the west in ways that would have been very difficult if we had not made that investment. Yes, there are abortive costs but it would be wrong to claim that all of that funding was written off. That is not quite the right term to use here.

Susan Hall AM (Chairman): If I was sitting in your position I would say exactly what you have just said but I will go back to the question that I asked about five minutes ago: how much is that?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): It would be a matter of lower single figures of millions.

Susan Hall AM (Chairman): A ballpark figure?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): I am not going to give you a precise number because looking at what we spent on, for example, master planning, a huge amount of that is still very useful. Perhaps we have wasted £500,000 of £3 million of consultants’ work.

Susan Hall AM (Chairman): That is not the total amount, though, because you were talking a minute ago about --

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): No, and you, of course, have topped up the operational expenditure ever since OPDC started. I do not have figures at my disposal to say exactly what expenditure in the first year of 2016/17 produced. I am only looking at the more recent. When we have been planning for our Housing Infrastructure Fund (HIF) bid, we spent a certain amount of money on producing the master plan. The master plan has helped us to put together a HIF bid. I would say out of that, maybe £500,000 was ultimately wasted. The rest has taught us enough to provide the foundation for our new bid.

Susan Hall AM (Chairman): You are now going from small amounts of millions to £500,000?

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Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): I was talking about the specifics around master planning.

Susan Hall AM (Chairman): The specifics. Let us start again. You mentioned it. It was not a question that came out of the blue. I am not finding this funny, if you do not mind, because this is public money. You said that you had wasted some money. I am asking a ballpark figure of the amount of money that has been wasted.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): I could not give you a precise one because all I am saying is that --

Susan Hall AM (Chairman): I am not asking for a precise one.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): -- circumstances have changed and certain things that we have done in the past we are not doing any more. Trying to attribute specific pounds – and I am very conscious that this is public money and the Board and our Audit and Risk Committee are also very conscious of how we spend money. I was then giving you an example of our master-planning exercise where, for instance, we paid a certain amount of money to consultants to produce master planning. I would estimate that maybe some £500,000 of that was wasted because we have changed our plans.

Susan Hall AM (Chairman): Yes, I know.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): We are looking at a different area.

Susan Hall AM (Chairman): Yes, and we will come to that in a while, I am sure. You mentioned that some money had been lost, if you like, by doing that. It was you that commented on it. Have you ever done the exercise to find out just how much was lost or wasted or whatever terminology you want to use?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): We did a very specific exercise for our Audit and Risk Committee in the light of the HIF bid. I would have to refer back to the paper to give you the very precise figure that we came up with on that. I do not have it in front of it at the moment and I cannot access it on my machine.

Susan Hall AM (Chairman): Perhaps you would like to send that to us.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): We will send you our Audit and Risk --

Susan Hall AM (Chairman): All encompassing, please, of what you think was wasted through that going wrong.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): That was specifically related to previous questions you have asked us, which is around the HIF bid.

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Susan Hall AM (Chairman): The Mayor is bringing Crossrail inhouse under Transport for London (TfL). With our original plan essentially in ruins, what is the case for the OPDC remaining as a separate mayoral development corporation rather than it being brought under Housing and Land into the GLA?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): Can I say something about that, if I may? First of all, as a statutory agency, which is what OPDC is, one of two mayoral development corporations (MDCs) in London, we do have a statutory position, not least of which is that we are a planning authority. Setting aside other issues and I might just come to those in a moment or two if I may, Chairman, were there to be made a decision to disestablish the OPDC, which at some point of course there will be - just as the LLDC is transitioning, as we have heard a little earlier this morning from colleagues there - it would first of all be a fairly time-consuming project.

It is not a straightforward matter to wind down planning powers and transfer them back to boroughs. There is a whole period of consultation and reorganisation that is necessary. Of course, any handing back of responsibilities or statutory powers would almost certainly require the resources associated with that to transfer to the recipient boroughs and organisations. I would suggest that that would be a quite serious and unnecessary distraction at the moment at precisely the time when we are looking to finalise our local plan and also to bring forward new plans and new proposals, including a bid for resourcing to support those proposals with central Government. If there were to be a decision to hand things back or bring things inhouse, that would be quite destabilising and disruptive at the moment.

Having said all that, it will not be lost on Assembly Members, I am sure, that currently I have two jobs, my Interim Chief Executive role at OPDC but also Executive Director for the Housing and Land team. In fact, one of the reasons why I still have both of those roles is because it makes it a lot easier for OPDC and Housing and Land resources to tie up and collaborate where that makes sense. Therefore, I am extremely supportive of the idea that we should be looking to work much more closely with colleagues within the GLA, who in many cases have expertise and experience that we can draw on.

Susan Hall AM (Chairman): OK, that was not quite the point. The point is whether it should be disbanded, but you have made your thoughts clear and I am not surprised by you taking that position. How can you convince this Committee that you can deliver real change in the new area when you failed to deliver the transformational change that was envisioned in Old Oak North?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): If I may - and Liz may well want to come in on this - it is important to remember that a lot of this is quite historic now. Most of the senior team at the OPDC were not around when the original plans were put together. Coming in over the last 18 months or so as I have done and looking back at the history and what has happened with regard to the Old Oak North proposals, what seems very clear is that, initially at least, there was an OPDC response as a result of a very direct request from the Mayor to try to accelerate delivery within the area, speaking to the point you have already made: where is the action, when can we see things happen? In response to that, the Old Oak North and HIF-related project came forward.

At the time, that was driven by what appeared to be - and was at that time - a viable route to securing infrastructure funding that would bring forward all of the sites that OPDC was then looking to redevelop. That was a reflection of the fact that back in 2016, 2017 and into 2018, industrial land values in west London had not skyrocketed to the levels that they subsequently did. The changing

Page 83 economics around land prices and viability led to a number of things. First, those Old Oak North plans started to look rather more expensive than they originally did. Secondly, Cargiant, as the major private-sector landowner there was very clear that it was not intending to relocate its business, partly because the cost of doing so would be prohibitive. Therefore, the external factors really came into play and meant that plans that originally looked achievable were no longer achievable because there had been so much change in the local economy.

Susan Hall AM (Chairman): We are coming to that in the next section, and perhaps we can go straight into that for anybody who has not been clear. Some of the information that has come up has come up since we have last been in Committee over it. I sense a reluctance to go back into the past, but nevertheless, since we are looking at taxpayers’ money, it is essential that we get these things clear in our head. Why was a HIF bid made for £250 million of public money that was clearly so dependent on Cargiant’s support?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): Shall I give David a respite here? He was not there when we first started talking about this? We had every reason to believe that at that time we had a scheme that we would be able to negotiate with Cargiant and that £250 million from the HIF bid would support. That turned out ultimately not to be the case but we made our HIF bid in good faith that we would be able to produce a deliverable scheme. For lots of the reasons that David started to talk about - changing land values - it turned out not to be deliverable. We did not pursue it once that was the case because we did not want to waste public money in doing that.

Susan Hall AM (Chairman): How much was the Ministry of Housing, Communities and Local Government (MHCLG) aware of the situation?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): We kept very closely in touch with MHCLG throughout this. We always made it clear that delivery was dependent on a number of things: that we had a very large private landowner that we need to work with. It also was well aware of the planning situation and the fact that we would need to get a local plan through. We have always been very close to the people in MHCLG and talked to them continually about what we were doing, what was happening with the bid and subsequently what meant that we needed to withdraw the bid.

Susan Hall AM (Chairman): Was it aware that Cargiant did not support the bid?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): Are you alluding to the fact that we did actually commit an error? We included in our final HIF document the fact that we had support from Cargiant when we did not. What Cargiant had done sometime earlier was it had written a letter saying that it supported us in putting an application in to the HIF fund. Through an error, which we have absolutely conceded and for which we apologise, we included that in subsequent documentation. There is no question that MHCLG made the grant to us, the initial grant, in the mistaken apprehension that we had Cargiant support because it had all come out quite clearly in the open, before it made the bid, that Cargiant was now no longer in support of what we were trying to do.

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): Can I just add as well to be clear? The owner of Cargiant wrote to the Director General at MHCLG in February 2019 setting out his concerns about the HIF bid and the fact that it was no

Page 84 longer in a position to relocate and was not supportive of our proposals. Therefore, it was a matter of written record that MHCLG was perfectly aware, both because we had told it but also because the owners of Cargiant had told it a full month before the HIF allocation was awarded. There was no doubt inside Government that the situation had changed with regard to Cargiant.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): If I could add one other point, this was not entirely black and white. We were continuing discussions, even preceding the letter from Cargiant to MHCLG. We were continuing in discussions with Cargiant to look at ways in which we might be able to accommodate its concerns. We continued to be hopeful that we would be able to accommodate its concerns and that ultimately the development that was going to be underpinned by the HIF bid would be possible.

Susan Hall AM (Chairman): David Lunts, on 11 June 2019 you told this Committee:

“At the point at which we put the HIF bid in, the proprietor of Cargiant was a willing supporter of what we were doing.”

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): At the time the HIF submission was made, as Liz has already said, we had a letter from Cargiant’s development partner, London & Regional Properties (L&R), that confirmed that it was indeed supportive of the principle of HIF. This all predates my arrival, but from what I can see Cargiant was always supportive of the notion that any redevelopment at Old Oak North was going to require not insignificant sums of capital expenditure and the only likely source of that was the Government. Back in 2016/17 it was quite supportive. It was definitely supportive of the principle but circumstances changed, the HIF bid was lodged and events conspired to mean that we were no longer able to meet those HIF conditions.

I would say, though, that one thing the whole HIF process did help with - and maybe this is a positive that we can take out of the whole experience, looking back and trying to learn some lessons - is that it certainly helped to establish the case for major infrastructure funding at Old Oak with the Government. That has been the case ever since we lodged the HIF bid. It remains the case as we start to think about the successor programme to HIF, the so-called Single Housing Infrastructure Fund (SHIF). It has given us the basis for looking forward, perhaps, rather than back. I am confident that we have learned the lessons from the failed strategy for Old Oak North and we are certainly applying them as we look forward to our new proposals for the Western Land.

Susan Hall AM (Chairman): I am sure you would like to look forward and we will in a moment but at the moment we are trying to clear in our heads the past. Assembly Member Pidgeon.

Caroline Pidgeon MBE AM: Could we just pick up here? It feels like you are trying to rewrite history, quite frankly. On the one hand Liz has just said, quite clearly, that it was an error that your final HIF bid went in claiming that Cargiant supported the development and, David, you are saying right up until it went in it in was fully supportive and it was all fine and later events happened.

Will you admit that you were wrong in putting that in and you put a document to Government that was inaccurate in claiming support of one of major landowners, which you did not have?

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David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): I was not involved with OPDC or the HIF bid at the time the submission was made and I am not going to take any personal responsibility for what may or may not have happened at the time.

Caroline Pidgeon MBE AM: Of course not.

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): Looking back, as I have said, it was clear that when the HIF was initially announced by the Government, with an intention that Old Oak OPDC might put a bid in, at that point in time there was support from Cargiant. That changed. We have been very open and acknowledged that. It was, frankly, an error for OPDC at the time to claim that Cargiant was still supportive when clearly it was no longer supportive. I have said that that was clearly the case and that was an error and so has Liz as Chair of the Board. We are not trying to rewrite history, we are trying to clarify what happened, and the facts are that events changed. Cargiant’s plans and proposals changed.

Susan Hall AM (Chairman): It has a little bit of a different story. I know you were not involved with the OPDC at this point. Were you not the one that signed off the HIF bid to Government, with your hat on here?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): As the Executive Director for Housing and Land I did chair the overall HIF Programme Board but I was not responsible for the assessment of OPDC’s bid. That was done separately by OPDC.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): I would say we would have to take responsibility for the fact that when the bid went in, it did contain something that was inaccurate. As I say, we have subsequently apologised for that. I have the letter in front of me. Back in August 2017 L&R said it supported the idea of bidding for HIF. Subsequently, as our discussions proceeded, we realised that it had some issues. As David said, circumstances had changed and it was less than supportive. We still, at the point at which we submitted our bid, hoped that we would be able to resolve those through negotiation. That is absolutely the case, but we failed to take out -- if I recall it was buried in the submission in a long list of who is supporting this, that there was a line to that effect. I regret to say it was left in that L&R was still supporters.

Susan Hall AM (Chairman): Bearing in mind it played such an enormous part in it, it was one hell of a mistake, was it not?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): Yes, but as I say, we were engaged in very intensive and very, very deep consultation with them, right down to, “If we move a road two feet this way, would that enable your business to carry on?” We went through a series of negotiations with it over a long period, looking at how we could resolve its issues and therefore remove any blockage to delivering the development that would have been supported by the HIF bid. It was very late in the process when we finally had to concede that we were not going to be able to do that and therefore we could not put our development alongside Geoff Warren’s business.

Susan Hall AM (Chairman): OK. I am going to ask some questions. If you could give a one- or two-word answer so that it is recorded, because I would like the answers to these so that we can record it so that we know.

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Was the MHCLG aware that Cargiant did not support the bid? The answer is yes, it was. When, who and how was MHCLG made aware that Cargiant did not support the bid?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): It was made aware in discussions that we had with it and it was made aware by a letter from the proprietor of Cargiant to the Director General at MHCLG in February 2019.

Susan Hall AM (Chairman): Did the Mayor know that Cargiant did not support the bid when he approved it in September 2018?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): I am not sure I can answer that because I was not at OPDC at that time.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): I am not sure I can answer that. He would have probably assumed that Cargiant did support the bid when it was submitted. I would have to follow that one up.

Susan Hall AM (Chairman): You are assuming he knew. Three days after it was announced the plans for Old Oak North were being abandoned, the Mayor’s Chief of Staff told the Committee on 16 December 2019, “The Mayor has been in regular discussions about the OPDC through the year”. How regular have these discussions been from the time of him approving the bid to when Old Oak North was dropped?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): I had a number of conversations with the Mayor and I remember Liz and I went to speak to him shortly after I arrived. It was a month or two after I arrived as Interim Chief Executive. We talked the Mayor through some of the risks and challenges around the project. This was shortly after the HIF award had been announced. The award was announced in March [2020]. We spoke to him a few weeks after that and we were very clear about the fact that there were a number of conditions attached to the HIF award that were going to be quite a challenge to meet. In fact, Liz and I both ran through some of those challenges with the Assembly a few months later. Therefore, the Mayor was very well aware.

The other thing that is worth adding is that the Mayor’s Chief of Staff and the Executive Director of Resources do have quarterly liaison meetings with Liz and me to go through progress and discuss any particular issues appertaining to OPDC. We have quarterly meetings with the Chief of Staff and there was detailed discussion with the Mayor once the HIF award was announced.

Susan Hall AM (Chairman): All those conditions came out in the March and yet you did not abandon anything until the December.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): It is fair to say we were trying to work very hard through those conditions. As I said to either this Committee or a full Assembly meeting, those conditions, particularly the condition relating to having a local plan, were always going to be challenging. We sought a substantial amount of good-quality advice on whether our local plan would get through an Examination-in-Public (EiP). On the basis of the advice we received, we felt we still had an extremely good case for it. We were disabused of that, of course, when we reached the EiP, but this is not a precise science. Inspectors take different views. We did not go

Page 87 into the EiP knowing we were going to fail. We would not have proceeded if we thought we were not going to succeed.

Susan Hall AM (Chairman): I hear what you say there. There was about a nine-month lag there. Have you any estimate --

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): Hold on, I am not sure the point you are getting at. We knew what the conditions were. We could not show we had satisfied the conditions, particularly the one relating to the local plan, until we had gone through an EiP. That was timetabled in as part of the planning process. It was never going to happen instantly. That was during the summer, and the Inspector’s first report came out in September. That was when, much to our chagrin, we discovered the Inspector was not going to support our line, even though we felt we had presented our case exceedingly well at the EiP, and that we had a very good chance that it would be supported. We could not have hurried that particular part of the process.

Susan Hall AM (Chairman): It is the amount of money that is spent during all these long lags, which is why I ask would things not be better brought in-house. Does the OPDC still have the confidence of the Mayor after all this?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): The last time I spoke to the Mayor he was extremely happy that we should proceed with the alternative approach. As David said, we do have regular meetings via his Chief of Staff and the Chief of Staff is kept up to date. I assume he speaks to the Mayor on a regular basis. We are talking to him as the Mayor’s representative.

Susan Hall AM (Chairman): Clearly we are concerned and I am sure Londoners are concerned whether they should have confidence that the OPDC can deliver the new approach, given its history, quite frankly, and lack of success. I will not ask you what you think because I know what you will say, but I know what Londoners think.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): I have some sympathy with your view. I would say regeneration projects like this are exceedingly difficult. We are working on our best endeavours to make sure this one does succeed. If I had to offer a reflection on what we were trying to do before, perhaps we were being over ambitious. This time we have cut our aspirations to what we think is absolutely feasible. However, our ambition was fuelled by the scale of the potential for Old Oak and Park Royal around the HS2 station.

Susan Hall AM (Chairman): For the record, I will finish these questions. At what stage was the MHCLG informed that there was no letter of support from Cargiant? If you do not have the exact time we will accept that in writing, but you must remember what its reaction was to that.

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): I do not have the exact information in front of me, I am afraid, Chairman, but we can check that. We were in very regular dialogue around the HIF bids. There were a whole number of conversations that were going on around all of the conditions around a period of many months. It is quite difficult to be sure exactly when that particular piece of information was sent over.

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Susan Hall AM (Chairman): OK. Anything you can send us on that would be helpful. If you can send us a precise chronological process of how the HIF bid was eventually withdrawn or dropped, that would be helpful for us to get some of this straight.

What oversight has the GLA had over the OPDC to date and what actions were taken by the GLA to review the OPDC’s activities when the HIF bid failed?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): As I say, the main forum for scrutinising OPDC’s business from a GLA perspective or the Mayor’s perspective is the liaison meetings that we have with the Mayor’s Chief of Staff and the Executive Director of Resources. From memory, we had a number of specific discussions in between regular meetings as well because clearly it was a rapidly-moving situation. That would have been the main forum. Separately, I have already mentioned that there is a HIF Programme Board for London that I chair in my capacity as the Executive Director of Housing and Land. MHCLG is represented there as well, as is Homes England. Progress was reported to that Board as well. There were two reporting forums for progress on the HIF bid.

Susan Hall AM (Chairman): You have never put in a statement of conflict of interest or anything, I assume?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): I am sorry?

Susan Hall AM (Chairman): With all your different hats, you do not have a conflict of interest?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): I have a number of interests.

Susan Hall AM (Chairman): I am just asking.

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): My interests did not conflict because the HIF Programme Board is a monitoring forum where we meet with MHCLG. It is not a decision-making body and there were no conflicts of interest between my role chairing that and having responsibility for the OPDC HIF award. No, there were not any conflicts of interest.

Susan Hall AM (Chairman): If you could send us those details we would be grateful for them.

Now we are going to look - which I am sure you will be much happier about talking about - at the new vision. Assembly Member Devenish, you are going to start with those questions.

Tony Devenish AM: Thank you, Chairman. Good morning to the team. I am going to start, before I ask a specific question, with a bit of a step back. We all know that both [The Rt. Hon, The Lord] Michael Heseltine [former Secretary of State for the Environment and Deputy Prime Minister] and - so that I do not upset the Labour Group - [The Rt. Hon, The Lord] Herbert Morrison [former Home Secretary and Leader of London County Council] had huge visions of how to build housing and create jobs and regeneration.

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If I ask you in that context, putting aside all the dirty laundry of what has been said for the last few minutes and moving forward with a new vision, can you please outline, Liz and David, where you are, how many homes you are looking to unlock and, partly putting COVID aside for a second, where are we going forward?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): To set the context of this and then David can talk about the specific details, we are still seeing this as a major regeneration project that will contribute not just housing numbers but a new district of London. It is the point David made earlier that with the huge investment that the Government is making in this area it would be a massive lost opportunity if we did not look at the economic growth, the economic regeneration, that we could create around that.

The original objective of OPDC when the corporation was set up, and as it conforms with the London Plan, was ultimately 25,500 homes and in the order of 65,000 jobs. Because of the way in which planning law works, we still have to show our trajectory for delivering our conformity or delivering in conformity with the London Plan. Certainly, the work we have now been doing initially will allow us to prove to an Inspector that we can do that and that we are on that trajectory to deliver the homes always envisaged for the development corporation. Now they are going to be in a different place. That is because we have had to adjust our plans because of everything we have just been talking about.

David can talk if you want to get into the specifics of how many we are delivering in the next ten years, bearing in mind we have already consented 6,000 homes within the OPDC area, even without a new specific direction. David, do you want to explain where the numbers come in the new Western Land setup?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): Yes, I will. Thank you for the question. The plan, the 10-year housing target, is something like 13,600 homes. We were disappointed when the Planning Inspector knocked out a substantial amount of that because of his view that the Cargiant site in particular should not have a site allocation for residential. The work we have been doing has been to try to see if there is a way to recover the lost homes but to do it in a way that looks more viable than turned out to be the case at Old Oak North.

It is also important to add that in looking slightly to the west and the north of the Old Oak Common Station rather than largely to the east of the Old Oak Common Station, which is where Old Oak North sits, it does give us a number of additional opportunities to speak to the fact that the orientation of the new station is very much to the west. That is where the new access point to the station will be, that is where the new plaza and public realm will be. We think that in urban design terms it is quite probably going to be a better solution as well.

In terms of the sites that we have identified, it is important to bear in mind that not only have we consented 6,000 homes but our new plans that we will be submitting to the Planning Inspector in the early new year includes a range of early delivery sites that are not dependent on the release of the HS2 and Network Rail landholdings. These are sites that are already either available for redevelopment or we think shortly will be.

Tony Devenish AM: David, can I stop you there? We have the 6,000 consented. We all know, having been in local Government a long time, that just because you have planning permissions does not mean

Page 90 they will definitely get built. Are you confident that the vast majority of those 6,000 will get built in the next 10 years and are you confident and can you give me a number? Am I right in saying you almost need to do units that will be built whatever happens, and perish the thought if there is a delay with these large rail transport projects, and the ones that are not linked to those transport projects?

