Select Committee on Transport Written Evidence


Further memorandum by the Secretary of State for Transport (RP 21A)

ROAD PRICING

  1.  In the discussion paper "Managing our roads" published in July 2003 and in "The Future of Transport" White Paper published in July 2004, the Government reaffirmed its commitment to tackling congestion and improving accessibility. The Government continues to invest increasing sums in public transport, and to actively promote joint planning and transport solutions through its programme to develop sustainable communities.

  2.  Road pricing is one means of reducing congestion to the benefit of the road-users, the economy and the environment. It would be a way of paying differently for the way we use roads in order to influence the way, the route or the times people choose to travel. The key is changing how, not how much, motorists pay for road use. By creating incentives to travel differently-whether taking the journey earlier or later than peak times, whether sharing a car or using public transport-it should be possible to make sure traffic on the roads flows more freely.

  3.  It is already possible to introduce relatively "low tech road pricing schemes in local areas—such as the London Congestion Charge. In 10-15 years, it should be technically possible to introduce a national road pricing scheme.

THE CHALLENGE OF CONGESTION

  4.  For most people, most of the time, the road network functions well. However, there are many places, especially during peak hours, where road capacity and the pattern of road-use results in slow and unreliable journeys.

  5.  Where congestion occurs it has a significant impact on:

    —  Individuals, through frustration and the consequences of unreliable journeys.

    —  Businesses, through the cost of lost time as their employees or goods are caught in traffic.

    —  The environment, with traffic caught in congestion causing more pollution and CO2 emissions.

  6.  Where congestion occurs, it is a problem for the traveller and a brake on our economy.

  7.  It is essential we get the most out of the road network. We are undertaking policies to promote smarter choices and better network management. We are piloting innovations such as car-pooling lanes, hard shoulder running and variable speed signs. The Highways Agency is increasingly moving to active management of the road network. We are continuing investment in public transport to provide an increasingly attractive and convenient alternative to car use. In parallel, we are targeting additional road capacity to where it is most appropriate and in keeping with our environmental commitments. These approaches will make a difference, but looking ahead, they will not be enough on their own to prevent congestion spreading to more roads and longer periods of each day.

  8.  By 2015, total traffic on the roads is predicted to have grown by over 30% compared to 2000 levels. There is a need to face up to the potential threat of growing congestion.

  9.  Targeted extra capacity is important, but we know we cannot simply build our way out. The cost would be too high economically and environmentally. There are legitimate objections to unrestrained road building across the countryside and little space in towns and city centres to build new road space.

  10.  We know doing nothing—and allowing congestion to increase to unacceptable levels—is the worst option of all.

  11.  Road pricing may provide a solution to the problem of congestion. The government will do the work necessary to develop this option and build a public consensus around the objectives for road pricing and how to use the revenues.

ROAD PRICING FEASIBILITY STUDY

  12.  In July 2003, the Government established a Road Pricing Feasibility Study (RPFS) to examine the feasibility of options for a new way of paying for road use within the following terms of reference:

    (a)  To advise the Secretary of State on practical options for the design and implementation of a new system for charging for road use in the UK.

    (b)  The study should take into account the following objectives for any new charging system:

    —  to deliver a more efficient approach to the structure of transport pricing;

    —  to be fair, respect privacy, and promote social inclusion and accessibility;

    —  to deliver higher economic growth and productivity for all regions of the UK; and

    —  to deliver environmental benefits.

  13.  A steering group including representatives of motoring and freight organisations, environmental interest groups, and business directed the Study. This steering group reported and published its findings on 20 July 2004.

  14.  The report forecasts that a well-targeted national road pricing scheme has the potential to make £12 billion worth of benefits to the economy in time savings and increased reliability. It concludes that such a scheme:

    —  is becoming technically feasible, and certainly will be in the medium term (10 to 15 years). This is based on the market-led development of in-vehicle satellite navigation equipment and the development of standards at the EU level. In practice there may be other technical options;

    —  would cost a lot to run, but the net revenue stream could be used in a number of ways. For example, to reduce existing motoring taxes, to reduce other taxes, to fund additional spending on road capacity, public transport and other public spending or for a combination of these;

    —  would lock in the benefits of other measures to tackle congestion;

    —  subject to further work, could meet the objectives that the Government set when commissioning the study;

    —  needs a sufficient level of public acceptability. Trust and confidence in the viability and delivery of any national road pricing scheme, including the use made of the revenue, are central;

    —  needs a greater knowledge at the local level of road use and road users;

    —  would be a massive and complex task requiring concerted action and co-operation at all levels of government over a number of years; and

    —  in the meantime, a number of congestion charging schemes at the more local level would amount to a trajectory towards a national road pricing system, leaving open choices to be made along the way.

  15.  In "The Future of Transport" White Paper (published July 2004), the Government welcomed the report and, in response, committed to:

    —  inform the public about what road pricing is and how it might work, and undertake the further research recommended, so that people can engage with a clear proposition, not just an abstract concept;

    —  lead a debate on what would make such pricing acceptable to motorists;

    —  seek to build a public consensus around the objectives of road pricing, and how to use the revenues;

    —  work alongside forward looking authorities and areas, to help them put in place packages of measures which tackle local congestion problems. (Resources from the new Transport Innovation Fund will be available to support packages which combine road pricing, modal shift, and better bus services); and

    —  begin a process which would lead to international standards for in-car equipment, taking account of current, market-led developments.

