imperial college london 1 centre for transport studies congestion charging where next? stephen...

Imperial College London 1Centre for Transport Studies

Congestion Charging

Where next?

Stephen Glaister

Professor of Transport and InfrastructureImperial College London

LSE 31 January 2005


The car is dominant – outside Central London

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Car

BusRail


Traffic speeds in London 1968 - 2003


The three options

• Tolerate the congestion

• Build lots more road capacity

• Road user charging – to reflect

congestion AND “environmental” damage


Infrastructure policy: Interlinked issues

:

Price

Funding Crowding/ delay/ service quality

Investment in capacity Case for new capacity

Better use of existing system

Levels of subsidy & tax

Capital financing


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


London Congestion Charging: February 2003


CC area is a tiny part of London


Forecast scheme revenues and costs for 2003/04 (£ million)


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


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


Result of loading additional 22% demand onto 2000’s networkN. b. these are average effects

Speed reduction % Traffic increase %


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.


Environmental tax + congestion charging additional to current dutyExtra revenue £10 - £15 bn pa (in 2000 conditions: more in 2010)

Traffic Reduction % Speed increase %


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


Zero fuel taxes, environmental + congestion charges Low environmental costs (-£4bn) High environmental costs (+£5 bn)

Traffic change % Traffic Change %


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


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


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 exemptionsResidents 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


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


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


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


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


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?


The Future of Transport – Transport White Paper , July 2004


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)


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 consultationCC 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


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

imperial college london 1 centre for transport studies congestion charging where next? stephen...

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