Policies influencing transport costs exist at local, regional and national levels of government (as set out in Table 1).

Whilst some of these policies are directly targeted at encouraging behaviour change, others exist to fulfil different purposes such as generating revenue.

Understanding the complexities of this landscape is important when considering the introduction of new policies as the cost to the end user typically involves a combination of policies at all levels.

National government

National government sets the overall direction for transport policies. It sets climate targets, fuel duty and road taxes for cars. This means that national government is well placed to introduce financial incentives as a lever for encouraging sustainable and active travel.

But national government is not a homogeneous entity and so these policy instruments are distributed between departments, leading to the introduction of policies with sometimes competing objectives. For example, whilst rail fare policies fall under the Department for Transport, fuel duty and vehicle excise duty (VED) are both taxes and so part of the remit of the Treasury.

Mayor of London and Transport for London

TfL is London’s regional transport authority, controlled by the Mayor of London. Like national government, TfL has existing policies influencing the costs of transport modes, such as the Congestion Charge, public transport fares and Santander cycle hire prices. However, TfL’s capacity for new financial incentives is currently undermined by a lack of funding.

Whilst TfL has typically been self-sustaining through fares and other commercial revenue, the sharp decreases in passenger numbers during and after the pandemic have led TfL to depend on financial support from central government. After a series of short-term deals, there is now a settlement in place to the end of March 2024. But this settlement contains certain conditions – such as fares rising at the same rate as on National Rail and concessions being in line with national schemes. ⁹

This process of agreeing funding has been acrimonious at times, and it is unclear how it will develop over the next one to two years. Our accompanying report on outer London proposes some policy solutions to support TfL financial security including changing the Greater London Authority (GLA) Act to allow for some fiscal devolution to raise more money in the capital.

Local authorities

Local authorities in London can influence the costs of driving and cycling. They receive funding from TfL to implement the Mayor’s transport strategy. Whilst this funding enables them to introduce many schemes to encourage cycling, walking and the use of public transport, the limited nature of the funds can also restrict their capacity.

Local authorities can also be limited by who they can influence. Whilst local authorities can financially incentivise the travel behaviours of residents, they are typically unable to apply these to people who are just travelling through. Interviewees from Central London local authority mentioned that this is a particular issue for boroughs situated between central and outer London, for whom through-traffic makes up a large part of the driving in the borough.

“The majority of our traffic is people travelling through the borough rather than to the borough.” – Local authority officer ¹⁰