MD2047 January 2017 Fare Changes

Type of decision: 
Mayoral decision
Code: 
MD2047
Date signed: 
17 November 2016
Decision by: 
Sadiq Khan, Mayor of London

Executive summary

The Mayor is committed to delivering a more affordable transport service by freezing TfL fares over the next four years.  This paper sets out how the Mayor’s commitment will be implemented from 2 January 2017, with a freeze in all TfL bus and Tube fares, a freeze in fares on all other rail services in London where Tube fares apply, and the protection of all TfL fare concessions.  

The Bus and Tram pay as you go (PAYG) fare is frozen at £1.50 and the One Day Bus and Tram cap at £4.50.  The Bus & Tram Pass season price is frozen at £21.20 for a 7 day ticket.  Freezing these fares adds to the benefits created by the bus Hopper free transfer fare introduced in September.

On the Tube and other rail services where Tube fares apply, PAYG single fares are frozen.   Where fares are set by the Train Operating Companies (TOCs), i.e. on most rail services not devolved to the Mayor, PAYG fares increase by 10p.

Travelcard fares and the associated PAYG caps will increase from January 2017 in line with the 1.9% annual increase in the Retail Prices Index (RPI) in the benchmark month of July 2016.  These increases reflect national government rail fares policy over which the Mayor has no control.  

The Mayor has called on the Government to join with him in freezing fares.  However, increases in the cost of London Travelcards and the associated caps in line with the RPI have been mandated by the TOCs.  

As a result, Travelcard season ticket prices increase by 1.8% on average.  This is close to the maximum permitted by the guidance from the Secretary of State for Transport to the TOCs that no regulated fare should rise by more than the percentage increase in the RPI.  The all day PAYG Travelcard caps, which are set at 20% of the relevant 7 Day Travelcard prices, increase proportionally in line with the increases in London Travelcard season tickets being mandated by the TOCs.    
 

Decision

The Mayor:

(i)    Approves the proposed revisions to fares to be implemented from 2 January 2017 as set out below; and

(ii)    Signs the attached Direction to TfL issued pursuant to the power in section 155 (1)(c) of the Greater London Authority Act 1999 to implement these fares on 2 January 2017.
 

Part 1: Non-confidential facts and advice

Introduction and background

1.1    The Mayor has pledged to freeze all Transport for London (TfL) fares for four years.  In line with this pledge, TfL proposes that the Mayor freeze all fares on buses and the Tube, Croydon Tramlink and the Emirates Airline, which are set by TfL.  Fares are also frozen on the Docklands Light Railway (DLR), the London Overground and TfL Rail services where Tube fares apply and on those Train Operating Company (TOC) services which accept fares set by TfL.  
1.2    The proposals build on the benefits of the new bus Hopper free transfer fare introduced in September and the successful launch of night services on the Tube.
1.3    Market research in recent years has shown consistently that high and rising fares are a major concern for Londoners, particularly the less well off.  The proposed freezing of fares will benefit most Londoners who travel by bus – with fares frozen for over 2.5m trips a day.  Freezing fares, rather than increasing them in line with the Retail Prices Index (RPI), will mean savings for bus passengers of over £13m in 2017.  On TfL’s rail services, fares will be frozen for over 1.5m trips a day, saving passengers over £27m in 2017.  Total passenger savings will thus be over £40m in 2017.  These savings are in addition to the estimated £30m pa savings resulting from the Mayor’s bus Hopper fare.
1.4    TfL fares have generally risen by at least the increase in the RPI in each of the last five years.  The Mayor’s policy of freezing TfL fares over the next four years is a very significant change of direction to that assumed in TfL’s previous Business Plan.  TfL have advised that the Mayor’s freeze will not have an adverse impact on TfL’s ability to run and invest in the transport services that London needs to remain successful.
1.5    Travelcard prices and the cost of the multi-modal pay as you go (PAYG) Travelcard caps are set by agreement with the TOCs.  The TOCs are being required by the Department for Transport (DfT) to increase their regulated fares in line with the 1.9% increase in the RPI in the benchmark month of July.  Under the TOCs’ agreement with TfL, even if TfL and the Mayor wish to freeze fares, the TOCs may elect to mandate RPI-matching increases in London Travelcard prices.  The TOCs have chosen to do this.
Overview of proposed fare changes in January 2017
1.6    Detailed fare proposals for 2017 are set out below.  The proposals for bus and Tube fares reflect the Mayor’s commitment to a TfL fares freeze for the next four years.  The proposals for Travelcards and the associated caps reflect the increase in the July RPI benchmark and have been mandated by the TOCs in line with Government policy as per paragraph 1.5.   
1.7    The Travelcard and cap price changes mandated by the TOCs increase TfL fares revenue by 1.0% or £41.2m in 2017.   The annual revenue increases are put at £29.3m for London Underground (LU); £7.9m for bus; and £4.0m for London Rail and TfL Rail. 
1.8    The Mayor’s fares freeze is expected to encourage additional travel and to generate fares revenue worth £11m in 2017 (£7m for LU; £3m for bus; and £1m for London Rail and TfL Rail).  In combination, the fares freeze and the increases in Travelcard prices will increase TfL fares income by £52.2m in 2017.
1.9    The Annex to this Decision Form includes summary fare tables. Fuller details are set out in the Schedules to the proposed Mayoral Direction to TfL.
Bus and Tram fares
1.10    On buses and trams, as part of the Mayor’s four year freeze, fares are frozen as shown in Table 1.1. The adult PAYG single fare is frozen at £1.50 and the free Hopper transfer maintained; the One Day Bus and Tram cap is frozen at £4.50, equal to the price of three bus fares. The Tram cash fare is frozen at £2.60 while the One Day Bus and Tram ticket is frozen at £5.00.  The 7 day Bus and Tram season ticket is frozen at £21.20.  Longer period season tickets are also frozen.  The scope of concessions and discounts is unchanged.

