Resources and investment

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London's transport system has suffered from decades of under-investment. In 2004/05, TfL reached an historic funding agreement with the Government, following the 2004 Spending Review (SR2004). This provided an additional Government grant and gave TfL the authority to borrow for long-term capital investment. The SR2004 settlement also gave TfL unprecedented certainty over its financial position for five years - essential for the management of large, complex projects that can take many years to complete.

This settlement meant TfL was able to start planning with confidence to meet some key challenges: making good long-term neglect; supporting the 2012 Olympic and Paralympic Games; and meeting the increase in demand on the transport system arising from the growth in population and jobs forecast in the London Plan. The challenges are long-term - the work has just begun.

'TfL's unprecedented settlement with Government reflects our track record of achievement and commitment to shared objectives. The success of our first bond issue shows confidence in TfL's ability to deliver.'
Jay Walder, Managing Director, Finance and Planning

Investment Programme and Prudential Borrowing

The historic funding settlement with Government enables £10 billion to be invested through TfL's 5-Year Investment Programme. Under new legislation, effective from April 2004, TfL used the funding agreement to establish a £3.3 billion borrowing programme for 2004/05 to 2009/10. A Medium Term Note programme was established in November 2004 giving access to capital market funding. Both Standard & Poor's and Fitch rating agencies re-iterated their 'AA' credit rating of TfL, demonstrating the very strong credit-worthiness of TfL's business plans within the international financial community.

In December 2004, TfL launched the first ever UK municipal Eurobond issue for £200 million through joint lead arrangers HSBC and Morgan Stanley. One of the issue's key aims was to establish a transparent and visible benchmark for TfL debt, enabling effective comparison with other forms of financing such as Private Finance Initiative (PFI) projects. The bond was seven times oversubscribed.

Efficiency savings

TfL's commitment to providing value for money produced exceptional results. Efficiency gains rose from £42 million in 2003/04 to £119 million in 2004/05. There were a number of reasons. A common back office IT system was introduced. Oyster was rolled out and the Business Procurement Efficiency Programme - developed to optimise TfL's considerable buying power - delivered a £99 million saving across the business.
This was achieved in 18 months instead of the original three year target.

The HR sections of the 15 businesses, which united to form TfL, combined into a single HR Service. Economies of scale and shared best practice meant that in 2004/05 this initiative delivered savings across the organisation of around £1.9 million, which was £0.4 million ahead of target. This initiative will deliver future savings of £8.1 million per annum.

Investment

London 2012 Olympic and Paralympic Games

Success in London's Olympic bid rewarded almost three years of dedicated work by the Mayor, the London Development Agency and TfL. The International Olympic Committee's (IOC) first report was critical of London's transport system. After eight months tireless work, buoyed by knowledge of the funds available as a result of the SR2004, and drawing on long experience of organising transport for major events, the TfL and London 2012 bid team delivered a comprehensive transport strategy that changed minds and secured IOC votes. The result: in good time for the Games, London's transport system will have benefited from TfL's £10 billion 5-Year Investment Programme.

Communities in east London will benefit and the Stratford development is a good example. Services will be transformed. Stratford will become a major international transport hub. The new International Eurostar Terminal will link to Paris and Brussels via the upgraded Channel Tunnel Rail Link. The extended DLR will connect south and east London and the Olympic Javelin train service will take spectators from King's Cross St Pancras to the Olympic Park and village in just seven minutes. Improved bus and Underground services plus walking and cycling initiatives will support an unprecedented building programme.

London Underground

The maintenance and upgrading of the Underground's assets is delivered by a mixture of PPP and Private Finance Initiative (PFI) contracts, together with additional work directly funded and specified by TfL. Comments on the delivery of routine maintenance were set out earlier on page nine. Concerns continue about the level of resources directed to renewal of the Underground's ageing infrastructure by the PPP infracos (Metronet and Tube Lines).

The upgrade of the Underground under the PPP is now well underway. Tube Lines has delivered the first tranche of station modernisation. Refurbishments incorporate new facilities such as digital CCTV, Help points at all stations and improvements to passenger service information. Regrettably the first Metronet station projects are late and were not completed by the year-end.

Major line upgrades are due to be delivered from 2009 onwards. Early milestones have been achieved, but such projects have very long programmes and there is a lot to do to deliver the upgrades. LU's PPP report reviews progress in more detail.

The Underground's power is provided under a PFI agreement. Suppliers EDF Energy Powerlink delivered the Northern line power upgrade and refurbished the Power Control Centre. By contrast the Connect PFI, under which CityLink is responsible for delivering a new communications network for the Underground, is running seriously behind schedule. When completed, Connect will mean new radio systems for the Tube, with the rollout now scheduled to start in 2006.

Progress on investment projects during 2004/05 gave a foretaste of the scale of improvements to flow from TfL's 5-Year Investment Programme from 2005/06 onwards. The east end of Canary Wharf station was opened, within budget and two months ahead of schedule. This key project delivered improved passenger access and increased capacity for this fast-expanding area.

Work on the first phase of redevelopment of King's Cross St Pancras station progressed while more than 120,000 passengers still used the station daily. In February the Department for Transport granted approval to start phase two which will deliver step-free access from the deep level Underground and a new northern ticket hall serving passengers transferring from the Channel Tunnel Rail Link.

