House of Commons - Transport

Select Committee on Transport Seventh Report

5 A phased approach to road pricing

42. There is an emerging consensus that if road pricing is to be introduced, it should be phased in incrementally, rather than with a sudden 'big bang' approach. Incrementally need not necessarily mean gradually. The London Congestion Charge scheme showed the importance of setting out a timetable with a reasonably short timeframe for delivery, in order to ensure progress is made and momentum not lost. Although there is a consensus that the introduction of road pricing should be incremental and phased, the various interest groups that have participated in the road pricing debate have failed to reach a consensus on the detail of what types of scheme to begin with, and where and when. This is understandable as the groups represent different interests. As the Secretary of State acknowledged it is the job of Government to now bring the different views together, and to take difficult decisions:

43. There are several choices to be made in terms of what steps to take, the sequence and timings of action. The dilemmas include:

which roads to price: urban or inter-urban, existing or new capacity;
what technology to use;
how charges are set and what use to make of the revenue collected;
and how to ensure fairness and accessibility.

The Department for Transport ought to set out an indicative timetable showing the incremental steps that would need to be taken in order to implement a system of national road pricing. Further research is needed into how to make the transition from several localised charging schemes to a national road pricing system.

Local urban congestion charging schemes

44. Some of the worst congestion in the country occurs in and around urban centres. Local authorities have the power to introduce local congestion charging schemes, subject to approval by the Secretary of State for Transport.[80] Although there were mixed views in the evidence we received, several witnesses favoured increasing the number of local schemes as a step towards national road pricing in the short term, using the 'low-tech' solutions already available.[81] The evidence suggests these would be the easiest and quickest to implement.[82] This is partly because the opportunity to provide alternatives to car travel with high quality public transport are greater in densely populated urban areas.[83] The Government's Feasibility Study outlined the advantages of implementing small-scale schemes now:

45. The Mayor of London introduced a £5 cordon charge in central London in February 2003 and the London Congestion Charge gives an insight into how local congestion charging schemes might be implemented. Results published after the first 12 months of operation show that the London scheme had produced significant benefits for people travelling in and around central London. Traffic congestion has reduced by 30 per cent.[85] Car and bus journeys are quicker and more reliable with vehicles spending less time in traffic queues. The majority of former car users have transferred to public transport, which is apparently coping well.[86] Some retailers have suggested that the congestion charge has harmed business and John Lewis has stated that sales have reduced by between 5 to 9 per cent as a consequence.[87] Transport for London denies this claim, stating that the scale of reduced travel overall to central London from congestion charging is very small and "not compatible with the scale of effects claimed by some retailers."[88]

46. The Local Government Association gave a cautious welcome to the prospect of pilot charging schemes in the short term:

The Association did not see local schemes as an end in themselves, however, as it favoured a revenue neutral approach to road pricing.

47. Although the theoretical reasons for the implementation of local urban charging schemes are clear, it is far from obvious that more local schemes will be implemented in practice. Other than London, only one authority - Durham - has introduced a charging scheme, to date, and this applies to just one road. Implementing road pricing would require strong commitment and direction. We note such leadership and commitment were shown by the Mayor of London in introducing the country's first congestion charging scheme. This commitment was key to the successful implementation of the London scheme. We expect equally strong commitment to be shown by both national and local Government in tackling congestion and implementing measures which are shown to be effective.

BARRIERS TO LOCAL CHARGING SCHEMES

48. Despite academics, professionals and other interested organisations calling for further local schemes to be implemented as part of an incremental introduction of national road pricing, local authorities themselves, and other stakeholders, are more hesitant when it comes to introducing charging schemes. In the 10 Year Plan for Transport the Government predicted that outside London there would be eight local charging schemes in place by 2010, with the earliest schemes appearing between 2003 and 2005.[90] These have, as yet, conspicuously failed to materialise.