Table 1.1: Bus and Tram fares being frozen in January 2017

 

2016

2017

Increase

PAYG - single

£1.50

£1.50

0.0%

PAYG - daily cap

£4.50

£4.50

0.0%

7 Day Bus & Tram Pass

£21.20

£21.20

0.0%

1 Day Bus & Tram Pass

£5.00

£5.00

0.0%

Tram cash single

£2.60

£2.60

0.0%

 

 

 

 

 

 

 

 

 

 

1.11    As a result of the Travelcard price increases mandated by the TOCs and outlined in the sections below, the January fare changes deliver a revenue yield for buses of 0.7% or £7.9m pa.  By comparison, the bus Hopper fare has reduced fares revenue by some £30m pa.

Travelcard season tickets in Zones 1-6
1.12    Travelcard season ticket prices increase as shown in Table 1.2 and Table A3 in the Annex.   These increases have been mandated by the TOCs.  The overall increase is 1.8%. This reflects DfT guidance to the TOCs that no individual increase should exceed the increase in the July RPI benchmark, which was 1.9%.
 

Table 1.2: Travelcard seasons – 7 Day ticket prices
Note: increases mandated by the TOCs

Number of zones

2016

2017

Increase

Including Zone 1

 

 

 

2

£32.40

£33.00

1.85%

3

£38.00

£38.70

1.84%

4

£46.50

£47.30

1.72%

5

£55.20

£56.20

1.81%

6

£59.10

£60.20

1.86%

Excluding Zone 1

 

 

 

2

£24.30

£24.70

1.65%

3

£26.80

£27.30

1.87%

4

£32.20

£32.80

1.86%

5

£40.50

£41.20

1.73%

Tube, DLR and Overground fares in Zones 1-6
1.13    On the Underground and other TfL rail services where Tube fares apply, PAYG single fares are frozen in line with the Mayor’s four year pledge.  See Table 1.3.
1.14    The flat child off-peak PAYG fare which applies on both TfL rail services and National Rail is frozen at 75p. The child peak LU PAYG fare is frozen at 85p – half the minimum adult peak fare.  The off-peak child cap is frozen at £1.50.  
1.15    The adult PAYG fares being adopted by the TOCs are shown for information in Table A1 in the Annex, together with the associated Train-Tube PAYG fares.  These all  rise by 10p, resulting in increases in TOC PAYG single fares ranging from 1.3% up to 5.0% in the peak; and from 1.9% up to 5.6% in the off-peak.
1.16    PAYG through fares are priced as the sum of the TOCs’ own PAYG fares plus add-on amounts for through travel.  In the case of the non–Zone 1 Train-Tube PAYG fares, the add-ons remain at zero in 2017.  In the case of the Train-Tube PAYG fares involving Zone 1, the add-on amounts involving Zone 1 are being frozen at £1.60 in the peak and to £1.50 in the off-peak. 
1.17    As shown in Table A1, the TOCs’ new fares mean that the PAYG peak 1-6 Train-Tube fare increases from £7.70 to £7.80 and the off-peak fare from £5.30 to £5.40.  These two 1-6 Train-Tube fares determine the maximum fares charged where a rail PAYG journey is incomplete (i.e. has only a touch in or a touch out).  The maximum PAYG fare charges will therefore increase by 10p to reflect the new fares.
 

