Barclays Bank paid nothing toward south-west Boris Bike expansion

£10 million cost funded by taxpayers and boroughs, but Barclays still gets branding

by John Stevenson   February 21, 2014  

Boris Bike (creative commons license by Jack999:Flickr)

London hire bike sponsor Barclays Bank made no contribution to the £10 million cost of extending the scheme into south-west London, despite the continuing presence of its branding on the bikes and docking stations, it has emerged.

Barclays was expected to bankroll the phase 3 expansion of the ‘Boris Bikes’ hire system, but Transport for London has confirmed to the MayorWatch website that no additional funding came from the bank after it decided last year to end its sponsorship in July 2015.

Yet a 2011 press release claimed Barclays had agreed to pay an additional £25 million toward the scheme to extend its support to 2018 and fund the expansion.

That press release was based on a Heads of Terms obtained by MayorWatch under Freedom of Information law. But a deal based on that document never came, despite repeated claims by Mayor of London Boris Johnson that Barclays would sponsor the scheme until 2018.

When it emerged in December that its sponsorship would end in July 2015, the bank said the decision was undertaken as part of a wide ranging review of deals done when Bob Diamond was in charge of the bank and had nothing to do with the recent spate of deaths involving cyclists in London.

With no money coming from Barclays to fund the expansion of the scheme, it has instead been paid for by taxpayers, including a total of  £4.2 million from the boroughs of Hammersmith & Fulham, Lambeth and Wandsworth.

As early as 2012, boroughs were told that the expansion of the scheme was conditional on them making a contribution, raising questions as to when Boris Johnson and Transport for London knew that Barclays was not going to renew its sponsorship.

Commentators and London politicians have hit out at the Mayor and TfL for allowing Barclays to continue to benefit from publicity on the bikes, but giving no credit to the boroughs.

Martin Hoscik of MayorWatch told the BBC: “Local councils have paid more than £4 million for this and yet their logos are nowhere over the bikes. A company that has provided nothing is benefitting from all the free publicity.”

London Assembly Labour Party member Valerie Shawcross said: “London’s council tax payers and the local boroughs have actually ended up funding the expansion and lo and behold Barclays have still got their branding all over these bikes even though they’ve not paid for them.”

Had the Heads of Terms become a formal contract, it’s possible Barclays could still have paid nothing. The document says: “The parties agree that the number of bicycles required to meet the actual phase 3 launch requirements and trigger payments by Barclays will be 2400.”

But when the expansion launched in December last year, only 2,000 bikes were available, well below the threshold at which Barclays would have been obliged to pay.

London Assembly member Darren Johnson commented to the BBC: “It does show what a poor contract this was from start to finish: poorly negotiated, poorly written. The fact that a multi-national company like Barclays Bank can get out of paying money that was due on the sponsorship deal while their advertising still goes ahead is absolutely shocking.”

No sponsor has yet been announced to replace Barclays Bank. It’s hard to see how the scheme could continue without one. It has been substantially more expensive to run than similar schemes in other cities around the world, in part because on average each bike is just for just 3.1 trips per day, rather less than the originally estimated ten.

A study published at the end of November by US sustainable transport think tank ITDP found that 6.7 trips per day per bike were made on similar schemes 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.”

16 user comments

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Have you ever heard of anyone referring to them as "Barclay's Bikes"?
I am not sure they get much in the way of publicity out of this.

posted by stuartp [53 posts]
21st February 2014 - 14:55

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Agree with above - ok, their logo is plastered over them but does it get extra business? It wasn't a factor in choosing the lender when I took out my mortgage. .......

I'm a barclays customer - maybe free bike hire use ought to he offered to all barclays account holders.

posted by allez neg [4 posts]
21st February 2014 - 14:58

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Everybody is following the contract then?

People don't just write contracts in a vaccum and present them to potential sponsors. You can't claim that they are badly written for not clobbering the other party for extra money. Contracts are negotiated. One of the key concerns of a potential sponsor would to remain unclobbered by extra costs.

There is a step up threshold on extra payments. It hasn't been crossed.

If there was an issue with only adding 2000 bikes (not 2400) in the expansion then their usage would be higher. If they had just added 2401 to get extra money from Barclays then I dare say Barclays would be crying foul if that was an overreach.

So the news is. Barclays and TFL had a contract. Neither side has breached it. Green Party AM thinks there's a problem with that.