49. The success of the London Congestion Charge scheme is seen as peculiar to London's specific circumstances.[91] In particular, the Mayor's control over public transport and bus service improvements, combined with the very high levels of congestion evident throughout the day in central London, before the £5 charge was introduced, were unique. It is not certain that the congestion reduction achieved in central London would be replicable in other cities.

50. Local congestion charging is perceived as a high political risk. The recent referendum in Edinburgh, which resulted in an emphatic three-to-one rejection of proposals for a city-wide congestion charge scheme, is likely to reinforce this view and delay the development of other local congestion charging schemes. Congestion in towns and cities outside the capital is largely restricted to a small number of peak hours each day and a limited number of roads. Even though some of these roads experience severe congestion, there may not be local popular support for charging.

51. There are also questions about the cost-effectiveness of a local congestion charging schemes, in cities other than London. The local authority has to be confident that it will capture sufficient revenue to cover both the costs of the scheme's infrastructure, administration and enforcement, and to pay for the improved public transport services that would ensure the urban areas remained easily accessible. Towns and cities are important economic centres which, to survive, need to attract business, employment, services and shoppers. Part of the risk associated with local charging schemes is whether an individual city would be able to withstand the economic impact of trade diverting to other neighbouring cities that did not have a congestion charge, and with out-of-town shopping centres and business parks, which already provide strong competition.[92] Peter Mackie, of Leeds University, summarised some of the considerations for local authorities investigating charging schemes:

52. Local authorities' lack of power over public transport is another barrier to the introduction of local congestion charging schemes. Under the Transport Act 2000, local authorities that introduce congestion charging schemes before 2011 will keep 100 per cent of the revenue for the first ten years of the scheme's operation, and this must be spent improving the quality of transport.[94] Although Stephen Joseph, of Transport 2000, suggested that local authority control over public transport services was a "minor barrier" but "not a showstopper",[95] the Local Government Association told us that lack of control meant local authorities were unable to improve public transport in advance of introducing charges.[96] They called for local authorities to be granted powers similar to those that had been available to the Mayor of London before he introduced the London scheme:

53. The Local Government Association clearly considered that the local bus quality partnerships and the funding available from the Department for Transport do not provide all that they need.[98] Although the Transport Act 2000 gave local authorities powers to make bus Quality Contract Schemes, which allow local authorities to specify the routes, fares and frequency of bus services where this is the only practicable way for them to implement their bus strategies, these powers have not yet been used. Even when the new time limits are introduced, there will still be a minimum of six months between a scheme being made and coming into force, leaving aside the time needed to prepare such a scheme and get it approved by the Secretary of State.[99]

LOCAL SCHEMES AS A PATH TOWARDS A NATIONAL SCHEME

54. Despite the difficulties, the Department for Transport continues to see local schemes as "a trajectory towards a national road pricing system".[100] The Secretary of State, Alistair Darling MP, indicated that he anticipated more schemes would be implemented within five to six years.[101]

55. In an attempt to balance the political risks associated with introducing a congestion charging scheme at the local level, the Department for Transport has offered a package of powers and funding to those local authorities willing to tackle congestion. In the Future of Transport White Paper, the Department announced a new Transport Innovation Fund, which would be used to support local authorities in tackling congestion problems.[102] These resources, which will build up to £2.5 billion by 2015, will be directed towards packages of measures that combine road pricing, modal shift, and better bus services.[103] The Guidance on Local Transport Plans invited Local Authorities to contact the Department by January 2005 if they were interested in exploring a package of measures to tackle congestion.[104] The Secretary of State told us that he had received a positive approach from local authorities:

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56. Although local urban congestion charging schemes are seen by many, including the Department for Transport, as a useful step towards a national scheme, as well as an effective tool for tackling congestion in the short term, local authorities have serious reservations. Given the Government's views about the desirability of local schemes, it is sensible of it to encourage local authorities through providing the necessary resources, powers and guidance. Ultimately however, it must be up to the judgement of local authorities themselves to decide whether a charging scheme is the best way to tackle their current and future traffic congestion problems. Local authorities should not be penalised if they decide not to introduce such schemes. Effective public transport services are a good in their own right, and should be promoted irrespective of whether a charging scheme is implemented.