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): Yes. The first responsibility of the plan, and this is what we need to convince the Planning Inspector of next year once we submit the modifications is that we have identified viable sites to bring forward the number of homes that we are charged to. In terms of site capacity and viability, that is the first and most important thing for us to lock down.

Of course, as a delivery agency we are not simply saying we are going to sit back and say, “As a planning authority we have identified the land and one day someone will build them.” We are also going to be very active around bringing those sites forward and around securing, we hope, the infrastructure funding to accelerate some of those sites. We are already very actively talking to a number of local landowners and developers who are, I am very pleased to stay, still showing considerable interest through the COVID months.

Most importantly, and this is a fundamental point because we are a delivery agency that currently has no landholdings - which is quite an unusual situation for a development agency and not a particularly enviable one - we also need to make sure that we have a very structured engagement with the Department for Transport (DfT), HS2 and Network Rail, because unlike the Old Oak North proposals the new Western Land proposals hinge very heavily on publicly owned land rather than privately owned land, nearly all of which is at least indirectly in the control of the Government. That is another reason why we can be cautiously optimistic that the Government will want to at least receive our proposals for SHIF funding in hopefully a positive way.

Tony Devenish AM: Thank you for that. My next question is perhaps not my view but I have been asked to ask this one and I will. Is this the right time to embark on a new vision when clearly, with COVID and so on, we are in unique times? Can I add my question to that? If I had one criticism of the work you do, it is because you always - and I understand why - are what we used to call grant-obsessed. You are always looking for, dare I say it, long-term public subsidy. That is understandable. What are you doing to try to get money from other sources as well?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): Can I have a first go at that? Taking the first part of your question, what we are doing at OPDC is still long term. It is not all going to happen tomorrow. One day we will come out of the COVID crisis and we do need to be well prepared with a good plan for sound, sustainable growth as we move forward through the decade. Also, you do need to start planning early. Even some of these HS2 worksites sound as if they are a long way in the future, some of the early ones will be released before the station opens. We are talking 2026/27. When you are looking at how you plan to do something with those, we need to start thinking now. If we are not thinking about it, somebody else will be. Often, dare I say it, opportunist developers will pop up with very suboptimal proposed land uses from which they can make money, which will not fit with the overall concept of what we are trying to do at OPDC. We come back to why do you want an OPDC. So that we can plan as a whole to create a better area than if you simply left it to individual proposals to make a quick buck out of the land that becomes available.

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Therefore, it is not the wrong time. We have to start thinking now. It so happens we have had to rethink because of the Planning Inspector’s view of our previous plan, but it has given us a very good opportunity also to think about some of those particular challenges that come out of COVID, around the need for space, the type of design, the type of places people want. As David said, one of our themes is around these locally focused centres, which have become more relevant in the light of COVID. Having said all that, I have now forgotten your second question, Tony.

Tony Devenish AM: You have to understand many of my colleagues are perhaps more suspicious of what you have done in terms of your past performance than I am. The issue is you are always grant-obsessed, be it from Homes, England or the GLA. Of course that has to be a major part of it but where else can you get money from? My personal view is you do not have a hope in hell of getting all your money just from the taxpayer.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): That is a perfectly pertinent point. On the other hand, with a major regeneration like this, almost certainly you have to get your first slug of money from the public sector because the private sector is not going to put its money at risk in this early stage of development. The private sector will come in when it can see that something is going to start happening, out of which it ultimately can make a profit. We have been having a number of discussions with potential development partners and the message we get from them is, “Yes, this is really interesting. Now we would like to see how you are going to kick-start it, how you are going to get it going. Then come and talk to us and then we will be interested in putting our resources into it.” I do not think you can do something of this scale - if you look at other major regeneration - without something to help you on the way. It is not about being grant-obsessed, it is a recognition of the realities of the situation.

Tony Devenish AM: I take all that, Liz, but let me go back to a question my Chairman has already asked you but it is important to ask it. I mentioned both [Michael] Heseltine and [Herbert] Morrison. You talk about the Chief of Staff to the Mayor and David’s meetings with him. How much time have you personally sat in front of Mr Khan [Mayor of London] over the last four years?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): I could not tot it up. I do not see him often but I do see him regularly.

Susan Hall AM (Chairman): That can be annual, biannual.

Tony Devenish AM: We did used to call this the largest regeneration project in Europe, which is what you need to do to sell it. I should declare an interest. One-third of these boroughs are mine, the Hammersmith one. I would love it, David, by the way, if you could write to us with a breakdown of your 13,600 and your 6,000 consented figures across the three boroughs. That would be helpful.

I will ask my question and then move on because time is of the essence. This is a horrible question but I am sorry I am going to ask it anyway. What additional value does OPDC offer that cannot be fulfilled centrally by one GLA team? At a time when we are trying to save over £500 million across the GLA, you will appreciate the question.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): My answer would probably be obvious and I am going to let David answer that because he is more familiar with the inner workings of the GLA. For what it is worth, Tony, I absolutely believe that having a team dedicated to

Page 92 selling the idea of Old Oak and how we can leverage off that huge national investment in Old Oak is essential. The GLA has to cover many different fronts and would not be able to provide that same focus, that same degree of urgency, that same degree of -- dare I say you have to have a bit of excitement about what we are trying to do as well? This could be fantastic and we are able to sell that idea. David, come on, defend the GLA.

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): As well as what you have said - because there is an argument for some sort of entity that champions that place and promotes it widely, as you have described - there are two other factors as well. One is OPDC is the statutory planning authority. That is quite important. As you know, our area is an area that partially covers three separate boroughs. To bring something forward that is both strategically sensible or planning-policy sensible, which is what we are doing at the moment, and then having some responsibility for seeing that those plans are properly implemented, does speak to the need for a single entity co-ordinating planning policy and planning delivery.

The second reason is that I have a lot of experience of Housing and Land and running major regeneration projects in that team and other teams. Compared to anything else I have ever been involved in, going way back 30 years or more, OPDC is the most difficult, challenging project I can recall. I say that because, unlike most projects that I have been involved in, the agency responsible for driving it forward has no capital programme at the moment and it also owns no land assets. Therefore, the task that it has been set is completely disproportionate to the resources that it has available. That is why we need to address both of those points. We do need a capital budget, which does speak to the need for some grant funding, at least initially, and we also need to have a sensible discussion, a joined-up discussion if you like, with Government and its local agencies, because they are the principal landowners that are going to drive this thing forward with us.

That is one of the reasons that I am doing the job, because it is the most complicated and challenging thing that I have been involved in as a single project, but I do think there is something here that we should not give up on. If we gave up on it now, we would be accused down the line by others of wasting what I honestly believe is London’s best opportunity to see something quite spectacular happen on the back of this £1 billion or £1.3 billion investment the Government is making in HS2.

Tony Devenish AM: I will quickly ask my last two questions; I know Caroline is keen to come in. If you cannot answer these now, please do write to us. What are the advantages and disadvantages of the new target area compared to Old Oak North? I will ask my final question as well and then I will be quiet. What is the plan for the non-Cargiant land at Old Oak North now, very briefly? Please do write to us because I am fascinated by this, as a third of it is in my constituency, but I know Londoners and the rest of my colleagues are as well.

David Lunts (Interim Chief Executive Officer, Old Oak and Park Royal Development Corporation): Liz and I would be very happy to come back and have a longer discussion about our plans. We can go through them in detail if that is of interest. The really interesting and important things about the new strategy is that there is a very large piece of public land that we know is going to come forward for redevelopment because HS2 will be vacating those sites. We also know that Network Rail is going through a freight-capacity review at the moment, which means that it is likely to be releasing some of its unused freight sidings. This gives us the potential to bring something forward at scale that was much more difficult at Old Oak North, where there was a major occupier, in the form of Cargiant, running a very profitable business that was always going to be very expensive either to

Page 93 relocate or redevelop. That is not the situation with the new Western Land approach and, as I have already mentioned, in many respects the Western Land that we are now looking to focus on for residential development, are oriented much more sensibly to the orientation of the new interchange station. Those are some of the differences but we would be very happy to come and make a more detailed presentation if that is of interest.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): One other point also - and the Board looked at this in detail yesterday and a lot of what we have been starting to say today is now a matter of public record and we can talk more publicly and show people plans - is the infrastructure requirement is not quite as heavy as in Old Oak North simply because of the layout of what is already there. There is rather less need for bridges and tunnels over and under canals and big railway lines and we can do it with what we think is a realistic infrastructure plan.

Tony Devenish AM: Thank you, Chairman. I will leave it there.

Susan Hall AM (Chairman): Thank you. We will definitely take you up in the future to come and talk to us about future plans. I am now handing over to Assembly Member Pidgeon for the rest of the questions.

Caroline Pidgeon MBE AM: Thank you. In terms of your new vision, you said earlier, Liz, that you had cut your ambitions, which is quite reasonable. To what extent has your new vision just prioritised somewhat disparate potential housing sites rather than having a genuine vision for a new neighbourhood?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): Thank you for that question. It is very pertinent because it is exactly what we started to talk about when David and the team were coming forward with their new plans. It is fair to say we have not lost our vision for the whole area over the longer period of time we are talking about. We do have a practical problem in that we need to get a local plan through and we need to be able to show delivery of a certain number of homes. That is why we have focused on how we can meet those housing numbers so that we can satisfy the Inspector. That is just the first stage of what we are currently doing.

David mentioned our four themes, which the Board got very interested and excited about yesterday. David and the team, now they think they have identified enough to deal with the local plan issues, are going to be looking at how we pull this all together and make sure that we are not losing site of any of the much bigger picture and challenges and objectives about delivering the right sort of place, a sustainable place, somewhere with the right sort of environmental infrastructure and with the right amount of green space. We talk a lot about homes. The other side of what we are very interested in is jobs. It is not just about building on the sites where we can build homes but about encouraging the crossover between people who are working in Park Royal and where they can live in Old Oak. We have absolutely not lost sight of that. We accept there is a bit more work to be done now that we have identified these new focuses for our development.

Caroline Pidgeon MBE AM: I look forward to perhaps hearing that at this briefing we are going to have, and also with the maps and looking at the site in detail.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): Absolutely, we can talk you through all that whenever you want to call us to explain that in more detail.

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Caroline Pidgeon MBE AM: Excellent. I have been listening carefully to what you have said in terms of key partners. You have talked about the DfT, HS2 and Network Rail. What progress have you made co-ordinating the relevant boroughs - you have mentioned those public sector landowners, Homes England and MHCLG - around the next steps given that you are increasingly dependent on third-party decision-making as well as funding?

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): Before David tells you a bit about all the people he has been talking to - and despite lockdown we have managed to have a very good programme of engagement with pretty much everybody you have spoken about - we do have the three borough leaders on our Board. Their executives have been briefed on what we were planning. Yesterday the three Borough Leaders gave their full support to what we are planning to do. We also have as an observer at our Board from the Infrastructure Projects Authority. They too were excited at what we were doing and, indeed, have always been very helpful in framing our bids for money to the Treasury because ultimately it is the Treasury that makes the final decisions. I am pretty confident we certainly have the boroughs on side.

You mentioned central Government. The DfT is ultimately really the owner of Network Rail and HS2 and it can decide how HS2 and Network Rail dispose of their land. If you recall, we originally had a memorandum of understanding (MOU) --

Caroline Pidgeon MBE AM: Yes, of course.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): -- between us and the DfT that looked at what would happen to the Network Rail sites. This was partly because the DfT recognised we had no capital and this was a way of giving us access to land/capital.

We hope that we will be able to have very constructive engagement at a sufficiently senior level in DfT to make our case, but we have been building lots of bridges over the last six months and David will say a little bit more about those.

David Lunts (Interim Chief Executive Officer, Old Park and Park Royal Development Corporation): Unfortunately, they are metaphorical bridges rather than real ones, but that comes later.

I have a little bit to add to that. We have a joint steering group with HS2 and Network Rail at a senior level to co-ordinate the land piece and we have been discussing regularly with them the evolution of our new ideas. That is one thing. We also have what we call a tri-borough group. Planning and delivery colleagues in my team meet with senior colleagues from Brent, Ealing and Hammersmith & Fulham on a regular basis. Therefore, there are a number of forums to try to keep that co-ordination working as well, as Liz says, as bringing things to the main Board where the three Borough Leaders sit in terms of formal governance.

Caroline Pidgeon MBE AM: OK. What about local residents, particularly as you are developing your new vision? How are you working and engaging with local residents? We regularly have contact from different residents’ groups and fora that are often concerned about what you are doing or not doing. How are you engaging with residents?

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David Lunts (Interim Chief Executive Officer, Old Park and Park Royal Development Corporation): On a whole number of levels, really. It has been frustrating for all of us that since March it has been very difficult - virtually impossible - to have the normal engagement meetings that were happening before then. We have had a whole series of quite constructive engagements, mainly remotely it must be said and perhaps inevitably.

In terms of what we do, we have a community review group that has community reps who sit down with my team on a regular basis to review projects and input. We also have a regular and really quite creative series of engagements with local communities around some of what we call our early activation work. We have done a lot to sit down with community organisations to talk about refurbishing the canal towpath at the Grand Union Canal, which is quite an important part of open space. We have a series of cultural programmes and public realm programmes, all of which have a huge amount of community engagement.

I am sure that Members will have perhaps had copies of correspondence from a couple of community groups over the last few days. I do understand why there is perhaps some level of frustration that our new plans have not been subject to the same sort of level of detailed discussion with community groups up to now. That was quite deliberate frankly, because we did feel that, one, our Board needed to be brought up to speed and, two, if we were going to be making formal proposals or possibly making formal proposals to reallocate land, then first and foremost we needed to talk to the local landowners and the businesses sitting on those sites before we went out for a wider public consultation. That has now been done and so the next stage is to start a meaningful and deep community consultation on our plans before we submit modifications to the Planning Inspector in February.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): Can I add one other point? That is consultation and community engagement on what we are planning to do. We are also very conscious that there is a lot of local community concern around HS2’s current activities and the construction activities. We actually did step in. It was just after lockdown, was it not, David?

David Lunts (Interim Chief Executive Officer, Old Park and Park Royal Development Corporation): June [2020], I think.

Liz Peace CBE (Chair, Old Oak and Park Royal Development Corporation): It was June and we asked HS2 to join us to meet to discuss how we could look after local people’s concerns perhaps a little better. Out of that has come a very productive relationship between us and HS2 with us helping them and their contractors to engage with the local residents who have some very real concerns about having such a major construction site pretty much in their back garden.

Caroline Pidgeon MBE AM: Yes, understandable. In his Comprehensive Spending Review (CSR) submission the Mayor describes the OPDC’s plans as “well advanced”. I am not sure I would describe it as that having listened to this discussion this morning but those are his words in his submission.

Given the issues you have experienced over the last year and your need for a change of focus following the HIF bid failure, do you agree with the Mayor, and this is potentially a misleading position again to be presenting to Government?

David Lunts (Interim Chief Executive Officer, Old Park and Park Royal Development Corporation): It is not misleading, with respect. By “well advanced”, we mean well advanced in the

Page 96 sense that we are now in a position to formally consult on our modifications. We are confident that we will be submitting those modifications to the Planning Inspector in February. That means that if we keep on programme, we should have an adopted local plan in around about a year’s time, certainly before the end of next year. This is not all going to happen in sequence, this can happen consecutively. We will be almost certainly making a submission to Government for infrastructure funding for its new SHIF programme shortly after that is announced.

It is reasonable to say these are pretty well-advanced plans actually, certainly in the sense of looking for Government support to address those plans which, of course, was the purpose of the Mayor’s CSR letter. No, it was not misleading.

Caroline Pidgeon MBE AM: How much Government funding for the OPDC is the Mayor hoping for?

David Lunts (Interim Chief Executive Officer, Old Park and Park Royal Development Corporation): We are not yet in a position to finalise that but we will be very shortly. As Liz has already described, the work we have done to look at the infrastructure requirements for the sites that we think can deliver our Western Land plans and a local plan that is in conformity with the London Plan does speak to the fact that we think we will be able to come forward with a realistic bid for new funding. Again, as Liz has already mentioned, the infrastructure requirements to the west are perhaps a little less onerous than they are to the Old Oak North plans that previously existed. I am not in a position to give a firm figure to the Committee but we hope to be in a position to do that in the near future.

Caroline Pidgeon MBE AM: What do you mean by “the near future”, David? Are we talking days, weeks or months?

David Lunts (Interim Chief Executive Officer, Old Park and Park Royal Development Corporation): First of all, of course, the Government has not yet announced its new infrastructure funding programme, although it has been pretty well trailed. We are hoping it will be announced before the end of the calendar year. We cannot be sure but we are hopeful of that. Once that is announced and there is more clarity about the bidding timetable and the arrangements, then we would be looking to come forward with at least an outline business case ready for submission very shortly after that. We are not talking days and we are probably not simply talking weeks, but certainly within a few months.

Caroline Pidgeon MBE AM: OK. Are we talking about a bid of tens of millions or are you talking hundreds of millions?

David Lunts (Interim Chief Executive Officer, Old Park and Park Royal Development Corporation): To deliver our plans we will need more than just a few tens of millions. I am pretty sure, as was indicated with the HIF bid, something on the scale of Old Park and Park Royal is probably going to need something in the hundreds of millions.

Caroline Pidgeon MBE AM: All right, thank you.

Len Duvall AM (Deputy Chair): In terms of bidding for these funds, who are we in competition with in terms of putting money in and would that be in our region or even in other regions? That seems to me quite an important assessment to put in about where you put your pitch, what you ask for, when

Page 97 you ask for it and in what stages you are asking for it. How does that work, David? Could you describe that for me? What is your thinking about that?

David Lunts (Interim Chief Executive Officer, Old Park and Park Royal Development Corporation): Again, it is quite difficult to know because we do not know how the scheme is going to run. We have been talking to MHCLG about this and we have some ideas but it looks pretty likely that it will be a national fund of some sort. I do not know whether there will be any kind of notional regional breakdown for that. We are pretty confident it will be a sizeable fund and we are pretty confident it will be a long-term fund, which is also quite useful for us because one of the problems with the old HIF programme was that it had relatively short timelines to deliver and that is not always easy when you have a big long-term project.

You do speak to an important point because, whatever else, it is bound to be a finite fund and there is bound to be, I would imagine, quite a lot of interest in it. From a London perspective perhaps, if that is what you are thinking, clearly there is going to be an issue for the Mayor as well as Government about prioritisation of bids once we see what the guidelines and assessment criteria are likely to look for. It is very clear from the Mayor’s CSR letter that has already been mentioned that he would certainly regard Old Oak as a priority project.

Len Duvall AM (Deputy Chair): Thank you.

Susan Hall AM (Chairman): Thank you. Are there any other questions from colleagues? No.

Liz and David, I am not surprised that people are excited by what you want to do because you do sell your vision as well. It is the ability to deliver this that we are, quite frankly, far more interested in and, of course, the cost. Given the history of what has already gone on you cannot blame us but to be concerned so we continue to ask our questions.

On that, our lead Officer, Gino Brand [Senior Policy Advisor, GLA], will send you a list of the questions we need answering that were not covered or that you could not answer earlier. If you could get those back to us as soon as possible, I will make sure the rest of the Committee get those. Thank you. I will also add that I would be interested to know who is on your Board and so I will ask Gino to put that on his list. Thank you very much for attending today.

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Appendix 1

London Assembly Budget and Performance Committee – Thursday 22 October 2020 Transcript of Item 5 - 2020-21 GLA Group Budget Review

Susan Hall AM (Chairman): That, of course, brings us to today’s main item of business, the 2020/21 GLA Group Budget Review. I would like to welcome our guests in the Chamber: Sadiq Khan, Mayor of London; David Bellamy, our Mayor’s Chief of Staff; and David Gallie, Executive Director for Resources on the Greater London Authority (GLA). Good morning.

I am going to start the questioning here and we are going to question first on Transport for London (TfL) finances. To the Mayor, please, the revised budget identifies a funding gap of £1.8 billion in the second half of 2021. How much of this have you secured in your negotiations with Government?

Sadiq Khan (Mayor of London): Good morning. The negotiations are ongoing. So far, nothing has been secured. The Government did agree, because of the numbers of passengers in the early part of the first half of the year (H1) being more than what was predicted, that we have some monies left over, in shorthand, of the grant secured and the loan secured, so there has been two more weeks’ worth of extension given by the Government. No additional money for those two weeks, but we have enough money in the kitty for the reasons I have said. We have until the end of the month to secure a deal with the Government.

Susan Hall AM (Chairman): You do not know how much you have secured as yet?

Sadiq Khan (Mayor of London): Nothing has been secured.

Susan Hall AM (Chairman): How much funding did the Department for Transport (DfT) offer on 9 October [2020]?

Sadiq Khan (Mayor of London): I am not sure they did.

Susan Hall AM (Chairman): Well, Andy Byford [Commissioner, TfL] stated at the TfL Finance Committee on, I think, 16 [October 2020], that a funding proposal with conditions was received on the 9th.

Sadiq Khan (Mayor of London): What he may have been referring to is that there have been some meetings. The Government has been talking about a six-month financial offer. Those are the conversations that are taking place and they are the work in progress that I referred to in relation to negotiations with the Government.

Susan Hall AM (Chairman): OK. Can you give us a ballpark figure?

Sadiq Khan (Mayor of London): There is no figure, is there?

David Bellamy (Mayor’s Chief of Staff): Chair, the problem is, as I think everybody realises, that we have no certainty about the future path of COVID-19 and what may happen in terms of restrictions, and what this may mean for economic activity and thus for passenger numbers. What is under discussion in the negotiations at the moment is a mechanism that recognises that uncertainty, so it may be less about, “This is the absolute amount of money and this is what you get”, and more about, “Here is the amount of money that we recognise, under the best possible scenario, TfL definitely will need. However, there is uncertainty and there is a Page 99 mechanism that additional support can automatically come through if the level of passengers means that is required”.

Susan Hall AM (Chairman): OK, but a ballpark figure? Surely you could give us a ballpark figure. Andy Byford said that you were very close to doing a deal so there must be a ballpark figure that you could at least share with us.

