Case not yet made for above-inflation fares rise, Assembly says

3 AUGUST 2010

 Transport chiefs have not yet justified a potential seven per cent rise in Tube and bus fares next year, a new report from the London Assembly says today.[1]

The Assembly’s Budget and Performance Committee says demand for public transport during the economic downturn has been higher than expected and so Transport for London (TfL) has collected more money from fares than it forecast. TfL also recently said that it does not intend to use fares to pay for the reduction in its government grant this year or its takeover of Tube Lines. [2]

The Committee’s report ‘Balancing Act’ therefore calls on TfL to publicly justify why it plans to recommend to the Mayor that fares should rise by two per cent above inflation in 2011.[3]

In January this year, fares rose by an average of 12.7 per cent on buses and by 3.9 per cent on the Tube. [4] 

However, a new survey commissioned by the Committee found that people on low incomes and not working have been particularly hit by the much higher rises in 2010. This is because these groups are most likely to travel by bus using Oyster Pay-As-You-Go or season tickets and these fares rose by up to 20 per cent in January. [5] 

The report recommends that if the Mayor is convinced that fares must rise next year he should spread the pain more evenly by ensuring the prices of these tickets do not rise by more than other ticket types.

The Committee also calls on the Mayor to make sure any future fares rises do not lead to unwanted changes to travel patterns, such as people opting to drive instead of using public transport.

John Biggs AM, Chair of the London Assembly Budget and Performance Committee, said: “These are tough economic times for Londoners and in January some of the poorest were hit by big increases in bus fares.

“Passengers should not face even higher transport costs without clear justification for them.

“And if the Mayor does decide that fares should go up next year, we would want him to think carefully about the potential consequences, particularly the risk that some people could be driven off public transport.”

The report highlights how funding for London’s transport is coming increasingly from passengers, rather than government grants. In 2009 for every £1 put in by central government, passengers paid 99p but by 2017 current plans would result in passengers providing £1.29 for every £1 from government. [6]

TfL’s longer-term government funding is very uncertain and could be much less than anticipated. The Committee says if funding is cut this autumn, TfL may have to amend its business plan and, at that point, the Mayor should ask Londoners about their transport priorities.

 The report makes four key recommendations:

 

  • TfL should publish detailed information about the cost increases it faces and a revised projection for fares revenue in 2010/11. It should answer questions about the likely increases in revenue and costs, in order to justify the need for a fares rise of two percent above inflation, and describe what other options were considered before deciding to recommend that to the Mayor. This response should be received by the end of September 2010 or before the Mayor announces his fares decision – whichever is earlier.
  • When the Mayor announces his fares decision in the autumn, he should set out the factors contributing to any increase, including the extent to which it is driven by the potential for future grant reductions. He should give details of the balance between increasing the cost of travelling for passengers and reducing spending on services or investments, as well as the reasons for choosing that balance.
  • In 2011 PAYG bus fares and bus season tickets should not increase by more than the average rate applied to other fares. In its response to the Committee’s report by the end of September, TfL should show what assessment it has done of the implications for the affordability of public transport of the average fares rise of around seven per cent.
  • When allocating fares rises between bus and Tube passengers the Mayor should be mindful of the potential for increase to bring about undesirable shift away from public transport. To enable him to do this TfL’s response to the report should include an assessment of the likely implications of its preferred fares rise and potential distribution across different forms of transport. When the Mayor publishes his decision, he should show he has considered the relative effects of bus and Tube fare increases in terms of discouraging public transport trips.

Notes for Editors:

  1. The report ‘Balancing Act’ is available here.
  2. See pp 26-29 of the transcript of the Budget and Performance Committee meeting on 17 June, which is available here
  3. At the Budget and Performance Committee meeting on 17 June, TfL said it was likely to recommend to the Mayor that fares from January will need to rise by two percent on top of the rate of inflation, based on the Retail Price Index (RPI) in July this year. RPI in June was 5 per cent. A transcript of the meeting is available here. Until last year TfL’s business plan had assumed an increase of RPI plus one percent until 2017/18.
  4. See Mayor of London’s press release, Fares for 2010, published 15 October 2009
  5. A survey of 602 people was conducted by Steer Davies Gleave between 24 May 2010 and 9 June 2010 this year for the Assembly. Full results are contained the survey report here.
  6. See paragraph 2.14 on P17 of the report.
  7. The Chair of the Budget and Performance Committee John Biggs is available for interview. See contact details below.
  8. As well as investigating issues that matter to Londoners, the London Assembly acts as a check and a balance on the Mayor.