THE NEED FOR A NATIONAL FRAMEWORK

57. Local authorities were not alone in their hesitation over implementing local congestion charging schemes. The business, freight and motoring lobby, amongst others, also voiced concerns.[106] Their main fear is that a patchwork of local schemes will appear around the country, with different charges, different methods of payment and different rules of operation. Although Transport 2000 noted that motorists manage to cope with different parking charge systems across the country, concern about encouraging a complex regime of different charging schemes is valid.[107] It is a pressing concern for businesses and road haulage companies, who fear having to operate within several different systems.[108] The CBI, although not opposed out-right to an increase in local charging schemes, noted the risks of this approach:

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58. If road pricing were introduced, the business and haulage sectors would want to see a single, seamless interoperable system with single billing.[110] Without some co-ordination the administrative burden for businesses which had to deal with a number of different systems could be significant. Standardisation, and centralised payment, would have the added advantage of preventing local authorities reinventing the wheel for every scheme. A critical mass of between five to eight local charging schemes would allow some common functions to be shared between the different schemes, including billing and enforcement.[111]

59. While standardisation may benefit the user, the tension is that allowing local authorities to develop different types of schemes may be the best way to identify what works most successfully, as we move towards a national scheme. Bob Kiley, Transport Commissioner at TfL, advocated such an approach:

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60. To overcome this difficulty, the Government should establish a national framework within which local authorities can design the finer detail of the scheme. Local authorities must have control over the scheme as they know the traffic problems in their area and would need to fit the charging scheme into wider transport strategies.[113] The Secretary of State told us that he would seek to get some standardisation agreed in the near future:

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61. The role of regional policy could also be critical. Co-ordination of road pricing policy at a regional level could overcome the local economic competition that currently acts as a barrier to individual cities moving ahead with a charge.[115] The Secretary of State indicated that he wished to pilot a road pricing scheme on a regional rather than very local scale.[116] He suggested the pilot would need to be undertaken on a larger scale than one city, in order for it to be effective in changing travel behaviour.[117] The indication in the Local Government Association's evidence was that local authority boundaries work as a barrier to large-scale charging schemes.[118] A 'pan-city' approach to road pricing could be promising and we will watch with interest the Department's involvement in getting such a pilot established. A monitoring and evaluation process must be agreed to assess whether the pilots are successful and to inform future charging schemes.

62. We are pleased the Government intends to agree standards for local congestion charging schemes. Local and regional authorities must be involved in determining design and charges, but an overriding national framework would provide consistency for the user, as well as lowering the costs of implementation for the local authority.

Inter-urban schemes

63. Some inter-urban trunk roads are among the most congested roads in Britain.[119] Public support for road charging is likely to be highest on those stretches of road where the level of congestion is already unacceptable, such as sections of the motorway network, and was supported by many of our witnesses.[120] Road pricing is compatible with capacity increases; business organisations which have called for increased road building, also want to see road pricing on motorways and major routes.[121] The freight organisations told us that they wanted to see road user charging applied to freight priority routes in the near future.[122] The way in which road pricing could be introduced on the strategic network needs to be considered carefully.