Cycling is like a church - many attend, but few understand.

posted by oozaveared [505 posts]
21st February 2014 - 15:00

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oozaveared wrote:
Everybody is following the contract then?

People don't just write contracts in a vaccum and present them to potential sponsors. You can't claim that they are badly written for not clobbering the other party for extra money. Contracts are negotiated. One of the key concerns of a potential sponsor would to remain unclobbered by extra costs.

There is a step up threshold on extra payments. It hasn't been crossed.

If there was an issue with only adding 2000 bikes (not 2400) in the expansion then their usage would be higher. If they had just added 2401 to get extra money from Barclays then I dare say Barclays would be crying foul if that was an overreach.

So the news is. Barclays and TFL had a contract. Neither side has breached it. Green Party AM thinks there's a problem with that.

Can you tell me where the contract in question is as the conditions you state are not mentioned?

I think the relevant points for me are that no one was told this without a FOI request and that Barclays still had their logo plastered everywhere at the taxpayers' expense. The expanded scheme should have been sans logo and people in London told why.

posted by lerrup [14 posts]
21st February 2014 - 16:03

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allez neg wrote:
Agree with above - ok, their logo is plastered over them but does it get extra business? It wasn't a factor in choosing the lender when I took out my mortgage. .......

I'm a barclays customer - maybe free bike hire use ought to he offered to all barclays account holders.

Agree with this - yes I'm aware that Barclays have a hand in the bikes but it doesn't influence me in any decisions I make financially and as the first poster said, they're Boris Bikes not Barclays Bikes. Take Barclays out the equation and it wouldn't exactly change a huge deal.

As for spending taxpayers money...it's not exactly the worst thing in the world to fork out for.

http://matmitchellcycling.wordpress.com
The usual new 4th Cat blog with some stuff about Pros too.

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posted by mtm_01 [90 posts]
21st February 2014 - 16:50

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lerrup wrote:
oozaveared wrote:
Everybody is following the contract then?

People don't just write contracts in a vaccum and present them to potential sponsors. You can't claim that they are badly written for not clobbering the other party for extra money. Contracts are negotiated. One of the key concerns of a potential sponsor would to remain unclobbered by extra costs.

There is a step up threshold on extra payments. It hasn't been crossed.

If there was an issue with only adding 2000 bikes (not 2400) in the expansion then their usage would be higher. If they had just added 2401 to get extra money from Barclays then I dare say Barclays would be crying foul if that was an overreach.

So the news is. Barclays and TFL had a contract. Neither side has breached it. Green Party AM thinks there's a problem with that.

Can you tell me where the contract in question is as the conditions you state are not mentioned?

I think the relevant points for me are that no one was told this without a FOI request and that Barclays still had their logo plastered everywhere at the taxpayers' expense. The expanded scheme should have been sans logo and people in London told why.

1 read the article
2 this is a tfl (taxpayer funded) scheme that has managed to attract sponsorship from Baclays it's not a Baclays scheme being funded by the taxpayer.
3 Has anyone other than Baclays offered more money. Ie is more revenue available that tfl hasn't taken advantage of?

A sponsorship deal is only worth what someone will pay for it. If no-one else is offering more, ipso facto it's the best deal.

It seems to me that the criticism is just for the heck of it.

One company sponsors a public scheme that would have been payed for by the taxpayer anyway. Taxpayer gets scheme for less than otherwise. The contract terms are not breached. Everything is in order.

No mark AM tries to make out there's something wrong to make a name for himself.

Cycling is like a church - many attend, but few understand.

posted by oozaveared [505 posts]
21st February 2014 - 22:05

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I'd strip the Barclays logos tomorrow providing it doesn't breach a contract and advertise to a replacement. Stuff the banker and the bankers.
The pollies should have left banks like Northern Rock to fend for themselves, they'd soon sort their own acts out.

posted by Guyz2010 [280 posts]
21st February 2014 - 22:40

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"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.”"

Nothing to do with the fact that - in contrast with Lyon and Barcelona - it's more often than not p*ssing with rain then? Or sleet?

posted by BrianL51 [6 posts]
22nd February 2014 - 1:39

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There was never a contract obliging Barclays to pay anything for phase 3, but nor was there a contract obliging TfL to put Barclays logo all over phase 3.

