The projected increases in fares are due to the burden of large capital projects such as CrossRail, the Olympics and the East London Line extension.
As Andrew Gilligan writes in his Standard article:
In confidential emails leaked to the Evening Standard, Peter Hendy, the head of Transport for London, accused the Mayor of telling "stories" when on 14 November last year he promised the London Assembly fares would rise only in line with inflation for the next four years.
TfL's actual plan... was to increase bus fares by two per cent above inflation, and Tube fares by one per cent above inflation, in both 2009 and 2010.
This is massively damaging for Ken Livingstone and plays entirely to Boris Johnson's charge that his administration is "corrupt". Mr Johnson's commitment to accountability in an administration headed by him will certainly resonate with voters more after these facts were revealed.
Away from the political argument, this story damages not just Mr Livingstone, but London as a whole.
Business and industry want accountability and transparency from the Mayor. They need to know where they stand and that they will not be blamed for increased cost to the taxpayer when actually Mayor-overseen bodies such as TfL have long projected such cost rises into their business plans.