David Bellamy (Mayor’s Chief of Staff): It is dependent on the mechanism and in the negotiations at the moment they have not finalised the mechanism. I do not think it is appropriate to bring that into public --

Susan Hall AM (Chairman): I do not think it is appropriate that an awful lot of the negotiations have already been put into the public. Jim Pickard [Chief Political Correspondent, Financial Times], who is a very well thought of journalist, seems to have got hold of half a letter from somewhere so that has been put into the public --

Sadiq Khan (Mayor of London): Yes. We also understand from media reports today that the Secretary of State [for Transport] gave a briefing to Conservative Members of Parliament (MPs) and Assembly Member [Shaun] Bailey yesterday. Maybe you can speak to them to get an update. They probably know more than we do.

Susan Hall AM (Chairman): We are in a public forum here. If your Commissioner, Andy Byford, said that you are, and I am quoting, “very close to a deal”, then you must have ballpark figures that you are looking at, and since the public have been treated to part of a letter that has been put out there then perhaps they could be treated to a ballpark figure of the sort of money that you are looking for.

Sadiq Khan (Mayor of London): If you want letters published you may want to seek permission from the Secretary of State [for Transport], which I am quite happy to give consent to. In relation to negotiations, I think it is not appropriate to conduct them publicly. I think it is appropriate to conduct them as grown up people around the room, or virtually, and that is what I have been encouraging the Secretary of State to do for some time now.

Susan Hall AM (Chairman): I think that is disingenuous, Mr Mayor. You are negotiating in the press all the time while the Government is trying to do a deal in good faith.

Sadiq Khan (Mayor of London): A Prime Minister who lies on the floor of the House [of Commons] is anything but acting in good faith.

Susan Hall AM (Chairman): Can we concentrate on you? I am here asking you questions today.

Sadiq Khan (Mayor of London): I am sorry, Chair, you mentioned the Government, who are the other parties in this deal. There is the Government, DfT, and there is TfL and me.

Susan Hall AM (Chairman): Yes. There are people watching this who would like to know more information, since lots has been leaked - I cannot imagine how - to the press but not the whole story has been leaked to the press. I think lots of people would be very interested to see what the ballpark figure is, given that you have a deal that is very close according to the TfL Commissioner. We would just like to know the sort of amount that you are looking at.

Sadiq Khan (Mayor of London): I am not sure I can add any more to what my Chief of Staff has said. Page 100

Susan Hall AM (Chairman): It is very selective, what you are putting out there in the public, then. What are the conditions or key conditions of the new funding? We do not know what the new funding is because that particular point you do not want to tell us. What are the key conditions of that?

Sadiq Khan (Mayor of London): The conditions that the Government want to put on Londoners, which are already in the public domain, are extending the Congestion Charge from the central London area up to the North Circular and South Circular, which would mean 4 million additional Londoners would have to pay £15 a day for using their car. Another condition the Government wants to impose on Londoners is to make Londoners pay additional council tax to pay for TfL. Another condition the Government wants to impose on Londoners is to increase the fares paid by more than Retail Price Index (RPI) plus one, well above inflation. Another condition the Government wants to impose on the poorest children is to remove their free travel, and another condition the Government wants to impose on the poorest Londoners above the age of 60 is to remove the 60+ concessionary card.

Susan Hall AM (Chairman): Yes, that is what has got out into the press, but not anything else. Are they actually imposing that or is it a suggestion? Since the deal has not been done, they are not imposing that. What else has been suggested? What suggestions have you put forward? If you are asking them for an amount of money, how much have you actually asked them for?

Sadiq Khan (Mayor of London): The two things the Government could do very easily --

Susan Hall AM (Chairman): How much have you asked them for?

Sadiq Khan (Mayor of London): The two things the Government could do very easily to assist us in relation to funding TfL on a sustainable footing is either, firstly, to restore the operating grant that was taken away by the Government, and/or, secondly, to devolve more powers to our city to be able to pay for services in London, or a combination of the two.

Susan Hall AM (Chairman): Right, OK, but of course you do get business rates now, which does not ever seem to be mentioned. Can I go back to my question? How much have you asked the Government for?

Sadiq Khan (Mayor of London): For the rest of the second half of the year (H2) I think it is £2 billion, and there is a separate figure for 2021/22 which I think is £2.7 billion.

David Bellamy (Mayor’s Chief of Staff): As set out publicly in TfL’s revised budget.

Susan Hall AM (Chairman): Yes, I just wanted to confirm. Around £5 billion. Do you think the Government should give that without any conditions?

Sadiq Khan (Mayor of London): I am quite clear the Government gave a blank cheque with no conditions to the privatised train operating companies (TOCs) who provide poor services, cancellations, delays, strikes, and exorbitant increases in fares. Compare and contrast to TfL, a world-class transit authority who help London contribute a quarter of the country’s gross domestic product (GDP), net surplus £40 billion tax to the Treasury. I think the Government should be --

Susan Hall AM (Chairman): I know. Mr Mayor, we have heard this on various --

Sadiq Khan (Mayor of London): You asked a question and then you interrupt. Page 101

Susan Hall AM (Chairman): We have heard this on various news --

Sadiq Khan (Mayor of London): Do not ask the question then, if you know the answer.

Susan Hall AM (Chairman): I want specific questions. I am asking you --

Sadiq Khan (Mayor of London): Well, I have answered it.

Susan Hall AM (Chairman): You are comparing --

Sadiq Khan (Mayor of London): You do not like the answer, but I have answered.

Susan Hall AM (Chairman): No, I am just trying to get some information out of you. You talk about the rail industry but of course it is having its operating model completely changed whereas you want to have money given to you, more or less, to continue as you are going now. Going back to the --

Sadiq Khan (Mayor of London): You are in danger of misleading those watching with your question. The Government has given the TOCs an 18-month blank cheque. I am happy, by the way, to discuss with the Government a sustainable long-term funding plan for TfL like the Government is doing with the TOCs. You should not mislead people in your question by saying things that are not true.

Susan Hall AM (Chairman): I am not misleading anybody, I am asking you questions. You want the Government to give you around £5 billion of taxpayers’ money. Do you think that there should be any conditions attached to that?

Sadiq Khan (Mayor of London): See, your question fails to understand a basic fact, which is that London --

Susan Hall AM (Chairman): My question is quite simple. My question is simple.

Sadiq Khan (Mayor of London): -- contributes £40 billion in addition to the Treasury, more than we receive.

Susan Hall AM (Chairman): No, no, Mr Mayor --

Sadiq Khan (Mayor of London): Integral to us doing that is TfL to be successful. TfL needs funding because of the COVID crisis. We are over-reliant on fares income.

Susan Hall AM (Chairman): Let us try this for the third time. You want about £5 billion of taxpayers’ money. OK, we have established that. I am asking you: do you think there should be any conditions attached to that?

Sadiq Khan (Mayor of London): I will try again.

Susan Hall AM (Chairman): No, no. Yes or no would be good.

Sadiq Khan (Mayor of London): Hopefully --

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Susan Hall AM (Chairman): It is quite a simple answer, yes or no. Do you think £5 billion worth of taxpayers’ money should have any conditions attached to it?

Sadiq Khan (Mayor of London): I am not going to be dictated how to answer your question. I can answer your question how I want to answer it or you can repeat the same question again. What do you want to do?

Susan Hall AM (Chairman): I just want an answer. With respect, that is what we are here for.

Sadiq Khan (Mayor of London): You have never been respectful, Chair. Let us not pretend.

Susan Hall AM (Chairman): £5 billion worth of taxpayers’ money. Do you think there should be any conditions attached to that or not?

Sadiq Khan (Mayor of London): As I have sought to answer - I am hoping this time without interruption - we have said to the Government that because the crisis that TfL faces has been caused by the pandemic, which has led to fewer passengers using our services than would otherwise be the case, and because, unlike any other transport authority in the world, we are over-reliant on fares income - around 80% of our income comes from fares - in those circumstances the Government should be giving TfL a grant to take us through the short to medium-term, and I am more than happy to discuss with the Government a medium to long-term plan to ensure TfL is on a sustainable funding platform. It is really important for London to do so.

Susan Hall AM (Chairman): OK. Well, I think everybody listening will realise that you will not accept that. Fortunately, on 1 October [2020], Andy Byford, your new Commissioner, said, and I will quote here to help you:

“We are not expecting a blank cheque: I accept that there will be conditions.”

On that premise that there should be conditions, what sort of conditions do you, Mr Mayor, think would be fair if the Government is handing over £5 billion worth of taxpayers’ money?

Sadiq Khan (Mayor of London): I have been quite clear that in the short term I think it is really important to give TfL the support they need to ensure we can have 100% service or thereabouts to keep TfL running, even though we know there are fewer passengers using TfL services. In the medium to long term, I am more than happy to work with the Government to put TfL on a sustainable financial footing.

Susan Hall AM (Chairman): OK, so what sort of conditions would you think were acceptable?

Sadiq Khan (Mayor of London): I will give you one example. The London Finance Commission (LFC) prepared a report, commissioned by a chap called Boris Johnson [MP, Prime Minister, former Mayor of London], which laid out a number of conditions where London would raise more revenues in London which could help pay for TfL.

Susan Hall AM (Chairman): OK. What would you put in if you were the one giving £5 billion worth of taxpayers’ money? What conditions would you find acceptable?

Sadiq Khan (Mayor of London): I am sorry, if I was the Government or if I was TfL?

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Susan Hall AM (Chairman): From either way. Let us put it to what you are in charge of. You are responsible for TfL. What conditions do you think would be acceptable for you to accept, on behalf of TfL, for the cheque for £5 billion?

Sadiq Khan (Mayor of London): I am unwilling to accept an extension of the Congestion Charge up to the North Circular and South Circular, I am unwilling to accept a regressive council tax being paid for by all Londoners to pay for TfL, I am unwilling to accept fares going way above inflation, I am unwilling to accept the removal of free travel for the poorest children, and I am unwilling to accept free travel being taken away from over-60s, some of the poorest Londoners.

What I am willing to do with the Government is to speak to the Government about a combination of two things. One is the restoration of the operating grant taken away by the Government, and, secondly, adopting some of the recommendations in the LFC report.

Susan Hall AM (Chairman): OK. We have heard so much about what you will not accept. Basically, then, we must assume you are going to the Government for £5 billion and do not really want any conditions with taxpayers’ money at all.

Sadiq Khan (Mayor of London): We are going in circles, are we not?

Susan Hall AM (Chairman): Well, we are, because you are not answering any of the questions.

David Bellamy (Mayor’s Chief of Staff): The Mayor --

Susan Hall AM (Chairman): This is what happens when somebody asks a question and it is not answered.

David Bellamy (Mayor’s Chief of Staff): The Mayor clearly said that it was entirely appropriate that there be conditions around delivery of service because that is the purpose of the funding, in order to keep London’s transport system operating at this time when passenger numbers are so much smaller and we are facing the consequences of the financial model the Government imposed in 2015.

Susan Hall AM (Chairman): Have you offered anything, Mr Mayor, in way of cutting costs in TfL that would assist with TfL’s horrific finances?

Sadiq Khan (Mayor of London): Yes. Fortunately, unlike the previous Mayor, I have a track record of making huge savings in TfL. I will give you some examples of some of the things I have done. We have, year- on-year, like-for-like, reduced the operational costs of TfL - the first time in its history - by £150 million a year. We have reduced the base cost of TfL --

Susan Hall AM (Chairman): Can I ask you what you are going to --

Sadiq Khan (Mayor of London): You may want to interrupt the answer because you do not like it, but you have to give me a chance to answer the question.

Susan Hall AM (Chairman): We have just heard it all before.

Sadiq Khan (Mayor of London): The question you asked was savings I have offered the Government and I was answering the question, but because you did not like the answer, you interrupted me. Carry on.

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Susan Hall AM (Chairman): No, I am saying --

Sadiq Khan (Mayor of London): Oh, can I answer? OK, I will give you another example.

Susan Hall AM (Chairman): You are asking for £5 billion now.

Sadiq Khan (Mayor of London): I will give you another example.

Susan Hall AM (Chairman): Let us not go back to the past to things that you have learnt, that you have repeated parrot-fashion on all the news reels, because everyone has heard that.

Sadiq Khan (Mayor of London): Clearly you have not, Chair.

Susan Hall AM (Chairman): I am asking: what new things are you going to tell the Government that you will look at in order to make savings within TfL, to give them comfort, as they are giving you £5 billion worth of taxpayers’ money, that you are looking at how you make the best savings and more savings than before?

Sadiq Khan (Mayor of London): Chair, I am happy to have sent to you the TfL Business Plan and the revised budget, which you may not have seen, which set out some of the savings that we have offered the Government.

Susan Hall AM (Chairman): You cannot tell us now?

Sadiq Khan (Mayor of London): They are public documents, Chair.

Susan Hall AM (Chairman): You cannot tell us if there is anything else in that letter that you would find palatable?

Sadiq Khan (Mayor of London): I am quite surprised that as the Chair of the Budget and Performance Committee, you have not had the time or the courtesy to read either the TfL Business Plan or the revised budget. I am disappointed but I will have them sent over again, please, David, to the Chair.

Susan Hall AM (Chairman): I think, Mr Mayor, you are constantly disappointed with me, which is reflected back again, but that is how things are with us. We progress, do we not?

Next question, because we did not get that far on that other than you want £5 billion with no conditions. TfL has said on several occasions that the Government required TfL to take part in the national furlough scheme before other funding was made available. Can you clarify the logic behind that?

Sadiq Khan (Mayor of London): We were told to do so by your Government’s Secretary of State [for Transport] and by the Permanent Secretary he has.

Susan Hall AM (Chairman): Right, OK. As far as we are concerned, really, you were paying, because you were topping up people that were on furlough, their wages, so in actual fact the taxpayer was paying for a lot of people to not work and sit at home on furlough.

Sadiq Khan (Mayor of London): Sorry, is that commentary or a question?

Susan Hall AM (Chairman): If you have a thought about that? Page 105

Sadiq Khan (Mayor of London): Your Government’s Secretary of State [for Transport], his Department, told us we had to use the furlough scheme. Those people who work for TfL have a thing called a contract of employment and the contract of employment is breached if you unilaterally reduce the amount of salaries they receive. We did a combination of two things: 1) follow the instructions and advice given by your Government, and 2) adhere to the law.

Susan Hall AM (Chairman): OK, but for the same overall cost to the taxpayers, these employees could have continued working?

Sadiq Khan (Mayor of London): Again, you are making a commentary, Chair, not asking a question.

Susan Hall AM (Chairman): I lifted my voice at the end of that, which indicates a question, but you do not want to answer it. When did the Government explicitly ask you to use the furlough scheme?

David Bellamy (Mayor’s Chief of Staff): We had a letter from the Permanent Secretary to TfL in April [2020].

Sadiq Khan (Mayor of London): 20 April.

David Bellamy (Mayor’s Chief of Staff): Yes, 20 April [2020]. The letter was just before that. On 20 April TfL started furloughing staff and reached up to 7,000 people furloughed.

Susan Hall AM (Chairman): Yes, I know that bit. From a taxpayer’s point of view, it is of concern, but we will look into that.

Can I ask you: how are you expecting TfL to contribute its share to your £493 million savings target, given TfL’s reliance on Government funding?

Sadiq Khan (Mayor of London): I think the revised budget sets that out, and TfL are working on further plans consequent to the negotiations with the Government taking place as we speak, I hope.

Susan Hall AM (Chairman): OK, but at a time when TfL is so dependent on financial support from the Government, does that not mean that TfL’s share of the £493 million is effectively being covered by additional Government funding?

David Bellamy (Mayor’s Chief of Staff): No, I do not think it does mean that, Chair. The reality is that the Mayor has no control over how much business rates income we receive, which is obviously the source of the funding for TfL he has. Obviously, he could decide to not cut TfL but with the sums of money involved you would have to effectively close down the Fire Brigade as the alternative because that is the other big place that funding source goes to. The decision the Mayor took in his budget guidance was that TfL should receive a proportionate reduction in business rates based on the share of business rates it receives so that he is not pushing the burden towards the DfT and equally he is not pushing the burden onto the Fire Brigade or the Metropolitan Police Service (MPS). It is an entirely neutral and balanced approach we are taking to deal with that.

Susan Hall AM (Chairman): OK, fine, thank you. I see virtually all my colleagues want to come in on this. Assembly Member Devenish, would you like to start?

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Tony Devenish AM: Thank you, Chair. Good morning, Mr Mayor. Can I ask you just a straight question? I hope I can get a straight answer, please, sir. Did you or your team leak the letter from the Government that appeared in Tuesday’s Financial Times?

Sadiq Khan (Mayor of London): I did not leak any letter. Is that straightforward enough?

Tony Devenish AM: You are trying to present to London that--

Sadiq Khan (Mayor of London): You may not like the answer, but it is the answer.

Tony Devenish AM: -- you did not leak that letter, sir?

Sadiq Khan (Mayor of London): Nor was I present during the briefing given by the Secretary of State [for Transport] yesterday to Assembly Member Bailey and Conservative MPs. I wish I was present because I could then have found out what his intentions are and found out a bit more. I was also not responsible for the leak to Sky last week, nor was I on the politics show on Sunday lying about what has been offered by the DfT.

Tony Devenish AM: Is that not astonishing? Do you really think Londoners believe that letter ended up in the Financial Times from any other source other than you or your office?

Sadiq Khan (Mayor of London): What I find astonishing is that this Government is imposing on Londoners an extension of the Congestion Charge that covers 4 million more Londoners, this Government is imposing on Londoners additional council tax to pay for TfL services --

Tony Devenish AM: Mr Mayor, we have heard your --

Sadiq Khan (Mayor of London): -- and I am astonished this Government is imposing on Londoners --

Tony Devenish AM: -- to the letter, we do not need you to repeat it. Thank you for that.

Sadiq Khan (Mayor of London): -- above-inflation fares increases, but also wants to take away free travel from the poorest children and the poorest Londoners above the age of 60.

Tony Devenish AM: We have heard the leak that you put out, sir. Can I ask you a different question, then? You earlier said that, quote, TfL is a “world-class” transport network. How do you define that?

Sadiq Khan (Mayor of London): I have managed to recruit a Commissioner for TfL who has previously worked in Australia, Canada and the United States of America (USA), and from the experience he has in those three different jurisdictions, having worked on three continents, he is quite clear we are considered a world-class transit authority.

Also, you will be aware that in fact the Government is so impressed by TfL they wish to replicate the concession model in other parts of the country, including Transport for West Midlands, Transport for the North, and, you will have seen recently, Transport for Wales as well. The other huge advantage we have in London is we have managed to integrate Tubes, buses, trams and the Overground, and the Government themselves are so impressed by us they want to give us more commuter lines as well.

The other point I would make in relation to TfL being a world-class transit authority is that because of our polices in TfL we have managed, during my mayoralty, to reduce the numbers of homes in areas of London Page 107 where the air is illegal by more than 94%, and because of the policies of this world-class transit authority, reduced the number of schools in parts of London where the air is unlawful by 97%. In addition to that, we have managed to introduce the world’s first Ultra Low Emission Zone (ULEZ), responsible for a massive reduction in nitrogen dioxide, particulate matter and carbon emissions.

At the same time, over the last few weeks and months, working with the Government, as a consequence of our Streetspace programme, we have massively increased the amount of walking and cycling taking place in our city. At the same time, we continue to invest in new signalling for the Piccadilly line but also to invest --

Tony Devenish AM: Thank you, Mr Mayor, thank you for the --

Sadiq Khan (Mayor of London): -- in infrastructure in our city, a good example --

Tony Devenish AM: I think that is a long enough answer. Can I get a question in, please?

Sadiq Khan (Mayor of London): -- with the Government giving us no operating grant, of us providing a world-class transit authority.

Tony Devenish AM: We have a week and a half, would you agree, to finish this negotiation between you and the Government? Are you prepared to do anything necessary to make sure that Londoners get an agreement between you and the Government without this party-political bickering, please?

Sadiq Khan (Mayor of London): I think you have made a really good point here. What you have said is: am I willing to do anything it takes to reach a deal with the Government? The answer is no, I am not willing to extend the Congestion Charge to the North and South Circular like your Government wants me to do. No, I am not willing to make all Londoners who pay council tax pay huge increases in council tax to get a deal with your Government. No, I am not willing to accept your Government’s condition to increase fares well above inflation. No, I am not willing to accept your Government’s condition --

Tony Devenish AM: You know well, Mr Mayor, that is not the Government’s position. The Prime Minister said so at Question Time yesterday.

Sadiq Khan (Mayor of London): -- to remove free bus travel from the poorest Londoners. No, I am not willing to accept your Government’s condition --

Susan Hall AM (Chairman): Mr Mayor.

Sadiq Khan (Mayor of London): -- to remove free travel for over 60-year-olds. The answer is no.

Tony Devenish AM: Chair, there is no point. He is not going to answer the question. This is a farce. I will move on to other Assembly Members. Thank you.

Susan Hall AM (Chairman): Thank you. Assembly Member Moore?

Dr Alison Moore AM: -- ask my question there, Assembly Member Devenish. I might also comment that the Prime Minister stood in the House of Commons and lied about TfL’s finances, so I think we are on fairly --

Tony Devenish AM: Sorry, I do not think calling the Prime Minister a liar, Assembly Member Moore --

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Dr Alison Moore AM: I think he did not --

Len Duvall AM (Deputy Chair): I think he is a liar.

Tony Devenish AM: I think you will find it is actually --

Susan Hall AM (Chairman): No, no, all of you, stop. I do not want anybody called a liar in one of my meetings, please. All of you.

Sadiq Khan (Mayor of London): Chair, the Prime Minister lied yesterday. Chair, the Prime Minister lied yesterday.

Susan Hall AM (Chairman): I am sorry, I have just said I do not want anybody called a liar in one of these meetings. It is unacceptable.

Sadiq Khan (Mayor of London): He is a liar. He lied yesterday.

Dr Alison Moore AM: Chair --

Tony Devenish AM: You should know, Mr Mayor --

Susan Hall AM (Chairman): Right, Assembly Member Moore, do you have a question?

