Congestion Charging
Where next?
Stephen Glaister
Professor of Transport and Infrastructure
Imperial College London
LSE 31 January 2005
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The car is dominant – outside Central London
Passenger Km (billion)
700
600
500
400
Car
300
Rail
200
Bus
100
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2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
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1958
1956
1954
1952
0
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Traffic speeds in London 1968 - 2003
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The three options
• Tolerate the congestion
• Build lots more road capacity
• Road user charging – to reflect
congestion
AND “environmental” damage
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Infrastructure policy: Interlinked issues
:
Better use of
existing system
Price
Levels of
subsidy & tax
Funding
Crowding/ delay/ service quality
Investment in capacity
Capital financing
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Case for new
capacity
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You cannot set policy for any one of these in isolation from the others
If you hold urban metro fares below long term growth in real earnings….
do not be surprised if you get
over-crowding,
declining reliability,
under investment
Road user charging: the attempt to introduce a proper set of incentives
(a) achieves a better use of existing assets
(b) provides a source of local revenues to fund infrastructure
(c) provides a meaningful long term capacity investment rule
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London Congestion Charging: February 2003
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CC area is a tiny part of London
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Forecast scheme revenues and costs for 2003/04 (£ million)
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Better pricing has improved quality of service
The London experience has been broadly as economists would
anticipate
It has been fundamental in demonstrating to the public that
• People do respond to price incentives
• Higher charges can produce a better outcome
• Road user charging can be made to work in a large urban area
• Road user charging can be politically acceptable
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It is a good solution in principle, but is national charging practical?
It does NOT necessarily mean charging more
Nb of every £0.80 for fuel, over £0.50 is tax
– or a charge for use of the system
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Result of loading additional 22% demand onto 2000’s network
N. b. these are average effects
College%
London
SpeedImperial
reduction
Traffic increase % 18
Centre for Transport Studies
Road costs (pence per vehicle km) 1998 prices
Cost category
Low
High
Infrastructure operating costs
and depreciation
0.42
0.54
External accident costs
0.82
1.40
Air pollution
0.34
1.70
Noise
0.02
0.05
Climate change
0.15
0.62
These are averages. Values vary by road type and urban density.
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Environmental tax + congestion charging additional to current duty
Extra revenue £10 - £15 bn pa (in 2000 conditions: more in 2010)
Traffic Reduction %
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Speed increase %
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Some different policies:
The previous scenario assumed charges would be added to existing
road taxes
It would be possible to rebate some, or all fuel duty and/or the tax disc
in order to balance the overall yield…
…. or to remove tax (over and above standard VAT) and replace it with
“proper” road prices, as follows
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Zero fuel taxes, environmental + congestion charges
Low environmental costs (-£4bn)
High environmental costs (+£5 bn)
Traffic change %
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Traffic Change %
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Rural road users are currently paying FAR too much, and peak time city
users are paying too little.
On a “middling” view about environmental costs the total tax take “today”
is about “right”… but it would have to increase as traffic grows.
Environmental costs can be dealt with by pricing (unless they are
thought to be infinitely high!)
Road pricing could generate congestion benefits and environmental
benefits without changing overall traffic by much.
It increases the economic value of the road assets by using them more
efficiently
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What might a practical scheme look like?
ALL THIS ASSUMES THE COSTS OF COLLECTION CAN BE
IGNORED, WHICH THEY CANNOT.
Since congestion is very localised in time and space
the technology must have a moderate degree of discrimination
The London technology is very expensive
At least half of the revenue is consumed by the investment and
administration costs
National road user charging only practical if investment and running
costs can be made reasonable
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Other issues: all depend on a clear statement of what the policy is
Administration, enforcement, propensity to offend, penalties
Privacy and human rights
Effects on business and commerce
What concessions?
Preferably very few exemptions
Residents should not be given too many concessions
Equity and “social inclusion”
Depends crucially on how revenues are used
(Imperial college for Independent Transport Commission is doing new
research on this)
It is absolutely essential that there is clarity about what will
happen to the net revenues
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The effect on rail finances
It would cause transfer to rail in those markets where
rail is already strong
rail subsidies are low
there is little spare capacity
It would strengthen competition from roads where
rail is already weak
rail subsidies are very high
there is unused capacity
If roads were properly priced then the case for rail subsidies would be
weakened: no congestion relief argument
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To promise “better alternatives” or not?
It is often claimed that alternatives must be offered before road charging
is introduced (e.g. better public transport)
This was the case for the central London CC Scheme
But central London is unique in its public transport density
Elsewhere it is generally INFEASIBLE
It is NOT NECESSARY to offer a genuine alternative
The case for charging is better use of existing system and better
investment in existing system
It stands irrespective of whether alternatives can be provided
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To promise “revenue neutral” or not?
Revenue neutrality would help reduce opposition from the road-user
lobby
But it leaves no net revenue for complementary measures eg
Public transport improvements
Road capacity or better maintenance
NB the London scheme is not revenue neutral
Revenue neutrality might shift cash from urban to rural areas
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Governance of roads
Which body would
set the charges?
collect the revenues?
make investment decisions?
carry the risks on those decisions?
Governance of the funds. Credibility is essential on:
Prudence and efficiency
Accountability
Transparency
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What is the meaning of “a national scheme”
What are the respective roles of Whitehall and local government?
Local authorities already have the powers but have great difficulty using
them.
There must be a degree of national compulsion
Yet local government knows its area and should set local transport
policy.
Raises issues of devolution and local government finance – would
adjustment be necessary?
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The Future of Transport – Transport White Paper , July 2004
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The London Congestion Charging: a chapter of accidents
1986 Mrs Thatcher abolished GLC (Leader K. Livingstone)
1997 New Labour: elected executive mayor for London
Battle with Treasury won to allow hypothecation of CC revenues to
transport in London area
1998 Technical group to design a practical scheme (RoCOL, 2000)
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2000
K. Livingstone NOT made official Labour candidate for Mayor
Livingstone stands as an Independent.
Strong public support because of 1986
Livingstone puts CC explicitly into Manifesto and elected
2001-02
Formal public consultation
CC survives two attempts to stop it by Judicial Review because
Mayor had an explicit mandate.
2003
CC successfully introduced.
2004
Livingstone proposes Western Extension
2004
Livingstone re-elected
2005
Kiley proposes alternative way forward
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The main obstacles to proper road and rail user charging…
The real obstacles are not:
Acceptability of the principle
Finding a suitable technology
The obstacles are
Finding a trusted, politically accountable system of
governance and administration of the funds.
National government clearly stating and then sticking to what the
policy is.
The rest will follow if, but only if, these issues are resolved
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