Request ID: FOI-3048-2324 Date published: 18 December 2023
You asked
Dear Sir/Madam,
Under the Freedom of Information Act 2000, I am writing to request information regarding the methodologies used by Transport for London (TfL) in allocating overhead expenses to the income statements of different operating segments.
Specifically, I am interested in understanding the following aspects:
Methodology: A description of the methodology TfL employs for the allocation of central overhead costs across various operating segments, if this occurs
Allocation Bases and Cost Drivers: Information on the allocation bases or cost drivers used when allocating different types of overhead expenses to operating segments
Breakdown by Overhead Types: A breakdown of the overhead expenses into different categories or types and the respective methodologies applied for each category. This should include, but not be limited to, administrative costs, IT expenses, advertising, and any other significant overhead categories.
Supporting Documentation: Any relevant policies, guidelines, or documents that describe or relate to the overhead allocation process.
I understand that under the Act, you are required to respond to this request within 20 working days.
Thank you for your attention to this matter. I look forward to your prompt response.
We answered
Our ref: FOI-3048-2324/GH
Thank you for your request received by Transport for London (TfL) on 22 November 2023 asking for information about the methodology for allocation of overhead expenses.
Your request has been considered under the requirements of the Freedom of Information Act 2000 and our information access policy. I can confirm that we do hold the information you require.
Methodology: A description of the methodology TfL employs for the allocation of central overhead costs across various operating segments, if this occurs
Central overhead costs are allocated to the operating divisions and reported via the indirect cost line in our external management accounts. Indirect costs are operating costs that don’t directly sit within a division’s P&L, but which support the operations of the business. These costs have generally sat within Professional Services and Group Items, and represent largely back office costs of Finance, HR, Health & Safety, Comms and Tech & Data. Costs are apportioned to divisions based on a calculation largely based on staff levels, but also including ticket sales (to apportion revenue collection).
Allocation Bases and Cost Drivers: Information on the allocation bases or cost drivers used when allocating different types of overhead expenses to operating segments
Central overhead costs are allocated to the operating divisions via three different cost drivers:
Total headcount
Total non-operational headcount
Percentage share of passenger income
Breakdown by Overhead Types: A breakdown of the overhead expenses into different categories or types and the respective methodologies applied for each category. This should include, but not be limited to, administrative costs, IT expenses, advertising, and any other significant overhead categories.
Central overhead
Cost driver
Finance
Total headcount
HR
Total headcount
Safety, Health & Environment
Total headcount
Communications
Total headcount
General Counsel
Total headcount
Group Items
Total headcount
Strategy
Total headcount
Customer
% share of passenger income
Technology & data (revenue collection)
% share of passenger income
Technology & data (IM support)
Total non-operational headcount
Estates
Total non-operational headcount
Media (advertising)
Income apportioned to the operating division it is generated by
Supporting Documentation: Any relevant policies, guidelines, or documents that describe or relate to the overhead allocation process.
Please see the internal process note attached. The process note was last updated on 29 March 2021. There may be some minor changes since this date and some out dated references, such as “Crossrail 2”.
Please note that some commercially sensitive information has been removed as it is subject to a statutory exemption to the right of access to information under section 43(2). This information describes how different commercial media contracts work and split the revenue. The section 43(2) exemption has therefore been applied as disclosure would, or would be likely to prejudice our commercial interests, as well as those of our media partners. Disclosure of this information hinder TfL’s ability to negotiate the best value for money for similar services in the future.
The use of this exemption is subject to an assessment of the public interest in relation to the disclosure of the information concerned. We recognise the need for openness and transparency by public authorities, particularly where the expenditure of public money is concerned, but in this instance the public interest in ensuring that we are able to obtain the best value for public money outweighs the general public interest in increasing transparency of our processes.
Please let me know if this is not the information you are looking for, or if you are unable to access it for some reason.
If you are not satisfied with this response please see the attached information sheet for details of your right to appeal.
Yours sincerely
Graham Hurt FOI Case Officer FOI Case Management Team General Counsel Transport for London