Dr Alison Moore AM: I do. I would just like to make the point that the finances of TfL are on the record and that was not the impression given by the Prime Minister yesterday. That comment stands.

TfL has kept London moving throughout the COVID crisis and we are heading into a second wave. Mr Mayor, what would the impact be to TfL and to Londoners if Government did not come forward with the money needed to support TfL and keep it running during this pandemic and throughout the recovery phase?

Sadiq Khan (Mayor of London): Thanks for your question, Dr Moore. One of the conditions the Government is imposing on us, which I am willing to accept, is that TfL should continue to provide as near as possible to 100% services on the transport network, for good reasons, because many people still need to use public transport. Think of the nurses, the doctors, the porters, the shop-workers. Many of us use public transport on a regular basis. Even though Tube numbers are down to now about 32% today versus last year and buses about 53% today versus last year, unlike any other business in the country, we are still providing 100% services because the Government has conditioned us to do so and we understand the reasons for doing so. If we did not, there would more breaches of social distancing and the virus could spread even further.

The challenge we have, Dr Moore, is that the money we have runs out at the end of this month. Unless the Government reaches a deal with us by the end of this month, TfL will have no choice under the regulations and the laws as they are, under the Local Government Act [2003], but to reduce services to make sure we have sufficient monies in our balances to pay the liabilities that we have: basically speaking, two months’ worth of cash balances. That will mean, I am afraid, fewer trains running on the Tube system, fewer buses, fewer trams, and fewer Overground trains, which is good for nobody. That is why I think it is important for the Government to stop playing party politics, stop being vindictive, get around the table as grown-ups and do a deal.

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Dr Alison Moore AM: Thank you. If I may just follow that up, Chair, you have said that London is at a tipping point. If we were to enter Tier 3 or more stringent restrictions further into the winter, what would the financial impact be on TfL and is this being factored into the current negotiations and planning?

Sadiq Khan (Mayor of London): One of the things that my Chief of Staff tried to explain earlier on, but he was interrupted, was the flex required in relation to working out the fares stream brought into TfL because some of the things are outside the control of TfL, including the move from Tier 1 to Tier 2 and the potential move - I am not saying this is going to happen but it is potential; we have to bear in mind what has happened in other parts of the country - from Tier 2 to Tier 3. There is an additional complication, which is that the Government may decide to follow the advice of the experts they asked to sit on the Scientific Advisory Group for Emergencies (SAGE), which is a short national circuit-breaker. Of course, the other potential, which we saw in March, April and May [2020], is a national lockdown.

All those things are unknowns which TfL do not know about and simply have no control over, and they have a huge impact on the business TfL has. There were some stages, Dr Moore, during the lockdown where there were around 5% of people using the Tube versus what was happening last year, and about 15% on buses. If we are relying so much on fares revenue, you can understand the impact in relation to our ability to provide services which is why we need support from the Government, as they have given to the privatised TOCs and others across the country.

Dr Alison Moore AM: Finally, could I just confirm that, as the Commissioner told us on 8 October [2020], TfL has been carefully modelling all those scenarios?

Sadiq Khan (Mayor of London): TfL has been using the Government’s modelling, DfT, the Office for Budget Responsibility (OBR), Bank of England and others to work out their estimates in relation to passenger usage. The Government thinks there should be 65% of customers using the Tube by next March. I cannot see that, and that is why conversations are important as grown-ups around a table, rather than people lying on the floor of the House of Commons as you saw yesterday from the Prime Minister.

Dr Alison Moore AM: Mr Mayor, thank you. Chair, I will leave it there.

Susan Hall AM (Chairman): Assembly Member Berry?

Siân Berry AM: Thank you, Chair. Good morning, Mr Mayor. I am feeling very, very worried and I can see on your face that there is a lot of worry about this situation. I am from a different party, but I do want to make sure that I am offering you my support. You are the person elected to represent London in these negotiations with Downing Street and I hope that in this very serious crisis situation those of us on the Assembly are here to make suggestions, but also to work together to find the right answer for Londoners on this. I am going to try and shed some more light and heat on this discussion, if that is OK.

My first question is really to get some clarity on how much of this problem that TfL’s finances face is the gap in fares income? I think, in Quarter 1, we had some raw numbers where the difference from what we would have expected was something like £900 million. Do you have to hand the numbers of how much of the gap that we face is just for loss of passengers?

Sadiq Khan (Mayor of London): Firstly, can I just say this? It is important I say this. I hope Londoners are watching the cross-party way you are seeking to work with us to solve this problem. I am really grateful for the way you approached this matter, and other matters, in fact, and you have done so over the last four and a half years consistently. Page 110

We rely, as you know, hugely on fares, Congestion Charge, advertising and our property. It is, roughly speaking, 86% if you add those four components together. We have looked at other transport authorities around the world, and nobody else is anywhere near that: New York, 38%; Paris, 38%; Madrid, 47%; Singapore, 22%. The funding model that was agreed between Boris Johnson [MP, former Mayor of London] and George Osborne [former Chancellor of the Exchequer] in 2015 is flawed. They decided to reduce the operating grant to zero, and it is not true to say that business rates can replace that.

Even in advance of this COVID crisis, there were challenges about our model because it is not sustainable in the long term, but what this pandemic has exposed is the frailty of a model based in that way. We had, as I said, more than a 90% reduction in our fares revenue. Clearly, for good reasons, we had to temporarily suspend the Congestion Charge. You will appreciate the impact on advertising, and you will appreciate we had to give rent relief to our tenants, our small businesses, who could not afford to pay our rent.

Siân Berry AM: We asked you to do that as well, yes.

Sadiq Khan (Mayor of London): Quite, and so the Government, rather than saying, “Listen, London, you have done the right thing by following the rules”, they are punishing Londoners by these draconian, vindictive, petty conditions.

Siân Berry AM: I will come on to that in a moment, but just to be clear, you are asking for £2 billion this year. Is that the fares income that is lost? Is that less or more than the fares income that has been lost?

Sadiq Khan (Mayor of London): Yes, good question. We have done a number of things. We have predicted the fares revenue but also the advertising lost because, as I explained, most of our money comes from those four streams, fares, advertising, Congestion Charge and property, and all those things have been affected by the COVID pandemic.

Siân Berry AM: If I remember rightly, the advertising income was about one-tenth of the fares income in the original budget anyway. It is really the loss of passengers that is causing it.

Sadiq Khan (Mayor of London): Yes, 72% is fares and the other 14% is the other three things I have mentioned.

Siân Berry AM: Of the £2 billion, is that mainly lost fares income?

Sadiq Khan (Mayor of London): The vast majority is fares.

Siân Berry AM: Right, and there is nothing we could have done about that in advance apart from having more a sustainable funding model--

Sadiq Khan (Mayor of London): No, there is. No, it is really important that I am fair to the Government. There is. What we could have done is ignored the advice from the Government and used public transport. We could have ignored the advice of the public health experts and returned to work. We could have breached the rules, but we chose not to do so and now we are being punished for it.

Siân Berry AM: Moving on to the conditions question - and here I might get a little bit more challenging - you have rejected all of the rumoured conditions: the fares going up, the increasing council tax, the higher Congestion Charge zone and the loss of the free travel for young and old people. That is right to me. None of Page 111 those things seem to be fair. I think all of us here would probably agree that an increased Congestion Charge zone with a flat daily payment would not be fair on Londoners and might even have some unintended consequences for central London, and that increasing council tax in a punitive way, because it would be a big increase in council tax, would not be a fair, progressive thing to do either because of the structure of that tax.

We do have to be thinking about what else to do. I know you have made a long-term investment case to the Comprehensive Spending Review (CSR), but in terms of a long-term way to make TfL’s income/revenue more diverse and more resilient, have you made any alternative proposals to the Government that arise from your independent review of TfL’s finances, for example, smart, fair, privacy-friendly road charging, which would be much fairer than a flat Congestion Charge?

Sadiq Khan (Mayor of London): Firstly, one thing I must just correct you on. You began your question by saying, “I am sure we would all agree” that extending the Congestion Charge or increasing the council tax is a bad thing. I am not sure if the Conservatives would agree with that, by the way. It is really important to clarify that for the record.

Siân Berry AM: I am certain I have seen people from all parties saying that the flat Congestion Charge increase would be rather unfair.

Sadiq Khan (Mayor of London): I think it is unfair, but it was a Tory proposal from a Tory Secretary of State. Let us just be clear we are not giving them credit they do not deserve.

Siân Berry AM: I think London is more or less in agreement on this.

Sadiq Khan (Mayor of London): Yes, you and I can agree, and Labour members would agree with you. I dare say even Brexit Alliance may agree with you. I know the Liberal Democrats would definitely agree with you. I cannot speak for the Conservatives.

Let us be quite clear in relation to the work we are doing. The independent review that TfL have commissioned has not reported back yet and I am not sure what is going to be in it. What you have inferred could be in it, I am not sure. What I do know that is already out there is the report of the LFC, the first one, commissioned by the previous Mayor, which had a number of ways to raise revenues in London. There is a second LFC report which I commissioned using the same experts that Boris Johnson [MP] had used, and they have also made a number of recommendations about ways to increase revenues in our city.

Siân Berry AM: OK. To my mind, what we do need from Government is short-term support to tide us over in just the way that they have given to the TOCs, that much is clear. The fares income has to be replaced by Government because there is nothing we could have done about that.

In the longer term, we ought to be coming up with alternatives to raise money in a fair way for the transport system, and to my mind the thing that is overdue here is the smarter congestion charging scheme that I have been putting forward for years. I hope that will come forward because that would be the way to get agreement from Government, short-term support with time to work up long-term resilience.

Sadiq Khan (Mayor of London): I agree, but you have to disaggregate the short-term funding London needs. COVID is going to be with us, unfortunately, for some time now, which is why the sticking plaster approach of six months does not work. We want an 18-month deal for TfL but we will have to wait and see what the Government does.

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You are right to say we should be thinking about how we put TfL on a long-term, sustainable financial footing. You have suggested one thing we have discussed in the past. It is in the long-term Strategy that I have. You will be aware of the Mayor’s Transport Strategy over some period of time. We have also queried whether the technology is there in the short term, but you are right, even if it was there, that is not a solution to the short-term challenges. That is Government grant.

Nothing should be ruled out vis-à-vis long term, particularly with technical innovations, but that is one of the reasons why I look forward to the independent review commissioned by TfL. Unlike the Government, we are not going to redact it and bury it away as they have done with KPMG report. We will make sure it is made public, as is the norm when it comes to work I commission.

Siân Berry AM: Do you have a date for publishing your review?

Sadiq Khan (Mayor of London): As soon as the team prepare the report, I will make sure it goes to the relevant Committee and is made public.

Siân Berry AM: Thank you.

Susan Hall AM (Chairman): Have you any idea when that might be, Mr Mayor?

Sadiq Khan (Mayor of London): I am not sure. Do we have a timeline?

David Bellamy (Mayor’s Chief of Staff): I am sure it will be this autumn, but it is worth saying that that the experts are doing the independent review on a voluntary basis and so they are fitting it in around their other commitments. They have been very clear, I understand, that they do not want to publish interim things, they just want to come out with a report which clearly and fully sets out their thinking. We are waiting for them to produce that to their own satisfaction.

Susan Hall AM (Chairman): OK, we should have it before the next budget round, though, should we not?

David Bellamy (Mayor’s Chief of Staff): I would expect so, yes, in terms of our next meeting, certainly.

Susan Hall AM (Chairman): Good, excellent. Question from Onkar Sahota [AM].

Dr Onkar Sahota AM: Thank you, Chair. Mr Mayor, I think we need to clear a few things up, and I want your help in sorting this out. The current crisis that the TfL finances are facing is entirely related to COVID-19 because despite what the Prime Minister said yesterday in the House of Commons, he left TfL finances in a very, very bad place and you have made a tremendous amount of improvement in recovering the finances. The current crisis relates entirely to COVID-19 and London is doing what is the right thing to do. Can you just clarify that for me, please?

Sadiq Khan (Mayor of London): Yes, let me clarify a few things. It is really important to do so, particularly for people watching this who may - not unreasonably - think that when the Prime Minister speaks on the floor of the House, he tells the truth.

The Prime Minister, when he was the Mayor, during his eight years, borrowed £7 billion in debt, £7 billion. I spent the last four years paying a lot of interest on that, but borrowed nowhere near those sums. The previous Mayor, when he stopped being Mayor, left me a deficit of £1.5 billion with no plans on how to reduce that and no plans to get it into surplus. During my Mayoralty we have already reduced it by more than 71%. Before the Page 113 pandemic struck it was down to £250 million with a plan by the end of the financial year to get down to £200 million, an 86% reduction in the deficit.

The cash balances we have, the reserves, have been increased. We have built it up to £2.2 billion, an increase of 31%. When the Prime Minister says, as he did yesterday, “TfL was bankrupt before this pandemic”, he is lying. He knows he is lying, and he is trying to mislead the public, and those Conservatives who sit in this Assembly should call him out for being a liar and stand up for the fantastic work done by TfL over the last four years.

Tony Devenish AM: Chair, we cannot have the Mayor continually calling the Prime Minister a liar. This is completely outrageous. He is lessening the quality of politics.

Sadiq Khan (Mayor of London): The one thing that we know is guaranteed to diminish politics is people lying. One of the things that diminishes even more --

Tony Devenish AM: Mr Mayor --

Sadiq Khan (Mayor of London): -- politics in this country is the most senior politician in this country lying, as Boris Johnson [MP, Prime Minister] did yesterday. I know you are embarrassed by the fact, which is what I am answering in relation to the question asked by Dr Sahota [AM], but the facts are there and the Prime Minister should look at the facts before he goes to Prime Minister’s Questions and lies to parliamentarians and those across the country.

The other two points I should say, Dr Sahota, which Conservative [Assembly] Member Devenish is unhappy about, is in 2016/17, for the first time in TfL’s history, we reduced the like-for-like operating costs - never done before - by £150 million. We have continued to do so. We have also managed to reduce costs in relation to our accommodation and in relation to our senior staff, which is why we managed to recruit a world-class Commissioner who has previously led organisations in Australia, in Canada and in the USA.

Dr Onkar Sahota AM: Mayor, thank you. The important thing is, of course, that even currently the Government policy is, “Work from home if you can”, and, therefore, the travel on our transport systems is reduced.

Also, what businesses and what TfL needs is certainty. The way the COVID-19 crisis has been handled by this Government has been a shambles, and I speak from the perspective of a doctor. We have not got test and tracing sorted here, we have not got confidence in the community, and so no wonder people are not confident travelling on TfL. To punish Londoners for the measures that are being proposed is unfair. Can you just comment on how important the test and tracing systems are to give confidence back to businesses and people who travel on TfL so the numbers can go up? Otherwise, all those assumptions made by the Government are total pie in the sky.

Sadiq Khan (Mayor of London): It is very important that we do not accept that where we are now was inevitable vis-à-vis this virus. The most important thing you can have, in the absence of a vaccine or without immunity, when it comes to a pandemic like this is have a functional Test, Trace, Isolate, Support system. The Government has had seven months to get one up and running and it has failed to do so. If we did have an effective Test, Trace, Isolate, Support system, we would not have the situation we have seen in the last two weeks where the numbers of people on the Tube and buses has gone down after an incremental increase after lockdown. You are absolutely right, if we are going to have more people using public transport we need to - in the absence of a vaccine and immunity - have an effective Test, Trace, Isolate, Support system. Page 114

Dr Onkar Sahota AM: Mr Mayor, we have this current crisis which you are dealing with and then, of course, there is the question about the sustainable model of finance of TfL. Of course, the current Prime Minister, the previous Mayor, gave up the £700 million operating grant we got and that placed the long-term finances of TfL on very dodgy ground.

There is a need to look at the new finance model and I know that the Government got a report by KPMG which has not been published at all. For the sake of transparency - and this is something which should have been brought up repeatedly by the Chair, that we need transparency - should the Government show some transparency and publish the report for all Londoners to see?

Sadiq Khan (Mayor of London): The Government, using taxpayers’ money, commissioned KPMG to do a report into TfL’s finances. As my Chief of Staff said, TfL asked independent experts to do a report for free. We are going to make our report public in the interests of transparency.

I have no doubt, by the way, you are being unfair on the Chair. I am sure the Chair of the Budget and Performance Committee has already written to the Secretary of State [for Transport] demanding that this taxpayer-funded report is made public. I would be astonished, bearing in mind her enthusiasm for transparency, if she has not written, and I am looking forward to when she has a copy of the report unredacted that she can make public.

Dr Onkar Sahota AM: The other thing is, of course, we are currently in Tier 2 but things can go bad, we could end up in Tier 3, and this is a long-term game here because we do not know whether vaccines will come along and we do not know whether testing and tracing is going to be sorted out. What would the impact be, if we did go to Tier 3 and we ended up at Tier 3 for a long time, on TfL finances?

Sadiq Khan (Mayor of London): I do not want to speculate, but TfL obviously have to do modelling. What TfL have done - and it is a really important point you raise - is because we are so reliant upon revenues from passengers using public transport, TfL have worked with Government experts, the DfT, the Bank of England, OBR, GLA Economics and others to do some modelling around future projections. One of the things that David Bellamy referred to was discussion with the Government about flexibility if numbers go up or numbers go down, about the additional support that may be needed, or less support needed. That is really important to build in to any deal we do with the Government.

Dr Onkar Sahota AM: Lastly, Mr Mayor, this proposal that the Government has put out is an extension of the Congestion Charge to the North Circular and South Circular. It will divide communities up and bring some 4 million extra people into the taxation liabilities. Have you had any information on what will happen to the residents who live in the extended area, 4 million people? What will happen? Will they get exemption for being residents there? How painful it would be - I know because I am in Ealing and the North Circular goes there - if you cross to one side of the road to do the shopping, and on the other side they are paying a £15 charge. It seems unfair that 4 million are being punished unnecessarily. What will happen to the residents living there, will they be getting exemptions from this Congestion Charge or not?

Sadiq Khan (Mayor of London): What we know from the Government’s proposals - the conditions, I should say - is that an additional 4 million Londoners will have to pay the Congestion Charge should I accept the conditions they are demanding upon Londoners. I am not willing to accept that and I have made it quite clear to Secretary of State [for Transport] and the Government that I am unwilling to accept this Conservative proposal.

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Dr Onkar Sahota AM: Finally, Mr Mayor, I want to thank you very much for standing up for Londoners. I can see there is almost all-party support for this resistance. I really want to thank you on behalf of my constituents for standing up for Londoners. We will not give in to these unnecessary and barbaric demands being made of Londoners. Will you keep the fight up, please, Mr Mayor?

Sadiq Khan (Mayor of London): Absolutely, thank you, Dr Sahota. I will make sure that I continue to resist this demand from the Government to extend the Congestion Charge.

Dr Onkar Sahota AM: Thank you.

Len Duvall AM (Deputy Chair): Mistruths, lying, ‘tomato, tomato’, all those issues, I am glad that you have called it out for what it is and it may be that the Prime Minister will have cause to regret saying the words that you said. Not only was the legacy left behind to you to reduce the deficit, he actually gave back money to central Government and got rid of the council tax precept in one of his great deals. I have called the former Mayor a liar in this Chamber and I was right to do so at the time, and I think you are right to call him that now. Not only is he dodgy on telling the truth, he is actually dodgy on finances because you could put it along with all his other transport schemes: the Emirates Flyway, the sponsorship of the so-called ‘Boris bikes’, the Garden Bridge, all those little deals that he did with Government giving back.

Can I just ask the question? If I recall rightly, the transport precept at the time did not really raise a lot. Given the financial situation we are in now - let us say we need £2 billion just to get to the end of the year - what sort of council tax precept or transport precept would we have to levy on Londoners to get that level of financing? We must have an idea of what that would be, because that is laughable if it was not good at the time, it was a small amount and it was done for tax reasons - I think for tax reasons it was reduced down - and Boris Johnson, then Mayor of London, cavalierly gave it back when he introduced this new financial model we are under at the moment.

I just would like that question, I have a second question and that will be it from me, Chair.

Sadiq Khan (Mayor of London): OK. To avoid me giving an answer which is too colourful, can I ask David Gallie to give an answer which is less colourful but equally factually correct? David.

David Gallie (Executive Director for Resources, Greater London Authority): Yes, of course. Thank you. If the non-police precept were increased by 1% that would generate about £2 million1 extra per annum. In the numbers we have been talking about of the scale of TfL’s deficit, to make even a significant contribution to meeting that deficit would require an eye-watering increase in the council tax precept. You are looking potentially of an order of magnitude of an increase of 50% in the Mayor’s existing precept on Londoners.

Sadiq Khan (Mayor of London): Can I just reassure you, Assembly Member Duvall? I am unwilling to accept the Conservative demand for a 50% increase in council tax in London.

Len Duvall AM (Deputy Chair): You have to resist it. Now, let us go back to the furlough scheme. Am I right in thinking the Government introduced the furlough scheme to protect jobs during COVID-19? Now, of course, the other reason why the Government might want you to do the furlough scheme was to make sure it was not transport money supporting TfL. They were also taking advantage of the emergency situation, giving you further financial support to actually protect jobs.

1 Following the meeting, the Executive Director of Resources, GLA, clarified that this would generate £3million per annum. Page 116

Sadiq Khan (Mayor of London): Yes, and I was surprised. It is not the first time it has been raised by the Chair of the Budget and Performance Committee, but I was surprised by her questioning and the direction she was going in. I am more than happy to arrange for my staff to give the Chair of the Committee a briefing about the Government’s intention behind those schemes.

Len Duvall AM (Deputy Chair): If we could also have a copy of the letter, if that could be put in the public domain? I think it is quite clear the intention is to protect jobs and to support TfL, but it is a question of which pot of money that support comes from.

Lastly on the issues, you mentioned earlier London’s net contribution to the Treasury of £38.8 billion. The real issue - and you are right to resist this Government - is why should Londoners have to pay twice, when we are owning, before COVID-19, the decisions that we take? Your fare freeze made sense when there was declining use under Boris Johnson [MP, former Mayor of London] because he was putting up the fares by 42% on his watch. It made sense in getting people to come back on buses and actually staved off some of those pre-COVID issues, where we were susceptible to another crisis because of a lack of people using buses. Equally, is that principle that Londoners should not pay twice driving your resistance to these Government demands?