LOCKING IN THE BENEFITS OF ROAD IMPROVEMENTS

64. One way to introduce road pricing would be to introduce charges when road improvements were made, in order to 'lock in' the benefit and contain traffic levels within the capacity provided by discouraging a large amount of induced traffic.[123] The Department for Transport identified the importance of 'locking in' the benefits of road improvements in its document 'Managing Our Roads':

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65. There is, in fact, a great deal of support for charging for new capacity.[125] Parts of the business sector, for example, accept that 'locking in' the benefits of improvement provides longer-term benefits.[126] Although the Department has accepted the principle of 'locking in' the benefits of additional and improved capacity, this commitment is yet to be seen in practice, other than on the M6 Toll, which has a quite different rationale behind its charges. History has shown that without charges the additional capacity of improved roads can be quickly undermined by greatly increased traffic levels.[127] If road proposals are approved on the basis that the benefits of the new road will be 'locked in', but the demand management measures necessary to achieve this are never actually implemented, this will lead to a distorted appraisal process and flawed conclusions. Many of the multi-modal studies anticipated that charging would be introduced with the capacity improvements that were provided. For example, the west midlands to north west multi modal study found that road user charges would be necessary on the length of the M6 after sections were widened.[128]

66. Furthermore, to prevent the consequences of induced traffic, it may not be sufficient to charge on the improved section of road alone. Denvil Coombe told us that to properly 'lock in' the benefits of road improvements it would be necessary to introduce charges on all other major roads in the corridor.[129] Other witnesses agreed that charging on the inter-urban network should not be restricted to improved roads, as this would limit the effectiveness of pricing policy.[130] They recommended charging on the most congested strategic routes, whether or not additional road capacity had been provided in the area.

67. The Government has stated its intention to 'lock in' the benefits of extra capacity where this is provided, using demand management measures. The Government must now put this commitment into practice by introducing demand management measures on the road improvements and widenings that it has approved. Delaying implementation of this policy commitment will mean that expensive road capacity improvements are quickly overwhelmed by the ever-growing levels of traffic.

TRAFFIC DIVERSION

68. Charging on the strategic road network could lead to significant diversionary effects.[131] It may be necessary to introduce charges over a wider area to prevent high volumes of long distance and heavy traffic re-routing from the trunk road network, which was specifically designed to carry such traffic, to less appropriate roads. Transport 2000 point to the long diversions people are prepared to make to avoid paying bridge tolls, citing evidence collected by Gloucestershire County Council in relation to the Severn Bridge.[132] It must be assumed that motorists and hauliers may well undertake significant diversions to avoid paying a charge for motorways.

Safety

69. Traffic diversion could have a significant effect on road safety. Modelling of motorway tolling by TRL has shown that it could increase crashes as traffic would move from motorways to untolled roads, which may be less safe and less appropriate for high vehicle flows.[133] PACTS drew our attention to studies which found that with the introduction of motorway tolls in Kent, 10 per cent of motorway traffic could divert to other roads, and that this could increase injuries by 3.5 percent.[134] PACTS concluded that:

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70. One solution that has been put forward is the introduction of charging in a 'corridor approach' for inter-urban roads.[136] In this approach the trunk road and other parallel roads would be charged in order to cut down the likelihood of dangerous re-routing. The potential for a corridor approach to trunk road charging should be thoroughly investigated.

71. Road safety is an important consideration that must be integral to the design of road pricing schemes. Charging on the inter-urban network should not be implemented unless measures have been taken to prevent the diversion of traffic onto less suitable routes. The potential for a 'corridor approach' to trunk road pricing should be investigated.

LEADING BY EXAMPLE

72. The Highways Agency has effectively ruled out pricing on the existing strategic network in advance of a national scheme.[137] It was concerned about the safety risks of diverting traffic and the problems of rat-running.[138] The Transport Secretary, Alistair Darling MP, categorically stated that the Government would not pursue congestion charging on the inter-urban network, unless the road had been improved:

139

It does not seem to concern the Secretary of State that the principle of charging people to use the existing road network is precisely what he wants to see Local Authorities bring into force. We do not agree with the Secretary of State that charging on inter-urban roads is necessarily "charging for something that has not changed one jot."[140] With the introduction of road pricing, congestion will be lower, since some people will have changed their behaviour in response to the charges. So the charge paid will buy a quicker, more reliable journey, as the Road Pricing Feasibility Study acknowledged.[141]

73. Moreover, the Government must demonstrate it is not leaving all the difficult decisions to local government. It should take the opportunity to show leadership and commitment to the principles of road pricing by investigating the possibility of introducing charges on busy parts of the network that are under its direct control. This would lend political support to local schemes, and would send a signal to technology developers and industry that the UK is seeking to have an affordable and appropriate national road pricing system in place as soon as is practicable.

