Taxi Fare Review 2018 - Consultation Report September 2018

Taxi Fare Review 2018 - Consultation Report September 2018

Taxi Fare Review 2018 - Consultation Report September 2018

Taxi Fare Review 2018 Consultation Report September 2018

Taxi Fare Review 2018 - Consultation Report September 2018

2 Contents Executive summary . . 3 1. About the proposals . . 4 2. About the consultation . . 12 3. About the respondents . . 16 4. Summary of all consultation responses . . 22 5. Next steps . . 69 Appendix A: Detailed analysis of comments . . 70 Appendix B: Consultation questions . . 84 Appendix C: Stakeholders consulted . . 93 Appendix D Consultation Material . . 96

Taxi Fare Review 2018 - Consultation Report September 2018

3 Executive summary This document explains the processes, responses and next steps of the consultation on taxi fares and tariffs.

Between 20 March and 27 April 2018 we consulted on proposed changes to taxi fares and tariffs and received 1,315 responses. The majority of respondents and the majority of taxi drivers agreed that Tariff 1 and Tariff 2 should be increased by 0.6 per cent and that Tariff 3 and the Tariff rate for journeys over six miles should stay the same. The majority also agreed that the minimum fare should be increased, with a 40 pence increase preferred over 20 pence.

Most respondents supported adding card payment transaction charges to the Cost Index and did not agree with removing the social costs element. A strong majority of respondents were in favour of continuing the provision to allow an increase in taxi fares if diesel prices rise by a significant amount. Support was lower for an increase to the Heathrow Extra charge, with only a third of respondents and taxi drivers supporting this. Support was higher (55%) among taxi drivers who use the ranks at Heathrow Airport.

Four in ten respondents supported a fixed fare from Heathrow Airport to Central London, with half in support going from Central London to Heathrow Airport.

Support for capped fares was at a similar level. There was strong support for updating the card payment device requirements to include American Express. Next steps We are now reviewing comments made during the consultation.. Recommended changes to the taxi fares and tariffs will be submitted to TfL’s Finance Committee for consideration and we will publish the details of any changes made.

Taxi Fare Review 2018 - Consultation Report September 2018

4 1. About the proposals 1.1 Introduction Taxi and private hire services in London are licensed and regulated by Transport for London (TfL). The Licensing, Regulation and Charging Directorate has day to day responsibility for the delivery of taxi and private hire licensing services. We license London taxis (black cabs/Hackney Carriages) and taxi drivers under Hackney Carriage legislation including 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) is the main set of regulations made under these Acts and it sets the fares regime that covers most taxi journeys in London.

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 six miles a different tariff rate applies. The fares are normally reviewed on an annual basis and this consultation is for the 2018 review. 1.2 Purpose The purpose of the 2018 consultation was to seek views on the following;  Changes to taxi fares and tariffs in London  Changes to extra charges for some taxi journeys  Changes to the Cost Index  Updating the card payment requirements  Fixed fare, capped fare and shared taxi scheme arrangements TfL licenses and regulates taxi (black cab) and private hire services in London.

We also regulate taxi fares and set the maximum fares that can be charged. These fares are determined by tariffs that are normally reviewed each year and updated to reflect changes in a Cost Index.

5 Cost Index The Cost Index tracks changes to the costs for a number of elements related to being a taxi driver in London (including vehicle costs, parts, tyres, servicing, fuel, insurance and social costs) plus changes to average national earnings. These figures are updated as part of the review of taxi fares and tariffs to give a total figure for the change in costs and average national earnings. For the 2017 review this total figure was 2.8 per cent. For this review the Cost Index figure is 3.6 per cent. However, it is important to note that the Cost Index and the total figure produced when this is updated are independent of the taxi fares and tariffs.

There is no statutory requirement for the Cost Index figure to be applied equally to all tariff rates. Any changes to the tariffs can be based on the Cost Index or on other factors. Last year’s review is an example of a different approach being taken. The total Cost Index figure for the costs of operating a taxi in London and national average earnings was 2.8 per cent. However, instead of increasing all of the tariff rates by this figure only Tariffs 1 and 2 were increased.

Following a public consultation the TfL Board approved increasing Tariffs 1 and 2 by 3.7 per cent and 3.9 per cent respectively, both of which were higher than the Cost Index figure (2.8 per cent). However, this was offset by Tariff 3 and the tariff rate for journeys over six miles being frozen to address concerns raised by passengers and taxi drivers about late night and longer taxi journeys being too expensive 2017 changes In summary, the changes introduced in 2017 were: • Increased average fares during Tariff 1 by 3.7 per cent • Increased average fares during Tariff 2 by 3.9 per cent • Extended the fuel charge arrangements in the event of a significant increase or decrease in the price of diesel • Updated the taximeter specification In 2017 we also: • Froze Tariff 3 • Froze the tariff rate for journeys over six miles (Tariff 4) • Froze the minimum fare All of the tariff changes came into effect on Saturday 3 June 2017 following approval by the TfL Board on 29 March 2017.

