The Empires Return – London and New York City Part 2

The rise of London and New York City as major global cities can be traced in part to investment in high quality transport networks, as we described in Part 1, which helped enable each city and its region to grow both organically, and in its competitive position compared to other city regions. There was another parallel between the two cities – the inter-relationship between the two cities’ public transport operations which started with Americans (and other directors with North American perspectives) – like Yerkes and Ashfield – being involved in London’s transport in the first half of the 20^th Century.

The post-WWII disinvestment in urban transport, along with other strategies such as planning and density policies, however, encouraged suburban development and relocation to other regions, to the detriment of the classic city cores and the underlying basis for funding public transportation. However, this situation started to change again in the 1980s.

Rebirth of the City

London and NYC, like most cities in Europe and North America, became less important in their countries’ economies after WWII, and the condition of their public transport networks generally reflected this. As government policies focused on other issues, ranging from health care to higher education, transport investment as a share of GDP also shrank. The creation of the UK’s National Health Service, growth of the university system and new limited access motorways such as London’s Westway, and USA’s Interstate Highway system are examples of this shift in public sector spending in both countries.

The lack of investment in public transport, combined with a shift of people and jobs into the suburbs led to a decline in urban transport networks. This publicly culminated with NYC’s default crisis and near bankruptcy in 1975. London headed along a similar but later trajectory, with the London Transport Board and then the Greater London Council (GLC) heading from crisis to crisis, with fare increases annually or more frequently, and service reductions, to keep heads above the deficit waters. As a share of transport investment, the 1970’s was a low point for public transport in both cities.

Official research had reinforced the historic trends with projections that these would continue, with the population of London and NYC each falling to around 5 million by 2000. Public policy followed these projections by focusing what little public investment there was in transport to roads and airports.

Transport and the economic fortunes of city regions

So, why did London and NYC begin to see a revival in their fortunes? Well, three wider factors in the economy and society helped to turn things around:

1. Global economic change shifting from industrial and manufacturing to a more service and knowledge-based economy. Cities are naturally suited for fostering the sharing of information and ideas, with both NYC and London having some of the best higher education institutions in the world in science, business and economics, legal & financial services, medical services, and fashion & design.
2. Deregulation in financial and legal services supercharged growth in the UK and USA compared to other G7 countries, where change was more limited.
3. Immigration, after slowing in the 1960s and 70s, began to rebound, particularly in London which saw a large increase in people from former colonial nations, working in difficult to recruit service industries, as well as university educated people. The increase in immigration from EU countries accelerated in the 1990s following passage of Maastricht Treaty and the introduction of the Single Market. Likewise, NYC (and the USA) benefited from immigration from Mexico and Central America, as well as retention of international university students entering the US economy.

Cities have always benefited from the synergies and economies of scale which result from the co-location of people, materials and money. In recent times, economic theory has identified the benefits of agglomeration, whereby production is facilitated when there is a clustering of economic activity, which is a major reason why cities increase in size and population.

In post-industrial economies, ideas are critical to economic activity and the concentration of people and businesses provide the stimulus to this phenomenon on a larger scale. Witness the creation of Silicon Roundabout near Old Street in London, and the hipster fashion hub that is Williamsburg, NYC.

Both London and NYC were well placed for these changes, given their global status as commercial, legal, and cultural centres. London particularly benefited from being seen as the leading European commercial capital, with inward investment significantly increasing. An example of the changes followed the creation of the London Docklands Development Corporation (LDDC). Whilst initially the LDDC vision was of a US style suburban edge city with low density housing and businesses replacing the shipping and heavy industry along the Thames, it changed into Europe’s largest commercial redevelopment triggered by the creation of the Canary Wharf development.

Over its first two decades, Canary Wharf generated over 100,000 new jobs (and was headed towards 200,000 before Covid), many of which would not have been located elsewhere in London, let alone the UK, without it. In turn, Canary Wharf was made possible by the investment in enhanced transport links such as the Docklands Light Railway and the Jubilee Line extension.

NYC also benefited with both the rebuilding and expansion of lower Manhattan around the World Trade Center, and developer friendly zoning changes to allow increased density in return for development impact fees, which paid for new and improved public infrastructure.

