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London's charge zone: blueprint for road pricing 'success'?

The spin says one thing, the numbers something rather different

One year on, London's congestion charge is being widely hailed as a success, Mayor Ken Livingstone is pushing for its extension, and numerous other cities seem poised to follow London's lead. London has shown that the public will accept road pricing, and has also shown that it can be used to reduce traffic. So it's the blueprint for the deployment of strong IT systems to fix the world's transportation problems? Well no, not exactly.

We accept that arguing that the charge has been a failure is not entirely fashionable, but we feel it important that politicians studying the scheme with a view to implementing their own version elsewhere should be encouraged to do just that - i.e., study the scheme rather than just the press releases and transcripts of the wit and wisdom of Mayor Ken. If they do, they will at best conclude that it is an irrelevance that tackles only a small aspect of London's transportation problems at some considerable cost, leaving the remainder conspicuously untackled.

First things first, the successes. As Transport for London tells us, the scheme has reduced traffic inside the charge zone by 18 per cent, and has reduced delays there by 30 per cent. These headline figures are annual, with more recent data from TfL showing delays down 26 per cent, but there's clearly not enough data yet to indicate a reduction of the scheme's effect. Non-Londoners should banish any preconceptions that it is 'London' that is subject to the charge - it is applied only in a fairly small area within central London, and in that sense is resolutely non-strategic. It has reduced traffic and improved flow within this area, but has had no significant impact on the major issue of moving people around London, to and from work.

The extension of the existing zone currently being proposed would likely be a success in similar terms, reducing traffic in a small area without addressing broader issues and without generating widespread opposition from Londoners. It does not however follow that this would be the case if road charging were applied to the whole of Greater London, or indeed to the whole of the country; we simply do not have sufficient information to say with any certainty, and London's charging experiment does not provide us with any such information.

Aside from stating that its objective of reducing congestion within the charge zone has been achieved, TfL goes to some lengths to show that it has had no significant adverse effects on traffic outside the zone. Which sounds nice until you realise that this means that the organisation responsible for transportation in London is therefore telling us that London traffic still stinks, and that the high-profile initiative has absolutely nothing to do with it one way or the other. Similarly, it argues that businesses surveyed place it only fifth on a list of factors impacting trade, beneath wider economic factors, the decline in tourism and seasonal influences. This sounds good until you grasp that's it's actually a statement of the obvious, and that had the charge not been implemented it clearly would not be viewed as a factor by businesses, full stop. Of course if it hadn't been implemented congestion might have been cited as a factor. Ken certainly thinks so, and is claiming ( on we know not what evidence) that congestion was costing London £2 million a week.

But it's a success in reducing traffic in its small target area, right? Well yes, but that is a TfL self-defined objective, and we should look next at bangs per buck - is the money London is spending on this very substantial IT project well-spent?

According to TfL estimates, contractor Capita is forecast to be paid £297 million over a five year contract. Under the revised agreement negotiated last year Capita is paid a standing charge of £3 million per month, a share of the revenues from the charge itself, from penalty charge notices and per telephone call handled. The scheme is yielding a net £50 million in revenue, according to TfL, which also says it will produce £68 million this year, rising to £80-90 million next. This compares with the £180 million it was predicted it would raise for London's transport budget. Livingstone claims "we didn't do it to raise money, we did it to reduce congestion," which just makes the very large hole in TfL's budget all the more mysterious.

The money coming in derives from the charge itself and from penalty notice enforcements on charge evaders. There are currently 110,000 payments per weekday, with 24,000 of these being at a discounted level, so it's probably safe to estimate incoming revenue as being in the vicinity of £2.5 million per week, or £130 million (let's be nice) per year. Penalty Charge Notice (PCN) revenue is currently quite substantial. PCNs are currently running at 165,000 per month, and in September TfL says 70 per cent of these were paid at an average level of £48.50. So on that basis the relatively small proportion of evaders appears to be contributing a sum of the order of that paid by the law-abiding majority, and 100 per cent compliance would represent a nightmare scenario for TfL.

The lower than expected revenue has been claimed as being a consequence of the charge's being more successful than anticipated in discouraging traffic, and earlier TfL claims put the reduction at 50,000 vehicles per day. It is however difficult to match this against TfL's current statements that the reduction in congestion of 30 per cent is on the high side of its original 20-30 per cent estimate, or its claim of a traffic reduction of 18 per cent. The original £180 million estimate therefore seems wildly inflated, and instead, on the first year figures, we have a maximum in the vicinity of £160 million being paid in, and £50 million coming out and being set (perhaps) towards the public transport budget.

So for every £3 paid into the charge by Londoners, one goes to transport improvements, one to Capita, and one on rounding errors, or something. Given that the scheme is most certainly not strategic while London transportation has strategic problems, it seems reasonable to question whether its small-scale achievement is sufficient justification, or is a cost-effective use of a transportation tax. ®

Related links

Report slams London Mayor's car charge zone contract
TfL claims success for charge
First annual report on the charge
London Assembly report on the charge

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