MD1562 January 2016 Fare Changes

PART I - NON-CONFIDENTIAL FACTS AND ADVICE TO THE MAYOR

Decision required – supporting report

1 Introduction and background

1.1 The TfL Business Plan to 2020/21, developed during summer 2013 and approved by the TfL Board in December 2013, assumed that fares would increase throughout the period by RPI+1%. However, the Prime Minister announced in April 2015 that additional funding would be made available to enable the National Rail fare increase to be held down to RPI for the five year duration of the subsequent parliament. The Mayor simultaneously announced that the TfL fares increase would also be held down to RPI in January 2016.

Latest trends – fares income

1.2 The performance of fares income is a key element in meeting Spending Review funding targets. To date in the current financial year TfL revenues are around 1% below Budget, largely due to a temporary weakening of demand for bus travel as a result of road conditions, caused by major development happening across London. By contrast, passenger numbers on the Tube are continuing to grow and are at record levels. These trends are projected to continue in the short term, with the restraining effects of higher fares being offset by positive employment trends and growth in the visitor and leisure markets. Longer term revenue forecasts remain under review, and are closely tied to growth of the London economy.

Overview of proposed fare changes in January 2016

1.3 Detailed fare proposals for 2016 are set out below. These proposals start from the 1.0% increase in the July RPI benchmark. The overall fare increase is 1.0%, providing a real terms freeze in fares relative to the RPI benchmark. The annual revenue yields for TfL are put at £30m for LU; £10m for bus; and £3m for London Rail.

1.4 Travelcard fares, One Day PAYG caps and certain PAYG fares involving National Rail are subject to agreement with the London Train Operating Companies. The proposals envisage that Travelcard season fares increase on average by just under RPI in line with the current National Rail target for January 2016.

1.5 The One Day Travelcard and the one day multi-mode PAYG caps, which were restructured last year, all increase by 10p.

1.6 The Annex to this Decision form includes summary fares tables. Fuller details are set out in the Schedules to the Direction.

Bus and Tram fares

1.7 On buses and trams, fares increase as shown in Table 1.1. The adult PAYG single fare is frozen at £1.50 while the One Day bus and tram cap increases by 10p to £4.50; equal to the price of three bus rides. The Tram cash fare, which accounts for around 0.5% of Tram journeys, increases from £2.50 to £2.60 in order to continue to reduce cash payments and encourage use of the cheaper PAYG fares. The one day bus and tram ticket, introduced last year, is frozen at £5.00. The 7 day Bus and Tram season ticket increases from £21.00 to £21.20. Longer period bus season tickets increase in the same proportion as the 7 day ticket. The scope of concessions and discounts is unchanged.

1.8 Overall, taken with the effect of the Travelcard prices outlined below, the changes deliver a revenue yield for buses of 0.8%.

Table 1.1: Bus and Tram fares in 2016

Travelcard season tickets in Zones 1-6

1.9 Travelcard season ticket prices increase as shown in Table 1.2 and Table A3 in the Annex. These increases have been agreed with the Train Operating Companies. Due to the rounding of individual fare values the overall increase is 0.9%.

Table 1.2: Travelcard seasons – 7 Day ticket prices

Tube, DLR and Overground fares in Zones 1-6

1.10 On the Underground and other TfL rail services PAYG single fares are frozen, except for Zone 1 only and Zone 1-2 off-peak fares, which increase from £2.30 to £2.40.

1.11 The flat child off-peak PAYG fare, which by agreement also applies to National Rail journeys, remains at 75p. The off-peak child cap, which is priced as two singles, also remains at £1.50. The child peak LU PAYG fare is also frozen at 85p – half the minimum adult peak fare.

1.12 The PAYG fares being adopted by the Train Operating Companies are shown for information in Table A1 in the Annex, together with the associated Train-Tube PAYG fares. These rise by 10p across the board.

1.13 PAYG through fares are priced as the sum of the Train Operators’ own PAYG fares plus add-on amounts for through travel. Under the PAYG Agreement with the Operators, the add-on amounts can only be less than the minimum TfL PAYG fare if the Train Operating Companies agree

1.14 In the case of the non–Zone 1 Train-Tube PAYG fares, the Train Operating Companies have consented to the add-ons remaining unchanged at zero in 2015. In the case of the Train-Tube PAYG fares involving Zone 1, the add-on amounts involving Zone 1 remain at £1.60 in the peak and to £1.50 in the off-peak.

1.15 As shown in Table A1, the Train Operating Companies’ new fares and the freezing of the add-on amounts, mean that the PAYG peak 1-6 Train-Tube fare increases from £7.60 to £7.70 and the off-peak fare from £5.20 to £5.30. These two fares will continue to determine the peak and off-peak entry and exit charges for all rail PAYG journeys in Zones 1-6.

Table 1.3: adult PAYG fares on TfL rail services

Oyster card deposit

1.16 The Oyster card deposit remains unchanged at £5.

LU cash fares in Zones 1-6

1.17 The £4.80 and £5.80 adult Tube cash fares for up to 3 and 5 zones, increase by 10p to £4.90 and £5.90 respectively. The fare for Zones 1-6 is frozen at £6.00. Child cash fares for the under 16s remain at half the adult rate. (Under 11s travel remains free on all TfL services.)

