London's Big Gamble

The controversial and much debated plan to impose a congestion charge on drivers who enter an eight-square mile area of central London took effect on February 17. Some 700 video cameras distributed at entry points and throughout the congestion zone scan license plates of vehicles that travel within the zone on weekdays between 7 am and 6:30 pm. This information is matched each night against a database of drivers who have paid the charge. Motorists can pay the daily £5 ($8) fee by phone, on line, or at designated sales points. Failure to pay by 10 pm on the day of the trip triggers a progressively higher fine which reaches £120 ($192) if the charge remains unpaid after 28 days. Residents living within the central zone receive a 90% discount and disabled drivers, taxis and emergency service vehicles are exempt from the charge altogether.

The scheme is intended to cut down on chronic traffic congestion in central London (and is expected to generate some £130 million/year for public transport improvements). Some 250,000 cars typically enter Central London every weekday. Authorities hope the charge will reduce this number by 10-15 percent. While congestion charges have been implemented successfully in Singapore and three Norwegian cities (Oslo, Bergen and Trondheim), no program has ever been attempted on this large a scale in a city with such complex travel patterns.

We have asked two veteran students of congestion pricing to send us their observations and reflections about London's big gamble. They are David Bayliss, former Chief Transport Planner for the Greater London Council and Director of Planning for London Transport, and the well-known transport economist and author of "Roads in a Market Economy", Gabriel Roth (who happened to be visiting London at the time). While their reports of the initial launch are generally positive, it will be weeks if not months before the full impact of this ambitious scheme on traffic levels, travel patterns and center city economic activity is known.

Commentary by David Bayliss

Monday 17th February
First day started without a hitch. Traffic levels were estimated to be about a quarter below a normal Monday (190,000 cars rather than the customary 250,000), but as this week was school half term in London, traffic levels would be expected to be lower than usual. No problems were encountered on the boundary route or its approaches from outside the charging area.

The media reports that there could be up to thirty UK towns and cities that could follow suit if the London Scheme is a success. This seems high to me but there are a number of cities, including Edinburgh, Bristol and Leeds that are watching keenly as they have their own plans. Outside there are other candidates, Stockholm and the Randstadt area in Holland have made attempts in the past to get road pricing schemes off the ground but have failed on the home front. If London succeeds there can be little doubt that we will see renewed efforts in these areas.

Tuesday 18th February
No significant problems reported other then some motorists were having difficulty paying their charges. Payment can be through one of nine thousand or so machines and retail outlets, by phone, by text and by Internet. To some extent at least this is because some drivers are using Internet purchasing for the first time. My own observation of conditions within the charging zone confirmed that traffic was flowing freely and bus services operating smoothly.

Wednesday 19th February
Still going smoothly... So concerns about the boundary route and its penumbra becoming clogged are, as yet, to be realized. There were a few protests about either traffic "rat running" through areas around the charging zone or impacts on low-income motorists who have to use their cars because of the hours they work. Most vocal of these are the Meat Porters of Smithfield Market who arrive at work at about 4 am and leave after the charging starts at 7 am. This protest is an interesting one as it can be argued that activities such as wholesale markets have no place in the heart of a global financial district and that congestion charging is doing its job in creating pressure for relocation of inappropriate land uses. Perhaps congestion charging is shaking out a remaining historical anachronism.

A Cautionary Note
Whilst the introduction has gone well it is too early to declare the system a success. Next week will see the kids back at school - with the "school run" and parents who had taken a few days off back at work. For a major IT system not to fail in its early days would be remarkable and there could be other "surprises". We do not yet know what the level of non-compliance has been and what resistance to late payment might be. Payment between 10 pm and 12 midnight is £10 (twice the standard rate). After that the fine is £80 - reduced to £40 if paid within a month. Three no-payments and the scofflaw can have his/her car towed and confiscated!

Commentary by Gabriel Roth

On June 2, 1975, the first day of congestion pricing in Singapore, I wandered about the streets of the central area looking in vain for traffic congestion. None was to be seen; in fact, there were but few vehicles on the roads, because the authorities in Singapore had pitched the road price too high in the priced zone, thus driving traffic to the congested roads on its periphery. Was the same mistake made in London?

London streets, on February 17 and 18, 2003, were also surprisingly clear of traffic, but so were most of the streets outside the zone. There were some trouble spots, but conditions overall were much better than anticipated. Traffic volumes on the first day of the congestion charging scheme were reported by the Royal Automobile Club to have been 60 per cent below normal, with 75 per cent of vehicles being buses or taxis.

On the second day I set off from Piccadilly Circus on the top deck of a No.13 bus and reached Golders Green bus station (about six miles away) 30 minutes later. The slowest part of the trip was the segment along Oxford Street, which is reserved for buses and taxis. I saw plenty of vacant on-street parking spaces all over Northwest London at different times of the day.

Commentators agree that London's road price was not pitched too high, as £5 is the approximate price of a daily public transport return fare or of seventy-five minutes of street parking in the West End. It looks as if the success of congestion pricing in its early days was due to the forecasts of "chaos" by the scheme's critics, which kept many travelers off the roads. The advent of school holidays was estimated to have reduced morning peak-period traffic by some 15 per cent.

Comments on the drop in traffic volumes missed the important point that rationing by price is bound to change the composition of traffic. Those with urgent business can, on payment of the daily fee, now travel in town more quickly, and those unwilling to pay the charge will have to change their travel arrangements. Thus, the scheme could bring substantial benefits even in the unlikely event that traffic volumes remain the same. It is not clear how the losers are to be compensated - not all can switch from private to public transport.

The politics of congestion pricing in London are paradoxical. Both the Guardian and the Daily Telegraph have written that the left-wing mayor is using Milton Friedman's "right-wing" philosophy of "rationing by the price rather than by the queue". (Actually, congestion pricing is due much more to the "liberal" William Vickrey than to the "right-wing" Milton Friedman). Those who oppose congestion pricing are supported by the Conservative party - its leader, Ian Duncan Smith, the Shadow Transport Secretary Tim Collins, and Mayor Livingstone's opponent at the next mayoral election, Steve Norris, have all come out in opposition to the "KEN-gestion tax". Prime Minister Tony Blair, who distanced his national government from the scheme just two weeks ago, has now declared that "we have always said we want the system to work". This sentiment is shared by many transport economists, even by those who keep asking how the money is to be spent.

Thirty-five other UK local authorities are reported to be observing the London scheme with a view to adopting it if it works. No wonder, then, that the national government is keeping an open mind about it. However, if congestion pricing in London turns out to be acceptable there, it will no doubt be improved so that the charge would not be a flat £5 for all, but related to actual travel in conditions of congestion. One would also like to see a scheme that does not involve the anomalies created by fixed boundaries. As GPS (Global Positioning System) technology is to be used in 2006 in several European countries to charge for the use of roads by heavy vehicles, it is possible that an improved system, based on GPS technology, will also be applied thereafter in Europe to price the use of congested roads by all motorized vehicles.

"London's Big Gamble" originally appeared in the March/April 2003 edition of Innovation Briefs Vol. 14, No. 2, and is reprinted with permission. Innovation Briefs is published by Urban Mobility Corporation, C. Kenneth Orski, Editor. David Bayliss, is the former Chief Transport Planner for the Greater London Council and Director of Planning for London Transport. Gabriel Roth, who happened to be visiting London at the time, is a well-known transport economist and author of Roads in a Market Economy.