MD3083 March 2023 fare changes

1.1 Between 2016 and 2020, the Mayor froze the TfL fares under his control, funding this through a TfL efficiency programme that has to date delivered £1.1 billion of annual recurring savings. With the fares increase proposed in this decision, fares are 12% lower than if the Mayor had increased them during his fares freeze period in accordance with inflation.

1.2 Since the May 2020 government funding settlement, there have been a further four funding settlements, dated 31 October 2020; 1 June 2021; 25 February 2022; and 30 August 2022, respectively. These settlements have been necessary due to the financial stresses created for TfL by the COVID-19 pandemic and the consequent loss of fares income. They represent the outcome of complex funding discussions and include various conditions set by the government in return for funding, including with regard to the level of passenger fares.

1.3 The funding settlement in August 2022 set out a passenger revenue scenario for 2022-23 and 2023‑24. The passenger revenue scenario assumed an annual increase of fares by 4 per cent in March of each year. The settlement set out that the government would update the scenario if the national rail annual fares increase differs from this. The passenger revenue scenario included a provision that if the Mayor chooses to increase fares by a different amount than the national rail increase, this would be factored into any top up funding TfL receives.

1.4 On 22 December 2022, the Department for Transport (DfT) announced that national rail fares would increase by 5.9 per cent. This increase is to be applied to the passenger revenue scenario set out in the provisions of the August 2022 funding agreement. The Mayor has proposed to implement an overall average fares increase on TfL fares that are under his control at the same level of 5.9 per cent.

1.5 This increase is consistent with assumptions in the funding agreement set by the government about the basis on which TfL would reach financial sustainability (in line with the long-term objective of the funding agreements), while ensuring the increase in fares is as affordable as possible. The fare changes will ensure ongoing vital investment in public transport once TfL reaches financial sustainability.

1.6 Travelcard prices and the cost of the multi-modal PAYG caps are set in agreement with the TOCs. As set out above, the DfT has mandated an increase to regulated fares of no more than the 5.9 per cent average increase.

1.7 Subject to approval of this decision, this fare revision will take effect on 5 March 2023.

1.8 Public transport usage remains substantially reduced as a result of the COVID-19 pandemic, which has significantly impacted the revenue collected by TfL. Overall, in 2022, demand was around 25 per cent below 2019 levels on London Underground (LU); and 18 per cent below 2019 levels on buses.

1.9 The continued impact of the pandemic on travel patterns for commuting and leisure, coupled with inflation at historic highs means that demand can reasonably be anticipated to continue to be suppressed throughout 2023 and into 2024. Revenue in 2023 is uncertain. The overall revenue yield is based on the core GLA budget passenger income scenario TfL submitted to the GLA in December 2022, including an assumed average fares increase of 4 per cent.

Overview of proposed fare changes in March 2023

1.10 As revenue in 2023 will be uncertain, an overall revenue yield has been calculated based on the core GLA budget passenger income scenario developed by TfL Finance, but with a 5.9 per cent increase applied across all TfL fares and prices.

1.11 These increases are projected to produce an annualised revenue yield of £256m overall in 2023, comprising £164m for LU; £72m for buses; and £21m for the DLR, trams, London Overground and Elizabeth line. As the 2023 fares increase has been delayed by two months at the request of DfT to align to fare changes on national rail services, the total yield expected in the 10 months of 2023 to which it applies falls to around £213m.

1.12 The Annex to this Decision includes summary fare tables. Fuller details are set out in the Schedules attached to the Mayoral Direction to TfL (Appendix 1 – Mayoral direction to TfL).

Bus and tram fares

1.13 On buses and trams, fares are increased as shown in Table 1.1. The adult PAYG single fare is increased by 10p to £1.75.

1.14 The daily bus and tram cap is increased to £5.25, equal to the price of three single bus fares. The 7 Day Bus & Tram Pass season ticket is increased to £24.70.

1.15 The free Hopper transfer is maintained and will continue to permit unlimited free transfers within an hour of a first-paid-for bus or tram PAYG journey.

1.16 All existing TfL fare concessions are protected and maintained. The half-adult and child fares for bus and tram will be 85p.

Table 1.1: Bus and tram fares in March 2023

Travelcard season tickets in Zones 1-6

1.17 Travelcard season ticket prices increase as shown in Table 1.2, below, and Table A3 in the Annex. The overall increase across all Travelcards is 5.9 per cent. This reflects the DfT guidance to the TOCs in line with national government rail fares policy. These prices also apply to the equivalent 7 Day PAYG caps. Monthly Travelcard season prices are calculated as 3.84 times the 7-Day price (rounded up to 10p multiples). Annual Travelcard season prices are calculated as 40 times the 7-Day price.

