Finance Committee – Chair’s Action Date: 12 November 2019 Item: Taxi Fares and Tariffs Update This paper will be published with the papers for the next meeting of the Finance Committee 1 Summary 1.1 The purpose of this paper is to update the Committee on the annual taxi fares and tariffs review and invite it to approve the recommended changes as described in Section 2 below. 1.2 The use of Chair’s Action is considered appropriate as taxi fares and tariffs are normally updated annually in April and any approved changes to fares and tariffs take around six weeks to implement to allow for the taximeter companies to create their taximeter updates, for these to be tested and verified and for arrangements to roll out the update across the taxi fleet to be put in place. A decision is considered to be an urgent matter as delaying the changes to taxi fares and tariffs impacts on the income of taxi drivers, notably during the forthcoming Christmas period. 1.3 The members of the Committee are asked to consider the proposal and provide Ron Kalifa OBE, as Chair, with their views on or before 5.00pm on 14 November 2019. This paper and the Chair’s decision will be reported to the next meeting of the Committee. 2 Recommendations 2.1 The Chair of the Committee (in consultation with its members) is asked to note the paper and: (a) approve increasing the minimum fare from £3.00 to £3.20; (b) approve increasing Tariffs 1 and 2 by 1.9 per cent; (c) approve freezing Tariffs 3 and 4; (d) approve extending the fuel charge arrangements for a further year; (e) approve a change to when Tariff 4 starts so that the distance at which it starts is linked to the distance units for Tariffs 1, 2 and 3; and (f) note that the changes will be implemented by Officers in accordance with TfL’s Standing Orders. 3 Background 3.1 Taxi and private hire services in London are licensed and regulated by TfL. The Licensing, Regulation and Charging Directorate within TfL has day to day responsibility for the delivery of taxi and private hire licensing services. 3.2 We license London taxis (black cabs/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 (as amended), made under these Acts, sets the fares regime that covers most taxi journeys in London. 3.3 Taxi fares are calculated using a taximeter and the meter shows the maximum fare that can be charged at the end of a journey. The fare is based upon the time of day, distance travelled and time taken. Once a journey reaches around six miles, a different tariff rate (sometimes called Tariff 4) applies. 3.4 There are four different taxi tariffs and the times at which these apply plus the current distance and time rates for each tariff are shown below: Tariff 1 Tariff 2 Tariff 3 Tariff 4 Days and Monday to Monday to Friday, Every night For journeys times Friday, 20:00-22:00 and 22:00-05:00 and over six applicable 05:00-20:00 Saturday and Sunday, public holidays miles 05:00-22:00 Minimum fare £3.00 £3.00 £3.00 N/A Distance unit 116.6 94.8 81.2 86.9 (metres) Rate per mile £2.76 £3.40 £3.96 £3.70 Time unit 25.1 20.4 17.5 18.7 (seconds) Rate per hour £28.69 £35.29 £41.14 £38.50 Taxi fare unit 20 pence 20 pence 20 pence 20 pence 3.5 The fare payable increases by 20 pence for each unit of distance travelled or period of time that has passed during the applicable tariff. For example, Tariff 1 will apply to a journey undertaken at 10:00 on a Monday and the fare will increase by 20 pence for each 116.6 metres travelled or every 25.1 seconds. 4 Reviewing taxi fares and tariffs 4.1 When considering proposed changes to taxi fares and tariffs, we try to strike an appropriate balance between drivers being fairly remunerated and taxi users getting fair, reasonable and affordable fares. 4.2 To help us achieve this we: (a) use the Cost Index (see Section 5 below) to inform any potential changes to taxi fares and tariffs, but at the same time we do not automatically increase or decrease fares or tariff rates by the total Cost Index figure; (b) consider changes to the costs of being a taxi driver in London along with the need for fares to be fair, reasonable and affordable for users; (c) take into account the need to maintain reasonable and justifiable differences in the tariffs for journeys in the daytime, evening/weekend and late at night or on public holidays; (d) take into account the need to maintain reasonable and justifiable differences in fares as the distance and duration of a taxi journey increases; (e) recognise specific criteria regarding taxi licensing and services in London including the Knowledge of London and taxi vehicles having to meet the standards set out in the Conditions of Fitness; (f) have regard to the impact of changes to fares and tariffs on those sharing characteristics protected under the Equality Act 2010 including those who may use taxis more frequently or place greater reliance on them compared to others; and (g) consider the costs of other modes of passenger transport and the competitiveness of taxi fares. 