As jobs began to increase in the key employment centres, people came back into the city for living as well as work. From around 1990 onwards, New York and London populations began to increase again, averaging over 50,000 per annum by the end of 1990s – in London annual increases of 100,000 or more were not uncommon. Forward looking studies at upwards demand trends on public transport were extant in London from the mid 1980s, such as the 1987 Underground capacity review, and the 1988-89 Central London Rail Study, which endorsed schemes such as Crossrail 1, Thameslink, and the Jubilee Line extension.

Transport’s Role

Transport played an important role in the phoenix-like rise in both cities. As discussed in Part 1, NYC’s subway deterioration was a symbol (along with rising crime) of the city’s fall from grace. In response to a failing transit network, NYC’s then MTA leader Richard Ravitch made the case for investment to not only fix a failing system, but also to save the city. In many ways, Ravitch was NYC’s equivalent to British Rail’s Sir Peter Parker in not only arresting the decline but making the case that public transport still had a role to play in the future of both NYC and the wider region. Ravitch also fought for structural reform, culminating with an 11-day strike on the subway in 1980 which did allow the MTA to eliminate some job grades which dated back to before WWII.

Additional funding from New York State (which controls the MTA) was secured – New York City has never been a major funder of the MTA. The US Federal Government has a relatively small role in transport funding throughout the country, other than for large capital projects, whether transit, highway/road or airports.

There were new levies to fund capital investment including development impact fees and a commuter tax. In 1983, Robert Kiley was appointed as MTA CEO, after having succeeded in reforming Boston’s transit network in the late 1970s.

At the heart of Kiley’s strategy was reforming the MTA – “the root of the problem, along with years of disinvestment, was the absence of real management: hardly anyone could be held accountable for the performance of some 51,000 employees”. Kiley appointed David Gunn in 1984 to take charge of the subway, who immediately started to tackle not only the core operational and safety issues, but also started the initiative to rid the subway of graffiti and other symbols of the perceived poor image.

Kiley, Gunn, and Chief Finance Officer Jay Walder, along with a strengthened management team, succeeded in stabilizing the network, improving performance and implementing strategies to return the subway to a State of Good Repair (SOGR). Multi-year capital programs, linked to clear outputs and funded by debt tied to future increases in revenues, gave the authority stability and time to plan effectively. Replacement of the 1940s and 1950s subway fleet started in earnest along with heavy maintenance of newer trains. Ridership began to recover in the 1990s as system reliability improved combined with an increase of the city’s population and jobs.

London Transport’s revival started perversely from a political war between the Conservative Thatcher UK Government and socialist London Greater London Council (GLC) led by Ken Livingstone, neither of whom were particularly interested in public transport per se. Ken’s ‘Fares Fair’ ticketing policy was as much a way to drive social fairness, as to influence transport policy. While a substantial subsidy portion of the ‘Fares Fair’ policy was struck down in the courts in Autumn 1982, from May 1983 a more restrained policy designed around a simpler zonal system and easy to understand Travelcard season ticket (which had already begun to be implemented pre-‘Fares Fair’) started to encourage people back to public transport.

Ironically, despite some real improvements in LT’s operational and financial performance, it was ‘nationalized’ by Thatcher as a result of the abolition of the GLC in 1986. A parallel ‘Capitalcard’ was created for main line railways in London, to enable attractive inter-modal travel, and this was merged with Travelcard by 1989.

In its own right, the 1980s’ fares and ticketing integration in London triggered the case for large capital investment programmes, which transformed travel patterns and modal split. This lesson still has yet to be learnt in other parts of Britain, let alone the US. Interestingly, NYC fares policy has yet to be integrated (nor elsewhere in the US except in very limited cases). This is likely to have depressed demand growth, in particular commuter rail at urban stations given the significant price differential. There was also a sea change in London’s transport planning during this decade.

While most UK politicians (and much of the general public outside of London) still saw public transport as low priority, the Kings Cross fire in 1987, which killed 31 and injured 100, exposed the fatal failings of lack of investment and poor management. The appointment of Denis Tunnicliffe as London Underground Managing Director in 1988 helped to garner public support with a ‘Decently Modern Metro’ campaign, not just to make the Underground safe, but also to renew its fabric to support London’s economy.