Work continued on the construction of an extension of the Piccadilly line to serve the new Terminal 5 at Heathrow Airport, scheduled to open in 2008. The Underground loop to Heathrow Terminal 4 closed in January 2005 so that a junction to the new line can be built. Until it reopens in September 2006, passengers travelling to Terminal 4 are using a dedicated shuttle bus link from Hatton Cross station. The major upgrade of Wembley Park station is on schedule to meet the opening of the new stadium in 2006.

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London Buses

'TfL has invested over £16 million to make London's streets better places to walk. Initiatives include improving crossings, street lighting, footways and links to stations.'
Peter Hendy, Managing Director, Surface Transport

As well as the virtual completion of the renewal and upgrade of the bus fleet, funded through contract payments, five major facilities greatly improved during 2004/05. Walthamstow Central bus station was refurbished at a cost of £6 million (June 2004). The Waterloo bus interchange was completed during summer 2004 and Putney Bridge bus station received a £450,000 makeover.

The TfL owned Walworth garage became fully operational in September 2004 and the new Vauxhall Cross bus station came into use in December 2004, encouraging greater use of public transport, walking and cycling. A contract for the renewal of TfL's bus radio, Countdown and Automatic Vehicle Location (AVL) systems was agreed during the year.

A Business & Technology Education Council (BTEC) qualification and training course was rolled out for bus drivers who work for TfL contractors. This will improve passenger care and driving standards. During the year, the number of in-service drivers with the BTEC award reached 10,320. The target is for all established bus drivers to be BTEC qualified by December 2005. Bus operator's supervisors are also now qualified to BTEC standard.

Streets

Work to maintain and renew London's streets continued. TfL resurfaced 95 lane kilometres and reconstructed 75 lane kilometres of carriageway on its own Transport for London Road Network(TLRN). The boroughs resurfaced and reconstructed 265 lane kilometres of their principal roads, supported with funding through TfL's Borough Spending Plan (BSP) programme. All were left safer to use and in a good state of repair.

Phase one of the Coulsdon Town Centre Scheme to improve access and traffic flow continued on target for completion in 2006, returning the existing road to a normal high street. Work continued on making the southbound lanes of the Blackwall Tunnel safer.

London Rail

The East London Line (ELL) extension played a key role in the Olympic bid. Completed, the ELL project will help regenerate some of London's most deprived areas. TfL formally took responsibility for the £900 million project to extend the line between Dalston and West Croydon/Crystal Palace.

TfL also worked closely with Government and the business community to maintain the momentum behind Crossrail, a key element of London's future transport infrastructure. In July 2004 the Government accepted the Crossrail business case and a Hybrid Bill, seeking the powers to construct Crossrail, was submitted to Parliament in February 2005. The bill was later 'carried over' to the next session following the dissolution of Parliament because of the May General Election. It achieved its Second Reading in July.

Major projects

The funding agreement reached with the Government paved the way for much needed schemes to strengthen London's transport infrastructure. These include the Thames Gateway Bridge (TGB) project and the East London Transit scheme. Long-term aims include local regeneration, quicker interchange and safer, faster and more convenient services.

Subject to the outcome of the Public Inquiry, the TGB will stand between Thamesmead in Greenwich and Beckton in Newham. When completed it will cut cross-river journey times and play a key part in the revitalisation of London's East End. TfL estimates that 35,000 jobs will be created in addition to the 1.4 million jobs that will become accessible within 45 minutes journey time from Thamesmead. The TGB inquiry illustrates the challenges TfL faces in the coming years in gaining consent for the many projects in its investment programme.

Local improvements and travel awareness

Alongside the progress in major projects in 2004/05, TfL continued to devote significant resources to smaller-scale local schemes, both on its own TLRN roads and on borough roads through the Borough Spending Plan (BSP) programme. Over £157 million of BSP funding was allocated to the boroughs for a range of schemes designed to improve the quality, safety and accessibility of London's streets and public spaces. These included bus priority, bridge and principal road renewal, cycle networks, road safety schemes and measures to improve access for all users. Boroughs delivered over 97 per cent of their allocations from TfL.

TfL worked with the Greater London Authority (GLA), the Mayor's Architecture and Urbanism Unit (AUU) and boroughs on an urban design agenda to take forward a number of projects in the Mayor's '100 Public Spaces' programme. These included development work on Sloane Square, Coulsdon Town Centre and Euston Road.

TfL continued to work closely with boroughs, schools and businesses on raising travel awareness in order to encourage modal shift. Safer Routes to School projects included more than 600 school journey plans. Along with local safety improvements, these will help tackle problems caused by the school run. Workplace journey plans were developed with employers to help encourage their employees to walk, cycle and use public transport.

TfL demonstrated its continuing commitment to substantial investment in borough transport schemes by allocating £781 million BSP funding in the 5-Year Investment Programme. In July 2004, the Mayor issued guidance to the boroughs on the preparation of their Local Implementation Plans (LIPs). These are statutory plans in which the boroughs set out how they propose to deliver the Mayor's Transport Strategy. Once approved, LIPs will provide the local framework for future BSP bids and wider investment in London's transport network.