The controversial plan to charge drivers to drive into London was proposed in December 2020 by Sadiq Khan as a potential way of raising around £500 million a year for TfL, with the Government having ruled out devolving money raised through Vehicle Excise Duty to the capital.
Despite opposition to the plan from Transport Secretary Grant Shapps, TfL confirmed in October last year that the charge was “still an option” and was included in a list of revenue generating plans sent to the Government’s spending review.
Mayor of London Sadiq Khan reiterated that the boundary charge was “one of the options” being considered as a source of income for TfL at a meeting of Mayor’s Question Time in December.
But speaking at a meeting of the London Assembly’s budget and performance committee on Friday, outgoing TfL chief financial officer Simon Kilonback said that the boundary charge was now off the table.
Mr Kilonback said: “We are at a very critical point with Government around thinking about what are the options beyond the council tax increases that the mayor has discussed and put forward, and what he will determine in terms of fares very shortly, to generate at least £500 million- [a year].
“Right now, we need to get some feedback from Government as to what they will support having ruled out the Greater London boundary charge, having ruled out the devolution of Vehicle Excise Duty and having ruled out also looking at new taxes.”
He added: “The Secretary of State for Transport has been very clear that he does not support the introduction of the Greater London boundary charge and does not support, or will not consider, the devolution of Vehicle Excise Duty.”
Sadiq Khan has already announced that the mayoral portion of council tax paid by Londoners will increase by an average of £31.93 a year from next April in a bid to help restore TfL to financial sustainability.
But Mr Kilonback on Friday said that the planned council tax increase will only bring in around £172 million a year after three years, while potential changes to TfL fares would bring in around £60 to £80 million.
He said that this would still leave TfL to find “about half” of the £500 million of additional revenue a year it requires.
While fares for TfL services could rise by as much as five per cent this month, the Mayor of London and TfL are also considering measures such as changing the fares structure in London, increasing the cost of an Oyster Card deposit from £5 to £7 and scrapping free travel before 9am for Londoners who hold a Freedom Pass or 60+ photocard.
Mr Kilonback told the London Assembly on Friday that TfL would need to look at “what is next after the expansion of the Ultra-Low Emission Zone” to raise additional funds, but stressed that schemes to manage emissions and congestion on the road “cannot be designed to maximise income”.
It was revealed at Friday’s meeting that compliance with the Ultra-Low Emission Zone since it expanded in October is at around 92 per cent, compared to the 87 per cent originally estimated by TfL.
This translates to around £300 million of revenue less than TfL had estimated for.