Barclays original contract was to sponsor phase 1& 2, no more.

BoJo announced in 2011 that Barclays had agreed to kick in an extra 25 million. They hadn't; there was no contract, just a Heads of Terms.

In 2012 BoJo and TfL started strong-arming the boroughs to kick in £4 million for phase 3; money that would not have been needed if Barclays was about to pony up.

That Barclays was not renewing its sponsorship past 2015, and was not therefore supporting phase 3 only became public as phase 3 was launched, almost as though BoJo hoped the euphoria over the expansion would make everyone look elsewhere.

In terms of take-up, and financially, the Boris Bike scheme has been little short of a disaster. The bikes get 2.3 to 3.1 uses per day, depending whose figures you believe. That's a long way short of the 10 journeys per bike per day promised when the scheme was announced, and it's part of the reason why the scheme's cost per journey is so much higher than the Lyon or Barcelona schemes.

The basic problem is that people who don't already own bikes and ride in London see the city as a horrifying place to ride a bike. Boris Bikes and TfL's hopelessly optimistic advertising for them aren't going to fix that.

Yeah right.

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posted by MiserableBastard [6 posts]
22nd February 2014 - 1:41

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oozaveared wrote:
Everybody is following the contract then?

People don't just write contracts in a vaccum and present them to potential sponsors. You can't claim that they are badly written for not clobbering the other party for extra money. Contracts are negotiated. One of the key concerns of a potential sponsor would to remain unclobbered by extra costs.

There is a step up threshold on extra payments. It hasn't been crossed.

If there was an issue with only adding 2000 bikes (not 2400) in the expansion then their usage would be higher. If they had just added 2401 to get extra money from Barclays then I dare say Barclays would be crying foul if that was an overreach.

So the news is. Barclays and TFL had a contract. Neither side has breached it. Green Party AM thinks there's a problem with that.

And is one allowed to think this was a bad contract that should not have been agreed in the first place?

Edit - seems comment above renders this point moot. The issue then is that Boris was until now succesfully obsfuscating the point that Barclays have ended up with the extra advertising without having to pay anything for it. And not for 'contractual' reasons after all? (not that the public sector has a particularly good record when it comes to negotiating contracts with private contractors and the like).

posted by FluffyKittenofT... [626 posts]
22nd February 2014 - 15:51

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"succesfully obsfuscating"

Or 'lying' as it's more commonly known.

The man's a snake, and anyone who thinks he's a friend of London cyclists needs to put down the Kool-Aid.

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posted by MiserableBastard [6 posts]
22nd February 2014 - 18:57

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FluffyKittenofTindalos wrote:
oozaveared wrote:
Everybody is following the contract then?

People don't just write contracts in a vaccum and present them to potential sponsors. You can't claim that they are badly written for not clobbering the other party for extra money. Contracts are negotiated. One of the key concerns of a potential sponsor would to remain unclobbered by extra costs.

There is a step up threshold on extra payments. It hasn't been crossed.

If there was an issue with only adding 2000 bikes (not 2400) in the expansion then their usage would be higher. If they had just added 2401 to get extra money from Barclays then I dare say Barclays would be crying foul if that was an overreach.

So the news is. Barclays and TFL had a contract. Neither side has breached it. Green Party AM thinks there's a problem with that.

And is one allowed to think this was a bad contract that should not have been agreed in the first place?

Edit - seems comment above renders this point moot. The issue then is that Boris was until now succesfully obsfuscating the point that Barclays have ended up with the extra advertising without having to pay anything for it. And not for 'contractual' reasons after all? (not that the public sector has a particularly good record when it comes to negotiating contracts with private contractors and the like).

This is a contract for a private company to pay money to sponsor a public transport initiative. You can't just look up an exact figure for what the value is in order to be able to say it was a good deal or a bad deal. The only metric you have is whether a better deal was on offer. If there wasn't a better one then ipso facto this was the best deal on offer. A good deal is usually the best one you can get.

This is just plain deductive logic. The only alternatives to the best deal on offer are:
1 a worse deal
2 no deal at all.

you can't just magic up up some mythical other deal that that coulda, woulda shoulda, mighta been offered and say the actual deal is bad because it wasn't as good as the one you invented in your head.

Cycling is like a church - many attend, but few understand.

posted by oozaveared [505 posts]
22nd February 2014 - 19:10

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BrianL51 wrote:
"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.”"

