TfL Press Release : New Tariffs

 

Annex B: Projected licensed taxi cost index changes 2015

Index Component1	Cost Increase	Weight2	Contribution to Total3	Data availability4
		Last Year		Latest
Vehicle Cost	8.6%	9.1%	0.8%	N/A
Parts5	1.8%	4.2%	0.1%	November 2015
Tyres5	1.8%	0.6%	0.0%	November 2015
Garage & servicing – premises5	1.8%	0.6%	0.0%	November 2015
Garage & Servicing – labour5	1.8%	2.0%	0.0%	November 2015
Fuel6	-12.8%	10.6%	-1.4%	Sep – Nov 2015
Insurance7	11.3%	4.5%	0.5%	November 2015
Miscellaneous	0.8%	1.0%	0.0%	N/A
The Knowledge8	2.4%	5.4%	0.1%	Aug – Oct 2015
Social Costs8	2.4%	2.8%	0.1%	Aug – Oct 2015
Total Operating Costs	0.6%	40.7%	0.3%
Average national earnings8	2.4%	59.3%	1.4%	Aug – Oct 2015
Grand Total	3.0%	100%	1.7%

 

Notes

1.          The index components are as normally used in the cost formula. Further details are available on request.

2.           ‘Weight’ is the proportion that the component contributes to the total cost per mile.

3.          ‘Contribution to total’ indicates the importance of each component’s cost change in determining the overall cost change. It is calculated for each component as the product of its percentage cost increase and its weight. The Grand Total is the sum of the individual components’ contributions.

4.          The ‘latest’ column under ‘Data availability’ indicates the dates to which data in the ‘cost increase’ column relates.

5.          As agreed in 2011, costs for Parts, Tyres and Garaging will be uplifted by the yearly change in the Office for National Statistics RPI figure for “motoring expenditure: maintenance of motor vehicles” (DOCT) published on 15 December 2015. 

6.          The change in fuel costs relates to the change from the average of the AA diesel price for the 3 months to December 2014 to the 3 months to November 2015. This figure will be revised as further monthly data becomes available.

7.          As agreed in 2011, costs for insurance will be uplifted by the yearly change in the Office for National Statistics RPI figure for “motoring expenditure: vehicle tax and insurance” (DOCV) published on 15 December 2015. 

8.          Provisional Knowledge, Social Costs and Average National Earnings changes are based on the year on year ONS average weekly earnings growth for the three months to October 2015.

 

TfL Pricing & Forecasting

23 December 2015

 

Appendix 2 

Details of taxi cost calculations

This table shows the cost per mile of each cost component in 2014 and 2015. 

 

Component of index	Cost p per mile in 2014	Proportion of costs in 2015	Cost p per mile in 2015	Increase in costs 2015	Contribution to total increase
Vehicle Cost	21.25	9.7%	23.08	8.6%	0.8%
Parts	9.89	4.2%	10.07	1.8%	0.1%
Tyres	1.46	0.6%	1.49	1.8%	0.0%
Garage & Servicing - Premises	1.34	0.6%	1.36	1.8%	0.0%
Garage & Servicing - Labour	4.74	2.0%	4.83	1.8%	0.0%
Fuel	24.92	9.1%	21.73	-12.8%	-1.4%
Insurance	10.53	4.9%	11.72	11.3%	0.5%
Miscellaneous	2.35	1.0%	2.37	0.8%	0.0%
The Knowledge	12.64	5.4%	12.95	2.4%	0.1%
Social Costs	6.48	2.8%	6.64	2.4%	0.1%
Total operating costs	95.60	40.3%	96.24	0.7%	0.3%
Average national earnings	139.16	59.7%	142.51	2.4%	1.4%
Grand Total	234.76	100.0%	238.74	3.1%	1.7%

 

 

Note that increases are rounded to one decimal place in the table, but greater precision has been used in the calculations.

Vehicle Cost

 

Four strategies have been considered for purchasing a cab:

 

1.       Purchase new and run to scrap, 

2.       Purchase new and sell at 4 years, 

3.       Purchase at 4 years and sell at 8, 

4.       Purchase at 8 years and run to scrap. 

 

Table 2 below gives the costs for the 4 strategies (as supplied by LTC in 2015). They relate to TX4 models for all strategies. 

 

Table 3 shows the corresponding costs provided for 2014.

