Londoners are likely to face a hike in council taxes and changes to fares to help TfL shrink the deficit in its income caused by the pandemic.

Although TfL is still in negotiations with the Department for Transport (DfT) over a funding settlement to keep London’s transport network running, it’s clear that the DfT wants TfL to make up more of the shortfall in its income by raising revenue from within London.

TfL is currently being required to put in place plans to raise future revenues by £500m-£1billion a year from 2023. That puts TfL in an unusual situation of not having the subsidy handed out to other cities, while also being expected to raise revenues during a revenue-killing pandemic.

The hike in council taxes, if it goes ahead is expected to raise approximately £172 million annually, and TfL is proposing other changes which will raise another £60-80 million per year. That’s somewhere in the region of £230-250 million a year raised, which is about half of the lower level set by the DfT, leaving a shortfall of at least £250 million still to be found.

There’s still a strong argument that Vehicle Excise Duty, which funds road maintenance across the UK, but not in London where TfL picks up the bill should be more evenly shared. It’s estimated that London loses out a substantial £500 million a year at the moment thanks to the way the Vehicle Excise Duty is managed.

London also contributes an average of £36 billion a year more in taxes to the government than is spent by the government in London, so it’s not as if funding London’s public transport would push London into a loss-making region for the UK government.

Council taxes

The Mayor of London has now announced that he plans to increase council tax in London by around £20 a year over the next three years. That’s subject to consultation. The council tax hike would also mean that Londoners would end up paying a larger contribution to their local public transport network through council tax than the average across the other metropolitan areas in England.

The 60+ Pass

There are also plans to raise the age of eligibility for free travel using the 60+ pass by 10 per cent each year over the next 12 years. That means Londoners who already have the 60+ travelpass won’t lose benefits, but everyone else will need to wait longer to qualify.

In 2010, the national government started to raise the age at which people qualified for free travel on public transport progressively to 66 years, and it was the current Prime Minister, then Mayor of London, Boris Johnson who introduced a 60+ pass for Londoners in 2012 so that 60-66 year olds would continue to receive free travel in London.

TfL picks up the bill for the 60+ pass while local councils pick up the bill for free travel for people aged 66+. Phasing out the 60+ pass introduced by Boris Johnson will save TfL around £100 million a year, but the full saving won’t kick in for a decade.

Heathrow Airport

TfL will also be applying an all-day peak fare for London Underground journeys between Zone 1 and Heathrow on the Piccadilly Line, to reflect that demand to Heathrow does not conform to the usual peak periods, with the daily and weekly price caps limiting costs for airport workers.

Travelcards

The Mayor is also proposing that TfL withdraws from the Travelcard Agreement with the National Rail services.

Travelcards are a range of tickets that are valid for use on National Rail services in London, as well as TfL services. Travelcard users are now a minority, as passengers gain many of the same benefits from other ticket types due to the introduction of Contactless and Oyster Pay As You Go.

Moving Travelcard customers to PAYG and retiring all magnetic tickets will simplify retailing and reduce costs, mainly due to a reduction in commission payments. TfL also expects increased income due to increased trips as a result of the simplified ticketing.

Fare rises

Under an existing funding deal, fares on TfL managed services will need to rise by the Retail Price Index plus 1 per cent, which should equate to an average fare rise next year of 4.8 per cent. That doesn’t mean TfL gets nearly 5 per cent more cash in the bank though, as the fare rise reflects the rising cost of running the transport network, which is how inflation is calculated in the first place.

All measures announced will be subject to appropriate consultation, impact assessment and decision-making processes before they are implemented.

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20 comments
  1. Brian Butterworth says:

    Oddly, I think this all quite acceptable.

    London Council Tax is very tiny compared to, say, Brighton and Hove which is about double.

    I would prefer to pay more than loose services.

    I did a Bakerloo Line closure version of the Tube Map… https://ukfree.tv/styles/images/2021/no-bakerloo.jpg which is cute, but I’d prefer to fund TfL with my Council Tax than close things.

    • ianVisits says:

      Just looking at where I live, and comparing with Brighton and Hove – my council tax is £1,275.56 per year compared to £1,597.73 in Brighton – so not that big a difference in fact.

    • Brian Butterworth says:

      OK, perhaps it just feels that way. Still I’d be happy to provide TfL £300 a year if they gave a cast-iron guarantee to keep the RMT away from the money.

  2. diamond geezer says:

    “Travelcard users are now a minority” is a weasel phrase and no mistake. As far as I’m aware they always have been.

    • harry says:

      “Always” is a dangerous word. But I lived slightly outside London around 1975 and as far as I can remeber, travelcards were then the main (and possibly only) alternative of travelling for less than the cost of multiple single tickets.

  3. Duncan Martin says:

    Vehicle Excise Duty simply goes into the Treasury Coffers. In no part of the country is it linked to road maintenance or building. The Treasury decides how much grant it gives to local authorities and it us up to them to to decide where to spend their money.

  4. JP says:

    I do like the phrase “simplified ticketing.” It has the elegance of being technically correct as well as sounding like a good idea.