Nothing to do with the fact that - in contrast with Lyon and Barcelona - it's more often than not p*ssing with rain then? Or sleet?

Well it pisses down and blows a gale just as much in Amsterdam and Copenhagen. From my experience more so. Doesn't stop them?

Cycling is like a church - many attend, but few understand.

posted by oozaveared [505 posts]
22nd February 2014 - 19:14

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MiserableBastard wrote:
"succesfully obsfuscating"

Or 'lying' as it's more commonly known.

The man's a snake, and anyone who thinks he's a friend of London cyclists needs to put down the Kool-Aid.

I'm not aware of Boris actually lying about this. Seems like more a case of just keeping quiet about it and hoping nobody notices. Which is, to be honest, exactly what most politicians would do in such a situation.
What I don't agree with is oozaveared's claim that its somehow wrong for another politician to draw people's attention to a fact that Boris doesn't want anyone to notice.

posted by FluffyKittenofT... [626 posts]
22nd February 2014 - 21:13

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oozaveared wrote:

This is a contract for a private company to pay money to sponsor a public transport initiative. You can't just look up an exact figure for what the value is in order to be able to say it was a good deal or a bad deal. The only metric you have is whether a better deal was on offer. If there wasn't a better one then ipso facto this was the best deal on offer. A good deal is usually the best one you can get.

This is just plain deductive logic. The only alternatives to the best deal on offer are:
1 a worse deal
2 no deal at all.

you can't just magic up up some mythical other deal that that coulda, woulda shoulda, mighta been offered and say the actual deal is bad because it wasn't as good as the one you invented in your head.

That seems naive to me. Those aren't necessarily the only two options. If a political administration is responsible for negotiating a contract, and it turns out to not be a terribly good one, its perfectly valid for opponents to suggest that maybe it could have been negotiated better.

It doesn't matter if there was an alternative offer (and it was BJ's administrations job to find such offers) - how do any of us know what was in the heads of the Barclays negotiating team? As you say, contracts are negotiated - and they can be negotiated skillfully or not.

One of the major problems with our current mania for PFI, contracting-out, and other forms of public-private deals is that there is a history of the public sector getting done-over by the smarter lawyers of the private one (actually its much less about smarts, and more about the extremely mixed-motivations of those in charge of the public-sector side vs the single-minded search for profit that drives the other party).

Time-and-again it later transpires in such contracts that the public sector has somehow managed to retain all the risk while transferring the potential profits.

Now this was a sponsorship deal rather than one of those contracting out jobs, so its a bit different, but the same question applies.

How do you know this was the best deal that could have been obtained, even in the absence of an offer from another company? You are _assuming_ that those on Boris's side who negotiated it achieved that.

I don't see how you can be so sure of that. Maybe it was, maybe it wasn't. But the fact that Barclays have ended up getting this bonus freebie does not inspire confidence that this was the best deal that could have been attained. In any case its useful to be clear how this has worked out.

posted by FluffyKittenofT... [626 posts]
22nd February 2014 - 22:27

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FluffyKittenofTindalos wrote:
MiserableBastard wrote:
"succesfully obsfuscating"

Or 'lying' as it's more commonly known.

The man's a snake, and anyone who thinks he's a friend of London cyclists needs to put down the Kool-Aid.

I'm not aware of Boris actually lying about this. Seems like more a case of just keeping quiet about it and hoping nobody notices. Which is, to be honest, exactly what most politicians would do in such a situation.
What I don't agree with is oozaveared's claim that its somehow wrong for another politician to draw people's attention to a fact that Boris doesn't want anyone to notice.

Though, on further reading, it seems like the mayor's office did come close to telling porkies, without actually doing so. The original press release did, apparently, claim Barclays would be paying £25million for the expansion. I would imagine that at that time that is what was believed, perhaps because they hadn't looked through the contract closely enough? I don't know if they ever issued a correction later mentioning that, "er, sorry, it didn't turn out like that after all."
Again, though, this is all pretty standard political behaviour. I don't think Boris is any worse than the norm in his tactics - its just a matter of whether one agrees with the ends or not.

http://www.london.gov.uk/media/mayor-press-releases/2011/07/mayor-s-flag...

posted by FluffyKittenofT... [626 posts]
23rd February 2014 - 16:36

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