Table 1.2: Travelcard seasons – 7 Day Travelcard prices

Tube, DLR, Elizabeth Line and Overground fares in Zones 1-6

1.18 On Tube and other TfL rail services where Tube fares apply, PAYG fares increase by 5.9 per cent overall. See Table 1.3.

1.19 Peak and off-peak fares become more graduated according to the number of Zones travelled through. A lower increase has been applied in outer zones to support the ongoing recovery of travel from outer London to the centre, and to incentivise public transport use in outer London where car use is generally higher.

1.20 The flat child off-peak PAYG fare, which applies on both TfL rail and national rail services, increases by 5p to 85p. The child peak LU PAYG fare increases by 5p to 95p – half the minimum adult peak fare. The off-peak child cap increases by 5p to £1.65.

1.21 Peak PAYG fares for journeys in Zone 1 will increase by 30p to £2.80 with off-peak PAYG fares only increasing by 20p to £2.70. This will see different peak and off-peak PAYG fares applied in Zone 1 from 5 March 2023.

1.22 On the Elizabeth line, TfL PAYG fares will apply in zones 1-6, with special single fares applying for journeys to and from Heathrow as specified in Annex A1.

Table 1.3: Adult PAYG fares on TfL rail services increases in March 2023

LU cash fares in Zones 1-6

1.23 Cash fares, also known as paper single and return tickets, for Zones 1 – 6 will increase by 40p to £6.70. Child cash fares for those aged 11 to 15 remain at half the adult rate. Accompanied under-11s will continue to travel free.

1.24 Fewer than 1 per cent of Tube journeys are now made with Tube cash fares.

1.25 National rail cash through fares in Zones 1-6 increase in line with the 5.9 per cent national rail fares target. Full details are set out in Annex Table A2.

One day PAYG price caps in Zones 1-6

1.26 Tables 1.4.1 and 1.4.2, below, set out the PAYG caps and Day Travelcard prices.

1.27 The all-day PAYG caps are set by agreement with the TOCs to be 20 per cent of 7 Day Travelcard prices. The caps increase by between 40p and 80p in proportion to the increases in Travelcard season ticket prices.

Table 1.4.1: All-day PAYG caps in 2022 and 2023

One Day Travelcard tickets

1.28 The prices of both the Zones 1-6 off-peak Day Travelcard and the Zones 1-4 Anytime Day Travelcard increase by 80p to £15.20. The Zones 1-6 All Day Travelcard ticket price increases by £1.20 to £21.50.

Table 1.4.2: Day Travelcard tickets in 2022 and 2023

1.29 Overall the prices of Day Travelcards and PAYG daily caps increase by 5.9 per cent. These increases are set by agreement with the TOCs and reflect the government’s national rail fares policy.

Concessions and discounts on TfL rail services

1.30 For under-16s, all Day Travelcard prices and peak PAYG daily caps are set at half the adult rate and increase in line with adult prices. These increases are set by agreement with the TOCs and reflect national government rail fares policy.

1.31 The under-16s off-peak cap available through the Zip card is increased by 5p to £1.65. Accompanied under-11s continue to travel free on all TfL services; and on TOC services provided a valid Zip card is held.

Tube fares for travel beyond Zone 6

1.32 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 will increase in line with the general national rail increase of 5.9 per cent. Full details are given in Table A4 in the Annex.

1.33 Travelcard prices and the associated PAYG caps with coverage in Zones 7 to 9 increase by an average of 5.9 per cent. Full details are given in Tables A6 and A7 in the Annex.

Fares on services transferred to TfL in May 2015

1.34 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 in line with the general national rail increase of 5.9 per cent.

Fares on services transferred to TfL in May 2018

1.35 On the Great Western and Heathrow Connect services transferred to TfL in May 2018, 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 in line with the general national rail increase of 5.9 per cent.

1.36 The TfL-set additional fare supplements to the Heathrow fares will increase by 40p.

Fares on the Elizabeth line service to Reading

1.37 Since 15 December 2019, an Elizabeth line service has run between Reading and Paddington. Under agreements reached over 10 years ago between the DfT and TfL, common fares will apply on the TOC and TfL services.

1.38 On these services, 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 in line with the general national rail increase of 5.9 per cent.