5 Cost Index 5.1 The Cost Index is maintained and updated by TfL and it provides a way to track changes to: (a) the costs related to being a taxi driver; and (b) average national earnings. 5.2 Different components for the costs related to being a taxi driver (e.g. vehicle costs, parts, tyres, servicing, fuel and insurance) are updated when we review taxi fares and tariffs, and update the Cost Index. 5.3 The Cost Index, and the total figure produced when this is updated, is independent of taxi fares and tariffs. The Cost Index provides us with a way to track changes to the costs associated with being a taxi driver and average national earnings and changes that occur over time. However, there is no obligation for TfL to increase or decrease taxi fares by the Cost Index figure nor to apply this figure directly when considering changes to taxi fares and tariffs. 5.4 The Cost Index was updated in November 2018 and the total Cost Index figure was +3.4 per cent. This figure was used when developing the proposals for consultation for the minimum fare and Tariffs 1, 2, 3 and 4. 5.5 For several years, average fares across Tariffs 1, 2 and 3 were increased by the total Cost Index figure generated when the Cost Index was updated. We consider that the historic use of the total Cost Index figure in this way has contributed to a perception amongst some users that taxi fares are too expensive, especially late at night and for long journeys. 5.6 However, the Cost Index still continues to provide us with a valuable way to track changes to the operating costs associated with being a taxi driver and average national earnings. Although we did not propose increasing taxi fares by the current Cost Index figure (+3.4%), the proposals we consulted on (see Section 6 below) were still informed by this figure. 5.7 Full details of the Cost Index components and change in each component was published as part of the consultation1. 5.8 The Cost Index already includes costs for diesel taxis and diesel but does not currently include costs for the zero emission capable (ZEC) taxis nor charging. Now that there is a significant number of ZEC taxis licensed, these costs will be added to the existing Cost Index components when the Cost Index is next updated. 5.9 We did not propose any changes to the Cost Index but did invite views on this and whether respondents thought changes should be made. A summary of the responses is set out in Section 13 below. 6 Taxi fares and tariffs consultation 2019 Consultation material 6.1 The 2019 taxi fares and tariffs consultation launched on 12 July 2019 and closed on 23 August 2019. The following documents were published on the TfL consultation webpage2: (a) background information about taxi fares and tariffs and taxi driver licensing plus details of the changes to taxi fares and tariffs approved by the Committee in 2018; (b) details of the Cost Index components; (c) results from research which included questions asking what taxi users and taxi drivers think about taxi fares; 1 Cost Index components, https://consultations.tfl.gov.uk/taxis/fares- 2019/supporting_documents/costindexcomponents.pdf 2 Taxi fares review 2019 consultation, https://consultations.tfl.gov.uk/taxis/fares-2019/ (d) information about previous changes to fares and tariffs, options considered and examples of fares for other modes of transport; (e) recent diesel prices; (f) current and proposed fixed fares from Euston station for sharing services; and (g) impact assessments for the consultation proposals. Consultation proposals 6.2 We proposed the following: Area Days and times applicable Proposal Increase by 20 pence Minimum At all times (6.7 per cent) taking fare this from £3.00 to £3.20 Increase by 1.9 per Tariff 1 Monday to Friday, 05:00-20:00 cent Monday to Friday, 20:00-22:00 and Increase by 1.9 per Tariff 2 Saturday and Sunday, 05:00-22:00 cent Tariff 3 Every night 22:00-05:00 and public holidays Freeze Tariff 4 For journeys over six miles Freeze tariff rates 6.3 The minimum fare and tariff proposals were developed as one single package of proposals, which was informed by the total Cost Index figure of +3.4 per cent.