Why remove the exemption to the Congestion Charge for Private Hire Vehicles?

Closes 28 Sep 2018

Opened 6 Jul 2018

Overview

Journey delays within the Congestion Charging zone have been increasing.  There has been a significant rise in the number of TfL licensed private hire Vehicles (PHVs) operating throughout London, including in the Congestion Charge zone.  Our Taxi and Private Hire Action Plan, which was published in 2016, made this clear. 

In 2008/09, there were fewer than 50,000 licensed PHVs, but now there are nearly 90,000 licensed PHVs operating in London; and there has been a significant rise over the last three years.  Over the same time frame, the number of taxis operating in London has stayed virtually the same.  The graph below shows the number of taxi and PHVs licensed to operate in London over the last 10 years.

 

When the exemption was first granted we believed that there would be around 4,000 individual PHVs entering (i.e. unique entries) the Congestion Charging zone each day.  By 2017, however, there were on average over 18,000 unique daily entries into the zone by PHVs.  Growth in the number of licensed PHVs is a factor in the increased congestion in the zone.  Furthermore, the proportion of vehicles in the zone that are subject to the charge continues to reduce, as falling numbers of private cars are counterbalanced by increasing numbers of licensed PHVs.

We believe that removing the PHV exemption would help to reduce traffic and congestion within the zone, to the benefit of everyone who lives, works or visits central London.

Why not also remove the exemption to the Congestion Charge provided to taxis?

Taxis and PHVs operate to different regulations and licensing requirements.  Taxi drivers, for example, must accept any booking within a six mile radius of Charing Cross or a journey up to 12 miles long (or taking no more than an hour to complete).  Unlike PHVs, which must be pre-booked, taxi driver may ply for hire and can be hailed on the street anywhere in London.  Taxi drivers must also take the shortest, most direct route to a destination.  These requirements do not apply to PHV operators, who are free to choose whether or not to accept a booking and what route to take.  A taxi driver, unlike a PHV driver, would be compelled to enter the Congestion Charging zone if required to do so when hailed or booked, or if the shortest and most direct route to a destination were through the zone.

All taxis are legally required to be fully wheelchair accessible, and include a number of additional features to assist disabled passengers, including a hearing aid induction loop, intermediate step and grab handles.  Fewer than one per cent of PHVs are designated wheelchair accessible.  Taxis are a part of the accessible public transport network in central London.  We believe that it is right, therefore, that taxis continue to be exempt from paying the Congestion Charge.  PHVs which are designated wheelchair accessible will retain an exemption to the Congestion Charge.

As shown in the chart above, the number of licensed taxis has stayed relatively unchanged since the start of the Congestion Charge scheme, in fact there has been a small decline in the number of licensed taxis in recent years.  In contrast, there has been a significant rise in the number of PHVs operating in the zone.

What impacts will the removal of the exemption cause? 

This section summarises the findings of the two independent reports commissioned by us, which examine the impacts of our proposals in detail.  Both are available to download.

Traffic and environment 

The report by CEPA forecasts that the removal of the PHV exemption would reduce traffic and congestion in the zone.  In summary, they forecast that during charging hours in the Congestion Charging zone there would likely be:

  • A 45 per cent reduction in unique PHV entries
  • A six per cent reduction in PHV traffic
  • A one per cent reduction in traffic overall 

CEPA’s forecast of a 45 per cent reduction in the number of unique entries by PHVs into the zone during charging hours is based on the assumption that operators with larger fleets will distribute their bookings to minimise the number of PHVs needing to enter the CCZ. Doing so would mean that a smaller number of vehicles specialise in taking bookings within the zone, potentially undertaking more trips in the zone than they would have previously. The reduction in unique PHV entries and traffic is, therefore, dependent on the degree to which operators do this.
 
Although a one per cent reduction in traffic appears modest, we believe that it is an important step in managing and reducing congestion in central London. The removal of the PHV exemption is also an important step in achieving the Mayor’s long-term approach, as set out in the Mayor’s Transport Strategy, to tackling congestion and working towards 80 per cent of trips being made on foot, by cycle or using public transport by 2041.
 
Although the purpose of the Congestion Charge is to reduce traffic and congestion, there have always been consequential improvements in air quality from doing so.  Removing the exemption for PHVs should reduce the number of vehicles in the zone and, therefore, help to improve air quality. This will complement other initiatives including the introduction of the Ultra Low Emission Zone in April 2019.
 
Impacts on PHV drivers
 
Responsibility for paying the Congestion Charge rests with the registered keeper, or hirer, of the vehicle entering the zone.  In some cases, the registered keeper will be the PHV driver themselves, and in other cases it may be an operator.

If a driver was responsible for paying the charge and chose to enter the zone every day, it would cost them £230 a month, assuming the driver registers for Auto Pay.  It would be for operators to decide whether this cost, either in part or in full, could be passed onto customers through their fares or if the driver needs to cover the cost themselves.  If a driver paid the charge themselves, they would need to consider whether it might require them to accept an increase in their expenses or work longer hours.  This could have a greater impact on some groups of PHV drivers than others.  Further details are included in the Integrated Impact Assessment.
 
Impacts on PHV operators
 
The effect of our proposals on operators would depend on whether they pay the charge directly, pass it on to passengers or expect drivers to pay it:

  • There may be revenue implications for operators who pay the charge directly
  • Operators who pass the charge to customers may lose business if those customers decide to travel in another way or with another operator
  • Operators who expect drivers to pay the charge may lose drivers to competitors if other operators choose not to pass the charge on in the same way, or they may find it harder to recruit drivers who are willing to work in the zone during charging hours


Operators with larger fleets may be able to distribute their bookings so that a smaller number of vehicles specialise in taking bookings within the zone.  This would likely lessen the impact of needing to pay the daily charge on their business.  Smaller operators who take bookings within the zone may be less able to ‘specialise’ in this way, although a number have taken advantage of joining together and allowing passengers to book trips via a shared app.
 
Impacts on passengers
 
Some operators may choose to pass the cost of the Congestion Charge onto customers through an increase in fares.  This isn’t unusual; many PHV operators already pass on extra charges, such as airport car parking charges.  For those who pass on the charge to customers, the analysis by CEPA indicates that fares may increase by around £1-2 per affected journey.  An increase may mean that some customers choose to walk or cycle, or use public transport to make a journey that they would previously have made by PHV. People that choose to still use PHVs, or are dependent on them for travel, such as those with disabilities, may need to pay higher fares.  Customers may benefit from reduced and more predictable journey times, since the proposed removal of the exemption is expected to reduce traffic within the zone.  
 
Mitigation for PHV drivers and operators
 
The Cleaner Vehicle Discount to the Congestion Charge will be available to all eligible PHVs, and provides an option for PHV owners to receive a 100 per cent discount to the Congestion Charge. We are already encouraging PHV owners to switch to low emission vehicles through PHV licensing requirements (further details are on our website) and the introduction of the ULEZ in April 2019, which PHV owners will be liable to pay to enter unless their vehicle meets the required standard.
 
Some drivers may be eligible for other discounts and exemptions to the Congestion Charge, for example the 90 per cent residents discount for those who live in the zone or the 100 per cent Blue Badge discount. PHVs that are designated as wheelchair accessible will also retain the exemption.

If you have any comments about any aspect of our proposals to remove the exemption to the Congestion Charge for PHVs, please complete our questionnaire or send us your thoughts in writing

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