Taxi Fares and Tariffs Consultation 2015 - Background information

Closed 5 Dec 2014

Opened 7 Nov 2014

Overview

Taxi and private hire services in London are licensed and regulated by Transport for London (TfL). The Service Operations directorate within TfL has day to day responsibility for the delivery of taxi and private hire licensing services.

We license London taxis (hackney carriages) and taxi drivers under the Metropolitan Public Carriage Act 1869. Section 9 of this Act allows us to make regulations which fix the rates or fares to be paid for taxis. The London Cab and Stage Carriage Act 1907 allows us to make regulations to fix the fares to be paid for the hire of taxis fitted with taximeters, on the basis of time or distance or both. The London Cab Order 1934 (the 1934 Order) is the main set of regulations made under these Acts and (as amended) sets the fares regime that covers most taxi journeys in London.

A summary of the regulations governing taxi fares is here. Tariff rates are reviewed each year, with a revision typically on the first Saturday in April. In 2015 this coincides with Easter weekend so the revision would take effect on Saturday 11 April.

London has just over 25,500 licensed taxi drivers and around 22,500 taxis.  Drivers can be licensed to ply for hire anywhere in London (All London/Green Badge, of which there are around 21,900 drivers) or in one or more of nine suburban sectors (Suburban/Yellow Badge drivers, of which there are around 3,700)[1]. All licensed taxi drivers must only pick up passengers within the areas they are licensed to ply for hire, however they may drop off passengers in any area.

There are estimated to be approximately 185,000 passenger-carrying taxi journeys per day, with an average taxi fare of almost £13 per journey and an average journey length of about 3 miles[2]. Although all taxis can carry five passengers and some can hold six, there are one or two passengers in a typical hiring.

In 2013 the overall passenger satisfaction score for London’s taxi services was 83 out of 100[3] and the overall satisfaction score has remained fairly consistent since 2002. The 2013 survey showed that around one third (30 per cent) of taxi users thought taxi fares were about right, with over two thirds (68 per cent) thinking taxi fares were either a little too expensive or much too expensive. Only 2 per cent of people thought that fares were too low[4].

Annual Revisions - general change in tariffs

Previous tariff reviews have adhered to three basic principles which are:

  • Using the taxi cost index to guide the increase in average fares;
  • Maintaining reasonable differentials between the day, evening/weekend and late night tariffs;
  • Maintaining a reasonable progression of fare with journey length.

The cost index has been used for several years and provides a mechanism for calculating tariff changes taking into account changes in the cost of operating a taxi. However, the cost index does not allow driver or public opinion to be taken into account when reviewing tariffs and does not necessarily reflect the general economic or social state at the time.

The increased tariffs in the evenings, at weekends and at night are intended to encourage drivers to work at these times, when the supply of available taxis has been poor.

Any review and change to taxi tariffs needs to be based on robust information and it will not be acceptable to impose arbitrary changes or increases. The cost index provides a well established mechanism for reviewing taxi fares and tariffs and the average fare increase, based on the current fares and tariffs and calculated using the cost index, is shown as 0.3 per cent.

A list of the current status of the cost index elements is here. The final cost index figures will be published in December and will include the latest figure available for the cost of fuel, which could result in the final average fare increase figure differing from 0.3 per cent.

Details of the proposed tariff changes based on the current cost index are shown here

Impact assessments

Costs

Any taxi fare increase will be borne by taxi customers. The cost index has been established for over thirty years as the most appropriate way of ensuring that regulated fares remain in line with the costs of providing the taxi service.

The proposed tariff increase is likely to be lower than both the Retail Price Index (RPI) and the Consumer Price Index (CPI) which are 2.3 per cent and 1.2 per cent respectively (October 2014).

Any changes not based on the cost index would represent a break with the established method of reviewing taxi fares but it is expected that any changes not based on the cost index would only be implemented if they resulted in lower increases to taxi fares and would therefore benefit passengers.

Taxis are heavily used by disabled and elderly visitors and Londoners and these groups will be affected by fare increases.

Any increase to taxi fares will affect the Taxicard scheme, which provides subsidised taxi travel for disabled Londoners with subsidy from TfL and the London boroughs. An increase in taxis fares will potentially result in members being able to make fewer trips if funding is not increased.

No other significant cost implications have been identified.

Crime and Disorder

Licensed taxis play a vital role in providing safer transport late at night and a balance needs to be maintained between ensuring that taxi drivers are encouraged to work late at night but that the public do not perceive taxis as unaffordable and see illegal, unsafe “cabs” as a cheaper and preferable option.

The proposed increase to taxi fares would help ensure that drivers are able to meet their costs and maintain earnings. This is important to ensure that taxi driving remains a viable career for drivers who have invested time and money in completing the Knowledge of London. It is also important to ensure that the supply of licensed taxis, especially at key times such as late at night, is not affected by drivers reducing their working time or leaving the trade.

Public Sector Equality Duty

Taxis are heavily used by disabled and elderly residents and visitors to London. These groups will be affected by the fare increases. Disabled residents in London are eligible for subsidised taxi journeys under the Taxicard scheme. An increase in taxi fares means that unless the Taxicard subsidy increases or Taxicard members are able to pay more towards fares then they will not be able to travel as much. The Taxicard service provides a door-to-door service, using an accessible taxi for social trips.

Elderly residents are likely to have a Freedom Pass and so potentially they will be able to use other forms of public transport free of change. However, not all other transport services provide a fully accessible door-to-door service that may be essential for some elderly travellers.

Wheelchair users can use bus services free of charge and will be able to continue to do so. Although all buses, with the exception of the Heritage routes, are wheelchair accessible they do not provide a door-to-door service.

Some other disabled travellers may also be able to travel for free on the bus or Tube but again these services do not provide a door-to-door service that may be essential.

Some residents may be eligible to use the Dial-a-Ride service which does provide a door-to-door service and accessible vehicles.

Although elderly and disabled taxi users will be affected by a taxi fare increase the proposed increase is likely to be lower than both the October RPI and CPI figures, as stated above.

Health and Safety

No significant implications for health and safety have been identified.

Environmental Sustainability

No significant environmental implications have been identified.

Further information

Information about this consultation is being sent to the organisations and individuals listed here. Comments from other interested organisations or individuals are also welcome. We also welcome suggestions as to other organisations or individuals that should see this document.

If you are responding as a representative organisation, please provide background information about your organisation and the people that you represent.

We will give full consideration to all points raised in responses to this consultation. A summary of the comments received and any changes to the proposals will be published.

You can contact us by emailing consultations@tfl.gov.uk, with ‘Taxi tariff 2015’ in the subject line.

The Freedom of Information Act 2000 requires public authorities to disclose information they hold if it is requested. This includes information contained in responses to public consultations. Our intention is to publish the responses received but with any personal information removed. If you ask for your response to be kept confidential this will only be possible if it is consistent with our obligations under the Freedom of Information Act.

 


[1] Period 5, 2014/15 Licensing information

[2] Taxi & PHV Driver Diary Survey, GfK NOP, 2009

[3] Taxi and minicab Customer Satisfaction Survey, TNS, 2013/14

[4] Ibid.

 

Areas

  • All Areas

Audiences

  • Taxi customers and other stakeholders

Interests

  • Taxis