Friday, June 15, 2012

Budget Committee

Tuesday's budget committee considered the handling of compensation for the August riot victims and took evidence from TfL about future fares settlemtnts.


The star witness was Tottenham MP David Lammy. David was briefly a list member of the London Assembly, before taking advantage of his list status to go on to greater things without leaving a by election in his wake. He has evolved into a passionate and articulate advocate for his constituents who are some of the poorest in London.

David was joined by Sir William Castell who chairs the High Street Fund trustees and Moaz Nanjuwany from the Tottenham Traders Partnership. The Assembly Members included the representatives of hard hit Tottenham, Croydon and Clapham.

MPA witnesses explained the limitations of the Riot Damages Act, a piece of legislation dating from 1886 which does not include compensation for vehicles or loss of business.  Confusion over this role meant that many people applied for compensation when they had little chance of qualifying.

Insurance provided a wider degree of compensation but in Tottenham 25% of traders were not insured. Even those who had bought insurance sometimes found it was not adequate in the face of such terrible damage. Furthermore those who claimed were now facing an increase in premiums of up to 20%, making insurance unaffordable in many cases. We were told of cases where insurers had been unhelpful and lossadjusters had made unreasonable demands - for example asking for receipts from businesses which had been burned to the ground. David Lammy cited Zurich as an example of an insurer who was difficult to deal with - this struck a chord as Zurich were my insurers when I was burgled in 1999, and they were great, until their loss adjusters turned up...

Sir William's High Street Fund had stepped in to fill the gap. Run by private businesses, they had targeted small concerns with 12 or fewer employees. With 623 applicants, 575 had qualified for initial stop gap payments of up to £2,000. Further grants of up to £8,000 had been made later, bringing the total number of payments up to 911. Most beneficiaries were businesses in Tottenham and Croydon. Sir William was critical of working relationships with some local authorities but he praised the commitment and support of Boris and the GLA.

David Lammy warned that further unrest was likely because of high unemployment in his constituency. He urged the government to take more steps to provide opportunities in London, in the same way that the relocation of the DVLA and other government agencies had boosted depressed areas outside London.


TfL's Stephen Critchley made his last appearance before his impending retirement. He confirmed that the business plan predicted a fares rise of RPI plus 2%, although this was subject to Mayoral approval and compared favourably with National Rail rises of RPI plus 3%.

Stephen Knight suggested borrowing to hold fares down. TfL replied that borrowing was limited by government agreement and was also subject to changes in their credit rating. Excessive borrowing would harm a good rating, leading to increased borrowing costs as well as reputational damage, higher supplier bills and harm to the pension fund - not much leeway there...

A better idea was to seek other income streams to subsidise fares. These included advertising, sponsorship, property, retail and technology - a new source of income manifested in the recent wifi deals. One possibility was to enlarge station car parks to generate more parking income and to facilitate more 'park and ride' opportunities.

I suggested that retail should be built into more stations, allowing for income generation as well as creating a buzz inside stations. Travelling on the Jubilee and East London line extensions reveals a preference for blank concrete walls over retail units. The cavernous ticket hall at Canary Wharf must surely provide for some retail income - certainly the privately run underground shopping complexes on either side of the hall are thriving. And Crossrail plans for new stations at Ilford and Romford have sacrificed commercial space in favour of blank walls and offices for station staff - don't get me started on that...

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