Barclays to end Boris Bike deal but SERCO contract to be extended - major overhaul of London's cycle hire scheme on the way?
New deal will end in 2015 at odds with earlier news of extension; TfL has already outlined "next generation" scheme plans to industry
Transport for London (TfL) and Barclays have confirmed that the bank’s sponsorship of the city’s Boris Bikes will come to an end in July 2015 – despite having announced in 2011 that they had agreed an extension to the initial contract that would take it through to 2018. Meanwhile, TfL's board is meeting today and is due to extend the contract of Scheme operator Serco, which also expires in 2015.
Barclay's said the decision to end its sponsorship of the scheme was undertaken as part of a wide ranging review of deals done when Bob Diamond was in charge of the bank and has nothing to do with the recent spate of deaths involving cyclists in London. This summer 20 year old French student, Philippine De Gerin-Ricard became the first peson to be killed ridng a Barclays Cycle Hire bike when she was in collission with a lorry on Cycle Superhighway 2. According to various media reports Barclays informed the Mayor's Cycling Czar, Andrew Gilligan last month that they would be ending the sponsorship agreement for the bike hire scheme.
TfL says that the scheme will in future fall under "a much wider and larger cycling sponsorship" and it has also been exploring an overhaul of the cycle hire scheme. In October, it invited businesses in the industry to hear its “plans for developing the next generation cycle hire scheme.”
That suggests that there could be some major changes on the way, although TfL's board is meeting today, one of the items on the agenda being to approve an extension to exising operator Serco's contract. Serco has been fined in the past for failing to meet targets associated with the scheme, but the board paper to be discussed today notes an improvement in its performance.
The news comes as new research shows that costs per trip in London are higher, and number of trips per bike lower, compared to other leading European schemes in Barcelona, Lyon and Paris.
The extension to the contract was announced on the first anniversary of the scheme in July 2011 and the wording of the press release was unequivocal, with Mayor of London Boris Johnson confirming “that Barclays has agreed to provide another £25 million of sponsorship,” taking the bank’s “total investment in the scheme to £50m.”
As the Mayorwatch website points out, Mr Johnson has subsequently reiterated at Mayor’s Question Time sessions that the deal runs until 2018 and is worth £50 million.
And in a December 2012 FAQs document regarding the much criticised Barclays Cycle Superhighways, TfL says: “The eight year sponsorship deal until 2018 with Barclays is worth up to £50 million. This will help offset the costs of operating both Barclays Cycle Hire and Barclays Cycle Superhighways.”
Yesterday evening’s announcement that it the sponsorship is to end in 2015 therefore not only comes as a surprise, it also raises questions over why TfL, Barclays and the mayor himself have stated that an extension was agreed if that is not in fact the case, leading Labour Greater London Assembly (GLA) Member Val Shawcross to call for more transparency.
She said: “Back in 2011 the Mayor and TfL announced this sponsorship would be extended to 2018, yet now we learn it will end in 2015.
“When looking for a new sponsor the Mayor must be completely open about the process. This scheme has the potential to be much more successful, but so far this hasn’t happened.
“The bike hire scheme in Paris for example generates a small profit for the city, whereas Boris’ scheme requires subsidy. Let’s hope he learns from the catalogue of failures and error to date and gets a good deal for Londoners this time round.”
With the Barclays Cycle Superhighways forming part of the sponsorship, some might suspect that the bank has decided to end its association with cycling in the capital due to the association of its name with a series of cycling fatalities in the capital that have taken place on or near the CS2 route from Aldgate to Bow.
Liberal Democrat Assembly Member, Caroline Pidgeon, accused Barclays of being happy to enjoy the advertising the cycle hire scheme gave it, the bank had decided to backtrack now things aren’t going so well.
She said: “Barclays have received immense benefits from the publicity given to the cycle hire scheme in its early years, but now that its performance is looking shaky they appear to be bailing out.”
“Fundamental questions have to be asked as to how such a one sided deal was ever struck between Transport for London and Barclays.”
But Conservative Assembly Member Richard Tracey, defended the bank, saying: “Barclays have been a very good sponsor of a fantastic cycle hire scheme, the deal has shown that sponsorship of public transport schemes work, and it is unfortunate that they have faced – and continue to face – such brickbats for their role in helping provide a cycling revolution to Londoners.”