6 1.3 Detailed description Potential changes for 2018/19 We wanted views on the following proposals:  Whether the minimum fare of £2.60 should be increased and if so by how much  Whether Tariff 1 and Tariff 2 should be increased  Whether Tariff 3 should be frozen  Whether the tariff rate for journeys over six miles (Tariff 4) should be changed  Removing the social costs element from the Cost Index  Adding transaction costs for card payment devices to the Cost Index – this would be in addition to the 20 pence minimum fare increase introduced in April 2016  Continuing the present arrangement that allows taxi drivers to add an extra charge of 40 pence to the fare if fuel prices increase significantly and reduce fares by 40 pence if fuel prices fall significantly  Whether there should be an increase to the additional charge for taxi journeys that start from a taxi rank at Heathrow Airport and, if so, by how much  Reviewing options for fixed or capped fares to or from Heathrow Airport  Increasing by 50 pence the fares for the fixed fare, shared taxi schemes that operate from Euston Station  Adding fares for six passengers sharing a taxi to the shared taxi conversion table  Updating the card payment device requirements for taxis so that all devices accept American Express as well as Visa and MasterCard Taxi tariff rates and minimum fare When taxi fares and tariffs have been previously reviewed, the outcome has often been to apply any change shown by the Cost Index to all tariff rates.

This has generally meant an annual increase to all tariff rates and taxi fares. Recent exceptions to this are in 2015 when the Cost Index showed fares should be decreased by 0.1 per cent and this change was deferred to the following year. Also, last year, when Tariffs 1 and 2 were increased by more than the Cost Index figure but offset by a freeze to Tariff 3 and the tariff rate for journeys over six miles (Tariff 4).

7 The general pattern of year on year increases has resulted in feedback that taxi fares are too high, especially late at night (Tariff 3) and for journeys over six miles (Tariff 4). It has been suggested that high fares late at night have affected the public’s perception of taxi fares at all times, making them less likely to use taxis at any time of the day as they believe the fare will be excessively high. If we applied the Cost Index figure to all tariff rates, this would mean an increase of 3.6 per cent across all of the tariffs. While we appreciate the costs of operating a taxi in London have increased, we also need to consider the passenger impact of the increase, in addition to the perception that taxi fares are expensive and becoming unaffordable.

Discussions have been held with the taxi driver associations, who wish to ensure taxi drivers are adequately recompensed. However, any proposals must also focus on providing passengers with an assurance that taxi fares are not too expensive. With this in mind, we invited comments on the following:  A potential increase to the minimum fare (flagfall)  A potential increase to Tariffs 1 and 2. It had been suggested that an increase could be set at 0.6 per cent.  A potential freeze in Tariff 3 fares (for the second year running)  A potential freeze to the tariff rate for journeys over six miles (for the second year running) or whether any changes to this tariff rate should be made We had been asked by the taxi driver associations to increase Tariffs 1 and 2, but to make no changes to the other tariff rates.

The taxi driver associations had also expressed a view that the minimum fare (flagfall) could be increased by 40 pence. The minimum taxi fare in London is currently £2.60, which is lower than in some other parts of the UK. Increasing the minimum fare by 40 pence, as requested by the taxi driver associations, would make it £3.00 at all times. A small increase to Tariffs 1 and 2, alongside an uplift in the minimum fare, and a freeze in the other tariff rates, would support taxi drivers facing increased costs of operating a taxi in London.

Tariff rate for longer journeys The tariff rate for longer journeys (sometimes referred to as Tariff 4) is higher than Tariffs 1 and 2 but lower than Tariff 3. The historical reason for there being a different tariff rate for longer journeys is because drivers completing these journeys may be less likely to be hailed on the return journey to the area where they normally

8 work. This may be less of an issue now as some drivers will be offered fares from a taxi company during their return journey. It had been suggested that taxi fares for longer journeys are too high and these are only a small part of the overall taxi market which is not growing or attracting new passengers.

We have previously consulted on changing the distance when this tariff rate starts and were interested in views on the tariff rate for longer journeys and if any changes to this should be made. Potential changes could include:  Changing the distance when this tariff comes into effect from six miles to a longer distance  Reducing the rate charged  Reducing the times when this tariff rate applies  Removing this separate tariff rate Social costs element of the Cost Index The Cost Index contains a number of different elements, one of which is social costs. The social costs element relates to the unsociable hours worked by some taxi drivers.

The current Cost Index shows that the social cost element would contribute 0.1 per cent to the total figure.

