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COVER THE COSTS? London taxi fare formula points to potential 7.07% increase in 2027
London’s taxi fare formula points to a potential 7.07% increase in fares from April 2027, according to figures supplied ahead of the annual tariff consultation. The calculation is an early indication; the level of any change will be considered through consultation later this year.
The projected figure combines a 5.03% increase in operating costs with a 2.05% rise in average national earnings. The operating cost basket includes items such as fuel, insurance and vehicles, which are used to track the costs faced by drivers.
The calculations are reviewed now to estimate whether fares may need to rise or fall. Any approved change would take effect in April 2027.
In commentary for the Licensed Taxi Drivers’ Association (LTDA), senior representative Sam Houston said members had received an email asking for their personal views on the matter. He noted that the Cost Index had come out at “around 7%”, significantly above an overall UK inflation figure of around 3%.
Houston said in TAXI magazine vehicle and insurance costs were the main reasons for the difference. “This basically means that prices paid by taxi drivers for things we need to do the job have increased at a higher rate than prices overall,” he wrote.
He also pointed to the cost and accessibility of purpose-built London taxis, saying 100% of the vehicles are wheelchair accessible. That feature, he said, is a “unique selling point” for the trade, alongside London taxis’ reputation and long-standing role on the city’s roads.
Houston said views on the tariff would differ among drivers and customers. While some may welcome an increase, he argued that the tariff is “actually a price” and forms part of a customer’s decision about which transport option to choose.
He added that the effect of an increase on the trade as a whole, including its impact on drivers’ hourly earnings, is difficult to quantify. Houston warned that if the trade does not accept the full Cost Index increase, “last year’s inflation will never be reflected in the tariff”.