He added: “Nevertheless the chance to work with a new sponsor is a great opportunity to expand this popular scheme even further to other parts of London. Cracking sponsorship is the key to bringing private sector funding into London's public transport. TfL must seize that chance.”
The earlier-than-expected end to the deal with Barclays also means that far from the £50 million that was trumpeted for the period 2010-18, Barclays will pay less than £25 million for 2010-15, with £ 1.57 million having already been deducted from that amount after the £225 million cycle hire scheme failed to meet performance targets.
Similar deductions in the remaining 18 months of the contract cannot be ruled out, with usage plummeting after Mr Johnson decided to double the costs of membership and access to the scheme’s bikes at the start of this year.
Labour’s shadow London minister, Sadiq Khan, claimed that Mr Johnson’s personal political ambitions were distracting him from his role in London.
He said: “Earlier this week we heard usage of London hire bikes has plummeted by a third after Boris Johnson hiked fares, and now reports that Barclays have pulled their funding of the scheme from 2015.
“This is yet another example of the Mayor’s incompetent handling of London’s vital transport networks. Londoners are suffering the consequences of having a part-time Mayor more interested in becoming the Leader of the Tory party than making commuting easier.”
A study published at the end of November by US sustainable transport think tank ITDP found that in London, 3.1 trips are made on each bike per day, compared to 6.7 in Paris, 8.3 in Lyon and 10.8 in Barcelona.
But the operating cost per trip was more than five times higher in London, at $4.80, than in Lyon and Barcelona, both at $0.86. Data for Paris were not available, but the operating cost in London was also more than three times that in Mexico City, Minneapolis, Montreal and Washington DC, and the highest of the nine cities worldwide measured by that metric.
Blogging about that study on CTC’s website, the national cyclists’ organisation's Chris Peck said: “CTC suspects that the lower than average use of London's scheme is a consequence of the poor conditions for cycling in central London, with little dedicated space for cycling, and far too many one-way streets and pedestrianised routes from which cyclists are banned.”
In yesterday evening’s announcement that the contract would end in 2015, TfL’s Director of Commercial Development, Graeme Craig, said the scheme would “become part of a much wider and larger cycling sponsorship offer encompassing Cycle Hire and the major new commitments made in the Mayor’s Cycling Vision – new flagship segregated routes through the heart of London, new Quietway backstreet routes, along with cycle training and potentially other forms of active travel.”
He also said that TfL would “seek new commercial partners to add significant sponsorship income to the £913 million already devoted to cycling.”
That process has already begun, with TfL holding an Industry Engagement Day in late October to meet with potential operators of the scheme with Serco's contract to operate it scheduled to end in 2015.
While that looks set to be extended, the information provided by TfL in a Prior Information Notice about the event published in September suggests that an overhaul of the scheme may be planned. It said:
Transport for London (TfL) is considering how it may approach the future procurement of the London cycle hire scheme and is seeking information through issue of this Prior Information Notice (PIN). TfL is looking to hold an Industry Engagement Day to understand the current market and to help scope and structure TfL’s requirements for the future London cycle hire scheme. Information provided will be used to inform TfL’s approach to any future procurement process. If determined appropriate TfL may at its sole discretion enter into further discussions with respondents.
Barclays Cycle Hire (BCH) - Overview
TfL is seeking to engage with potential suppliers for the next generation of this flagship scheme. The current contract is due to expire in July 2015, but includes an option to extend up to a further 2 years [sic].
TfL is considering the future procurement of BCH beyond the current contract and looking at the options for transition. The existing contract delivers performance based operations and maintenance of the cycle hire assets.
TfL is now looking to develop a future business model prior to commencement of any procurement to ensure that
TfL is able to continue to operate, maintain and modernise BCH at the conclusion of the current contract.
As part of this process TfL is taking the opportunity to review the current business operating model, which is supported by the existing contract to drive further efficiencies whilst meeting its strategic objectives.
The Industry Engagement Day is an opportunity for bike-sharing scheme operators and IT, logistics, manufacturing and other suppliers from around the world to inform TfL’s approach to any future procurement of a London cycle hire scheme.
TfL would like to invite all interested parties to attend a free Industry Engagement Day to be held on Friday 25 October at West Kensington, London.
At this meeting:
• Hear TfL’s plans for developing the next generation cycle hire scheme
• Use the opportunity to inform TfL’s thinking, and network with potential supply partners
• Find out more in advance of any formal tender process.