74. The Government cannot expect local authorities to implement charging schemes, while it refuses to test the potential of road pricing on the strategic road network for which it is responsible. The Secretary of State has told us that he would not introduce charges on roads that have not changed; but if charges were introduced on congested roads, the motorist should gain from a smoother, more reliable journey. The Government must re-think its policy on charging for inter-urban strategic roads, and take responsibility for introducing measures on the congested roads under its control.

Technology

75. The principal reason why comprehensive national road user charging cannot be implemented today is because there is no sufficiently sophisticated, reliable and accurate technology currently available. A road pricing system which charged on the basis of distance, time and place, throughout the UK's complex road network would require a highly advanced technological solution. The Road Pricing Feasibility Study showed that, nationally, the most likely solution would come from a system based on satellite-positioning but estimated that this technological solution would not be available until 2014 to 2019.[142] David Lamberti, of Department for Transport's Road Charging Division, explained some of the limitations:

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76. Lack of existing technology is obviously a barrier to a sophisticated national road pricing system. However, a number of witnesses thought that the Government was too pessimistic in its estimate of the time it would take for suitable technology to develop.[144] Bob Kiley warned that the 10 to 15 year time-frame that has been associated with road pricing is "a lullaby to rock us to sleep."[145] The contention is that some basic systems are already available, and that if there is a clear demand, industry will see a market and the pace of technological development will quicken.[146] As a result, accurate and appropriate satellite technology could be available for road pricing systems within ten years:

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77. Indeed, the accuracy of Global Navigation Satellite Systems in Europe is expected to improve once the Galileo system is operational.[148] In the meantime, lower accuracy systems have some constraints, but the Chartered Institute of Logistics and Transport (UK) insisted that these should not be considered as overriding.[149] The Norwich Union 'Pay as You Drive' insurance scheme - discussed in our Cars of the Future Report - has successfully used a black box and global satellite tracking technology to calculate a distance-based charge.[150] Siemens advised us that the technical capability of GPS for road pricing schemes has been demonstrated internationally, with the most complete application of the technology being a public authority road pricing scheme in Seattle.[151] The company was confident that GPS technology would offer significant potential over the next 3 to 10 years, with greater operational flexibility than Dedicated Short Range Communications (DSRC) systems, in terms of complex tariffs, interoperability with other systems, and the potential for geographical expansion.[152]

78. Microwave-based DSRC 'tag and beacon' systems, which have proven successful for motorway tolling in many countries, are an alternative to the satellite systems still under development. The M6 Toll has a tag payment lane which can process vehicles at three times the speed of manual payment.[153] Tag and beacon systems require overhead gantries to read the tags, and this could prove a barrier to introduction in urban and heritage sites, and could make the technology expensive if the area covered expanded significantly. However, on strategic roads, at least, tag and beacon technology appears suitable for use today.

79. The choice is whether to wait for a long-term solution to appear that could meet all the requirements of variable distance-based charges, or whether to push ahead with the available satellite and microwave technologies. It was suggested to us that "the best technology could be the enemy of the good".[154] Indeed, the technology used in the London scheme is not flawless and is not particularly user-friendly. These shortcomings have not prevented the scheme from meeting its objectives and trailblazing for the rest of the country. A staged approach towards the preferred system for road pricing should be adopted, building on proven technologies.

80. Congestion is already acute in many urban areas and on many inter-urban trunk roads and motorways in the UK. We cannot afford to wait 10 to 15 years for the technology for a national system to arrive before testing the effectiveness of road pricing. Although there are limitations to the existing systems, technology should not be used as an excuse for inactivity. London has shown that technological limitations are not a show stopper.