Sadiq Khan (Mayor of London): There are a number of reasons that I have noted, and you have mentioned one of them. Just to remind those watching this, we contribute as a city about a quarter of the GDP of our country and, as you said, we contribute £40 billion more to the Treasury than we receive back, so not only do we pay for our own transport authority, we subsidise transport authorities around the country. Because of this pandemic, we have fewer people using public transport, so we cannot have the fares to pay for the services we provide.

I do not think it is unreasonable, for a short bit of time, for the Government to give us the grant to keep TfL running, so TfL can continue to be used by London’s businesses to be successful and so London can continue to contribute to the country’s wealth and prosperity. It is a false economy for the Government, for vindictive, personal reasons, to be punishing Londoners with these onerous conditions to a grant we need.

Len Duvall AM (Deputy Chair): Thank you.

Susan Hall AM (Chairman): We are coming to the end of that section and more Boris-bashing, which is what I expect, and I am sure, Mr Mayor, the Prime Minister could argue his case very easily. Calling him a liar is unacceptable. We do not have the full picture on this TfL deal, we only have what was leaked to the press and only various bits have been left out. We are going to have to wait and see what the deal is and what it is not. £5 billion is one heck of a lot of money to be asking for.

Sadiq Khan (Mayor of London): Sorry, Chair, is there a question?

Susan Hall AM (Chairman): I do not have to ask a question at this point. I am concluding this section.

Sadiq Khan (Mayor of London): OK, fine. I was not sure whether to zone out or not.

Susan Hall AM (Chairman): No, that is how it works, Mr Mayor.

Sadiq Khan (Mayor of London): Is that right?

Susan Hall AM (Chairman): After four and a half years, you should know. Page 117

Sadiq Khan (Mayor of London): I am used to having impartial Chairs, Chair. It is quite unusual for me to have a partial Chair.

Susan Hall AM (Chairman): You have a Chair that does not sop to you the whole time.

Sadiq Khan (Mayor of London): Oh, right.

Susan Hall AM (Chairman): Everything is somebody else’s fault with you, Mr Mayor, is it not, and today it was Boris-bashing again. We are now going to move on to Crossrail, which --

Tony Devenish AM: Chair? Sorry, Chair --

Susan Hall AM (Chairman): Very quickly.

Tony Devenish AM: AM Duvall asked a question I absolutely agree with, he asked the Mayor whether the Mayor would actually release the letter in full. I think we would all like to see the letter in full. Will the Mayor do as AM Duvall asked, please?

Sadiq Khan (Mayor of London): Chair, I did not hear that. Was that a comment to you? I do not have it here.

Susan Hall AM (Chairman): I think the comment is: we have seen half the letter. Whoever let half the letter out has obviously had a plan behind that, as opposed to the whole letter coming out. As that is the case, we would like to see it, but I am sure whoever leaked it - cannot imagine, can you - they would like to leak the entire thing.

We are now going to move on to Crossrail and, of course, again, more billions of pounds required to sort this out, and robust questions, I am sure, from Assembly Member Moore.

Dr Alison Moore AM: Chair. Crossrail is another project that clearly has been impacted significantly by COVID. Crossrail’s monthly update to the Transport Committee talked about that £1.1 billion above the finance package agreed in December 2018. That is obviously the funding that is now calculated to be required to get Crossrail built and running, and obviously we are in a pivotal point with it at the moment. Have you secured the elements of that £1.1 billion that is required for Crossrail funding?

Sadiq Khan (Mayor of London): No, we have not yet. Just to remind you, Londoners are paying more than two-thirds of the cost of Crossrail through the various schemes, the business rates supplement, various infrastructure levies and council tax.

Dr Alison Moore AM: In that funding part of your discussion with Government at the moment, are there any conditions being sought as part of that funding package?

Sadiq Khan (Mayor of London): What the Government are saying is that London should pay for this national infrastructure. Those are some of the conversations that we are having with the Government.

Dr Alison Moore AM: Just to confirm, Crossrail runs not just in the centre of London but a significant distance either side, and this really is a south-eastern and national project?

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Sadiq Khan (Mayor of London): Absolutely, but this is an anti-London Government, so do not be surprised when they demand Londoners pay for a piece of infrastructure that actually goes from, as you said, outside of London west to outside of London east. That will benefit the entire country.

Dr Alison Moore AM: That would, I assume, drive the housing development and regeneration that the Government is seeking?

Sadiq Khan (Mayor of London): I was just reminded by my Chief of Staff, additional monies for the Treasury are going out of London that we do not get back as well, generated by this project paid for - any additional costs - by Londoners.

Dr Alison Moore AM: If TfL or the GLA is required to contribute, how will that impact on the investment on other transport projects?

Sadiq Khan (Mayor of London): If, for example, the monies we have, that we are securing from businesses across London, have to carry on longer, that obviously has an impact on further infrastructure projects we want to do. It has an impact on Crossrail 2. It has an impact in relation to a number of other schemes as well, but I do not want to give a running commentary on conversations with the Government. Let us wait and see where this ends.

Dr Alison Moore AM: Thank you very much for that. There have been a series of changes over the last month. Perhaps you can tell us what has changed to improve Crossrail’s chances of being delivered on time. It is a challenging and hugely complex project, as I am learning, somebody who is relatively new to this. You are looking now at a new delivery estimate of the first half of 2022. How confident should Londoners be that the changes you have brought in will get Crossrail back on track and staying on track for that delivery date?

Sadiq Khan (Mayor of London): The two sponsors of Crossrail, DfT and TfL - for reasons that have been rehearsed before - set up a limited company, Crossrail Ltd. They were autonomous and they were in charge of the construction, the procurement, the integration and all the rest of it. What has happened recently with the new Commissioner is he has taken up the governance of this project. The Crossrail Ltd Board, as it was, has been subsumed, in relation to the next phase, into TfL. That has a number of advantages. Obviously, it means that we can welcome the integration that is needed for this to be a train line that runs rather than a construction project with the tunnels and all the rest of it.

We can make sure that stations, when they are handed over, are handed over to the spec we want, because we are now in charge of governance, the routeway clearance, the integration and all the rest of it. It also means there can be more transparency because there was a big concern - for good reasons, by the way - around the Crossrail Ltd meetings and the minutes and all the rest of it, but because TfL in the recent past has a record of transparency that would mean they can be more transparent in relation to what is going on, and more regular reports as well.

Dr Alison Moore AM: Thank you. I have a couple more questions but I would just like to comment that we will have an opportunity in the Transport Committee to look at all of this in detail at the beginning of December, but we are currently looking at this in the context of the budget.

How will you balance this important project’s timescales with other capital projects and the ongoing pandemic, because we are looking at everything through that lens of the COVID pandemic at the moment?

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Sadiq Khan (Mayor of London): Yes. The difficulty with construction on Tube lines like Crossrail is they are in confined spaces. They are not like outdoors. That does pose challenges and that has led to some of the delay being caused, so it is a challenge. There are some advantages to the work on construction being paused and slowed down because some of the other assurance stuff can take place, software stuff can take place and the various upgrades can take place.

As part of the timeline for it being finished, there is some time built in for COVID delay but, clearly, if there was to be a further massive increase in this pandemic which would necessitate a slow down or a pause in the construction and work, that could have an impact on Crossrail being finished when we need it to finish, want it to finish and predict it to finish.

In relation to other capital works, any stopping or pausing is caused more by financial challenges rather than Crossrail and so us taking over the governance of Crossrail should have no impact on other infrastructure projects, but the other infrastructure projects are contingent on a decent deal with the Government and of course the pandemic not getting worse.

Dr Alison Moore AM: We would all want to keep our fingers crossed that it does not get worse. You have reflected a little bit, but do you know what the Government’s thinking was around TfL oversight of Crossrail?

Sadiq Khan (Mayor of London): Yes. The Government is in full agreement in relation to the switch from the Crossrail Ltd Board to TfL. Also, we have asked the Government - and it has agreed - to have a Government representative on the relevant committee. It is important that we are co-sponsors. There has been good collegiate working between the Government, DfT and TfL and so we want that to carry on. The Government can provide expertise through its representative and just another pair of eyes is an advantage when it comes to this sort of stuff.

David Bellamy (Mayor’s Chief of Staff): It is worth noting that it is a jointly sponsored project. Crossrail Ltd was set up with great independence, as the Mayor has previously said. It was set up within TfL for legal reasons, in terms of TfL having the powers to set up companies in the way that I understand DfT does not. Historically, long before our time, that was the approach that was taken and it was always envisaged that, as we got closer to being an operational railway, it would be appropriate for a closer move into TfL to take place. As the Mayor says, there is absolutely DfT representation in the new structures and that is important because this is a jointly sponsored project of national significance.

Dr Alison Moore AM: Absolutely. The Mayor talked earlier about the value of the London transport system being an integrated one, with buses and trams and surface rail as well as the Tube. The Elizabeth line will - when it is completed - add significantly to that capacity.

It has been a complex project and the Commissioner was very clear that he did not want to look backwards. His real driver was getting the project delivered on the ground, getting the Elizabeth line open and running. What work has been going on around the lessons learnt that will feed in to driving that final phase of the project and I suppose, from a Londoner’s perspective, when would Londoners expect to see a thorough lessons learnt? Obviously, the Commissioner has referred to that as well as being something that you would do in the fullness of time.

Sadiq Khan (Mayor of London): We are very keen for lessons to be learnt. I welcome and invited the Public Accounts Committee (PAC) and the National Audit Office (NAO) to look into Crossrail, what has happened, what is happening, and they will continue to keep an eye on this. There is an additional KPMG report that TfL commissioned that was made public. Clearly, over the course of time, when we get this Page 120 finished, there will be lessons to be learnt looking back on it once it is opened as well. We are keen to make sure lessons are learnt if for no other reason that it could help with High Speed 2 (HS2), it could help with Crossrail 2 and we hope that there will be further infrastructure projects. We see how our colleagues in Europe tend to do these things, quicker, cheaper, and we are keen to learn to make sure when there is a recovery in relation to this pandemic that we can learn some of the lessons in the short term and not wait until the line opening before lessons are learnt.

Dr Alison Moore AM: That is important. It is a hugely complex project - probably one of the most complex in Europe - so I think that is important, and certainly in the context of those other capital projects and the lessons one learns about project management. I thank you for that. I suspect that there are quite a number of Assembly Members who, like me, have had an opportunity to see parts of the project during its construction phase and have been blown away by the sophistication of it. We will all be keeping a very close eye on that deadline and that budget to make sure it is delivered on time and with no further additions to the budget. That is certainly something that the Commissioner was very clear about when he spoke to the Transport Committee. I shall look forward to having a detailed discussion on that in December but thank you very much for your answers today.

Susan Hall AM (Chairman): Mr Bellamy, did I catch you wanting to come in on that?

David Bellamy (Mayor’s Chief of Staff): If the Committee wants, I was going to give an example of how learning for other projects and full review is important, just to reassure about learning within the project. One example would be obviously the Committee will be aware that the signalling and the relationship between the signalling system and the trains is an immensely complex feature of Crossrail and one of the big challenges. To address that, what is called a plateau was created, bringing together physically - now obviously virtually in this COVID environment - teams from the relevant suppliers to work directly together. That has been a huge success and it is clear that has helped move the software on the train, on the signalling, forward. Crossrail is looking at where else it can use that approach, for instance around some of the stations. Just to give that as an example to reassure the Committee that Crossrail is looking to learn lessons as it goes and apply them to deliver the project as quickly and cheaply as possible.

Susan Hall AM (Chairman): Absolutely, let us hope so, Mr Bellamy. Assembly Member Duvall.

Len Duvall AM (Deputy Chair): As an aside, we ought to always remember that this was meant to be a management of good practice. The Government has come together with other professionals so that this project would not get into this way, and the same issues around cost overruns. The key issue for me about Crossrail is about when information became available that things were not going right.

It is a complex project, as Mr Bellamy has just outlined, and there are some good things arising from the crisis but something tells me that maybe there should never have been a crisis in the first place if there had been the transparency under the new practices that were meant to be there. Let us remember that as well, not just that it is a complex project because I do not think there are some excuses for what we have had to put up with. Pre-COVID-19, the consequences of the Crossrail overrun almost killed off Crossrail 2 and damaged other capital projects that are much needed here in London. That was a catastrophe from that, and I still think there are some further questions that ought to arise from it.

The question I want to ask is this. This might be a bit cheeky but given all the other things TfL has had to deal with, the issues that we touched on previously at Mayor’s Question Time, the cost of materials, the cost of labour - and the Home Secretary has just added to those costs yesterday with a statement of what she is going to do, going against her advisers about labour that we might need in the future in this country, in terms of an Page 121 economic recovery - have we done any work around what those cost increases might do to our capital programme, albeit much reduced, in terms of some of the extra work going on into Crossrail? It seems to me Brexit, COVID-19 and the general economic international timetable says they are all going to go up. They are not likely to go down.

David Bellamy (Mayor’s Chief of Staff): You are right, Assembly Member Duvall, to point that out. When we were asking the question about whether there would be a withdrawal agreement reached at a couple of points in, I think it was, 2019, clearly all organisations were thinking about the consequences of that, and now again it becomes a very real consideration. I have not personally yet seen anything from TfL to set out its assessment. I am sure that work is going on in among the priorities, as you say.

I have seen the MPS’s work on this. They have been seeking to secure supplies. For instance, they are refreshing the body-worn video that officers have. A lot of the units are reaching the end of their service life and so they have been placing bulk orders and seeking to ensure things are in by December [2020] for that mitigation. I also touched on this on a call with the London Legacy Development Corporation (LLDC) Chief Executive earlier this week. Around the Group, organisations are thinking about the impact and seeking to mitigate where we can, but clearly in some senses, in terms of labour and availability of firms - if some firms cease trading - to actually do the work, there are real risks there and they are not things that are going to be in our organisation’s power to mitigate.

Sadiq Khan (Mayor of London): I would add, Chair, with your permission, it also affects the London Fire Brigade (LFB) when it comes to some of the engines we are buying from Europe with the exchange rate as well. Some of the work that we are doing is using good procurement expertise, and the Chief of Staff is right to not just answer your question directly but to mention other areas where it does affect us.

Len Duvall AM (Deputy Chair): Across the Group.

Sadiq Khan (Mayor of London): Yes.

Len Duvall AM (Deputy Chair): It is across the Group, I get that.

David Gallie (Executive Director for Resources, Greater London Authority): Obviously we will reflect that in the capital strategy that will be part of the budget consultation document in December.

Len Duvall AM (Deputy Chair): Thank you. Mr Mayor, in terms of having some difficult decisions that you have had to take on ‘oven-ready’ - whatever that may mean these days to the Prime Minister, maybe it is another mystery, I am not sure - deals to push part of the economy when we are in better times, when do you think you are likely to hear back from Government about those schemes that you have submitted? Some of those schemes are part of this capital projects issue. It is quite crucial, is it not, that all points lead back to the Government now on these schemes?

Sadiq Khan (Mayor of London): I will let David give you an update in relation to where we are but we have had a number of proposals put in for shovel-ready projects to the Ministry of Housing, Communities & Local Government (MHCLG) and to other Government Departments. We have already had some knock backs from the Government. In relation to projects we are still waiting for, for shovel-ready, some of those are in the CSR submission we put in as well. There were specific pots of money the Government put aside for shovel-ready projects, so in addition to the CSR you will recall we are doing some work around the Recovery Board. There are some missions there around green recovery as well.

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David Bellamy (Mayor’s Chief of Staff): Where we are in terms of the CSR, the Committee will presumably be aware that what was intended was a three-year CSR with a four-year focus for capital. The Chancellor of the Exchequer announced yesterday that that would not be the case, that it would be a one-year spending review and that he would give consideration to capital in areas where it had a multi-year nature. We have had no confirmation yet that, for example, TfL’s capital programme will be included in that. Clearly, we are in a situation now where we were due a CSR in late 2019, owing to the general election and the Brexit situation and the change of Government that did not happen, and we had a one-year rollover. We are now looking at a one-year spending review. To what extent that will bring changes on initial allocations we do not know, but the fundamental problem is that without long-term certainty of funding it is not prudently possible for TfL to commit to major finance schemes.

That is why, for instance, the signalling on the Piccadilly line had to be paused because, even if we could afford it in year one, there was no guarantee that we would be able to across the lifespan of what would be a very big project. This is absolutely a problem for us in London. We have heard comments from the defence sector about the needs there, the long-term approach to recognise the changing nature of technology and the impact that that has in that arena. From the capital side of things, it is immensely important that as a country we are able to set out a long-term plan.

We must now be coming up to two and a half years - I think I am right in saying - since the National Infrastructure Commission (NIC) published its infrastructure assessment. The Government has still not responded to that or set out its plans. That means that projects and things, which I am sure this Committee and Londoners will want to see happening, are just not moving because we do not have that certainty.

Len Duvall AM (Deputy Chair): It is important to say that the projects that you submitted would not just help London’s transport capacity but could stimulate house building, stimulate the United Kingdom (UK) economy where we would get certain materials, probably UK materials. I am thinking of Thamesmead to Barking, the Thamesmead line that you submitted as well. They are all things that the Government says that is where it wants to go in terms of the economic recovery. Am I clear in that, that the projects you submitted fit the Government’s criteria of what it wants?

David Bellamy (Mayor’s Chief of Staff): Absolutely. It is in terms of new projects, as you set out, Assembly Member. Also, vitally important is renewal where we need that in the existing network. The Bakerloo line rolling stock dates back to 1972 and is the oldest rolling stock now in use in Britain. Clearly it will not keep rolling on forever. Through the deal TfL was able to do in terms of the Piccadilly line train replacement, the supplier, knowing that TfL had the option to look at trains for the Bakerloo line, for the Central line and so on, built a factory, which is under construction now in Goole. It is great to see the Prime Minister visiting that and seeing directly the benefit to people around the country of the investment in public transport in London.

It really is the case that so much of TfL’s supply chain is all around the country, so it is not just that there is direct economic benefit for London in terms of, for example, us keeping the Bakerloo line running but it is the economic benefit to the whole country that is so vital.

Len Duvall AM (Deputy Chair): Thank you.

Susan Hall AM (Chairman): Any colleagues? No. OK, thank you. We will now go on to the GLA budget from the Mayor. Assembly Member Devenish. Thank you.

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Tony Devenish AM: Thank you, Chair. If I could put my questions first to the Mayor’s Chief of Staff and then to David Gallie, that will be helpful. Good morning, gentlemen.

My first question is: surely, the ease with which the year-end savings target for both the GLA and the Mayor’s budget has been achieved for 2021, and indeed, exceeded, indicates that there is a high degree of financial flexibility within the budget, or dare I say fat?

David Bellamy (Mayor’s Chief of Staff): No, I would not accept that, Assembly Member. What you would have to recognise is that we were in an exceptional situation, which meant that a number of important activities that were budgeted for this financial year could not take place, the most notable one being, obviously, the men’s European Football Championships and the half a dozen matches at Wembley, and also the events programme, the various events in Trafalgar Square and so on.

What that meant is that - along with a number of other specific projects that could not be delivered under COVID restrictions - there was a load of expenditure there that simply could not take place. That on its own did not get us to the position of a balanced budget. I had three meetings with each directorate going through the budget line by line and it was a very difficult and challenging set of circumstances to get there.

Of course, what is important to remember, looking forward, is that some of that expenditure did not take place. The Euros is a great example there. We are absolutely expecting and looking forward to the Euros happening next summer but - while we have agreed with the Union of European Football Associations (UEFA) that we are capping our budget - despite the fact that some money was necessarily spent on things that did not happen, we will not be increasing that budget. Nevertheless, yes, we are looking forward to that happening but that is a cost that will need to be met next year.

Tony Devenish AM: OK. MD 2666 lists £14 million of in-year programme savings. In your view, what will be the impact to Londoners of this degree of savings?

David Bellamy (Mayor’s Chief of Staff): As I say, some of that is around events that cannot take place. For instance, the community events in Trafalgar Square are things that are greatly appreciated by Londoners from those communities and I know there is a real sense of sadness that it has not been possible for them to take place. In other matters, it is around the individual projects. I know the Committee obviously put questions on the specifics of each project and the impact when the GLA Executive Directors were in front of you on 29 September [2020].

Tony Devenish AM: Thank you. I was going to come on to 29 September. Both the Chief Officer and the Executive Director of Resources explained to us on that day that MD 2666 savings are “one-off and not repeatable next year”, which of course poses challenges, as you have mentioned. What approach is being taken by you and the team for identifying savings for next year, 2021/22, please? Are they one-offs? Are they repeating savings going forward?

David Bellamy (Mayor’s Chief of Staff): The process we are taking is a fundamental review of the entire GLA Mayor budget. It will be published in about four weeks’ time, ahead of the meeting with the Committee in late November. Rather than take the traditional departmental view, it will break down and show of the GLA Mayor budget what costs are the core costs of running the organisation, so the core finance team, facilities, human resources (HR), the Mayor’s office, the core things that we need to do to run the organisation. All of those costs and the areas of costs are being reviewed and savings sought.

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Beyond that, it will look at trying to focus the work of the organisation on London’s recovery from COVID-19. What we will see then is an expenditure plan set out for each of the missions approved by the Recovery Board and, also, the foundational activities that the organisation does, for example, engaging with Londoners, our special development planning, things like that, that are necessarily needed and contribute towards those recovery missions.

The process that is being gone through is reviewing all our expenditure, understanding whether it is still relevant in a COVID and post-COVID world and trying to make allocations to each mission. Then, within that, in the months ahead we will be looking at individual projects and deciding on what the best use of the money assigned for each mission is, given the situation we are in, which projects will continue, and which projects will stop.

To the other part of your question, it is obviously the case that we are seeking recurring savings. However, in the nature of the budget, there will be some things I am sure that are just one-off in their nature and clearly we will take those savings where they are available.