Table 1.3: Adult PAYG fares on TfL rail services being frozen in January 2017
 

Number of zones

2016

2017

Increase

Peak

Off Peak

Peak

Off-peak

Peak

Off-peak

Zones incl. Zone 1

 

 

 

 

 

 

1

£2.40

£2.40

£2.40

£2.40

0.0%

0.0%

2

£2.90

£2.40

£2.90

£2.40

0.0%

0.0%

3

£3.30

£2.80

£3.30

£2.80

0.0%

0.0%

4

£3.90

£2.80

£3.90

£2.80

0.0%

0.0%

5

£4.70

£3.10

£4.70

£3.10

0.0%

0.0%

6

£5.10

£3.10

£5.10

£3.10

0.0%

0.0%

Zones excl. Zone 1

 

 

 

 

 

 

1

£1.70

£1.50

£1.70

£1.50

0.0%

0.0%

2

£1.70

£1.50

£1.70

£1.50

0.0%

0.0%

3

£2.40

£1.50

£2.40

£1.50

0.0%

0.0%

4

£2.80

£1.50

£2.80

£1.50

0.0%

0.0%

5

£2.80

£1.50

£2.80

£1.50

0.0%

0.0%

 

Oyster card deposit
1.18    The Oyster card deposit remains unchanged at £5.

LU cash fares in Zones 1-6
1.19    The £4.90 and £5.90 adult Tube cash fares for up to 3 and 5 zones respectively, and the £6.00 fare for Zones 1-6, are all frozen.  Child cash fares for the 11s to 15s remain at half the adult rate.  Under 11s will continue to travel free.
1.20    National Rail (NR) cash through fares in Zones 1-6 increase by 10p.  Full details are set out in Table A2 in the Annex.  These fares have two elements: an NR element which is increasing by 10p; and an LU element which is frozen.

One day PAYG price caps in Zones 1-6
1.21    Tables 1.4.1 and 1.4.2 below set out proposed all day PAYG Travelcard caps and one day Travelcard ticket prices.  These increases have been mandated by the TOCs.
1.22    The all day PAYG Travelcard caps are set by agreement with the TOCs to be 20% of 7 Day Travelcard prices.  The caps increase by 10p or 20p in proportion to the increases in Travelcard season ticket prices which are being mandated by the TOCs.

Table 1.4.1: All Day PAYG Travelcard caps in 2016 and 2017

 

All day caps

Zones

2016

2017

Change

 

 

 

 

1-2

£6.50

£6.60

1.54%

1-3

£7.60

£7.70

1.32%

1-4

£9.30

£9.50

2.15%

1-5

£11.00

£11.20

1.82%

1-6

£11.80

£12.00

1.69%

Note: increases mandated by the TOCs

 

One Day Travelcard tickets
1.23    The prices of both the Zones 1-6 off-peak Travelcard ticket and the Zones 1-4 all day Travelcard increase by 20p to £12.30. The Zones 1-6 all day Travelcard ticket price increases by 30p to £17.50.  See Table 1.4.2.  These increases are being mandated by the TOCs and reflect national government rail fares policy.

Table 1.4.2: Day Travelcard tickets in 2016 and 2017
 

 

Day Travelcards

2016

2017

Change

All day 1-4

£12.10

£12.30

1.65%

All day 1-6

£17.20

£17.50

1.74%

Off-peak 1-6

£12.10

£12.30

1.65%

 

Note: increases mandated by the TOCs

 

1.24    The overall increase in TfL rail fares revenue resulting from the Travelcard cap and one day Travelcard price increases is 0.4%.

Concessions and discounts on TfL rail services
1.25    For the under 16s, all day Travelcard prices and all day Travelcard caps, which are set at half the adult rate, increase in line with adult prices.  The printed off-peak Travelcard for the under 16s aimed at the visitor market increases in price by 10p or 1.7% to £6.10.   These increases have been mandated by the TOCs and reflect national government rail fares policy.
1.26    The under 16s off-peak cap available through the Zip card is frozen at £1.50. Accompanied under 11s continue to travel free on all TfL services; and on TOC services provided a valid Zip card is held.
1.27    The scope of all TfL fare concessions is unchanged in 2017.

