A clear comparison of the likely impacts if TfL implemented a fare freeze in 2026/27 similar to the national rail fare freeze announced by the Chancellor in the 2025 Budget, versus “business as usual” with planned fare increases under the current funding settlement, is something Londoners can be asking themselves. 

1. What Business-as-Usual Looks Like in 2026/27

Under current plans, TfL’s draft budget assumes fares will rise by Retail Prices Index (RPI) inflation + 1% (often seen as 5–6% depending on inflation), in line with the government-secured capital funding deal.

There is already a freeze on bus & tram fares funded by City Hall (bus/tram only) until mid-2026, but Tube and TfL rail fares are expected to go up. Also planned fare increases help provide revenue for operating costs and capital investment, and are factored into the multi-year funding agreement with government.

TfL’s passenger income has been in the region of £5.7 bn in recent budgets (2025/26) and rising year-on-year under the current fare assumptions.

Impact of a Fare Freeze in 2026/27 (Compared with Business-as-Usual)

If TfL were to freeze fares in 2026/27 — meaning no inflation or RPI+1% rise, mirroring the Chancellor’s rail fare freeze — key impacts would include:

Passenger income would be lower than under business-as-usual because TfL would not collect the additional revenue that comes from higher prices.

Estimates suggest cancelling an average planned fare increase (e.g., ~3.6–4.6%) could cost TfL around £180 million a year on a ~£5 bn passenger revenue base.

If the average planned increase were higher (e.g., ~5.8% under some scenarios), the foregone revenue could be closer to £230 million+.

This reduction is money would have otherwise helped cover operating costs, renew infrastructure, and meet funding settlement conditions.

Impact on Operating and Capital Budgets

TfL’s finances are heavily reliant on farebox revenue — historically around 40–50% of total income — with other income from business rates, grants, congestion charges, etc.

A freeze means TfL must find alternative funding to compensate if it wants to maintain the same level of service and investment. That could come from:

Greater London Authority (GLA) funding top-ups

Borrowing or reserves

Service cuts or deferred investments (if no funding replacement is found)

Without replacement funding, essential projects (signalling upgrades, rolling stock renewal) or service levels could be threatened because the current funding settlement assumes some contribution from fare rises.

Affordability and Ridership Effects

The positive social impacts of a fare freeze include, lower travel costs for passengers, helping households with commuting costs, especially given national rail freezes elsewhere.

There is of course potential modest uplift in ridership if cheaper fares stimulate some demand (though elasticity on urban transit is typically limited).

However, TfL’s current policy already includes bus fare freezes and small cap increases on Tube fares, mitigating some cost burdens without a wholesale freeze.

Compared to the Chancellor’s Rail Fare Freeze

The difference for TfL is National rail fares are frozen for regulated services, benefiting many commuters outside London. But TfL fares are partially exempt from that freeze under business-as-usual, leading to ongoing increases to support TfL’s finances.

A full TfL fare freeze would align TfL more closely with the national policy, but would amplify the funding gap relative to current plans.

What the Congestion Charge Changes Are Expected to Generate

London’s Congestion Charge scheme is being overhauled from 2 January 2026, with two major changes:

• Charge rises from £15 to £18 per day, first increase since 2020. Transport for London

• Electric vehicles (EVs) are no longer fully exempt — previously EVs were 100% exempt, but under the new rules:

  • Electric cars pay 75% of the full charge (≈£13.50) if registered for Auto Pay. British Brief

  • Electric vans, HGVs, and quadricycles get a 50% discount. Transport for London

💷 Revenue Uplift From the New Congestion Charge Regime

📌 Estimated Income Figures

Current projections suggest:

• TfL expects Congestion Charge income to rise to ~£320 million in 2026/27. Cinch

• That’s up from roughly £240 million in 2024/25 — about an £80 million increase overall. Regit

• Data analysis suggests removing the full EV exemption alone could generate £75 million+ per year, and combined with the rate rise might add around £80 million–£90 million annually. Motor Trade News+1

• Some sources even estimate up to £110 million extra revenue annually when compared with the previous regime. The Standard

So congestion charging changes are a meaningful revenue boost for TfL, and that money goes back into the transport budget — including supporting public transport, walking and cycling infrastructure. The Standard

📊 How That Compares With the Fare Freeze Gap

A full fare freeze for TfL in 2026/27 (i.e., scrapping planned inflationary increases) has been estimated to cost roughly £180 million+ in foregone revenue versus business-as-usual — depending on how large the planned increases would have been. That’s because fare rises are a major contributor to TfL’s income. (This figure was in the earlier analysis.)

🔹 Congestion Charge vs. Fare Freeze Gap

So the additional income from congestion charging might cover a substantial chunk of the missing fare revenue — potentially half or more — but not all of it on its own. The uplift is significant, but still smaller than the fare revenue foregone if fares really were frozen instead of rising for TfL services.

📌 Why It Helps But Doesn’t Fully Close the Gap

✅ Positives

• The revenue from charging EVs and higher congestion fees realises money from vehicles that were previously exempt, and reflects the reality that EVs are a much bigger share of central London traffic. Transport for London

• Congestion charging revenue flows directly back into TfL’s transport budget and helps fund public transport operations and infrastructure. The Standard

• It diversifies TfL income away from total reliance on passenger fares alone.

⚠️ Limitations

• Even with ~£80m–£110m extra, that won’t fully offset the potential £180m+ lost from a full fare freeze compared to planned fare rises.

• Congestion Charge revenue is also more volatile than farebox income — it depends on driving patterns, economic conditions, and behaviour changes (e.g., fewer drivers due to ULEZ or working from home).

• Some of the revenue increases are already assumed in financial planning rather than “new windfalls,” so they wouldn’t all be additional if the baseline already factored in the higher charge.

🧠 Conclusion

✔️ Yes — bringing EVs into the Congestion Charge and increasing the charge to £18 a day will raise significant additional revenue for TfL in 2026/27.
✔️ That extra income could meaningfully reduce the budget shortfall caused by freezing fares.
❗ But it likely wouldn’t be enough alone to fully compensate for the revenue lost if fares had been allowed to increase as planned.

TfL would still need either further funding from City Hall/government, cost savings, or other new income streams to balance the books if fares were frozen entirely.