Tony Devenish AM: Thank you. I am moving on to a question on London & Partners (L&P), please. In the 29 September meeting we were told by the Executive Director of Good Growth that they were working on a new business plan taking into account the changed priorities, including COVID-19 priorities. He also stated that their funding of £13.1 million per year has not yet been reduced. Have you seen this plan yet and, as he stated, would it need your sign-off?

David Bellamy (Mayor’s Chief of Staff): The business plan was signed off in MD 2656, and that is public for the Committee’s review and scrutiny. That went through the usual sign-off processes. In terms of funding, we have in place a three-year grant agreement with L&P that ends this year. The business plan sets out how L&P has been repurposing its funding at a time when, clearly, a number of its usual non-GLA sources of funding are not available and, as part of the budget process that I just described, discussions are taking place with L&P about the level of grant funding that we may be able to provide in future.

Tony Devenish AM: Thank you. Then I am moving on to the famous 124 GLA-funded posts during this Mayor’s term. Mr Bellamy, you are quoted in a letter to Assembly Member Duvall as an Oversight [Committee] Chairman in August 2020 as saying, “At a time of austerity”. Do you think it is appropriate a so-called time of austerity to have an additional 124 GLA-funded posts?

David Bellamy (Mayor’s Chief of Staff): All the recruitment that has taken place under this mayoralty, around two-thirds it has been funded by external partner organisations. All of it has been there to deliver for Londoners and in all cases, it has been based on recurring budget being available where those are permanent posts for the future.

It is inevitable that between mayoralties there will be changing staffing levels. One of the things that we found was quite simply there was not enough investment in the environment and air quality and there were not enough staff to work in this area, despite the fact that we face a climate emergency and the critical importance of that and of toxic air to Londoners’ lives, so absolutely there has been more expenditure on staff in those areas. That was scrutinised by this Committee and Assembly in successive years and the budget was there to be able to afford that on a recurring basis.

Tony Devenish AM: Mr Bellamy, the Mayor earlier talked about transparency, and we can all agree on the need for transparency on whoever is in government at whatever level of government. This Committee has been asking for over two months for a proper analysis of the 253 externally funded GLA posts supposedly Page 125 created over this mayoral term. Why has it proved so difficult to provide this simple analysis when the most recent GLA workforce report heralded there being such a high number of externally funded new posts as an indisputable fact?

David Bellamy (Mayor’s Chief of Staff): I suspect the answer to that is that officers are working so incredibly hard on what is providing to be an incredibly difficult challenge to produce the GLA Mayor budget in time for the Committee’s meeting next month. Given the statutory nature of the process, has necessarily taken priority over some other matters. I would be keen for that information to be provided to the Committee as quickly as possible.

Tony Devenish AM: We will definitely get it before the next meeting you are confirming?

David Bellamy (Mayor’s Chief of Staff): It is not me that holds the list but, yes, I am keen for you to receive it. I see no reason why that should not happen.

Tony Devenish AM: On this point - and we had this debate before but it is important to repeat it - there seems to be confusion between full-time and part-time posts. Is this not basically differentiated and routinely made within any HR data? Perhaps the other David could comment on this, please.

David Gallie (Executive Director for Resources, Greater London Authority): Yes, thank you, Assembly Member Devenish. At the meeting we had on the GLA’s budget it was very clear that both Mary Harpley and I committed that we would move to the full-time equivalent (FTE) analysis because that is clearly how it should be done. I will make sure that the analysis is provided on that basis. I will also chase up the questioning that is still to be answered around the numbers that you requested at the last Committee meeting.

Tony Devenish AM: Can I also just double-check that there will be no misallocation this time in terms of posts, whether they are fully or partly funded by the GLA or external parties?

David Gallie (Executive Director for Resources, Greater London Authority): Yes. The FTE effectively avoids that problem because it includes, of course, full-time and part-time, so it will be clear from the actual number in the FTE analysis.

Tony Devenish AM: Is there anything else that you need to do to improve the poor quality of GLA HR data in your view?

David Gallie (Executive Director for Resources, Greater London Authority): We had a discussion and we do not want to repeat the debate that we had then. To me these things are fairly basic and it does not require any external intervention. We just need to make sure our basic processes work. Payroll data can be very complex. It can be very detailed. There are a lot of staff whose details change regularly. We just need to have resilient processes in place to ensure that we can cope with those dynamic changes.

We need to prioritise that and we will do that through, as I say, the FTE analysis that we have committed to provide you.

Tony Devenish AM: OK. We have talked about before the TfL HR shared service project that is ongoing. Do you think there is going to be anything particularly good that comes out of that in terms of the quality of the data that we receive at these Committee meetings?

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David Gallie (Executive Director for Resources, Greater London Authority): Yes, there will be. There is obviously investment that is needed but, essentially, what we have is that the GLA system is not fully compatible with our TfL SAP system, which is what we use for our financial information. One of the key areas that I am looking at is the improvements that could come by putting GLA HR effectively on the same platform as TfL and also on our financial system. That will ease a number of the problems that we have been having about the level of reconciliation between two systems. I am hopeful that will be a significant improvement and also a significant efficiency that we would derive from the shared service.

Tony Devenish AM: OK. Moving back to the other David, at a previous meeting, David, you flagged up that the Assembly component of the budget had grown by 19% over the last four years, but the mayoral component has gone up by 92%. Do you think that is equitable?

David Bellamy (Mayor’s Chief of Staff): I do not recognise the 92% figure. The mayoral budget obviously attracts external funding we have ringfenced for particular projects. We have been very successful in securing additional funds for projects for Londoners across the adult education budget. Devolution is the outstanding example, as well as the affordable housing grants that are not agreed with Government, but there are a range of other smaller items as well.

What the Mayor’s budget guidance does is focus in on what the core discretionary income is and the issue that we have at hand, which is the expected falls in income from council tax and business rates. It is that that forms the discretionary heart of the GLA Mayor budget. That is the place where we will have to deliver savings.

Tony Devenish AM: Do you agree that the Assembly’s staffing levels have remained constant during your four years in charge?

David Bellamy (Mayor’s Chief of Staff): I believe they have grown slightly.

Tony Devenish AM: Is David Gallie able to give a figure on that? That is not my understanding.

David Gallie (Executive Director for Resources, Greater London Authority): I do not have the figures to hand, but I think it is a marginal increase of one or two FTEs, but we can confirm that to you in detail.

Tony Devenish AM: Going back to David Bellamy, do you think that the 92% increase has achieved a 92% increase in whatever you are trying to produce for London?

David Bellamy (Mayor’s Chief of Staff): As I say, I do not recognise the particular figure but clearly the investment we have seen in affordable housing, the record progress in delivering affordable homes and council homes is going to make a very real difference for Londoners. Similarly, the investment we talked about in the Environment Team, the introduction of the ULEZ that their work has enabled has saved lives so, yes, I am very comfortable with the work that we have done and the achievements we have delivered through the investment we have received.

Tony Devenish AM: Chair, thank you.

Susan Hall AM (Chairman): Thank you, Assembly Member. Now we will go to Assembly Member Duvall.

Len Duvall AM (Deputy Chair): Thank you very much. Can I just preface my remarks? I understand the budget situation we are facing and I understand that everyone needs to make a contribution towards those budget savings/cuts that we need to make. One of the issues that we have lobbied you directly, Mr Mayor, is Page 127 the fixed-term cost. We have had exchanges over the summer. There was a further representation made to you and it goes on the basis of, look, it is about the nature of services delivered and the wriggle room to deliver savings in the way that you want.

I am not arguing that we do not make savings in the London Assembly. What I am arguing for is that you take into account what that capacity is to do. There are three entities that make up the London Assembly. There is TravelWatch, which is an independent consumer organisation that adds value to TfL and benefits Londoners. Then you have the secretariat that supports us Members around the meetings such as this, and then we have political group support.

The level of cuts we are going to have to sustain, we cannot pick and choose to a degree that no one is going to be affected and the level of cuts is going to have a differential impact on each of those services. I ask you again just to urge - and I understand the issue because you have not taken it into account for other parts of the GLA - that you should take fixed-term costs when you are allocating out your allocations. That is good practice in some senses because some places, for instance, the London Assembly, has no cost over 25 Assembly Members and the pay and rations for those. We cannot cut those, much though some people might like to but that is not where we can go. In that sense, I would just urge you to rethink that again.

Secondly, there are representations made from political group leaders to try to meet with you. We know you have been busy on COVID-19 and TfL negotiations, but if you could make 30 minutes available to meet with those group leaders. They want to talk to you about budget issues in a way that may make sense longer-term. Our budget situation is not going to get any easier in the coming years and if you can find time in that diary for us to have that before you make final decisions, we would be extremely grateful for that.

Susan Hall AM (Chairman): Do you want to answer that, Mr Mayor?

Sadiq Khan (Mayor of London): In relation to the Assembly’s budget, my understanding is we have increased it over the last three or four years. The number I have - and I could be wrong, so apologies if I am - is that since I have been Mayor, the Assembly’s budget has increased by 20%.

Len Duvall AM (Deputy Chair): It is a bit less than that. We have taken out savings as well in that sense and there is an issue about when we did a reorganisation. We look at that but, equally, as we heard earlier, your savings have increased as well. The difference between our bits of the organisation, you have a better ability - much that we do not want to because we want to spend money on Londoners in terms of services - to find some of those savings than some of the issues that we have to do. I am not arguing that we will not make savings. I am saying we will and we might have to have a look at some of those issues and where we have put some growth. I am not saying we are, but we could argue about the percentage growth years earlier on that you heard in terms of some of the growth that you have had. That is right and proper.

We are going to have to look at that. We are going to have to have a hard look at that in terms of those savings. What I am arguing for is there are special natures and I believe that there are probably special parts of the GLA that deserve a different treatment, where you need to take into account what they can do and what they can contribute because, unless you do that in a budget process, it is too blunt. At the moment, the target and the challenges we are facing demand that you do it. When we do pro rata parts, that is a very blunt instrument. I have always advocated that we need to do a longer-term budget strategy and we need to go into a much more sophisticated priorities and settings.

You have done some of that. I can recognise that from afar. We have had a first run at looking at some of that scrutiny of how people have arrived at some issues. I have raised some questions and my eyebrows rose at Page 128 some areas that were being proposed for cuts. What we are saying here is that you do need to think about the treatment long term.

Our relationship - you in the executive, us being scrutiny - almost says you look at it. It does not mean we do not make cuts. We have to make a contribution. Is it done fairly? You might want to look at some of the other aspects of the organisation, around some of the things that you have said are priorities, to make sure that your priorities are still being maintained and they are being considered. That is the difference between the pro rata situation and the approach. I just raise that. In a sense, we have added changes. I understand why you are saying no at the moment. I still think there are some arguments making. That is why I am raising them now with you. I feel that it is worth looking at again. We definitely should be looking at it in the future because this issue, our budget pressures, are not going away.

Sadiq Khan (Mayor of London): Sure. I will let David [Bellamy] respond but just to say it is not quite right, though, that the savings being asked for are pro rata. In fact, it clearly is not the case in relation to what you suggested, that they are pro rata savings being asked for, but, David.

David Bellamy (Mayor’s Chief of Staff): I agree with the Assembly Member that a straight pro rata approach would not be appropriate, just as I disagreed with this Committee’s report in January [2020] that said we should have an efficiency target that was the same across the whole organisation. The Assembly Member has set out well how there are differences within the organisation and that is why, as the Mayor says, the budget guidance proposes proportionately lower savings targets for the Assembly than the Mayor, recognising the flexibilities, to some extent, that the Mayor does have.

What I would also say is that the Assembly Member rightly highlights that Assembly Member salaries are absolutely a fixed statutory cost that your budget has to meet. Equally, in our work on the GLA Mayor budget it is more challenging to identify there, given the very disparate nature of the responsibilities the Mayor holds, but we are already through £20 million of statutory expenditure that we need to meet. It is a very significant undertaking in the GLA Mayor budget as well.

That just goes to show how complicated and difficult this process is for all of us. What I would say to the Assembly Member and the Committee is what I have said in person and in correspondence since June, which is that obviously the Mayor would be happy to meet if his diary allowed but, regardless, I have always said that I am happy to sit down, roll up my sleeves, look at the practical problems and, through this process, as we learn if we find that any targets are not right we would look to adjust those. That has always been the position. It remains the position. We know across the GLA there are sadly going to be redundancies. We can look at how we use reserves that the Mayor holds to try to support that so that does not have more impact on budgets than is necessary. We absolutely do want to work constructively together to meet this situation that none of us wish to be in.

Len Duvall AM (Deputy Chair): Thank you for those last remarks because I think there may well be some situations at the smaller end where we may require some intervention, partly because the 1 April cuts that we want to make, it may make sense that we get into May of the election cycle, but there are some other issues, practical issues, that we might wish to follow up just to make sure that we are doing it. But like I say, no one is arguing not for us to make cuts. We understand that, but there is some limitation of where we can do it and what we can do.

Susan Hall AM (Chairman): Thank you also for your comments, interesting to hear. Just to say that we agree in the Conservatives on those comments. Thank you, Assembly Member Duvall. Assembly Member Berry. Page 129

Siân Berry AM: Thank you very much, Chair. I just want to quickly follow up and use the opportunity to lobby you on three issues that I brought up in the meeting we had, I think on the 29th, where we were discussing this part of the budget. The first one is the water fountain refill stations that have been put up around London. The budget for that in the mayoral decision, changing the budget, cut the budget this year by half and the Executive Director for Good Growth was unable to tell us what the long-term future of this scheme would be. Can I just get some reassurance from you, Mr Mayor, that you are committed to the long-term future of these stations and are looking for a way to reopen the ones that were already built?

Sadiq Khan (Mayor of London): I am really pleased for you to give me the opportunity to brag once again about the new water fountains that we have installed across our city. We have had to pause their use for obvious reasons, because of this pandemic. We are working with Thames Water and other partners and I am quite keen, once the pandemic is over, to have even more water fountains being used by Londoners. I am fully committed to this agenda for a variety of reasons, which you are fully versed with.

David Bellamy (Mayor’s Chief of Staff): Just to add to your specific [question] on the budget, so you are talking about the reduction to the revenue budget. That was in two parts. Around half of that £202,000 was uncommitted money from a separate project that we had looked at spending on water fountains if we needed to and the remaining £246,000 was revenue funding for the water fountains programme, but we found that actually we had managed to resource the project in a more efficient way than we first thought, which meant that we could still deliver what we intended without needing to make that revenue expenditure. The capital budget for the project remains unaltered and so we have the money there to complete the network of fountains, as promised, when it is safe and appropriate to do so, given the circumstances.

Siân Berry AM: Thank you. That is very reassuring. The other programme that has been cut back is the Warmer Homes Advice Service. Now, it has not been cut back as in you are doing what you were doing before, but the expansion has been paused, basically. Yes, we decided to hold off on that expansion is what we were told at the last meeting. That worries me. I think of all the things to cut, it should not be advising people in fuel poverty, advising people how to save money on keeping their homes warm, particularly when people are working at home more and having to provide more of their own heat during the day. I just wanted to lobby for reinstating that project with any leeway that you possibly have elsewhere.

David Bellamy (Mayor’s Chief of Staff): Just to note, Assembly Member, that since the previous hearing we have actually, I believe, secured funding from the Government in this space. I am sure we can write with details. Yes, we are able to still make progress in the area.

Siân Berry AM: Is that not money that was going to come anyway from the Government? This was discussed at the last meeting. You were planning to put some of our money into this to make it the biggest possible scheme, as far as I can tell, and that has been scaled back.

David Bellamy (Mayor’s Chief of Staff): I am not quite sure that is my understanding, but I am not expert on the area. I suggest we write and we will set it all out clearly.

Siân Berry AM: It would be great to see the plans from before, including planned Government funding compared with what you are planning to do now. It massively worries me.

The third thing is the housing programme. We have had some clarification since we first asked on 22 September, I think it was, for details of that. We have had a letter back from the Housing and Land Team that outlines that there is over £500 million of unallocated affordable housing settlement money and that to Page 130 me seems like something you could do something with. We are facing again a winter of potentially increased homelessness, problems with renters. We know that council housing programmes are overstretched. We also know there are problems in the housing market.

I have discussed before with your Deputy Mayor for Housing and Residential Development the possibility of acquiring maybe landlord properties or unsold new build private homes to use as new homes for councils to put people in who are at risk of homelessness and build some resilience into London for the winter with that money that you could potentially get back later or just use to create permanent new affordable homes. Surely that is a good idea. Are you thinking about that?

David Bellamy (Mayor’s Chief of Staff): Of course the money is --

Siân Berry AM: Sorry, I was asking the Mayor that, really. Sorry, David.

Sadiq Khan (Mayor of London): Your question is based on a premise that is just not true. That is why I thought it is important for the Chief of Staff - for the sake of your question - to correct the premise that you falsely made.

Siân Berry AM: We asked for clarification at the last meeting and we have --

Sadiq Khan (Mayor of London): That is what he is about to provide you, given the chance to do so.

Siân Berry AM: -- received the information since.

David Bellamy (Mayor’s Chief of Staff): Yes, we have received a list of questions as follow-up from the previous meeting and obviously we will reply to them. We will set it out in more detail than I can now, but the two points I would make is of course firstly the affordable housing grant, the Government gives this for a particular purpose and that purpose is to create more affordable housing. That has clearly got to have a focus on new builds and growing the housing stock because the fundamental problem in London is the lack of supply.

The other point to make is that actually we do what you say because the Mayor’s Land Fund is created from cash flow. David Gallie may want to say more about this if you have questions, but it is created from cash flow by the fact that the affordable housing money, part is paid out when schemes start and part is paid out when schemes finish, so that creates the opportunity to use some of that money for cash flow purposes.

David Gallie (Executive Director for Resources, Greater London Authority): Siân, if I could just perhaps add to the answers you have been given. Within the limited flexibilities we have on the Affordable Homes Programme, obviously our housing colleagues look really closely about how they can max out those flexibilities to meet in particular the challenges arising from London’s recovery, and in particular a major priority in running our housing function is to try to optimise those flexibilities. But as David says, they are very, very limited.

Siân Berry AM: We have got clarification from the team in Housing and Land. I do not know if you have got the agenda papers in front of you. I am trying to work out which page of the agenda it is. I think it is page 13 of 76 in the overall electronic version of the document and it says page 9 on the bottom of the page that we are looking at. It is a copy of a letter from the Housing and Land Team. It does say there is £500 million of unallocated, like not even for future phases of projects or anything like that, that potentially could be brought in in the two ways I suggested. One was buying up existing homes from landlords, who may be struggling. Page 131

That you say may not be compatible with the overall goals of the programme, but the other option is to help housebuilders who have built homes and cannot sell them. That is surely compatible with the aims of the programme as a whole, if you can create new council homes out of those properties that might just sit there otherwise. Like I say, this winter is the time to be doing it, not some time in the future.

Sadiq Khan (Mayor of London): Both those suggestions are not new to us, because they were in our Taskforce report prepared during the pandemic that you are well aware of, the GLA working with --

Siân Berry AM: I thought you were looking at this.

Sadiq Khan (Mayor of London): We are, but we cannot use money that is ring-fenced for something else to use for those schemes. What we have done is we have a submission to Government in relation to the Taskforce recommendations. I think David is about to find the reference you are looking for in relation to the Housing and Land letter you refer to. I am not sure you are right though, as David said to you, that we can reallocate this money as you suggest.

Siân Berry AM: Do we have clarification? Because I know that there is money that is for future phases. I know that a lot has gone out in promises to housing associations and councils that is owed to them in the future, so you cannot just give that to someone else, but this seems to be absolutely spare money that is intended to be used to make the programme work better in a slightly flexible way. It seems to me this should be got on with.

David Gallie (Executive Director for Resources, Greater London Authority): Just to reiterate, we obviously will look at it as closely as we can. There are constraints upon the whole programme that limits that, but as I said, my housing colleagues are very, very keen to ensure that resource is used to the best effect. I am sure they will take a message back from you, Siân, and again reinvigorate the attempt to try to make best use of that money.

Siân Berry AM: I have seen, for example, in the first phase of the Aylesbury Estate, Southwark Council has done what I think is a very good thing. They have borrowed, according to new flexibility in borrowing, and they have made phase 1 of that scheme entirely social housing now using that extra money. That is the kind of thing. It was going to be private housing. That is the sort of thing I am thinking we might do.

Susan Hall AM (Chairman): OK, if you do not have the documentation then we cannot have an answer to that, Assembly Member Berry. Can I suggest that we ask the --

Siân Berry AM: Did they not have the agenda of the meeting, Chair?

Susan Hall AM (Chairman): Sorry?

David Bellamy (Mayor’s Chief of Staff): I have now, while you have been talking, managed to get up the letter and obviously, as the Committee will be aware, what it says in the letter is that the remaining settlement, £535 million, will be used to fund additional homes towards the target plus some over-programming so that we ensure that any slippage on non-delivery can be mitigated, recognising the wider risks that there are, I guess tied in with some of the points Assembly Member Duvall was making earlier.

Siân Berry AM: I read that and I asked could you be doing more in this year in preparation for winter. I thought that was legitimate.

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Susan Hall AM (Chairman): Do you have a response?

David Bellamy (Mayor’s Chief of Staff): Beyond what the Mayor says about what the Taskforce has identified and what we are looking at, yes, I do not have any more to say now. I am happy to write in more detail.

Siân Berry AM: I might follow up with the Deputy Mayor because, like I say, we have already discussed this potential issue.

Susan Hall AM (Chairman): OK, I think we cannot get any further with that. Do you have anything else, Assembly Member Berry?

Siân Berry AM: No, I am quite finished.

Susan Hall AM (Chairman): No. Can I ask, gentlemen, that we get a proper answer to that question and that it is sent to me? I will make sure that all our Members get it.

David Bellamy (Mayor’s Chief of Staff): Absolutely, in the usual way.

