London Mayor Sadiq Khan has been accused of squandering money on a “gold-plated” pension scheme costing three times more than others while the capital’s transport body runs headlong into financial crisis.
Conservative mayoral candidate Shaun Bailey has claimed that Mr Khan has failed to manage Transport for London’s (TfL) finances efficiently during his years in office.
He pledged yesterday to overhaul what he described as TfL’s overly generous staff pensions and bring them into line with other public-sector pensions.
TfL is now trying to negotiate a financial bailout from the government to cope with the black holein its finances caused by the coronavirus pandemic and the dramatic loss in commuter fares.
Ministers are demanding the extension of London’s congestion charge zone and further fare rises as part of a £1bn proposal to rescue the transport authority for the second time this year.
Currently, over 26,000 TfL staff are on unreformed pensions, with staff contributing 5% while the employer contributes 31% 1.
In contrast for the Local Government Pension Scheme (LGPS), the average employer contribution is 13% for staff pensions, including local government, education, police staff and even City Hall and London Fire Brigade employees.
Mr Bailey says that since the Mayor has been in office, TfL has paid out £1.4 billion in
employer pension contribution payments. Had the 13% public sector average been used, the employer contributions would have totalled £588 million.
Mr Bailey said that means the Mayor overpaid by £828 million in pension contributions — the equivalent of funding almost 14,000 police officers.
He promised to cut TfL’s employer contribution from 31% to 13%, for all new employees and explore if existing employees can move onto it, in defiance of their trade unions.
Mr Bailey said: “TfL has one of the most extravagant pension systems in the public sector, along with some of the highest-paid employees. This makes no sense. With TfL in financial difficulty, taxpayers’ money should go towards services — not gold-plated pensions.
“Sadiq Khan could have fixed this at the start of his term and saved almost £1billion. Instead, he left pensions unreformed, made a mess of TfL’s finances and put services at risk.”
He added: “As Mayor, I’ll reform TfL’s pension system — bringing it in line with average public-sector pensions. Helping to restore order to TfL’s finances and protect the services Londoners love.”
But City Hall has rejected the claims, accusing Mr Khan’s predecessor Boris Johnson of having presided over a regime of financial mismanagement.
A London Labour Party spokesperson said: “Sadiq Khan has spent four years cleaning up the financial mess that Boris Johnson created at TfL. While Boris Johnson was Mayor, fares increased by 42 per cent, but TfL’s operating costs went up every year, its debt increased by £7billion, millions were wasted on vanity projects like the Garden Bridge and TfL’s Government grant was given away with no plan to replace it.
“In stark contrast, Sadiq brought TfL’s net deficit down by 71% over 4 years and increased its cash balances by 13% – all while freezing fares.
“The pandemic is the sole cause of the financial difficulties facing TfL and other transport providers across the world and anyone claiming otherwise simply does not understand the facts.”