Tube fares for travel beyond Zones 6 
1.28    Beyond the Greater London area, PAYG and cash single fares involving Zones 7 to 9 applying on the Tube and on certain other rail services are frozen.   Full details are given in Table A4 in the Annex.
1.29    Travelcard prices and the associated PAYG caps with coverage in Zones 7 to 9 increase by an average of just under 1.8%, reflecting the increases being mandated by the TOCs and national government rail fares policy. Full details are given in Tables A6 and A7 in the Annex.
Fares on services transferred to TfL in May 2015 
1.30    On the Greater Anglia to Liverpool Street services transferred to TfL in May 2015, National Rail cash single fares and point-to-point season prices were retained as part of the transfer arrangements.  These National Rail fares will increase by around 1.9%.  
1.31    All PAYG fares in Zones 1-6 where TfL fares apply are frozen.  In both peak and off-peak, three fares to the Liverpool Street terminus where National Rail fares have been retained as a transitional measure will increase by 10p.  These fares will remain below standard Tube fares.
1.32    Beyond Zone 6, most PAYG fares are frozen.   There are 10p increases in a number of fares involving Shenfield and Brentwood, reflecting TfL commitments to keep TfL fares aligned with those applying on the adjacent mainline rail services operated by the TOCs and to avoid creating split ticketing anomalies.  Further details are in the Fares Direction.
Emirates Air Line
1.33    On the Emirates Air Line, all fares – including child fares and cash fares - are frozen.

Objectives and expected outcomes

2.1    The Mayor is under a statutory duty to develop and implement policies for the promotion and encouragement of safe, integrated, efficient and economic transport facilities and services to, from and within Greater London. The proposals to freeze TfL bus and Tube fares aim to ensure that fare policy supports the objectives and policies set out in the Mayor’s manifesto and will promote the use of London’s public transport facilities and services.  
2.2    The increases of some 1.8% in London Travelcard prices and the associated PAYG caps have been mandated by the TOCs and reflect national government fare policy for the railways. 
2.3    Overall, the fare changes are considered to be consistent with the continued delivery of TfL’s transport investment programme while also supporting the transport objectives of the London Plan and the Mayor’s Transport Strategy.
 

Equality comments

3.1    Under section 149 of the Equality Act 2010, as public authorities, the Mayor and TfL must have ‘due regard’ to the need to eliminate unlawful discrimination, harassment and victimisation as well as to advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not.  Protected characteristics under section 149 of the Equality Act are age, disability, gender re-assignment, pregnancy and maternity, race, religion or belief, sex, sexual orientation, marriage or civil partnership status (duty to eliminate unlawful discrimination only).
3.2     The duty above applies to the Mayor’s duty to direct TfL as to the general level and structure of fares under the GLA Act 1999.  The Mayor is not required to conduct a consultation in relation to the fares proposals in this decision. 
3.3    TfL has identified seven groups of Londoners (highlighted below) who typically face increased barriers to public transport use.  Among the key issues for these groups is the cost of fares.  The January 2017 fare package will freeze all TfL bus and Tube fares.  The freeze will add to the benefits already created by the bus Hopper fare.  Londoners with protected characteristics who are likely to be affected by increases in fares, such as those on low incomes or who rely on public transport, will especially benefit.   However, the increases to Travelcard prices mandated by the TOCs  in line with inflation may have an adverse impact.  The potential impacts are considered further below.
3.4    BAME Londoners are more likely to live in low income households and are likely to cite affordability barriers to transport.  The freezing of TfL bus and Tube fares in the January 2017 fares package should reduce barriers to travel for these groups as it will provide a real-terms reduction in fares.  
3.5    Women tend to be the primary carer at home so are less likely to be in full-time employment and more frequently cite affordability as a barrier to transport.  The freezing of TfL bus and Tube fares in the January 2017 fares package should reduce barriers to travel for women as it will provide a real-terms reduction in fares.
3.6    Older Londoners are more likely to be retired, and many live on low incomes.  Disabled Londoners are also more likely to live in low income households.  The 60+ concession and the Freedom Pass for older and disabled people mean that the January 2017 fares will have only marginal effects on these two groups.
3.7    Younger Londoners are less likely to be physically disabled but more likely to be from a BAME community.  The Zip card concession and the freezing of bus and many Tube fares limit the impact of the January 2017 fare changes on younger Londoners.
3.8    Londoners on low incomes tend to be women and older, BAME and disabled people, and those not in work. Low income largely reflects working status, though the underlying causes are tied to education, qualifications, health and, in some cases, transport.  The January 2017 fares should reduce barriers to travel for low income Londoners whose priority tends to be on local trips by bus where all fares are being frozen.
3.9    LGBT Londoners tend to be younger and have reported hate crime as a concern for them.   Men form the greater part of the LGBT community, which is in contrast to the general population. The January 2017 fares have no specific implications for the LGBT community.  
3.10    Many of those who comprise the seven groups above are likely to benefit from free travel concessions or discounted fares. All current concessionary fare schemes are being maintained in order to keep public transport accessible to people who face barriers to public transport use, and thereby offset or mitigate any detrimental impacts including those discussed above.  
3.11    The concessions available are set out below:
•    Children under 11 travel free on all TfL services (subject to a maximum of four accompanying an adult).
•    11-15 Oyster photocard provides free TfL bus and reduced fare rail travel in London.
•    16+ Oyster photocard provides free TfL bus and half fare rail travel in London.
•    18+ Student Oyster photocard provides reduced rate TfL Bus Pass season and Travelcard season travel.
•    Job Centre Plus Travel Discount Card provides half price TfL bus and rail travel.
•    Bus & Tram Discount photocard provides half price TfL bus and tram travel.
•    Veterans Concessionary Travel provides free travel in London.
•    60+ London Oyster photocard (men and women up to female pensionable age) provides free travel in London.
•    London Freedom Pass (men and women over female pensionable age) provides free travel in London.
The Mayor is required to consider the potential equalities impacts discussed above, and any mitigations in place, at the time a decision to direct is made in relation to the fare proposals in this paper.
 