IFS Cloud Cable Car

1.39 The IFS Cloud Cable Car is a popular attraction destination in London which offers views of the city. The one-way adult fare to ride on the cable car will remain at £6.00. The child fare will remain at 50 per cent of the adult fare. Discounted fares will no longer be available.

1.40 Return tickets will be removed to simplify the ticket offering, with round trips made on IFS Cloud Cable Car at double the price of a one-way trip.

1.41 The carnet ticket price will stay the same so that it remains equal to £1.70 per journey, which will continue to support local and regular users of the service.

Table 1.5: IFS Cloud Cable Car fares in 2022 and 2023

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. He has proposed an overall average fares increase of 5.9 per cent to meet the assumptions of the funding agreement set by the government, which aim to ensure TfL can reach financial sustainability (in line with the long-term objective of the funding agreement) while ensuring the increase in fares is as affordable as possible. The proposals will also support vital investment in public transport once TfL reaches financial sustainability. The funding from the government provided under the funding agreements has been and continues to be necessary to ensure that TfL is able to continue operating, given the impact of the pandemic on its income; as such, the Mayor is required to meet the conditions of the funding agreement. The fare changes will ensure ongoing vital investment in public transport once TfL reaches financial sustainability.

2.2 The proposal to increase fares in line with the assumptions in the government funding agreement as set out in this decision are therefore key to supporting and enabling the delivery of the Mayor’s Transport Strategy, and the continued delivery of TfL’s transport investment programme.

3.1 Under section 149 of the Equality Act 2010, as public authorities, the Mayor and TfL are subject to a public sector equality duty and must have ‘due regard’ to the need to (i) eliminate unlawful discrimination, harassment and victimisation and any other conduct that is prohibited by or under the Act; (ii) advance equality of opportunity between people who share a relevant protected characteristic and those who do not; and (iii) foster good relations between people who share a relevant protected characteristic and those who do not. Relevant protected characteristics under section 149 of the Equality Act are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.

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 Greater London Authority Act 1999 (GLA Act 1999). The Mayor is not required to conduct a consultation in relation to the fares proposals.

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

3.4 Londoners with protected characteristics are likely to be affected by increases in fares, because statistically they are more likely to be on low incomes and rely on public transport. Increases to fares may have an adverse impact on all Londoners, with the impact exacerbated on some groups. These Londoners are also likely to be those most reliant on public transport and would be most affected if the quality and reliability of public transport was to deteriorate. The potential impacts are considered further below.

3.5 Black, Asian and Minority Ethnic Londoners are more likely to live in low-income households and are likely to cite affordability as a barrier to transport and more likely to use buses than the Tube. The proposed increase in TfL bus and Tube fares in the March 2023 fares package may therefore have a particularly negative impact on Black, Asian and Minority Ethnic Londoners.

3.6 Women are more likely 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. Women are also more likely to use buses than the Tube.¹ The proposed increase in TfL bus and Tube fares in the March 2023 fares package may therefore have a particularly negative impact on women.

3.7 Older Londoners are more likely to be retired, and many live on low incomes. The 60+ concession, and the Freedom Pass for older and disabled people, mean that the proposed March 2023 fares will have only limited impacts on older people, as the concessionary scheme will remain unchanged by this fares revision. See also 3.13.

3.8 Disabled Londoners are more likely to live in low-income households. One in three families in London with a disabled child live in poverty. One of the reasons for this is the higher costs of supporting a disabled child. In some cases, it can be three times more expensive to bring up a child with an impairment. Carers are also likely to experience financial hardships as a knock-on effect of the need to take lower-paid and part-time work.

3.9 While the Freedom Pass means that the proposed March 2023 fares will not impact some disabled people, it is important to recognise that parents of disabled children, and some disabled Londoners whose income is impacted by the barriers to employment, are not eligible for a Freedom Pass. The discretionary nature of the eligibility criteria can mean that applications from some disabled people for example adults with learning difficulties are not successful. This group are therefore especially impacted by increases in fares.

3.10 Younger Londoners are less likely to be physically disabled but more likely to be from a Black, Asian or Minority Ethnic community than the White community; and are therefore more likely to be experiencing the financial barriers discussed above. The Zip card concession – which allows free or discounted travel – limits the impact of the proposed March 2023 fare changes on younger Londoners.