 

Table 2: Vehicle Cost 2015

 

Strategy	Model	HP rate	Price	Deposit	Term	Payments	Total	Less Value	Net Cost	Total cost over 12 years
1	TX4 E6	9.20%	£42,795	£4,280	48	£1,097.69	£56,969	£0	£56,969	£56,969
2	TX4 E6	9.20%	£42,795	£4,280	48	£1,097.69	£56,969	£25,677	£31,292	£93,875
3	TX4 E5	11.40%	£26,100	£2,610	48	£712.53	£36,811	£11,750	£25,061	£75,184
4	TX4 E4	11.40%	£14,750	£1,475	36	£494.86	£19,290	£0	£19,290	£57,870

 

Table 3: Vehicle Cost 2014

 

Strategy	Model	HP rate	Price	Deposit	Term	Payments	Total	Less Value	Net Cost	Total cost over 12 years
1	TX4 E5	9.20%	£37,995	£3,800	48	£974.57	£50,579	£0	£50,579	£50,579
2	TX4 E5	9.20%	£37,995	£3,800	48	£974.57	£50,579	£22,797	£27,782	£83,346
3	TX4 E4	11.40%	£24,400	£2,440	48	£666.12	£34,414	£9,500	£24,914	£74,741
4	TX4 E4	11.40%	£12,500	£1,250	36	£419.38	£16,348	£0	£16,348	£49,043

 

Table 4 shows indicative Vito purchase costs.

 

Table 4: Vehicle Cost of Vito Taxis 2015 and 2014

Year	Model	HP rate	Price	Deposit	Term	Payments	Total	Less Value	Net Cost	Total cost over 12 years
2015	Vito	3.00%	£43,000	£4,300	48	£903.00	£47,644	£0	£47,644	£47,644
2014	Vito	4.00%	£42,995	£4,300	48	£935.13	£49,186	£0	£49,186	£49,186

 

In October 2015 Vito taxis made up 11.6% of the fleet. Purchase costs for these taxis and the TX models have been weighted using this figure to provide an overall average purchase cost.

 

The average cost over 12 years in 2014 was £62,652 or 23.73 pence per mile. The average cost for the same strategies in 2015 was £68,257 or 25.85 pence per mile, giving an increase of 8.7 per cent.

 

Pence per mile rates have been calculated assuming an annual vehicle mileage of 22,000 miles. 

 

Parts, Tyres, Garaging & Servicing

In 2011 a study was conducted comparing the changes in costs associated with parts, tyres, garaging and servicing incorporated into the cost index over recent years with the yearly changes in the Office for National Statistics RPI figure for “motoring expenditure: maintenance of motor vehicles” (DOCT). The study concluded that the two series were comparable and it was agreed to use this ONS RPI figure to represent these cost index items in future.

 

In November 2015 the DOCT RPI series showed an annual increase of 1.8 per cent. This gives an increase in the cost per mile of these components from 17.43p in 2014 to 17.75p in 2015.

 

Fuel

The Derv price index from Arval, which has been used to calculate the change in fuel price, was discontinued in 2013. In deciding on an alternative source of fuel price data analysis of London diesel prices from the AA (available at http://ift.tt/1LcuhRH) shows close correlation with the Arval Derv price index. Based on AA data last used to calculate the index, the average fuel price over the three months to December 2014, was compared with the AA average price over the latest three months to November 2015. This gives a value of 110.6p per litre compared to 126.9p, giving a decrease of 12.8 per cent.

 

Insurance

A similar comparison to that made for parts, tyres and garaging costs was made of previous years’ cost index insurance figures versus the ONS RPI series figure for “motoring expenditure: vehicle tax and insurance” (DOCV), and again it was decided to use the RPI figure in future cost index revisions.

 

In November 2015 the DOCV RPI series showed an increase of 4.7 per cent compared to the benchmark October price level used to calculate the last index. This gives an increase in the cost per mile of these components from 10.53p in 2014 to 11.72p in 2015.

 

Miscellaneous

This comprises the cost of hiring a meter, smoke test, vehicle licence and driver licence. The average cost in 2014 was £481 or 2.35 pence per mile. The average cost for the same strategies in 2015 was £485 or 2.37 pence per mile, giving an increase of 0.9 per cent. 

 

Earnings Related

The latest average weekly earnings data (headline rate ONS series KAC3) show a 2.4% increase for the three months to November 2015, compared to the three months to November 2014 used for the 2015 index. This gives a cost per mile figure for the updated index of 142.5p, representing 59.7 per cent of the total index cost.  

 

The “knowledge” and “social” costs have also been uplifted each year in line with national earnings. In 2015 these increased to 12.95p and 6.64p respectively, together representing a further 8.1 per cent of the total index cost.