1.18 Cash through fares including National Rail services in Zones 1-6 increase by 10p. Full details are set out in Table A2 in the Annex.

One day PAYG price caps in Zones 1-6

1.19 Table 1.3 below sets out the proposed one day PAYG caps and adult Day Travelcard prices. See also Table A3 in the Annex. These changes have been agreed with the Train Operating Companies.

1.20 The all day PAYG caps, which last year were reduced to become 20% of the 7 Day Travelcard price, increase by 10p proportionally in line with the increases to Travelcard Seasons. See Table 1.3.1.

Table 1.3.1: Daily caps in 2015 and 2016

One Day Travelcards

1.21 The price of both the Zones 1-6 off-peak Day Travelcard and the Zones 1-4 all day Travelcard increase by 10p to £12.10. The Zones 1-6 all day Travelcard price increases by 20p to £17.20. See Table 1.3.2.

Table 1.3.2: Day Travelcards in 2015 and 2016

1.22 The overall increase in PAYG and Day Travelcard fares in 2016 is 1.3%

Concessions and discounts on TfL rail services

1.23 All day Travelcards and all day caps for the under 16s remain at half the adult price. The under 16s off-peak cap available through the Zip card is retained and frozen at £1.50. The price of the printed off-peak Travelcard for the under 16s aimed at the visitor market is frozen at £6.00. All accompanied under 11s continue to travel free on all TfL services.

1.24 The scope of all fare concessions on TfL Rail services is otherwise unchanged in 2016.

Free travel for under 11s

1.25 Young people under the age of 11 travel for free on TfL’s buses and trams, and for free on the Tube, DLR, London Overground and TfL Rail services when accompanied by a fare-paying adult. There is currently no similar concession on National Rail services. This means that fares from neighbouring stations can differ and young people are expected to pay a fare on some services and not others, causing frustration and confusion for customers.

1.26 TfL will provide funding to the Train Operating Companies of £0.5m per annum to secure free travel for Zip photocard holders aged 5-10 on National Rail services within London from 2 January 2016, bringing the offer closer to that on TfL services.

Fares for travel beyond Zones 6 on TfL rail services

1.27 Peak PAYG caps for Zones 7-9 are reduced to 20% of the price of a 7 Day Travelcard, bringing them into line with the all-day caps introduced in Zones 1-6 last year. Full details are given in Table A7 in the Annex.

1.28 To fund the cap reductions, a number of PAYG fares on TfL rail services beyond Greater London involving Zones 7 to 9 increase by 10p, whilst others are frozen. Full details are given in Table A4 in the Annex.

1.29 Travelcards with coverage in Zones 7 to 9 increase by an average of just under 1.0%. Full details are given in Table A6 in the Annex.

Fares on services transferred to London Overground Rail Operation Ltd (LOROL) and London Rail in May 2015

1.30 On the Greater Anglia to Liverpool Street services transferred to LOROL and London Rail in May 2015, cash singles and point to point seasons increase by 1 per cent. PAYG fares to Liverpool Street are frozen. Otherwise, all PAYG fares changes in Zones 1-6 are as on LU.

1.31 Beyond Zone 6, many PAYG fares on the transferred services are higher than on LU. Many PAYG fares are frozen in 2016 and there are fewer increases than on LU.

Stratford station rezoning

1.32 As announced by the Mayor last year, Stratford, Stratford High Street and Stratford International stations will be rezoned as boundary Zone 2/3 from Zone 3 in January 2016. In addition, after detailed review of the operational and customer implications of this change, a number of smaller adjacent stations will also move to Zone 2/3 status. These are West Ham and Canning Town, and on the DLR Star Lane and Abbey Road.

1.33 The re-zoning of these smaller stations will ensure that customers approaching Stratford from central London will never require a ticket valid in Zone 3 in order to reach Stratford. The changes have been agreed with the Train Companies and the DfT. Some 105,000 customers per week will benefit.

1.34 The rezoning will result in a fares revenue loss of around £8m per year, including £1m for the rezoning of the adjacent stations. These costs have been allowed for separately in TfL’s budgets and plans and are not included in the yield figures shown in Table 5.1.

Emirates Air Line

1.35 On the Emirates Air Line, the single fare for adult PAYG users and Travelcard holders is increased by 10p to £3.50. All other 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 Mayor’s Transport Strategy (MTS) contains the Mayor’s policies and proposals for doing this. Overall, the fare proposals aim to ensure that fare policy fully supports the objectives and policy criteria set out in the MTS. The increase of 1.0% proposed for January 2016, is in line with the benchmark July 2015 RPI increase and amounts to a real terms freeze overall. The fare changes will continue to sustain the transport investment programme needed to support the delivery of the objectives of the London Plan.

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 the Equality Act cover 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). The duty applies to the Mayor’s duty to direct TfL as to the general level and structure of fares under the GLA Act 1999.

3.2 Fares increases this year are relatively evenly spread across modes and geographies. Therefore differential effects across different types of passengers have been minimised.