81. The Department advised us that the sheer number of vehicles that a national pricing system would cover was a difficulty for existing technologies.[155] One way round the problem of scope, is an application which allows a small scale introduction in relatively few vehicles. Drivers willing to be 'early adopters' of the technology are able to trial the scheme, in advance of wholesale application. This approach to distance-based road charging has been trialled in parts of north America:

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In the UK, the Norwich Union 'Pay as You Drive' insurance scheme has been introduced using this approach, with a fleet of 5000 vehicles involved in the pilot. Given the reported success of the small-scale satellite-based insurance system introduced by Norwich Union, the Department for Transport should research whether an "early adopter" scheme could be used as a route to introducing distance-based road charging across the road network.

INTERNATIONAL EXPERIENCE

82. The Feasibility Study identified that extensive development is underway internationally, particularly in Germany, on hybrid systems that combine satellite positioning and microwave technologies. The Government must look to international experience of road pricing, where valuable lessons could be learned. If overseas schemes prove successful, the Government should bring forward the anticipated implementation date in the UK.[157]

83. The European Parliament has approved a directive on the interoperability of electronic road toll systems within the Community.[158] The directive aims to "create a European electronic road toll service in order to secure the interoperability of toll systems in the internal market and to contribute to the elaboration of infrastructure charging policies at European level."[159] The Department for Transport told us that a European technical committee was looking at how to implement the directive.[160] A positive European approach would strengthen the market attraction for industry. Although full interoperability may be the goal, the systems would have to be highly flexible to permit individual member states and local operators the freedom to determine the charging regimes and means of payment.[161] Transport for London identified the limitations of only looking to the European directive and a long-term satellite based solution:

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The Government should not allow any delay in producing the detailed road toll interoperability specifications at the European level to prevent it from exploring more localised schemes on the inter-urban and urban road network.

79 Q748 Back

80 The Government provided the Mayor and London authorities with the opportunity to introduce congestion charging as part of the Greater London Authority (GLA) Act 1999. The Transport Act 2000 made similar permissive powers available to local authorities outside London, to introduce road user charging or workplace parking schemes, subject to approval of such schemes by the Secretary of State for Transport. Back

81 Q372, Q387, RP 17A, RP 21A, RP 24, RP 26, RP 27, RP 28, RP 31, RP 35, RP 37, RP 38, RP 43, RP 44, RP 47, RP 50 Back

82 RP 38 Back

83 Q372, Q387, RP 17A, RP 21A, RP 24, RP 26, RP 27, RP 28, RP 31, RP 35, RP 37, RP 38, RP 43, RP 44, RP 47, RP 50 Back

84 DfT (July 2004) Feasibility Study of Road Pricing in the UK: A report to the Secretary of State for Transport, p7 para 24 Back

85 Impacts Monitoring Second Annual Report, TfL, April 2004 Back

86 RP 38. TfL Congestion Charging Impacts Monitoring Second Annual Report (2004) - Of the 65,000 to 70,000 car trips that are no longer made to the charging zone during charging hours: between 50 and 60 percent have transferred to public transport, 20 to 30 percent now divert around the charging zone (these being trips with both origins and destinations outside of the zone), and 15 to 25 percent have made other adaptations, such as changing the timing of trips. Back

87 RP 45 - In April 2004, the John Lewis Partnership launched a report by Professor Michael Bell, Imperial College London: " The Impact of the Congestion Charge on the Retail Sector". In the report Professor Bell concluded that even after allowing for other factors, the central London congestion charge appeared to have reduced sales at John Lewis Oxford Street by between 5 percent and 9 percent. Back

88 RP 38 Back

89 RP 33 Back

90 DETR (2000) Transport 2010: The 10 Year Plan, paragraph 6.48 and paragraph 9.5 Back