 

TfL Pricing & Forecasting

23 December 2015

 

 

 

 

Appendix 3

Tariff Changes – 1.6 per cent average increase[1]

 

Tariff Changes – 1.6 per cent average increase

 

Average Fares

 

	Current average	New average	Increase (£)	Increase (%)
Tariff 1	£11.51	£11.69	£0.18	1.6%
Tariff 2	£13.34	£13.56	£0.21	1.6%
Tariff 3	£15.67	£15.92	£0.25	1.6%
All Week	£12.72	£12.92	£0.20	1.6%

 

Tariff Rates – 1.6 per cent average increase

 

		Tariff 1		Tariff 2		Tariff 3
		Current	New	Current	New	Current	New
minimum fare[2]		£2.40	£2.60	£2.40	£2.60	£2.40	£2.60
minimum units		2	2	2	2	2	2
metres/unit < 6 miles		126.2	123.9	102.5	100.6	82.7	81.2
secs/unit < 6 miles		27.1	26.6	22.0	21.6	17.8	17.5
metres/unit > 6 miles		88.5	86.9	88.5	86.9	88.5	86.9
secs/unit > 6 miles		19.0	18.7	19.0	18.7	19.0	18.7
Units at lower rate		76	77	94	95	116	118
Metres at lower rate		9591.2	9540.3	9635.0	9557.0	9593.2	9581.6
changeover fare		£17.40	£17.80	£21.00	£21.40	£25.40	£26.00

 

Example Fares – 1.6 per cent average increase

 

Journey length	Tariff 1			Tariff 2			Tariff 3
Miles	Current	New	Change	Current	New	Change	Current	New	Change
minimum	£2.40	£2.60	8.3%	£2.40	£2.60	8.3%	£2.40	£2.60	8.3%
0.5	£3.40	£3.60	5.9%	£3.60	£3.80	5.6%	£4.00	£4.20	5.0%
1.0	£4.60	£4.80	4.3%	£5.20	£5.40	3.8%	£6.00	£6.20	3.3%
1.5	£6.00	£6.20	3.3%	£6.80	£7.00	2.9%	£8.00	£8.20	2.5%
2.0	£7.20	£7.40	2.8%	£8.40	£8.60	2.4%	£9.80	£10.20	4.1%
2.5	£8.40	£8.80	4.8%	£10.00	£10.20	2.0%	£11.80	£12.20	3.4%
3.0	£9.80	£10.00	2.0%	£11.60	£11.80	1.7%	£13.80	£14.20	2.9%
3.5	£11.00	£11.40	3.6%	£13.00	£13.40	3.1%	£15.80	£16.20	2.5%
4.0	£12.40	£12.60	1.6%	£14.60	£15.00	2.7%	£17.60	£18.20	3.4%
4.5	£13.60	£14.00	2.9%	£16.20	£16.60	2.5%	£19.60	£20.20	3.1%
5.0	£14.80	£15.20	2.7%	£17.80	£18.20	2.2%	£21.60	£22.20	2.8%
6.0	£17.40	£18.00	3.4%	£21.00	£21.60	2.9%	£25.40	£26.00	2.4%
7.0	£21.00	£21.60	2.9%	£24.60	£25.20	2.4%	£29.00	£29.80	2.8%
8.0	£24.80	£25.40	2.4%	£28.20	£29.00	2.8%	£32.80	£33.40	1.8%
9.0	£28.40	£29.00	2.1%	£31.80	£32.60	2.5%	£36.40	£37.20	2.2%
10.0	£32.00	£32.80	2.5%	£35.40	£36.40	2.8%	£40.00	£40.80	2.0%
11.0	£35.60	£36.40	2.2%	£39.20	£40.00	2.0%	£43.60	£44.60	2.3%
12.0	£39.20	£40.20	2.6%	£42.80	£43.80	2.3%	£47.20	£48.40	2.5%
13.0	£43.00	£44.00	2.3%	£46.40	£47.40	2.2%	£51.00	£52.00	2.0%
14.0	£46.60	£47.60	2.1%	£50.00	£51.20	2.4%	£54.60	£55.80	2.2%
15.0	£50.20	£51.40	2.4%	£53.60	£54.80	2.2%	£58.20	£59.40	2.1%
16.0	£53.80	£55.00	2.2%	£57.40	£58.60	2.1%	£61.80	£63.20	2.3%
18.0	£61.00	£62.40	2.3%	£64.60	£66.00	2.2%	£69.00	£70.60	2.3%
20.0	£68.40	£69.80	2.0%	£71.80	£73.40	2.2%	£76.40	£78.00	2.1%

All example fares assume entire journey charged on distance rates

Tariff times 

·        Tariff 1: Monday to Friday between 06:00 and 20:00 

·        Tariff 2: Monday to Friday between 20:00 and 22:00, Saturday and 

·        Sunday between 06:00 and 22:00  

·        Tariff 3: Every night between 22:00 and 06:00, Public holidays

 

 

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[1] An increase of 1.6% has been selected as the 1.7% increase in fares calculated this year is offset by the 0.1% decrease calculated last year, which was not implemented.

[2] The minimum fare is increasing from £2.40 to £2.60

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