Not all taxi drivers work unsociable hours and the different tariff rates are designed so that drivers who do work unsociable hours can potentially earn more as the tariff rate is higher – Tariff 3 applies to taxi journeys undertaken between 22:00 and 05:00 every night and this is the highest tariff rate. Last year, we proposed removing the social costs element from the Cost Index. This change was not taken forward. However, this is still an option and we sought views on this. Adding costs for card payment transaction charges to the Cost Index Since October 2016, all taxi drivers have been required to accept card payments and all taxis must now be fitted with a fully working TfL-approved card payment device in the correct position in the passenger compartment.

Enabling passengers to pay by card in all taxis has generally been well received by taxi drivers and passengers. There are transaction charges when taxi drivers accept card payments and these can vary depending upon the type of card payment device used and the agreement the driver has with the company who provides the device. The transaction charges are typically between two and four per cent but can also include additional charges.

9 We reviewed whether transaction charges should be included in the Cost Index. Including these in the Cost Index would mean that if transaction charges increase, then taxi fares would also increase and passengers would pay more. In April 2016, we increased the minimum fare by 20 pence for all taxi journeys. This increase was intended to help drivers cover the costs of accepting card payments. If transaction costs were to be included in the Cost Index, this would mean that there were two increases to the fares for all passengers (regardless of whether they pay by card) – the minimum fare increase plus any increase as a result of changes to the Cost Index.

We sought views on transaction charges when paying by card for a taxi and if these charges should be included in the Cost Index. Diesel price changes Diesel prices can vary rapidly and unpredictably, and a high increase during the year would result in additional costs for drivers which they would not be able to recover from passengers. Since July 2008, special provisions have been in place to allow an extra charge of 40 pence to be added to each taxi fare if the cost of diesel rises significantly. The extra charge would be authorised if diesel prices reach a threshold level. The threshold represents the price at which the overall increase in taxi costs would be in proportion to the increase in the average fare, represented by the diesel charge.

We proposed to continue this arrangement, setting an appropriate threshold for diesel prices which, if met, would trigger the approval of an extra charge of 40 pence being added to taxi fares. The threshold depends on the level of the general fares increase and the diesel price used in the calculation of the fare increase. A provision has also been introduced where fares would be reduced by 40 pence if diesel prices fell significantly.

We sought views on extending the arrangements in the event of a significant increase or decrease in the price of diesel. Heathrow Airport extra charge Taxi drivers picking up passengers from the taxi ranks at Heathrow Airport must pay a fee to access the taxi ranks. To compensate drivers for this they can add an extra charge on to the fare for journeys which start from Heathrow Airport taxi ranks. The fee drivers must pay is currently £3.50 and the extra charge they can add on to the fare is £2.80. The taxi driver associations had requested that this is increased from £2.80 to £3.20 and we sought views on this.

10 Fixed fare and capped fare schemes We are continuing to review options for fixed fare and capped fare schemes to and from Heathrow Airport. In the past there have been mixed views on these but it is felt that fixed or capped fares could benefit passengers travelling to or from the airport. Fixed fares are already available at some airports including in New York, Rome and Paris. We wanted views on fixed and capped fares between Heathrow Airport and central London, if respondents felt that a fixed fare or capped fare scheme should be trialled and, if so, what the fares should be and which areas should be covered.

Euston Station fixed fares A number of fixed fare, shared taxi schemes operate from Euston Station. The schemes match up passengers travelling to similar destinations and the fare each passenger pays is below the metered fare but the total fare the driver receives is above the metered fare, meaning that the schemes should be attractive to both passengers and drivers. The fares were last reviewed and increased in April 2012. Following a request from the taxi driver associations, there was a potential proposal to increase each of the fixed fares by 50 pence, and we requested views on this. Shared taxi conversion table The shared taxi conversion table can be used to calculate taxi fares when passengers share a taxi.

The table shows the fare each passenger pays and these are based on the fare on the taximeter and the number of passengers sharing the taxi. The fare each passenger pays is lower than the metered fare but the total fare the driver receives is greater than the metered fare, meaning that the arrangement should be attractive to both passengers and drivers. The shared taxi conversion table can be used anywhere in London and at any time, although it is not believed to be widely used.

At present the table only covers five passengers sharing however, many taxis can carry up to six passengers. We proposed to add fares for six passengers sharing and welcomed views on the proposed fares. Updating the card payment device requirements to include American Express All taxis must have a TfL-approved card payment device fitted in the passenger compartment and the device must accept as a minimum Visa and MasterCard.

11 All of the approved devices already accept American Express and we proposed to update the list of cards that approved card payment devices must accept so as this included American Express as well as Visa and MasterCard.

12 2. About the consultation 2.1 Purpose The objectives of the consultation were:  To give stakeholders and the public easily-understandable information about the proposals and allow them to respond  To understand the level of support or opposition for the proposals  To understand any issues that might affect the proposals of which we were not previously aware  To understand concerns and objections  To allow respondents to make suggestions 2.2 Potential outcomes The potential outcomes of the consultation were:  Following careful consideration of the consultation responses, we decide to proceed with some or all of the proposals as set out in the consultation  Following careful consideration of the consultation responses, we modify some or all of the proposals in response to issues raised and proceed with slightly revised proposals.