Susan Hall AM (Chairman): Lovely, thank you very much. Colleagues, we are going to have to step up the pace a little bit because we have just got one hour left. We are now moving to the Old Oak and Park Royal Development Corporation (OPDC). I will take these questions and I will address them to you, Mr Mayor, as you had a whole section and we need to keep warm, so let us just think about this one. The OPDC’s budget was reduced this year compared to last and it is running at an underspend, with the potential to make the savings you have asked it to without any real impact. Does that not suggest to you that it is treading water as an organisation?

Sadiq Khan (Mayor of London): No, it does not. Obviously, there was the disappointment in relation to what happened with the local plan, the examination of what happened there. It was successful in relation to the money secured from the Treasury and now it is working on trying to secure further monies from the single Housing Infrastructure Fund (HIF). The good news is the Government has now given the green light to HS2, which means that expenditure of about £1.3 billion on a new station at Old Oak Common. The key thing is to make sure we do not allow a laissez-faire market forces-type development around the station, but co-ordinate what happens there. I have been impressed with the way it is engaging with Network Rail, with local landowners, with the boroughs, with the local employers to try to get schemes up and running to secure maximum homes, but also maximum jobs sooner rather than later.

Susan Hall AM (Chairman): That will be interesting, will it not? If we can go back a bit, to what extent were you aware that Cargiant did not support the OPDC’s HIF bid when you approved it in September 2018?

Sadiq Khan (Mayor of London): There was a change during the course of the process. I think it has been referred to in previous Committee hearings with various Committees. The original support was, I think, in 2017. In 2018 there was a change of tack, but the additional factor was the massive increase in land values during the course of the process.

Susan Hall AM (Chairman): I think the issue is that Cargiant did not actually want to get involved in it and a letter went in with the bid that was incorrect. You are obviously aware of that.

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Sadiq Khan (Mayor of London): I think Cargiant actually wrote directly to the Government in relation to this process and the Government was well aware of Cargiant’s views in relation to it giving the monies. At the time when the bid was submitted in September 2018, Cargiant had not formally written the letter of objection, but its then development partner had written a formal letter of support in August 2017.

Susan Hall AM (Chairman): We have not seen that letter. Have you got the letter that is of support?

Sadiq Khan (Mayor of London): It is in the public domain. I am sure we can send it again if you do not have it.

Susan Hall AM (Chairman): Because Cargiant say something completely different. It has got an incredible business down there and it has said all along - when I went to see it - that it was not supportive of that bid. How regularly did the updates or discussions between you or your office take place with OPDC between the time you approved the bid in September 2018 and when it ditched its original plans in December 2019?

Sadiq Khan (Mayor of London): I am sure we can do you a note about that.

David Bellamy (Mayor’s Chief of Staff): I meet every two to three months with David Gallie, the OPDC Chair and Chief Executive and other relevant officers. Obviously, there are other discussions that happen outside that process.

Susan Hall AM (Chairman): You have just spoken, Mr Mayor, very well of the OPDC, but as David Lunts [interim Chief Executive, OPDC] actually said, it has not secured any land, it has no money, it has no local plan, but you say that you have confidence in it.

Sadiq Khan (Mayor of London): I would remind you that the previous Chair of this Committee lobbied me quite aggressively to increase the monies I give to OPDC, so I am surprised by your U-turn. The reality is OPDC is doing some good work in relation to this piece of land. That was always intended for long-term development, creating jobs and homes. It was successful in securing £250 million from the Government by way of its HIF for reasons that you have alluded to. We were able to spend it the way we had wanted to do, working on a new submission to ensure we can secure money from the Government, but the OPDC do not own a vast amount of land, it does not have a massive amount of capital, but is doing a very good job in co-ordinating what happens to land that is in three different boroughs that is next to a station that will have the largest amount spent on it of any station in our city for more than 100 years. I think it is important for there to be proper co-ordination, which is what OPDC are doing.

Susan Hall AM (Chairman): I am just surprised you have so much confidence in it, bearing in mind its first plan was such a disaster really, it has to be said, but you still have confidence in it. Since the first bid went very wrong, when we met with the OPDC on 14 October, it made a comment about how much money had been wasted. But then I asked it how much had been wasted and it really fluctuated between £500,000 to £3 million or £3 million worth of work on consultants, did not really know how much other monies it had lost, but I do believe it is in the millions. I think it was Liz Peace [CBE, Chair, OPDC] said it was a few lower millions in quite a dismissive way. Do you have any idea how much money it has wasted?

Sadiq Khan (Mayor of London): Firstly, you said the bid went wrong. The bid did not go wrong. The bid was successful in securing £250 million from HIF, so --

Susan Hall AM (Chairman): On incorrect evidence though, Mr Mayor.

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David Bellamy (Mayor’s Chief of Staff): No. While there was clearly an error in the submission, for which OPDC has apologised, as discussed, Cargiant directly wrote to MHCLG and OPDC officers, discussed at length with MHCLG, so the decision was made after a very, very extensive process based on accurate information. The challenge that has been faced is incidentally the same challenge that caused Cargiant to change its approach and decide to keep its business at Old Oak, which is the significant rises that have taken place in industrial land values. That ultimately made the approach that it concluded it was not going to work and why we have had to withdraw from the HIF bid.

Susan Hall AM (Chairman): An error in submission you say, made on a bid for £250 million of public money, taxpayers’ money. OK, I hear what you say then. In your CSR submission, you describe OPDC’s plans as well-advanced. This is its new plan. What exactly do you mean by that? Mr Mayor.

Sadiq Khan (Mayor of London): The plans are advanced in relation to what our intentions are with this piece of land. The option is to allow a laissez-faire approach to this piece of land or to have plans which went through the examination with the local plan. You know about the interim local plan. You know its plans in relation to working with those who are landowners there. It has plans in relation to the homes it has given permission. It is a planning authority, of course, as a development corporation (DC), so its plans are developed. I am happy to send you details of those plans if you are not cognisant of those. I will make sure they are sent through the usual channels.

Susan Hall AM (Chairman): I am just concerned because it was David Lunts [Chief Executive, OPDC] himself that said it had no real money, no masterplan and no land, so I do not know how advanced that can be. If it is advanced - and I will have to take your word for it, despite that - and it is looking for another submission, how much is it going to be looking for financially?

Sadiq Khan (Mayor of London): It depends what the Government scheme is and how much we are allowed to bid for.

Susan Hall AM (Chairman): Yes, granted, but then if it has lots of plans in place, it must have a ballpark figure of the sort of money that it would like. How much would that be?

David Bellamy (Mayor’s Chief of Staff): There are figures that I have seen. I am cautious that we are approaching a space where there will be commercial issues in terms of landholdings in the area and so I do not think I am going to go too much further publicly, but I did note that Liz Peace [CBE, Chair, OPDC] and David Lunts [interim Chief Executive, OPDC] offered to meet with the Committee in more detail and I think that would be a good thing to do. What I can say in public is that this is a long-term project and so the amount is going to vary, depending on what is brought forward in say the first decade of the project, what is brought forward in the second decade and then to the point the Mayor made, it is about the terms of the Government funding scheme which was announced back in March, that this scheme would be created, but as of yet there are no more details on it from the Government and what time window that scheme will offer will determine what the bid into it will be.

Susan Hall AM (Chairman): OK, but for a reasonable scheme, ballpark figure, how many millions?

David Bellamy (Mayor’s Chief of Staff): I do not want to get into specifics in public.

Susan Hall AM (Chairman): Because when we asked this, they said they did not know, so I just wonder how --

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David Bellamy (Mayor’s Chief of Staff): Yes, work is going on at pace on this. Certainly, when I met them in the last few days, things had moved forward a lot in the previous two to three months and so it is firming up all the time, together with the final stages of securing the local plan, which is the other key part of this.

Susan Hall AM (Chairman): I grant you, it has got lots of enthusiasm. It is a shame it is not matched by an ability to deliver so far at all. What do you have to show for your investment in the OPDC since its inception?

David Bellamy (Mayor’s Chief of Staff): I think I would highlight the relationships and the work that is going on in Park Royal is very important. Otherwise I would say that fundamentally in any large project the expenditure enables the creation of the infrastructure, which enables sites to be brought forward, both by public sector and by private sector. It is inevitable that at this early stage there is not much visible. Things like the investment in the additional power supply to the area, which will have a huge benefit in allowing it to develop over the decades ahead, at the moment that just looks like a cost and the benefit will follow.

Sadiq Khan (Mayor of London): It is worth reminding the Committee that this is a development over more than 20 years. It could be argued what have we got to show for the huge amounts of money spent on HS2, which is a valid question to ask. I think the regeneration on this site, Old Oak and Park Royal, is stimulated by the new station at Old Oak. The Government has finally, ten years after first being elected, given a green light to HS2. I think that will stimulate more activity here. There was a huge amount of uncertainty until the recent past about whether HS2 would happen, whether there would be a station here and I think we have got more confidence now with the green light given to HS2. That is one of the reasons why there is some enthusiasm - that was even accepted by this Chair - about the work of OPDC and I am looking forward to further details and a further submission, which we hope will be successful.

David Gallie (Executive Director for Resources, Greater London Authority): Chair, just to add OPDC discharges the planning responsibilities in the area and if OPDC was not there, then that would have to be done by the boroughs. There is a concrete example of what OPDC has actually delivered.

Susan Hall AM (Chairman): It is interesting, because that was going to be my next question really, as in what have they delivered that the local boroughs could not have delivered.

David Gallie (Executive Director for Resources, Greater London Authority): If there was no OPDC, then the boroughs would have discharged the planning responsibilities, but without the co-ordinated overview that OPDC has provided.

Susan Hall AM (Chairman): It is not going so well though at the moment, is it?

David Gallie (Executive Director for Resources, Greater London Authority): As a planning authority, I think it has been very successful in getting a whole series of housing starts going.

Sadiq Khan (Mayor of London): I think your argument is an argument against DCs, which is a different point. I think the DC was set up for good reasons. There was a huge amount of uncertainty caused in relation to will there be HS2, will it happen. That has now been sorted out, we think. This Government is not averse to U-turns. That certainty gives us some confidence that we can have this area regenerated. By the way, this station is the first new station of this scale for more than 100 years. The alternative, if we follow your train of thought, is no DC and carte blanche in relation to what happens around the station, so the station can open, a fantastic new 21st century station, and there being industrial units, ad hoc buildings. I think that is not a sensible thing to do and there is an opportunity for tens of thousands of jobs and homes.

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Susan Hall AM (Chairman): I understand what you are saying, it is just the cost of the delivery and the lack of delivery so far. Of course, one has to look at its first bid and the omission or the error in submission that is of concern. You have brought Crossrail, Mr Mayor, in-house to have better oversight of that project via TfL. Do you have any plans therefore or do you think it would be prudent to bring OPDC into Housing and Land, given the uncertainties around its next steps?

Sadiq Khan (Mayor of London): The long-term future of any DC is for them to be short-term. They are not meant to be there forever, whether is the LLDC or the OPDC. This is one with three boroughs and there is a very good reason why it has been set up and it serves a very important purpose. There is a difference in relation to this and where we are now with Crossrail, but for many years there was a Crossrail Limited Board, autonomous, for good reasons, set up by the two sponsors. We have got three boroughs working closely with central Government, so it is a bit different in relation to apples and apples and apples and pears.

David Bellamy (Mayor’s Chief of Staff): A DC cannot just simply be brought in-house because it has a range of powers, including with regard to planning, that are simply not available to the GLA if it does not exist. What can be done is ensuring we have close working between the organisations to ensure that things are done as effectively and efficiently as possible. That is why we have David Lunts, as GLA Executive Director of Housing and Land also acting as Chief Executive of OPDC so that we have that co-ordination and through the group collaboration work, we aim to be ensuring that we are working as closely as possible with OPDC so that there is not duplication and it is completely a one-team operation.

Susan Hall AM (Chairman): To use Mr Bellamy’s words then, Mr Mayor, do you think that they are effective and efficient?

Sadiq Khan (Mayor of London): Yes.

Susan Hall AM (Chairman): OK. All right then, we can look at that as time goes by. That finishes the OPDC unless any of my colleagues want to -- yes, Onkar Sahota and then Tony Devenish.

Dr Onkar Sahota AM: Thank you, Chair. Mr Mayor, just to pin this down, I think you may have alluded to it, but this OPDC was established by the previous Mayor, who is currently the Prime Minister.

Sadiq Khan (Mayor of London): It was, and the previous Chair of this Committee, who is now a Member of Parliament, lobbied me quite aggressively to increase the budget of OPDC.

Dr Onkar Sahota AM: This was described as the biggest development opportunity of 650 hectares in Europe. I know when you came in you had to look at the structures again, but it has been plagued about the uncertainty on HS2. The Prime Minister was sometimes against it, sometimes for it and that uncertainty did not help the OPDC get off the ground. Am I right in assuming that?

Sadiq Khan (Mayor of London): Yes, a huge amount of lack of confidence in relation to this part of London because of the uncertainty around HS2. You need to have infrastructure support in an area like this, not just in relation to the station, Old Oak Common, but also, as David alluded to, some of the concerns around the power grid, energy supplies. It is quite a complicated site. You know well, because you are from the area. A lot of that work that needs to take place is, to use a phrase, loss leading. That sort of frontloading of the costs facilitates the land being used for the reasons we need it to be used for and the regeneration. The other thing - you will know this - is we do not own that land; a lot of that land is owned by local businesses. Park Royal is just there as well, Network Rail, and we have managed to secure first dibs on surplus Network

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Rail land, but you will have seen the massive increase in the value of those industrial land sites, which has led to some complications in relation to the previous plans that we had.

Dr Onkar Sahota AM: As you say, Mr Mayor, this is a site which you are not a landowner on it, it is owned by other people. It needs a lot of infrastructure development. There are going to be upfront costs. The Government needs for this to be successful. The Prime Minister set this up. Do you not think it is important that it is unfair to expect the OPDC to be making a profit or being self-funding at this early stage? Because in any development of such a site, it needs upfront investment by the Government to make it successful. It is in the interests of all of us that this is made successful and that the Government does put the money into it and that we get the infrastructure right so that other developers then can see it and come and take over the projects.

Sadiq Khan (Mayor of London): Absolutely. It will be some time before we start seeing some of the real value-added that a DC can bring, but you are already starting to see that with the local plan, with more co-ordination, with the certainty around Old Oak Common, with the agreement with Network Rail around the surplus land, some of the progress around Park Royal. Some of the stations that are already there need to be improved and so the idea that you will, in a very short period of time, see the regeneration potential realised on this site is ridiculous. That is why it is important to have the right team, to have the right plans, have the right relationships and we are hoping to have a successful submission to the Government again. We were successful last time, but we could not use the money for the reasons that you are well aware of. We are keen to make sure though, bearing in mind our role is principally a co-ordination one, yes, a planning authority, but to bring the right people around the table and hold a ring to get the regeneration needed.

Dr Onkar Sahota AM: Thank you, Mr Mayor.

Susan Hall AM (Chairman): Thank you. Assembly Member Devenish.

Tony Devenish AM: For once, Mr Mayor, we almost agree. I am very keen on this project and I do agree it is a long-term project, but would you agree with me that to kick-start this project, we not only need money from the Government, which we clearly do - and I will obviously support what David Lunts [interim Chief Executive, OPDC] is doing to get that money - but would you rule in also going for overseas private money as well? Because this is a huge project. We need hundreds and hundreds of millions of pounds and it is not all realistic. Whatever political position you come from, in the current environment we are not going to get perhaps as much money as we would ideally like to move this long-term project forward, because this is your largest regen project and it obviously is across three wonderful London boroughs, including one of mine, and I am keen that we move it forward, sir.

Sadiq Khan (Mayor of London): I think you are right to suggest a public-private partnership; whether it is foreign or domestic is a moot point. But I think of course we will have private investment in this area. We are actually already seeing some private investment from the local landowners. The employers are already there. The Chair referred to one very good business, Cargiant, but other good employers are there as well. You are right, we have got to see a good example of public-private partnership here. There is no reason at all why some of that investment should not be private.

David Bellamy (Mayor’s Chief of Staff): I think to add to that, what OPDC has found in its discussions to date is that, yes, there is going to be some interest there from the private sector, but they need things to be further advanced and have more certainty on infrastructure etc in order that there is then something that they feel safe and comfortable in investing in. That again, yes, speaks to the importance of the public sector

Page 138 leadership role here in order to get the sort of development and seize the opportunity in the way that the Assembly Member and the Mayor both wish to see.

Tony Devenish AM: Chair, I will leave it there, but you may just want to see on our WhatsApp group there has been an announcement about Moody’s and TfL’s rating you may just want to ask the Mayor about.

Susan Hall AM (Chairman): Shall we wait until the end? Because the Mayor would have to be informed about that and then we will ask, but in the meantime, let us carry on with this meeting as timely as we can. We are now asking questions on the LLDC, Mr Mayor.

Len Duvall AM (Deputy Chair): Like the previous section, I think these projects are important and the work of the LLDC has been important. I just do want to say, and I do not normally comment about officers who come before us, but I thought Lyn Garner [Chief Executive, LLDC] and her team were pretty impressive in terms of some of the ways they answered the Committee’s questions, so I would like to place my personal thanks for that.

Now, the East Bank project, I am a big supporter of the East Bank project; you are a big supporter of it. The Prime Minister was a big supporter of it when he was in your job and the previous Chair was a big supporter of it, but of course in these difficult times costs are going up. We heard from Lyn Garner [Chief Executive, LLDC] and her team around some of those issues. Have you got a handle yourself of how much you expect this complex budget -- because it is a number of building blocks coming together that make this project happen with different budgets coming in from different areas and those issues. What is your thinking about that? What should we think about the costs?

Sadiq Khan (Mayor of London): I will respond firstly that I will bring David Bellamy in, because there has been an increase in costs for the reasons actually you refer to when it came to Crossrail. Similar reasons apply in relation to the East Bank increase and we have got a plan how we will meet the difference on that as well. Firstly, I am really grateful for you first putting on record your gratitude to one of our finest officers, but secondly, you recognise the potential of East Bank. It is going to be amazing. We call it East Bank, not some Greek word that I cannot even say that ends with ‘copolis’, but it is really important that there be education and culture coming together, but also being a part of a development that benefits the local community. What is really important, whether it is University College London (UCL), whether it is the Royal College of Art, whether it is the BBC, whether it is the other buildings going there like the Victoria and Albert Museum (V&A), all of them are really keen to make sure that local people benefit from this during the construction but also once it is finished as well. There has been an increase in predictions for the costs. I will David talk them through, including how we are going to meet that difference as well.

David Bellamy (Mayor’s Chief of Staff): It is worth saying obviously this is a very, very major and significant capital programme and the approach LLDC take is to look at its capital programme in the round and then the components within it, so it has a long-term model because this will play out over many decades. What you see every year - and it is in the process of finalising this ahead of its budget submission to the Mayor at the end of November - is its capital model and understanding all the changes around all the different schemes. Those can be things that are very obvious because, like East Bank, they are under construction at the moment.

It actually in some instances can relate back to things done by the Olympic Park Legacy Company (OPLC) even before LLDC existed and the changes there. What we see in a normal year is a range of changes, some positive, some negative, that impact firstly the overall position in terms of the capital programme and the ultimate outcome and the ultimate return that we will receive and then secondly the timing of all that within Page 139 individual years. It is actually that kind of overall picture and then what the picture is for the LLDC overall in each year that actually are the kind of critical things from a financial perspective.

Yes, East Bank has been particularly badly hit by Covid-19 because the nature of the site is very constrained. I do not know if this was reported to the Committee, but there has been a Health and Safety Executive (HSE) inspection, which passed with shining colours. I believe the phrase was they should be proud and that is obviously really good news. With the double shift, we are working as quickly as we can to claw back lost progress there and we know that time is money, but clearly in all of this we have huge uncertainty about potential future Covid-19 related restrictions and what that will do for the finances and delivery schedules of the project.

Yes, in any extent there is going to be uncertainty for the next year and that is why the Mayor took the decision in the summer to prudently set aside a sum of money, not just for East Bank, but for the whole LLDC capital programme just so that we have that flexibility because we are committed to ensuring the successful delivery both of East Bank, but also of all the affordable housing that LLDC is bringing forward.

Len Duvall AM (Deputy Chair): I want to talk about affordable housing, but just going back to East Bank, are we taking steps to hold the partners together and then any sponsoring agent they have, if they are in central Government or beholden to central Government in that sense, about saying, “Look, difficult times ahead. We know we are all facing budget issues, but this project does touch the buttons of central Government’s regeneration schemes, it touches what London needs in terms of a new quarter in that sense of activity going on”? Is that sort of running concurrently as well as looking at the cost of the scheme and trying to see how we try to contain those costs where we can?

David Bellamy (Mayor’s Chief of Staff): Absolutely. In terms of the partners I know they are all very committed still to the project and very excited by it. I know the Mayor attended a meeting with the Partnership Board back at the end of July to speak to them first-hand about this and that still absolutely is there. and that real commitment is there. In terms of the Government, you are right, the Government has made a significant contribution to the project, principally around the UCL aspect of it, which obviously is being run by UCL through its books, so impact on construction there is a matter for it. At this moment, the Government has not agreed to provide any additional funding for the project, but we clearly will be making the case for that.

Len Duvall AM (Deputy Chair): Mr Mayor, when you first arrived here, in terms of the housing issues, I think it is fair to say the LLDC was working in a silo and then Housing and Land, whatever we called it when you first arrived. It seems like we change names every week in regional government, local government and even the Government. The question was now that they are working together, I think we have seen better outcomes, but the numbers of affordable still within the LLDC, it is OK, but it is not where we would desire it to be. Some of the issues post-COVID in terms of challenges to increase those records, I am waiting to see the transcript of our last meeting with Lyn Garner [Chief Executive, LLDC], but I am not sure if I heard her on one particular scheme or whether it was a general principle that it felt that it could not do the 50%, issues around that. Some of those issues clearly are going to compromise in terms of achievement. It has always been difficult on this site. What is the plan, trying to maximise it? Is that linked to what Mr Bellamy said earlier on about putting capital monies in to try to support that or where are we on this?