Other considerations

a)    Links to Strategies and Strategic Plans
4.1    The Mayor’s Transport Strategy and the Mayor’s new “A City for All Londoners” vision highlights the importance of improving transport opportunity for all Londoners and, in doing so, ensuring that the costs of transport remain affordable.  On buses and trams, fares are being frozen as part of the Mayor’s four year programme, while all concessions for the less well-off are being maintained.
4.2    On the Tube and other TfL rail services, all concessions are being maintained and Tube fares frozen on all the rail services in London where they apply.  National government railway fare policies being mandated by the TOCs mean that Travelcards and the associated caps will increase in line with RPI.
b)    Risks
4.3    GLA officers consider that implementation risks are minimal assuming Mayoral approval in November. 
 

Financial comments

5.1    There are no direct financial implications for the GLA from these proposals and TfL will manage the income from fares. 
5.2    Table 5.1 summarises the revenue yields for TfL from the fare changes.  Overall, the increases in Travelcard and cap prices which reflect national government fare policy for the railways and increases mandated by the TOCs will increase revenue from TfL users who pay fares by 1.0% or £41.2m in 2017. As these products are accepted on both buses and the Tube, fares revenue for buses will increase by some £7.9m and for the Tube by some £29.3m per annum.  For TfL’s other rail services, fares revenue will increase by some £4m.   
5.3    The Mayor’s fares freeze is expected to encourage additional travel and to generate fares revenue worth some £11m in 2017 (£7m for LU; £3m for bus; and £1m for London Rail and TfL Rail).  In combination, the fares freeze and the increases in Travelcard prices will increase TfL fares income by just over £52m in 2017.

Table 5.1: Revenue yields from the 2 January 2017 fare changes - £m pa

 

Bus yield

Tube yield

Rail yield

Total Yield

TfL Cash and PAYG singles

0

0

0

0

PAYG Travelcard caps

1.5

5.3

0.7

7.5

Off-peak day Travelcards

0.3

2.9

0.3

3.5

Anytime day Travelcards

0.2

2.9

0.2

3.3

Bus and Tram season tickets

0

-

-

0

Travelcard seasons

6.0

18.1

2.8

26.9

Total yield from price increases

 

7.9

0.73%

29.3

1.06%

4.0

1.07%

41.2

0.98%

New traffic due to the fares freeze

3

7

1

11

Total fares income gain

10.9

36.3

5.0

52.2

Note: Totals may not match sum of individual figures due to rounding

 

 

 

 

 

 

Planned delivery approach and next steps

Activity

Timeline

Mayoral Decision and Direction to TfL

November 2016

Announcement

November 2016

Delivery Start Date

2 January 2017