Barclays Libor Scandal Raises Cycle Hire Sponsorship Questions

Rachel Holdsworth
By Rachel Holdsworth Last edited 68 months ago
Barclays Libor Scandal Raises Cycle Hire Sponsorship Questions

The scandal surrounding Barclays's manipulation of the inter-bank lending rate has filtered down to London's streets – literally. Questions are being asked about whether they're an appropriate sponsor for the Cycle Hire scheme.

The bikes have the bank's logo plastered all over them in a sponsorship deal that's worth a maximum of £50m to 2018. London Assembly Member Jenny Jones told politics.co.uk

They are not the sort of people we want to be associated with. It would have been good to set up smaller sponsors who were ethically in line with the concept.

A report from the London Assembly earlier this year looked at TfL's sponsorship policy in the wake of the Wonga/New Year travel deal, and carries this prescient comment:

TfL’s new sponsorship policy should also set out how it would manage a situation where a sponsor suffered major reputational damage

Barclays is in trouble because its derivatives traders lied to manipulate the Libor rate – the interest rate at which banks lend to each other – either to increase their profits or to hide how badly the bank was doing. (The last time Libor was in the headlines was during the credit crunch, when banks mistrusted each other so much that Libor shot up and the whole banking system froze.) During Wednesday's Talk London event, Boris Johnson joked that he'd be able to squeeze Barclays for another £50m but by Thursday morning struck a more sober note, saying it "looks to me like a very, very dodgy practice indeed".

Assembly members say they'll question the Mayor over the appropriateness of Barclays continuing to sponsor such a high profile scheme at Question Time on Wednesday. With sponsorship so tightly linked into the brand new cable car, is it time to reconsider the strategy of hitching so many high profile transport projects to private companies, with all their potential to go horribly wrong?

Photo by Strikealight from the Londonist Flickr pool

Last Updated 29 June 2012

Nicolas Chinardet

According to the Green, Barclays have also been able to suck back £27m from TfL in bank charges.That's effectively more than 50% rebate on an already very advantageous sponsorship deal...

Tim Hardy

When we used #askBoris to raise the same question yesterday he refused to back down about the sponsorship, but had changed his tone towards Barclays, stating: "Barclays has saved taxpayer £50m and if employees have engaged in criminal behaviour then bang em up".

Unfortunately nobody has been able to verify Johnson's claim about the £50m saved because not all the money has been paid and he refuses to answer any questions about if or when it will be.

e3alan

The Boris Bikes, in the nice Tory blue, are a great success. Take their money while we can. 

Will

I don't know how many people actually read the content of these articles.

They haven't put in £50m, they have only pledged to 'do so by 2018'. So even the initial £25m is unlikely to have been paid, whilst public funding has actually been used to set up the scheme and local councils have used their budget to provide for the expansions.

Given that there are also reports that they stand to get back £27m of their sponsorship in charges to TFL, their contribution seems even more lightweight. Of course all of this is back-of-napkin calculation since, as accords their firm commitment to public oversight of public money, open government and transparency, the Conservatives + Boris have both refused to publish the actual details of the contract with Barclays.

That the bikes are a great idea is not the issue on the table. I bloody love them. But they seem to represent shockingly bad value for money when the setup/operational costs are considered.