Tunnicliffe also initiated or accelerated reforms to the Underground by better spending its limited public subsidy, including rolling out driver-only operated trains across the network and a customer charter. Ridership, which began to increase as jobs returned to central London, accelerated, causing stress on the network, particularly as much of the Underground network had not seen any real investment since the period immediately after WWII. After a nearly 10 year gap, new trains were ordered to replace the last of the 1950s’ tube fleet.

Cool Britannia and New York Drift

As mentioned earlier, transport is an important enabler of economic and social growth and both cities began to benefit from this synergistic effect. However, it was not until the turn of the 21^st Century that politicians and public policy began to recognise these trends.

As a result, it took some time for public officials to recognise the rebound in London and NYC. London, benefiting from its emerging role as Europe’s commercial centre, began to be seen as needing additional attention. The new Labour Government included in its 1997 general election manifestoa devolution of powers for London, as well as for Scotland, Wales, and Northern Ireland. One of the key policy areas which was devolved was transport, which for London including the transfer of London’s transport back to the newly created Greater London Authority (GLA) and the newly restored Mayor role.

The creation of Transport for London (TfL), which combined the historic underground and bus operations with responsibility for strategic roads (as well as the Thames), allowed a more integrated approach to transport policy than previously. The first Mayor of London, Ken Livingstone (once again at the helm of Greater London) realized that transport could deliver real benefits to Londoners in a way that other Mayoral responsibilities could not, such as police and fire services.

Livingstone, impressed by the way the MTA structure was revamped in the 1980’s and 90’s, recruited a core of ex-NYC MTA top managers to head up TfL. Bob Kiley, along with Jay Walder, Peter Zuk, plus the former CEO of one the US’s largest freight railroads Tim O’Toole, were brought in expertise of how to transform London’s transport services. They created tools to fund improvements through public debt instruments, combined with increased public funding. Early investment in improving bus services, led by Peter Hendy, also started to deliver improved frequencies and service.

Prime Minister Tony Blair and the Chancellor Gordon Brown, wary of Livingstone, did retain one key lever of transport policy, by implementing the Public Private Partnership (PPP, or P3 in US lexicon) procurement model for London Underground, despite vociferous opposition from Livingstone and Kiley.

Whilst the Tube PPP was a contractual failure, by requiring a long-term public funding commitment to ensure private participation in long term capital investment, the Underground secured a stable and long-term funding base which it had lacked since before WWII. Rebuilding the core assets of every Underground line began, which improved both service performance and capacity, sometimes by as much as 50%. In parallel, the concession contracting model used for London’s bus network had significantly improved bus services across London.

London resurgent

Together, TfL transformed services and increased capacity which helped shift demand away from auto to public transport. Between 2000 and 2014, demand on London’s buses increased by 67%, and on the Underground by 31%, well above the previous all-time high in 1948. Car use declined by 13%, all while the population within the GLA boundaries grew by 15%. This resulted in an 11% increase in the modal share for public transport, cycling, and walking.

Whilst many other cities in Europe and North America have also witnessed a shift away from auto to more sustainable travel modes, London had the largest shift. Investment in public transport was also unlocking commercial development and new jobs, best witnessed by lengthening Jubilee Line trains from six to seven cars which filled up within 18 months largely as a result of the parallel expansion of Canary Wharf.

London has enjoyed a number of new lines (Victoria and Jubilee Lines plus the creation of the DLR, and a local tram revival based in Croydon), plus wider ‘transit expansion’ (Heathrow Airport in 1977 and a revamped orbital network (London Overground/East London Line extensions).

New York stasis

NYC saw smaller, but similar trends in public transport travel as population and jobs increased, notably with a rebound in the number of trips made by subway almost reaching the all-time high in 1947, and to a lesser extent by bus. An interesting contrast between London and NYC is that while capital investment increased in both cities, NYC has seen little expansion of its public transport network since the completion of the core subway network in the 1940s. The first stage of the Second Avenue Subway was opened in 2017, but being the most expensive tunnels on Earth, was only 1.8 miles long and just three stations — at a cost of $4.5 billion. So this line is not a major improvement to the subway network. Meanwhile, a much more regionally important rail link, the Access to the Region’s Core (ARC), which was to double train capacity between New Jersey and midtown Manhattan under the Hudson River commuter train tunnel, was cancelled by New Jersey’s governor).