3.11 Londoners on low incomes tend to be women; older, Black, Asian, Minority Ethnic and disabled people; and those not in work. A low income largely reflects working status, though the underlying causes may be tied to the cost of housing, childcare and transport, as well as access to education, qualifications and health. Among children living in poverty, more of them are part of low-income working families than of workless families. London has the highest poverty rates in the UK across all age groups. The combined impact of fares increases and an increased cost of living during the pandemic will have a negative impact on Londoners with low incomes. As well as this, Londoners on low incomes are more likely to use buses than the Tube. Therefore, the proposed March 2023 fare changes may have a negative impact on this group, compared with a scenario in which fares are not increased.

3.12 LGBTQ+ Londoners have reported hate crime as their major concern in relation to transport. The March 2023 fare changes have no specific implications for the LGBTQ+ community expect where they also have any of the other protected characteristics set out above

3.13 Some of those who comprise the seven groups identified above are likely to benefit from free travel concessions or discounted fares related to age, disability status or receipt of income-related benefits. While restrictions are now in place between 4.30am and 9am for the use of the 60+ and Older Person Freedom Passes, these concessions remain more generous than that statutorily required and available in most other parts of the country. Free travel remains in place at all other times in the week and at all times during the weekend and bank holidays. Other current concessionary fare schemes are being maintained in order to keep public transport accessible to people who face barriers to public transport use. These schemes thereby offset or mitigate any detrimental impacts resulting from fares increases, which could reduce the affordability of transport for people on low incomes.

3.14 The Hopper fare which provides unlimited bus and trams travel within an hour for the price of a single fare continues to help keep the cost of travel low for those customers with protected characteristics.

3.15 The concessions available are set out below:

i. children under 11 travel free on all TfL services (subject to a maximum of four accompanying an adult on TfL rail services)

ii. the 11-15 Oyster photocard provides free TfL bus and tram travel, and reduced fare rail travel, in London

iii. the 16+ Oyster photocard provides free TfL bus and tram travel, and half-fare rail travel, in London

iv. the 18+ Student Oyster photocard provides reduced-rate TfL Bus and Tram Pass, and Travelcard season travel

v. the Jobcentre Plus Travel Discount Card provides half-price TfL bus, tram and rail travel

vi. the Bus & Tram Discount photocard provides half-price TfL bus and tram travel

vii. the Veterans Concessionary Travel photocard provides free travel in London

viii. the 60+ London Oyster photocard (over-60s up to state-pension age) provides free travel in London; there are restrictions on the use of these concessions between 04:30 and 08:59 on weekdays, excluding bank holidays

ix the London Freedom Pass (for people above state-pension age, and people with an eligible disability) provides free travel in London; there are restrictions on the use of the older persons’ Freedom Pass concessions between 04:30 and 8:59 on weekdays, excluding bank holidays.

3.16 This increase is proposed to meet the assumption in the funding agreement set by the government which aims to ensure that TfL can reach financial sustainability in line with the long-term objective of the funding agreements. The potential consequences to the groups identified above of not securing adequate funding for TfL to continue to provide an effective service, and not achieving financial sustainability, are likely to outweigh any of the potential negative impacts of the fares increase identified above.

3.17 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 set out above. The proposals will not have an adverse impact on TfL’s ability to run and invest in transport services; and have been prepared having due regard to the Mayor’s public sector equality duty.

Key risks and issues

4.1 The funding agreements with the government have been necessary to ensure TfL has sufficient funding to continue operating its services. This followed the near-collapse of its income during the COVID-19 pandemic. While passenger demand has risen significantly from its low point during the pandemic, in 2022 overall demand remained around 25 per cent below 2019 levels on the LU; and 18 per cent below 2019 levels on buses.

4.2 GLA officers consider that implementation risks are minimal.

4.3 Failure to comply with the provisions of the funding agreements could have financial consequences for the GLA / TfL were the government to withdraw or reduce the level of funding it provides.

4.4 The principal risk associated with fare rises on public transport is that there may be a resultant increase in fare evasion. Fare evasion also brings with it additional crime risks, in that where people evade fares their “visibility” to TfL is reduced, compromising detection capability. Thus, the ability to detect crimes that are committed on the system, and thereby to bring offenders to justice, could be reduced if fare evasion increases. Any increased engagement, particularly in relation to enforcement activity, can also increase the risk of staff assault.

