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Raising fares better than cutting services, says TfL exec as Mayor’s decision on price hike looms

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Increasing bus and tube fares is always better than cutting services, according to TfL’s chief technology officer Shashi Verma. (Photo by Peter Macdiarmid/Getty Images)

Increasing bus and tube fares is always better than cutting services, Transport for London’s chief technology officer Shashi Verma said today.

Verma told members of London Assembly’s transport committee that “a service cut is much worse than a fare increase” as cuts usually lead to a bigger decrease in passenger demand.

“A 1 per cent increase in fares leads to a 0.3 per cent reduction in demand,” the executive said. “[Whereas] a 1 per cent service cut leads to something between 0.6 and 0.8 per cent reduction in demand.”

Verma’s words come as London mayor Sadiq Khan is set to make a decision on whether to hike fares across the network “very soon”. 

Khan will need to decide if he will raise tube and bus fares by 5.9 per cent – in line with what the government announced for rail in mid-December. 

The mayor told ITV last week that he wanted to limit the rise to 4 per cent but he was tied to the government’s long-term funding deal for TfL.

Announced in late August following a drawn out dispute between City Hall and government ministers, the deal will keep TfL running until the spring of 2024.

As part of the agreement, the public network will receive an additional £1.2bn base funding on top of £3.6bn of capital funding.

But in return, the government has demanded TfL increase its revenues from £500m to £1bn per year, which included hiking fares.

Deputy mayor for transport Seb Dance said Khan might be forced to hike fares in line with government guidance as any shortfall would have to be made up by TfL. 

“The agreement is very clear that any shortfall between the government’s announced figure and the figure the mayor decides on has to be made up by TfL,” Dance told committee members.

If TfL failed to make up for the shortfall, the government might withdraw its support, Dance added.

“So if we receive less support from the government, then obviously we need to find the money elsewhere,” he said. “And that would make a difficult situation more difficult.”