This has both constrained the New York subway system from tapping into new markets, but also limited its ability to meet growing demand. Bus services also suffered from a lack of traffic priority measures (again unlike London), leading to slow and unreliable journeys, which has been a factor in the weakness in bus ridership since 2005:

Most damaging however, was that the MTA began to suffer from the diversion of commitment and funding to other public policy priorities, notably policing and education. The impetus for this diversion was the election in 1994 of a new Governor of New York State, George Pataki.

It is worth briefly outlining that since 2000, transport has been the responsibility of London and its Mayor In NYC, however, the MTA is a New York State political responsibility, with the City and its Mayor having only an influencing role. Further, the state sees NYC through a lens of wealth and privilege and the Governor, whether Democrat or Republican, is elected by voters in suburban battleground counties, reducing NYC’s ability to shape political priorities. London by contrast has historically been a battleground location with numerous Parliamentary seats switching in each election.

So the MTA has access to key dedicated funding streams and TfL, until recently, was largely dependent on UK national government funding for capital investment., But NYC was disadvantaged politically in making its case that increased funding can generate new jobs and wealth that benefited the wider electorate. The US Federal Government predominantly improves USA mobility, except for intercity journeys through generous subsidies to construct the interstate highway network and airports.

Unlike his predecessor, Mario Cuomo, Pataki did not see NYC as vital to the success of New York state and was committed to keeping taxes low. As a result, public funding was reduced whilst allowing the MTA to continue to fund its large capital plan, which focused on renewals rather than expansion through increased public borrowing. Furthermore, fares only increased once between 1995 and 2009, reducing a key funding stream. So while total funding actually increased over the 12 years of Pataki’s Governorship, it was largely financed through increased borrowing both for capital works and maintenance. Ironically, the success of returning the subway to a SOGR in the 1990s, provided the cover to reduce direct public grants, rather than maintain or even increase funding to deliver further enhancements that were needed as NYC continued to grow at the turn of the 21^st Century.

The MTA became increasingly reliant on funding streams linked to property development. The 2008 financial crisis blew a massive hole in the transportation authorities’ ability to keep services running. This resulted in fare increases (three times from 2008 to 2010), service reductions (including the elimination of some bus and subway lines, the V and W), and cutbacks on some critical track and signaling renewals. Additional borrowing was insufficient to cover even SOGR renewals, and labor reforms stagnated, frustrating any investment which could have improved efficiency such as driver-only operations. This would see a return to the crumbling edge of quality witnessed in the 1960’s and 1970’s. There is more detail on the political, financial, and infrastructure reasons for the MTA’s funding challenges.

London’s golden moment

Meanwhile, TfL went from strength to strength with improving services, an ability to successfully deliver capital projects (for example transformation of London Overground including the East London Line Extension), and innovative funding linked to progressive policies such as the introduction of the Central London Congestion Charge. London was increasingly seen as the coolest city on earth and TfL as a world class system, winning international awards.

Despite Austerity Britain being linked to the 2008 financial crisis, London’s transport funding was largely protected. Mayor Boris Johnson helped convince the incoming Chancellor George Osborne that infrastructure investment in London was vital even if other public services like the NHS saw cutbacks. The overlap between the Gordon Brown premiership and that of David Cameron, in 2009-10, included starting construction of the transformative Crossrail 1 line to enable further growth in London including job growth hubs around the City of London and Canary Wharf, while opening up development and deprivation zones in south east London and around Stratford Olympic zone.

The zenith for London and TfL was the highly successful delivery of the 2012 Olympics, where selective infrastructure investment and outstanding project management culminated in a highly reliable network delivering over 4.5 million Underground trips on one day and 100 million trips on the TfL network over Olympics and Paralympics. It also established Stratford as a fourth major employment centre. The operational know how acquired to make the Olympic Games a success had a further output several years’ downstream, with the introduction of selective night tube services as well as other improvements.

2012 was a symbolic watershed though. London has since struggled to retain its status as the golden goose of the UK economy and with it, TfL has struggled, and has so far failed to retain its privileged funding status.

Stay tuned for the next in this series which will look at the period from 2012 forward, where both Transport for London and MTA endure transport crises and find themselves bogged down by the wider political dysfunction.