4.5 Fare evasion is managed through a number of methods:

i. deterrence – TfL operates an extensive communication campaign to engage with customers in order to encourage proper fare payment and discourage evasion

ii. face-to-face engagement – staff across the transport modes encourage proper payment, and assist with any problems that customers may have with paying their proper fares using the cash-free methods available

iii. checking and application of penalties – a range of operational staff operate across the TfL modes and are enabled via statutory powers to carry out engagement and to apply penalty fares where first-time fare evaders are encountered; intelligence-led deployment assists with the effectiveness of these staff resources

iv. checking and enforcement – the same operational staff are empowered to initiate enforcement action on repeat evaders where appropriate

v. debt recovery and prosecution – as a prosecuting authority TfL is empowered to recover fares and costs, and to prosecute where required.

4.6 It should also be noted that a fares increase can contribute positively to TfL’s ability to create the necessary enhancements to staffing and intelligence-gathering that, in turn, assist in reducing fare evasion and other crime on the transport network in London. Operational staff contribute positively to a wide range of crime reduction areas through their presence and their vigilance whilst deployed on the network, including counter terrorism and security.

Links to Mayoral strategies and priorities

4.7 The Mayor’s Transport Strategy highlights the importance of improving transport accessibility for all Londoners and, in doing so, ensuring that the costs of transport remain affordable. These fares proposals limit the impact of the increases on those commuting into central London and for those travelling in outer London. All existing TfL concessions and discounts remain in place to support those with protected characteristics or from low-income households when travelling in London.

Consultations and impact assessments

4.8 The Mayor is not required to undertake a consultation in relation to the fares proposals in this decision.

Conflicts of interests

4.9 GLA officers involved in the drafting or clearing of this Mayoral Decision are likely to be affected by the change in fares when travelling on public transport. There are no other interests to declare.

5.1 There are no direct financial implications of this decision to the GLA.

5.2 TfL’s Business Plan on 7 December 2022 was based on the 30 August 2022 funding agreement with the government. This funding agreement guaranteed a level of passenger income for TfL for 2022-23 and 2023-24, as government funding to TfL over this period will be adjusted for any variances from a passenger revenue scenario set out by the government.

5.3 The passenger revenue scenario set by the government was based on an assumption that national rail fares would increase by 4 per cent in March 2023 and March 2024. However, the funding agreement set out the scenario would be updated in accordance with the actual national rail fares increase once confirmed. As the government has announced that national rail fares will increase by 5.9 per cent in March 2023, the revenue scenario will be updated with this figure. The quantum of ‘base funding’ from the government to TfL is dependent on the revenue scenario, so this would in turn reduce the level of base funding provided by the government to TfL, leaving TfL financially neutral from this decision.

5.4 Crucially, the funding agreement also included a provision that if the Mayor choses to increase TfL fares by a different amount than the national rail fares increase, this would be factored into any top up funding TfL receives. This means that if the Mayor chose to increase TfL fares by less than 5.9 per cent in March 2023, TfL would be financially worse off.

5.5 The proposal, subject to the Mayor’s decision, to increase TfL fares by 5.9 per cent avoids this scenario. Therefore, it ensures that TfL receives the level of funding assumed in the 30 August funding agreement and the 2023 TfL Business plan over the period to 31 March 2024. The proposal would increase the funding available for TfL beyond this point, which will be available for TfL to reinvest in its services and meeting the challenges of high inflation on its costs.

5.6 Table 5.1 summarises the revenue yields for TfL based on 2019 demand, assuming that all fares and prices rise by 5.9 per cent overall. This gives an annualised total revenue yield of £256m. As the 2023 fares increase will take place in March, the total yield expected in the 10 months of 2023 to which it applies falls to around £213m.

Table 5.1: Annual revenue yields from the 5 March 2023 fare changes based on 2019 Revenue and an overall increase of 5.9 per cent (figures are per annum)

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

5.7 All existing concessions will be maintained and are funded in the TfL budget until the end of the current financial year, and in the TfL business plan for 2023-24. Further to the conditions of government, earlier this month the Mayor approved MD3014 to make previously temporary peak-hour restrictions on the 60+ Oyster and Freedom Pass permanent.

6.1 The Mayor may issue general directions, under section 155(1)(b) of the GLA Act, as to the manner in which TfL is to exercise its functions, as well as, under section 155(1)(c), specific directions as to the exercise of TfL’s 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 public 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 equality obligations referred to in section 3 of this report, “Equality comments”. Consideration is given in this section to the likely effects of the fare proposals on protected groups, and the Mayor must have regard to these matters when taking this Mayoral Decision.

6.3 The Mayor is not required to conduct a consultation in relation to the fares proposals.

Annex: Fares table

Appendix 1: Direction to TfL

Appendix 2: Fares advice to the Mayor (January 2023)