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So after eight years of Boris Johnson, London this month elected a new Mayor.

Despite their political differences there is a key link between Johnson and his successor, Sadiq Khan, as they worked closely together at the beginning of the mammoth Crossrail project at the end of the last decade.

Khan, who was transport minister at the time Crossrail was getting underway, has also pledged as Mayor to follow Boris in promoting cycling in the capital – and indeed to get Crossrail 2 underway.

I wish Khan the best of luck – but I believe he faces a major challenge to make good on his raft of infrastructure promises.

Just look at Transport for London (TfL). This is the body responsible for ensuring people can travel smoothly across one of the biggest cities in Europe.

TfL is already expecting significant challenges as its assets age and its user population grows. On top of this, it is having £700 million slashed from its annual budget by the government, by the end of this decade.

Yet Khan has not only pledged a raft of projects including further cycle superhighways, river crossings, Crossrail 2 and an extension to the Docklands Light Rail – he has pledged not to raise fares during his first term.

Now the prices TfL charges people to use its services account for 40% of its income. So how is Khan going to keep his fare freeze promise (estimated to cost £1.9bn) as well as his infrastructure spending pledges?

Well he has a plan, but I’d like to tell him that it’s not a very good one.

Khan’s mayoral manifesto said his plan to freeze transport fares would be funded “by making TfL a more efficient and profitable operation”. Different engineering departments would be merged; duplication will be slashed; and almost £200 million less would be spent annually on consultants and agency staff.

This is a classic politician pledge; it sounds very attractive to the general public – reducing costs in an apparently simplistic way, without upsetting the unions by cutting TfL frontline staff numbers.

If the Mayor is going to rely on ideas such as these to fund infrastructure projects, then I advise people to get a good pair of walking boots. Cutting the use of third-party staff is something TfL and all other infrastructure bodies have been trying to do for years – if it was that easy to do then they would have done it by now.

TfL, like many of their peers are reliant on consultants, agency staff and freelancers to deliver many of their objectives. The current £383m annual bill in question is spent broadly on two things; interim appointments and consultants of all types (management consultants, engineering firms, quantity surveyors, transport planners and architects etc.).

The desire to reduce the interim appointments, typically with permanent full-time staff, is nothing new. I have sat in countless meetings with infrastructure clients who have been frustrated about the numbers of interim consultants and freelancers they are using to fulfil senior roles, that really look as though they should be done in-house. But they often have pay scales totally at odds with the external market and would lose most of their best interims if they tried to impose permanent contracts on them.

Why would a highly skilled individual accept a lower income, with less flexibility and higher tax bills? They wouldn’t; they would go elsewhere. The only answer would be to put lower quality staff into critical roles, which would clearly be a false economy.

Another false economy, in many cases, would be reducing the use of consultancy staff. They are usually brought in to provide a service which TfL as the infrastructure client has no capability to do itself, or no desire to do itself.

Cutting this spend significantly isn’t achievable without breaking pay scales (and potentially changing the company culture) to attract consultants en masse to join TfL permanently. TfL has previously tried this in some areas (such as transport planning) and it has increased their wage bill and driven up consultancy fees.

It’s not just on surface transport where I fear Khan will struggle. He has promised to oppose the construction of a third runway at Heathrow and support Gatwick expansion, yet he has no power to do so. Boris Johnson never stopped talking about his plan for an airport in the Thames Estuary, only for it to be rejected by the Davies’ commission on numerous grounds, not least it would cost £30-60bn more than expanding Heathrow.

Airport expansion will be a central government decision, and opposing Heathrow will be difficult for the Mayor both practically and politically, with businesses and the construction industry desperate for swift action.

Khan has also pledged to deliver 80,000 new homes a year in the capital, while making more than half of them affordable. Again it is hard to see how he can solve viability issues here and manage these dual pledges. Getting close to 80,000 homes built a year will be a minor miracle; Boris previously promised 42,000 per annum and barely reached more than 20,000.

Time of course will tell, but I have a clear feeling that Khan has set himself far too much to do on infrastructure. Good luck Sadiq, you are going to need it.

Author: Jim Newsom

Jim Newsom

Managing Director