 Following careful consideration of the consultation responses, we decide not to proceed with any of the proposals. Our conclusion and next steps are set out in Chapter 4 and 5. 2.3 Consultation history Meetings had taken place with taxi driver organisations and taxi booking companies prior to the consultation to seek their views on taxi fares and tariffs and help develop proposals for wider consultation.

13 2.4 Who we consulted We sent the consultation to taxi driver associations, taxi booking companies, taxi drivers, taximeter companies and London wide stakeholders.

We also emailed Local Authorities, London Councils, passenger groups, MPs and GLA members. 2.5 Dates and duration The consultation was open between 20 March and 27 April 2018. 2.6 What we asked A full list of questions can be found in Appendix B. 2.7 Methods of responding Consultees could respond to the consultation via the consultation online portal, email or by letter using our freepost address.

2.8 Consultation materials and publicity We used a variety of methods to promote the consultation, these are listed below. 2.8.1 Website The consultation and supporting material was published online https://consultations.tfl.gov.uk/taxis/fares-2018/ 2.8.2 Twitter We used Twitter and the weekly email updates to promote the consultation. We Tweeted from the @tfltph account on seven different occasions through the consultation period. The dates that we tweeted were 20, 25 and 30 March. 3,11, 21, 26 April, A copy of the tweet can be found in Appendix D.

We also promoted the consultation using the TfL Accessibility Twitter (twitter.com/TfLAccess) account.

14 2.8.3 Emails Over 25,000 emails were sent out to stakeholders and members of the public. 2.8.4 Press and media activity The consultation appeared in “The Cab Driver” edition on 4 April page 13 requesting people to participate. The LTDA ran a survey and the headline results were published in TAXI on 20 March 2018. 2.8.5 Meetings with stakeholders Several meetings took place with stakeholders during and prior to the consultation period to discuss the proposals, details of these meetings are below. 20/10/17 Taxi Booking Companies  Computer Cab  Dial a Cab  mytaxi  Gett/Radio Taxis 28/11/17 Taxi Driver Associations  London Cab Drivers Club (LCDC)  Licensed Taxi Drivers Association (LTDA)  RMT  United Cabbied Group (UCG)  Unite the Union 11/04/18 Taxi Driver Associations  LCDC  LTDA  RMT  UCG  Unite

15 2.9 Analysis of consultation responses Due to the number of open questions in this consultation and the predicted number of responses, analysis of the consultation responses was supported by 2CV research. All closed questions were reviewed and the results tabulated and reported. All open questions, where respondents provided comments were read and analysed in detail. Each individual comment was attributed to one or more codes according to the issues raised. A code frame was developed for each of the open questions, consisting of a series of themes, which contained detailed comments (or “codes”) capturing the sentiment of each respondent who left an open text response.

During the coding process, each open text response was analysed and either a new code was created or the response was added to one or more of the existing codes within the code frame. As this was an iterative process, some codes were merged as similar themes emerged. This process created a quantitative value for each code and theme which were used to rank themes.

16 3. About the respondents This section provides information about the consultation respondents, including how they heard about the consultation and in what capacity they responded e.g. as a taxi driver/taxi user/other. 3.1 How respondents heard about the consultation 1,254 out of 1,315 respondents answered this question. The majority heard about the consultation via an email from TfL, with social media the second most common source. How respondents heard Total % Received an email from TfL 865 66% Social media 317 24% Saw it on the TfL website 34 3% Read about in the press 13 1% Received a letter from TfL 7 1% Other 18 1% Not Answered 61 5% Total 1,315 100%

17 3.2 Respondent type 1,254 out of 1,315 respondents answered this question. Respondents were asked to state which of the following respondent types best described them:  A taxi (black cab) driver  A taxi (black cab) user  A Taxicard member  A non-taxi (black cab) user  A private hire/minicab operator  A private hire/minicab driver  A representative of an organisation Respondent type Total % A taxi (black cab) driver 1,131 86% A taxi (black cab) user 81 6% A non-taxi (black cab) user 42 3% A private hire/minicab driver 8 1% A representative of an organisation 7 1% A Taxicard member 2 0% A private hire/minicab operator 1 0% Not Answered 43 3% Total 1,315 100% Out of 1,131 taxi drivers, the majority (94%) were All London drivers.

All London or Suburban driver Total % All London driver 1,059 94% A Suburban driver 64 6% Not Answered 8 1% Total 1,131 100% Half of all taxi drivers who responded to the consultation had been licensed for over 15 years.

Length of licence Total % Less than 3 years 96 8%