Has Boris blunder handed Barclays £10m free advertising?

It appears the Mayor has presided over an almighty fiasco.

Val Shawcross AM is London assembly Labour group transport spokeswoman

In his 2008 election campaign Boris promised to secure sponsorship for a cycle hire scheme that would not cost the taxpayer a penny.

This was a laudable aim; we all support the bike hire scheme and covering the cost by bringing in the private sector was an interesting idea.

However, six years later and we can see that promise is in shreds. We already knew that Barclays sponsorship deal did not cover the running costs of the scheme, with an annual deficit of £11m, and it had also been discovered that Barclays had clawed back over £2million from the Mayor due to poor performance of the scheme.

The original scheme has been expanded twice since its launch, once into east London – as set out in the original contract – and again in December last year into south west London (Hammersmith and Fulham, Lambeth and Wandsworth).

This week we found out, thanks to the FOI-ing of MayorWatch, that Barclays did not pay anything to cover this second expansion. In Summer 2011, TfL and Barclays signed a ‘Heads of Terms’ agreement whereby the bank would pay £15million to extend the time period of the sponsorship from 2015 to 2018, and also provide £10million to fund the physical expansion into south west London.

However, in December last year that agreement had not been turned into a contract and Barclays announced they would not renew their sponsorship. This may sound like an obscure legal point, but there are currently over 2,000 Barclays branded bikes sailing around our city – and they haven’t paid a penny for the privilege.

It appears the Mayor has presided over an almighty fiasco. First he allowed a contract to be signed that gave Barclays naming rights for the whole scheme, even if it was extended, and then when it was extended failed to get any funding from Barclays. This means that TfL and the London boroughs have had to bridge this funding gap.

So, it looks like Boris failed to get any funding from Barclays for a major expansion of the cycle-hire scheme and handed the company at least £10million of free advertising. Not only does this undermine the whole point of bringing in sponsors to part-fund public transport projects, but it appears London boroughs – and their council tax payers – have had to stump up the missing money.

I have written to Boris asking him to urgently clarify exactly what has happened, how this was allowed to happen, and how much Londoners lost as a result.

The Mayor and TfL are currently looking for a new sponsor. They must ensure any mistakes are not repeated and the best possible value is extracted for tax and fare paying Londoners. We need to get to the bottom of what has happened, and what went wrong.

It’s increasingly looking like Boris is not on top of the detail of his day-job and this is now costing London millions of pounds.

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