To fix public transport in Britain, we should copy France

Transport for London (TfL) has been hanging by a thread since the Covid-19 pandemic began. Fare revenues first collapsed when the country was locked down, but now commuters have developed a taste for working from home, the fare box is yet to fully recover.

The situation is particularly difficult for TfL, because unlike most transport systems around the world, it funds its operations from the fare box, with no day-to-day subsidy from the government.

Since TfL’s source of funding collapsed, the Department for Transport has been stringing the tube and bus operator along: giving it temporary deals and bailouts to tide it over every few months. The result has been depressing and destructive: work on projects ranging from new tube trains to protected cycle infrastructure has stalled, with no clear, long-term funding paths paralysing one of the country’s transport success stories.

Sadiq Khan says the government needs to stop dreaming and restore proper funding to TfL permanently: it received a block grant until quite recently, when it was abolished by George Osborne. The government does not want to – reluctant to spend cash, especially on a city that stubbornly refuses to vote for it.

That the transport operator ever financed itself from fare revenues in the first place was an impressive feat of efficiency, but the result of that balancing act, even before the pandemic, was some of the highest fares in the world.

London, Manchester and Birmingham were ranked the three most expensive major cities in Europe for public transport in a recent study by the Clean Cities Campaign. A 30-day travel card in London costs £167 – a deal often regarded as good value for the UK. But the equivalent 30-day public transport pass in the Danish capital of Copenhagen costs 620 Danish krone (£69), a far more typical figure on the continent. Urban transport in the UK is not cheap.

Restoring TfL’s block grant would be fantastic, but it wouldn’t solve the long-term problem of the capital’s transport being dependent on central government whim. Even if the money were restored tomorrow, there is no guarantee a future Tory chancellor would not try to pinch a few pennies for her budget by picking a fight with the capital.

A more durable solution is found across the channel in France, and specifically Paris. The UK’s capital loves to compare itself to its anglophone cousin New York, often neglecting its cross-channel links. But Paris has a durable system for funding urban public transport which the UK would do well to, frankly, copy.

In France, urban public transport is funded by a system called the "versement transport" or VT. Under this system, cities can levy an employer payroll tax (think employers’ national insurance) of up to 2 per cent on companies with more than 11 employees. The result is that businesses that benefit from public transport end up contributing to it.

It turns out you can do a lot with this cash: in the Ile-de-France, Paris’s equivalent of the Greater London area, around 40 per cent of transport funding is provided by the VT – with the cash used to keep fares low and invest in new lines. As a result a monthly pass giving unlimited travel on all public transport in the wider Paris region costs just €75 (£62), under half that of London.

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The VT also gives not just Paris, but other cities around France huge independence to fund their own public transport improvements. French cities have built 21 tram systems since the year 2000, largely funded by introducing their own VTs, from Bordeaux to Besançon. If Leeds could levy a VT, it could have funded and built its own trams, or even a proper metro, decades ago, without waiting for Westminster to make up its mind.

Other French cities have chosen to use the revenue from the levy to improve their bus services, with Dunkirk in September 2018 making its impressive network entirely free for passengers, massively boosting ridership. None of this is possible in the UK, where the Treasury jealously guards any and all public subsidy.

There are already UK precedents to imposing such levies – a temporary business rate supplement was imposed in London to fund Crossrail work, and the government’s apprenticeship levy provides a possible model that might fit the UK tax system.

Any British government that genuinely cared about "levelling up" would have given local areas the power to levy a VT yesterday. Improving public transport is also crucial to meeting our climate goals.

Introducing a similar local transport levy in the UK would solve London’s transport funding crisis and put TfL on a sustainable and independent footing. But giving all British cities the option of introducing such a funding mechanism would revolutionise public transport in this country, and put power and cash in the hands of local areas.