3.3 TfL has identified seven groups of Londoners (listed below) who typically face increased barriers to public transport use: Among the key issues across these groups is the cost of fares.

• BAME Londoners have a younger age profile than white Londoners, are more likely to live in low income households and are more likely to cite barriers to transport.

• 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.

• Older Londoners are more likely to be retired, and therefore many live on low incomes. They also are more likely to be white and/or disabled. For older and disabled Londoners, the greatest barrier to transport is concern over antisocial behaviour, while for all other groups it is overcrowding.

• Younger Londoners are less likely to be disabled but more likely to be from a BAME community.

• Disabled Londoners tend to be older and are more likely to be white, women or retired. They are also more likely to live on low household incomes. Disabled and older Londoners are more likely to experience difficulties relating to physical accessibility.

• Londoners on low incomes. These tend to be women and older, BAME and disabled people, and those not in work. This largely reflects working status, though the causes of low income are tied to education, qualifications, health and, in some cases, transport.

• The LGB community. Men form the greater part of the LGB community, which is in contrast to the general population. LGB Londoners also tend to be younger and have said hate crime is a concern for them.

3.4 These groups may be more likely to benefit from other travel concessions or discounted fares. All current concessionary fare schemes for those less able to pay 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. The concessions are set out below:

·Children under 11 travel free (subject to a maximum of 4 accompanying an adult)

·11-15 Oyster photocard

·16+ Oyster photocard

·18+ Student Oyster photocard

·Job Centre Plus Travel Discount Card

·Bus & Tram Discount photocard

·Veterans Concessionary Travel

·60 + London Oyster photocard (men and women up to female pensionable age)

·London Freedom Pass (men and women over female pensionable age)

3.5 From January 2016, children under 11 holding a Zip Oyster photocard will also travel free on all National Rail services in London, due to a settlement agreed by TfL with Train Operating Companies.

3.6 A number of fares will be frozen in 2016. Fare freezes are likely to benefit those passengers outlined above who are more likely to find fares unaffordable.

3.7 Some fares are increasing. On the Tube, users of the PAYG fares covering Zone 1 and Zones 1-2 off peak will see an increase. These same users benefitted significantly from the restructuring of the daily caps in January 2015. Those changes were specifically designed to give a better fares deal for part-time workers, who are significantly more likely to be women and to be less well paid than full time workers. The fares increases in zones 7-9 on TfL rail services will fund the same lower daily caps in those zones.

3.8 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. No significant or material adverse equalities impacts for groups with particular protected characteristics are envisaged as being likely to arise.

3.9 The Mayor is not required to conduct a statutory consultation on fares.

4 Other considerations

a) Links to Strategies and Strategic Plan

4.1 The MTS highlights the importance of improving transport opportunity for all Londoners and, in doing so, ensuring that the costs of transport remain affordable. All concessions for the less well off on buses are being maintained, whilst the free travel concessions for under 11s are being extended.

4.2 On the Tube and other TfL rail services, all concessions are also being maintained.

b) Risks

4.3 GLA officers therefore consider that implementation risks are minimal.

Financial comments

5.1 There are no direct financial implications for the GLA from these proposals and TfL will manage the income from fares. The Mayor’s aggregate level of funding to TfL, principally from business rates, is potentially affected by the level of fares set.

5.2 Table 5.1 summarises the revenue yields for TfL from the fare changes. Overall, the fare changes increase fares for the 67% of bus users, and the 95% of Tube users, who pay fares, by 1.0% on average. The bus fare changes yield some £10m and the Tube fares changes some £30m in additional revenue per annum. A further £3m will be raised by the parallel increases of London Rail fares. The proposed changes are expected to increase TfL’s fares revenue by some £43m per annum in 2016.

5.3 The financial implications of moving Stratford and adjacent stations from Zone 3 to the Zone 2/3 boundary will result in a fares revenue loss of around £8m per year, including £1m for the rezoning of the adjacent stations. These costs have been allowed for separately in TfL’s budgets and plans and are not included in the yield figures shown in Table 5.1.

Table 5.1: Revenue yields from the 2 January 2016 fare changes

Legal comments

6.1 Under section 155(1) of the Greater London Authority Act 1999 (“the GLA Act”) the Mayor may issue directions to TfL as to the manner in which it is to exercise its functions, including, under section 155(1)(c), specific directions as to the exercise of its functions. Under section 174(1) of the GLA Act, the Mayor is under a duty to exercise his powers under section 155(1) so as to ensure that the general level and structure of fares for passenger transport services (provided by TfL or other persons who provide services under agreement with TfL) are determined. This decision is consistent with those statutory obligations.

6.2 Under section 149 of the Equality Act 2010, due regard must be had, when the Mayor exercises a function such as the making of this decision, to the equalities obligations referred to in the “Equalities comments” above. Consideration is given above to the likely effects – or absence of effect – of the fare proposals on equalities groups.

8. Planned delivery approach and next steps

See table below:

Appendix A: Summary Fares Tables

Appendix B: Advice to the Mayor

Appendix C: Letter and Direction to TfL