Sadiq Khan (Mayor of London): You have got to remember that was the legacy, those permissions were already granted, which we cannot touch, very few affordable housing as we mean affordable housing to be. There was that for viability reasons before we inherited this and were in the pipelines. What we have sought to do by a combination of planning, but also grant, anything since I became Mayor to get the right requisite Page 140 amount of affordable housing. What has happened in the recent past, and Lyn Garner [Chief Executive, LLDC] may have referred to this, if on one particular site, site A, we cannot get the right numbers of affordable homes, let us take it across the piece, so site A may have fewer than the relevant amount of affordable homes, but site B may have more to make up the difference lost on site A.

Tom Copley [Deputy Mayor for Housing and Residential Development] and Jules Pipe [Deputy Mayor for Planning, Regeneration and Skills] are working closely with the team here to make sure with the accommodation of grant money - but other sums of support as well - we increase the amount of genuinely affordable homes in this part of London. That goes back to the ethos of East Bank. We have learnt some of the mistakes made before and learnt the lessons to make sure we have things being built that local people can benefit from and homes is just one example.

David Bellamy (Mayor’s Chief of Staff): Just to give a bit more detail on that, across the three remaining sites that LLDC has - Stratford Waterfront, Rick Roberts Way and Pudding Mill Lane - a portfolio approach has been agreed and has gone through planning. It is absolutely established now and says we will have 50% affordable housing across those three sites. That is absolutely locked in. LLDC is working closely with Housing and Land because it is recognised that the development of these sites will take place over a period, potentially over a decade, and that may well be beyond the lifespan of LLDC. GLA Housing and Land absolutely will have a key role to play in ensuring that this happens and there is very close work-in taking place between the two organisations now.

Len Duvall AM (Deputy Chair): This is my last question, I suppose. Look, on the knockabout in politics, some of it is serious and real. TfL is a good example of where there is a serious knockabout between politics. With housing issues such as this and such as we heard previously about Old Oak Common about what we are trying to achieve, actually there is a degree of bipartisanship in terms of trying to reach the housing numbers. There may be some issues over social-rented, which we would aspire to have more of within that affordable, but of course Government has a key role to play in this.

Would you say then both of the LLDC and of Old Oak Common, in terms of housing and generally what we are trying to achieve on housing, that there is the same agenda? This is going to become very important post-COVID about using housing as another kick-start for the economy, which the Government is saying it is doing. Is it clear to say - just for the members of the public, because sometimes we do - that there is a clear agenda about providing those housing units, if I can call them that?

Sadiq Khan (Mayor of London): I wish there was. I think when you have an increase in permitted development, where you see an increased situation of centralisation --

Len Duvall AM (Deputy Chair): Planning, yes.

Sadiq Khan (Mayor of London): -- when it comes to permissions being granted, it leads to us not having the sort of homes we need. You referred to affordable homes, social rent homes, and we are keen to work with MHCLG. Tom Copley [Deputy Mayor for Housing and Residential Development] and our officials spend a lot of time working collegiately with them, simply because I think sometimes they have not been aware of what our needs are. It is officials, hopefully on a non-party political basis, saying, “Listen, you know what? The sort of homes we need are these sorts of homes. We appreciate your wish to have a big target of homes in there; that is fine, but you need to understand that we know London a bit better than you do”. A combination of the laws around permissions but also the grants to help us subsidise those sorts of affordable homes is needed. You cannot underestimate the important role of the private sector when it comes to investment as well.

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Nobody is against them making a profit, but we have to make sure that we get to build the homes that we so desperately need.

Len Duvall AM (Deputy Chair): The crucial part of that political discussion is about quality, quality of public rail, the quality of the homes themselves. In dashing for the units, dashing for the numbers, you get reduced quality. I get that. That is the other testing point for Government.

On the issues of grant, of course we all want more. We all know where the pot is, but we want more in terms of Government grant, which would stimulate more housing developments.

Sadiq Khan (Mayor of London): Absolutely.

Len Duvall AM (Deputy Chair): OK. Thank you.

Susan Hall AM (Chairman): OK, thank you very much. The next section, Mr Mayor, is on the London Fire Commissioner (LFC) and these questions will be taken by Onkar Sahota [AM].

Dr Onkar Sahota AM: Thank you, Chair. Perhaps I will direct the first question towards Mr Bellamy. As you know, the Fire Brigade service faces a huge amount of financial pressures and is proposing to use its reserves to make the underlying transformation required in services, but of course that model is not sustainable. What progress have you made to fundamentally transform the LFB?

David Bellamy (Mayor’s Chief of Staff): The first thing that is important to remember, Assembly Member, with the Brigade is that the way we present its budget for future years is on a very prudent basis. You will be aware that there is in the region of a £25 million a year additional pensions cost that LFB faces, which is a consequence of Government action. The Government has provided funding for that, not quite the full amount but £21.7 million. It has provided that for the last couple of years, but it has not given us advance notice that it is going to do so. It has said that it will think about the long term in the context of the spending review, although of course now we just have a one-year spending review and we have uncertainty there.

What is shown in budget documents is a quicker exhaustion of reserves than is what we hope is going to happen because, clearly, these are additional costs imposed by the Government. It has clearly accepted the principle in terms of the funding it has provided to date, but it is down to it to meet them. What we really need is a long-term solution on that in place so that we have got clarity and certainty.

Before COVID-19, that meant that with that long-term certainty if the Government was to continue to provide funding at the same level, then the situation and the efficiencies required were manageable. With COVID-19, clearly the Brigade faces costs arising from COVID-19 - we have a bid in with the Home Office at the moment to try to get some funding for that - but the loss of income that we face in terms of the economic impact poses a bigger challenge.

The Brigade has a new Director for Transformation, who is in place and starting to work. She is working both on the short term in terms of this year’s budget, more medium-term in terms of next year’s budget and how that can balance, but also starting to look at what will be the longer-term path in terms of the next London Safety Plan. That will be the thing that sets out the plan across a number of years about how the Brigade is going to change, both to work within the resources that are likely to be available but also in terms of the changes that are needed, as highlighted both in the Grenfell Tower Inquiry Phase 1 report and also Her Majesty’s Inspectorate of Constabulary and Fire and Rescue Service’s (HMICFRS) inspection.

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Those changes clearly are coming through. The LFB has published an update on that and we will continue to both work with and monitor those changes closely. One of those that the Committee may be interested in is to note that LFC’s Audit Committee will begin work next month and they will have people in-house to directly look over LFC’s plans and what it is doing.

Dr Onkar Sahota AM: Thank you, Mr Bellamy. I recognise that of course COVID-19 was unpredictable, none of us knew it was coming our way and it has had a huge impact. The report by the HMICFRS was published in December 2019. What efficiencies were identified in that report and have they been quantified? Also, what progress has been made in implementing some of those things? Is there demonstrable evidence that we are working on the report?

David Bellamy (Mayor’s Chief of Staff): A lot of what was identified was cultural and also around processes. I do not think it is the case that necessarily they will require vast amounts of money. Clearly, there were a number of things arising from Grenfell that did require significant investment. We are starting to see the benefit of that now, for instance, through the high-rise appliances that have been procured and are now entering service, which is really good to see. I do not think that HMRCFRS requires necessarily masses of investment, but clearly there will be some things that will affect the structure of how the Brigade works and perhaps some of the specific roles and that may lead to change in the time ahead.

Dr Onkar Sahota AM: Mr Mayor, the LFB is facing additional costs as Grenfell-related activity and the risks that flammable cladding causes. Is there anything the Government can do to support the LFB in reducing these costs and risks such as strong activity when it comes to tackling the issues of flammable cladding in London, please?

Sadiq Khan (Mayor of London): I suppose just to remind the Committee that we spent on the LFB about £20 million more than the Government advises we should spend on the Fire Brigade. We are making up for years of cuts to the fire service and we think it needs that, even before Grenfell Tower exposed the lack of safety in the built environment.

The biggest thing the Government can do to assist the LFB is, in fact, to make rapid progress in relation to ameliorating some of the concerns around the built environment. The Stay Put advice, for example, now is something that the fire service says with caution because of the lack of confidence in some of these buildings. That is not just because of the aluminium composite material (ACM) cladding but because of the other cladding that makes these buildings dangerous, not just above 18 metres but below 18 metres.

The best thing that can happen to help the LFB - because we have got two-thirds of these buildings in London, the high tower ones, potentially dangerous ones - is to sort that out. A bigger building safety fund, legislation being passed urgently, sorting out issues in relation to inspection, resources for leaseholders to sort out their buildings: that will really help the built environment as far as the LFB is concerned. There are two pieces of legislation going through Parliament in relation to that.

The second big thing the Government could do is in relation to implementing the recommendations of Grenfell Phase 1. An amendment was put forward in the House of Commons that was rejected by the Government in relation to putting on a statutory footing the Phase 1 recommendations of Grenfell.

The third thing the Government could do is to make up the pension gap that David Bellamy referred to, circa £25 million a year, because of Government changes in pension regulations.

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The fourth thing the Government can do is to give the LFB the finances they need to make sure we have got a fire service that deals with terror attacks, that deals with fires in high-rise buildings, that assists the London Ambulance Service (LAS) when it comes to dealing with this pandemic, that deals with prevention and on and on. The fire service is really happy to adapt and evolve for the 21st-century environment in London, but it needs the right support from central Government. I have given some examples of things the Government can do to help the fire service after eight years of it being decimated by fire stations closing down, firefighters losing their jobs and fire appliances being cut under the previous Mayor.

Dr Onkar Sahota AM: Thank you, Mr Mayor. Maybe I can be forgiven to just use a few moments of time to thank the Fire Brigade for the excellent service it gave in my constituency yesterday, in Southall, with a gas explosion. I want to thank them for all the hard work they did in Southall yesterday. Thank you, Chair.

Susan Hall AM (Chairman): OK, fine, thank you. We come to our last section now on the Mayor’s Office for Policing and Crime (MOPAC) and Assembly Member Berry is going to take those.

Siân Berry AM: Thank you very much, Chair. I think at our last meeting with the MPS, we did not get very detailed answers on what was going to happen with the in-year budget gap. I wanted to ask: do you have any more information about how that is going to be dealt with? It seems like there are delays in savings projects, so you are not able to save money within the MPS.

Sadiq Khan (Mayor of London): Yes, sure.

Siân Berry AM: Also, with this requirement that they deliver a balanced budget, are you going to be relaxing that on the MPS if it just cannot cut back in-year in the way that it would perhaps want to?

Sadiq Khan (Mayor of London): There are a couple of things. As far as 2020/21 is concerned, the two things that will help the in-year savings are, firstly, we have been more successful in recruiting police officers than we had planned. If you remember, we from City Hall gave additional funds to recruit 1,000 officers, but separately the Government announced 1,369 officers for 2020/21. We have managed to recruit the officers that we funded but also the Government funded in advance of the end of the financial year. That means that we have got to the levels early and they are on the streets, keeping our city safe.

Therefore, we have paused the additional 600 officers we were going to bring in until the next financial year for those reasons. We have got the numbers we intended to get, but that 600 will be saved and that money will help with the in-year savings. The second part of the savings is from the unspent money we have from MOPAC’s budget, which will also help us reach the in-year savings. The good news is there will not be a need for there to be any cuts in the MPS because we have managed to find the savings in-year. Have I got the figures right?

David Bellamy (Mayor’s Chief of Staff): Yes, that is right in terms of the savings target. Firstly, to Assembly Member Berry’s point, the in-year savings target, as has happened for both GLA component budgets and for LFC, has been halved, given the flexibility that the Government announced on 2 July [2020]. We will be able to look to make those other savings in 2022/23 and 2023/24. It is a combination of not expecting that growth in 600 officers to happen at the end of this financial year and, of course, it is worth remembering that it was early recruitment of officers the Government is going to fund in 2021/22. However, we still have no news from the Government on how many, if indeed any, additional officers it is in fact going to fund in 2021/22. Therefore, clearly, they cannot be on the streets by April [2021] because of the time that it takes to recruit and train a police officer. Obviously, that uncertainty is disappointing, and we hope it will be resolved soon. Page 144

The balance, as the Mayor said, came from the one-off growth money that was allocated to MOPAC for 2021/22 but had not yet been assigned to specific projects. It now will not be possible to do that in order to do protect MPS activities and that is where we are.

Of course, the MPS faces other cost pressures arising from COVID-19. There has been some Government funding, for example, for personal protective equipment (PPE). It has set up a scheme around loss of income, but there are other factors that are not currently being funded by Government, despite the Mayor’s request. Basically, the MPS will have to look for in-year efficiencies in order to achieve the balanced budget it has to achieve.

Siân Berry AM: Can I get some clarity? To maintain the growth trajectory, you put business rates into this year and next year and the year after, I think, in order to provide some certainty. Are you saying you have brought some of that into this year and therefore it is less available in future years?

David Bellamy (Mayor’s Chief of Staff): No. What the Mayor did in the 2018/19 budget was announce a recurring allocation of business rates of £59 million a year to the MPS, which would allow the recruitment and retention of 1,000 additional police officers more than otherwise would have been affordable. He did that based on the advice from the then Chief Financial Officer whose advice was that that would be affordable on an ongoing basis. Those 1,000 extra officers are recruited, they are out there doing their jobs now and the funding for that is there.

What we also provided for in the budget was one-off money. We never had a figure, but the Home Office said it was going to fund additional officers in 2021/22. We put additional one-off money in the budget, which would allow those officers to be recruited in this financial year and get them onto the streets earlier. Because essentially that money has had to be spent because the MPS has been so successful in recruiting the 1,369 extra officers the Government is funding, they got ahead of the Government’s profile. We had not assumed how quickly we could recruit those officers and therefore that money that was going to be used to recruit early in the second half of the year in essence has already been used to do that.

Siân Berry AM: OK. The 1,000 officers are safe and still provided for in future years, but you have had to put off, you say, 600 more?

David Bellamy (Mayor’s Chief of Staff): Yes, we did effectively bring forward in this year some of the 1,369 the Government is funding, but we are not able to bring forward the 600.

Sadiq Khan (Mayor of London): Hopefully, that will still happen next financial year, but I was trying to bring them in earlier than the next financial year.

Siân Berry AM: OK. The other thing that happened at the last meeting is we spoke with the Chief of Corporate Services [MPS], who told us that, essentially, they were relying quite heavily on the CSR for making future plans and that they were very, very optimistic that the Government would continue funding that. Obviously, the CSR has been put off and we are going to see some one-year settlement. Do you have a sense from the Government of how much it is going to prioritise supporting police officers in that one-year settlement yet? I know the announcement of the delay was only, I think, yesterday.

Sadiq Khan (Mayor of London): It is worth distinguishing two things. One is the Government’s promise of 20,000 officers over three years, and we think that we should be receiving 6,000 of 20,000 over three years.

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The first year of that is 1,369. If you park that for a second, we assume the Government will keep that promise and we are looking forward to years 2 and 3.

What David Bellamy was referring to is the lack of certainty. We do not know yet - and we are in October - how much we are going to get next year, and we cannot start recruiting. Will it be 3,000? Will it be 4,000? We will have to wait and see.

There is a separate discussion about additional monies we need, because one of the things the Commissioner has made quite clear is that it is not simply police officers. It is the other support a police officer needs to allow them to do their job properly, the buildings, the equipment, the police staff, the forensics and all the rest of it. We are still looking for that money and the CSR is an opportunity to get the Government to look at the whole picture in relation to the monies that the Home Office should first receive and then the Home Office then gives out to MPS and the other 42 police forces across the country. That is what you will have probably been referred to in relation to our optimism; that the Government will, after ten years of cuts to the police, start finally giving them the investment they deserve.

David Bellamy (Mayor’s Chief of Staff): The particularly important aspect of that, Assembly Member, is capital funding. It is clearly not just about officers. It is buildings, cars, technology and equipment. The Government provides an incredibly small capital grant and therefore to create that equipment, if there is another source, we end up borrowing, which then creates an additional pressure year-on-year in the budget. Obviously, I understand the Chancellor’s decision just for a one-year spending review, but just as we talked about in the context of TfL, it is true but in a different way regarding the MPS: we need long-term certainty around capital funding and proper capital funding so that officers can have the equipment they need to do their jobs.

Siân Berry AM: OK, that is really useful. I know we have seen for TfL quite a comprehensive submission to the CSR, arguing for the wider case and the wider economy for doing this. Have you done something similar for MPS investment and the capital investment you are looking for there or have you done that in connection with other parts of the country as well? Presumably, the case is roughly the same in terms of the Treasury business case for each.

David Bellamy (Mayor’s Chief of Staff): Yes, this is done in two ways. Obviously, it is addressed in the Mayor’s CSR submission, which of course is a public document. Also, importantly, it is done through the Home Office’s internal submission into the spending review. Clearly, the National Police Chiefs’ Council and all forces, but especially the MPS, work very closely with the Home Office in putting together that submission and making the case. Robin [Wilkinson, Chief of Corporate Services, MPS] and his team will have a very active role in that.

Siân Berry AM: That makes sense. Since the announcement that it is being turned into a one-year short-term review, have you been in touch with the Home Office about amending your asks for that?

David Bellamy (Mayor’s Chief of Staff): I am sure that the MPS will be having conversations to understand the implications of that. I have not heard anything directly myself, but of course the Chancellor’s announcement was only yesterday.

Siân Berry AM: Given this is the Budget [and Performance] Committee, is it possible we could ask for some kind of update on what you are asking for in the shorter-term review, once you know it, specifically in budget terms?

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David Bellamy (Mayor’s Chief of Staff): Yes, I am sure we could get either Sophie [Linden, Deputy Mayor for Policing and Crime] to write and set out the position. The key is the capital investment and uncertainty of our officer recruitment.

Sadiq Khan (Mayor of London): I am not sure it changes much in relation to our ask, because I think the Government was keen to have the submission on the deadline it gave. Actually, you will be aware where there is some recruitment, planning police officer numbers or buildings, whether it is one year or three it does not really change much in relation to the ask.

Let me give you an example. If it is the case that the Government wants to let us know how many of the 20,000 officers we were getting, we would then need to adapt the building requirement and flex that to the number of police officers we are receiving, police staff and all the rest of it. At the moment, we are circa 32,000. Let us work on the basis the Government gives us the 6,000 officers that we at least should have. That is an additional 4,000 and we can then work out a footprint for 36,000 officers. I am not sure if our capital submission changes too much whether it is year 1 or year 3.

Siân Berry AM: I suppose not, but you might want to re-profile things or reprioritise things if you are only going to get one-year certainty. Yes, if there are any changes, please let us know.

I think that is all I have, Chair. Is that OK for me to stop?

Susan Hall AM (Chairman): That is fine. Actually, we were on really good time, but Assembly Member Duvall is going to ask something very quick.

Len Duvall AM (Deputy Chair): It is quick. Look, we concentrate - and rightly so - on police officer numbers and sometimes that takes the focus away from other budget headings within the police. We know that we can get greater performance efficiencies by focusing on information technology (IT). Time and time again, you see in that IT budget of the MPS not moving at all in terms of spend or implementation and they do make some great technology improvements. I used to see police officers walking round with their tablet and I do not see them walking round with their tablet as much as I used to see. Maybe it is hidden or maybe it is staying in their car. For those issues in terms of this budget and future budgets, we do not like people overspending budgets and we do not mind people coming in under their budget. What we do not like is when they are not using their budget.

How can we, in this budget and the police and generally - because there must be some other budget holders just not moving on the issues? I say this in terms of the pressures on policing and where policing is going in the future, what will drive change in the right direction in tackling crime and technology is one of those. Have you got a view on that and where that is?

Sadiq Khan (Mayor of London): Chair, can I just say? I was smiling when Assembly Member Duvall came in because every Budget and Performance Committee over the last five years Members rightly mentioned IT and the MPS. I thought we had managed to survive a Budget and Performance [Committee] without that being mentioned. It is a common theme; it has been and you are right to mention it.

There are a number of issues. David [Bellamy] in the past has referred to this because I know the previous Chair was also fascinated by this and interested in this, rightly so, because of the previous lack of investment in this area and some of the old kit we are using. We have made some progress and David, as part of the Group Procurement Team, is doing some work as well and the MPS is investing. [Former] Deputy Commissioner [Sir] Craig Mackey [QPM] did a lot of work in relation to this and you are seeing some of the fruits of that. That is Page 147 being carried on by [Sir] Steve House [Deputy Commissioner, MPS] and Robin Wilkinson [Chief of Corporate Services, MPS].

In relation to the specific point you mentioned around training our officers, one of the really good things, to give you an anecdotal, is officers now will not go out unless their body-worn videos are working. That is very different to two years ago, where there was a concern that officers would not want to wear body-worn video. That is a cultural change because of the training. They have seen it work and seen it is good.

With the tablets as well, what has been fascinating though is that, if we are honest, they were not quite brilliant when they first started being used. If an officer has a bad experience with a tablet, he or she will be less keen to use it in future because it takes time and it is a hassle. I am kept regularly updated by the Deputy Commissioner in particular on the improvements and the iterations made, which has given officers the confidence and they are using it more and more. What often happens is with an officer in a station who uses it well, the ripple benefits go on and we see more of that in relation to training.

Just a final point just to mention, Len, to reassure you - I know you have mentioned this before - is to make sure we invest in the wellbeing of our officers, particularly in relation to what we have seen with Sergeant Mike Ratana recently and other officers who get assaulted. Just to reassure you, in previous budgets we for the first time invested in the wellbeing of our staff as a specific budget item. We still want to do that going forward as well; it is really important.

Len Duvall AM (Deputy Chair): Yes, more on the specific. The digital policing spend in the capital budget last year, the budget was for £43.8 million and the MPS actually spent £46.7 million. It actually slightly overspent, on the original budget at least. Then for this year, the budget is £32.7 million and at the end of Quarter 1, it was not forecasting any variance. Obviously, Quarter 1 is very early in the year and it was really only the property area that it was forecasting variance on the capital programme at that stage. We will see what is in the Q2 report when we all receive it in the next few weeks. Thank you.

Susan Hall AM (Chairman): OK. How lovely we are finishing in harmony because we all agree that the IT for the police needs to be improved and so we will stop the questioning there on a harmonious note. Can I thank our guests for attending today and for their answers to our questions?

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