    My problems with the idea of removing paper tickets are the usual. What if you don’t own a smart phone / have enough battery on it / you’re a tourist or even that you don’t want the powers that be to know that you are on a particular train service off on a dirty weekend / off on a ‘why do you need to know anyway Mr. G. man?’ journey.

    I hold dear the anonymity of a paper ticket / an Oyster card paid for with cash and have lost count of the number of times I’ve seen a frustrated train guard waiting for a passenger, sorry, customer to find the right screen on their phone. Likewise a self-absorbed person fumbling for same on a bus whilst those in the queue behind wait to board in the rain.
    Yes, you can fumble for your oyster card too but it never seems to take the same time.

    The cost saving can’t be very much in the ticket machines as card / phone readers still need to be maintained. The gain is almost purely in sacking the ticket office staff, removing the facility itself and replacing it with a Tesco Express or similar.

    • Brian Butterworth says:

      And the answer, as as you’ve been told each time is, you print the QR code and take it with you as if it was a ticket.

      And, as I’m sure you’re aware, contactless/barcode devices have no moving parts so incur no need for maintenance that can’t be done via a remote, automatic software upgrade.

  5. NG says:

    Quote:
    ” puts ..TfL in an unusual situation of not having the subsidy handed out to other cities..”
    Which seems remarkably like anti-special pleading, if you see what I mean.
    Some people are suggesting that this is spite from a certain BJ, I wonder why?

  6. Dave says:

    I see all this as ‘levelling down’ – not up. It will be interesting to examine the state (if it still exists!) of TfL buses and trains in 10 years from now.

    Those outside London – expect to be disappointed.
    N P Rail, HS2 (N) gone, and expect their replacements to get watered down over time.

    Pessimistic – Moi!

  7. Nick L says:

    The Travelcard change hasn’t been explained clearly anywhere. No problem with getting rid of paper tickets if that’s all it is, though it will be inconvenient for anyone outside the Oyster area travelling into town. Some employers insist on paper tickets ordered via their travel agents for business journeys so they’ll have to start allowing staff to claim contactless fares on expenses instead.

    If it turns out he’s also scrapping Travelcard-linked pricing (and doesn’t the agreement with National Rail also cover Overground, zonal season tickets, Gold Card discounts etc?) for those reliant on trains instead of the Tube, that’s a massive kick in the teeth, particularly for Londoners living south of the river.

  8. Paul says:

    “There are also plans to raise the age of eligibility for free travel using the 60+ pass by 10 per cent each year over the next 12 years.”
    I don’t understand this proposal – my maths suggest an annual 10% rise would bring the eligibility age to 66 after 1 year, 73 after two years, and eventually reaching 188 after 12 years. Surely that can’t be right?

    • ianVisits says:

      10 per cent of the 6-year gap between the two passes is 6 months a year.

    • Carllo says:

      The state pension age is planned to be increased to 67 between 2026 and 2028, so my guess is that the age of eligibility for the current Londoners’ 60+ pass will therefore have to be increased for 14 years, rather than 12, until the qualifying age for the pass also reaches 67.

  9. Colin says:

    The National Rail travelcard add-on can be a significant discount on the Oyster price cap, at least for off-peak fares. A trip to Zone 6 will cost me nearly £10 more with this change.

    You can reasonably argue that as a non-resident I shouldn’t be getting cheaper tickets, but an extra £4-£10 for every trip to London will add up.

  10. ChrisC says:

    The DoT are saying increase the council tax but the Treasury and Dept for Local Government will be insisting on only a 2% rise (plus their separate rules for the police precept. GLA does not provide social care so the 3% for that does not apply)

    I don’t know what £172m is as a % of the existing GLA precept as a % and how it fits in with the above

    How does the £20 a year also mentioned factor in when some of that will be for the non TFL elements of the GLA such as the police and fire brigade

    • ianVisits says:

      The DfT is not saying increase council tax – that’s a decision by the Mayor of London, and none of the £20 rise will go to non-TfL elements.

  11. Colin Newman says:

    “Some employers insist on paper tickets ordered via their travel agents for business journeys so they’ll have to start allowing staff to claim contactless fares on expenses instead.”

    What still? We’ve had Oyster Cards since 2003. Just need to supply the relevant details from the online account.

    “If it turns out he’s also scrapping Travelcard-linked pricing (and doesn’t the agreement with National Rail also cover Overground, zonal season tickets, Gold Card discounts etc?) for those reliant on trains instead of the Tube, that’s a massive kick in the teeth, particularly for Londoners living south of the river.”

    He can’t change the availability of travel cards on National Rail.

  12. K W says:

    Receipts and Oyster Cards.

    When there were ticket offices on the underground you could get a printout on request of your last ten journeys. This was on a length of till roll and clearly showed the price of every single trip more or less exactly as you can see this on the screen at a TfL ticket machine after swiping the card you are travelling on.

    Is it still possible to get this at a manned ticket office run by TfL which sells tickets for Overground and TOC trains as well as tickets inter-available on the Underground – e.g. Travelcards?

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