  16.  The Government will be publishing a full response to the feasibility study in due course.

Should road pricing be introduced for certain sections of the road network in the short term?

  17.  Within the boundaries of current legislation, the Transport Act 2000 (the 2000 Act), local authorities have the powers to introduce road pricing schemes for the purpose of directly or indirectly facilitating the achievement of policies in their local transport plans. The Secretary of State has the power to charge on national roads, where this would be "ancillary" to a local scheme. In line with White Paper commitments, the Government will be working with interested local authorities to develop further schemes under the 2000 Act powers and providing financial support through the Transport Innovation Fund. As London showed, there is little doubt that road pricing can be successful in local areas when it is implemented as part of a wider transport package.

If road pricing is introduced, what factors should determine which roads are priced and what technology should be used?

  18.  The main factors to be determined are the benefits to road users, and to the wider community, from reflecting through prices the costs of choices to drive on busy roads at busy times. The extent to which such a regime is necessary depends critically on the effectiveness of parallel strategies (management and investment in public transport), and ultimately on its public acceptance as a better alternative to yet further capacity or yet higher congestion. Under current legislation, it is up to local authorities to develop their own schemes, ensuring that they are consistent with national policy objectives and local transport plans, and of course are value for money. This will need to be reconsidered in the future if we wish to move towards a national road pricing scheme.

How "hi-tech" does road pricing need to be?

  19.  Local schemes, particularly the smaller schemes, can be fairly "low-tech". Technological requirements should follow scheme design. London has shown how a technologically relatively simple scheme—using self-declaration payment mechanisms, with enforcement through cameras which automatically recognise number plates—can still deliver large-scale benefits. Microwave-based technology that reads tags in vehicles as they pass by road-side equipment (such as is used on the Dartford River Crossing) is another potential approach for the medium term.

  20.  Charge structures which aim to charge on the basis of distance, time and place, in complex networks can require very demanding technological solutions. The Road Pricing Feasibility Study showed that, nationally, the best benefits will come from a fine-tuned system based on satellite-positioning. However, this would be challenging to deliver and is some years away.

What role should local highway authorities play in introducing road pricing?

  21.  Local authorities are key to bringing forward schemes in our towns and cities. With their detailed understanding of transport in their area, they are best placed to design a successful scheme as part of a overall package, and to win a local consensus. However, the Road Pricing Feasibility Study showed that there is a need for action at the national level too, and the Government is prepared to act as set out in the White Paper.

How easy will it be to move from individual toll roads and local urban congestion charging schemes in the short term, to national road pricing in the long term, and what needs to be done to ensure the transition is a success?

  22.  The Road Pricing Feasibility Study showed that, while a national scheme is at least 10 years away, there are reasons for undertaking forms of road user charging on the more limited scale that is technically feasible now, in particular area or cordon congestion charging. These can help to address current problems on the road network, improve our knowledge of the practicalities and effects of pricing, and, through growing familiarity, should greatly improve understanding of its benefits.

  23.  In "Managing our Roads", the Government reaffirmed its commitment in the Transport Act 2000 that any local authority which introduces its own scheme before 2011 under the powers already available will continue to keep the revenue for at least the first decade after implementation, irrespective of whether or not a national scheme is introduced subsequently. The Government will take into account the existence of such schemes in the design and implementation of any national scheme.

How will the Lorry Road User Charge fit into any national road pricing and motorway tolling developments?

  24.  The purpose of the Lorry Road User Charge (LRUC) is to ensure that all hauliers, regardless of nationality pay their fair share towards the costs they impose in the UK. It will apply to all goods vehicles over 3.5T running on UK roads, regardless of their nationality of origin. The Government has made a commitment that this charge will be tax-neutral, at an overall level, for that part of the haulage industry which purchases fuel in the UK, with the charge being offset by a rebate on fuel duty on all fuel bought in the UK by charge-payers.

  25.  Responsibility for implementing LRUC has been laid to HM Customs and Excise (HMCE), and it is intended that the charge will take effect from 2007-08, following trials during 2006. Full implementation of charging is expected to be phased in, with the heaviest lorries being brought into the scheme first to ensure a manageable introduction.

  26.  HMCE issued preliminary Invitations to Negotiate to 10 bidders in August 2004; the bidders' responses are currently being evaluated, and a shortlist will be selected to receive the final Invitation to Negotiate. In March the Government published a Progress Report which set out an indicative timetable including legislation in Finance Bill 2005 and contract awards by the end of 2005, followed by testing, recruitment of staff and further, secondary, legislation before the charge goes live, with vehicles starting to be registered in 2007.

  27.  The procurement is being conducted on the basis of an output-based specification, requiring the bidders to develop proposals for technical solutions rather than specifying these at this stage. It is intended that standard contractual flexibilities will be used so that we have flexibility for LRUC to be adapted for consistency with any wider national charging scheme or significant pathfinder that might be implemented during the lifetime of the contracts.

  28.  While LRUC will clearly anticipate many features of a national road pricing scheme, there are a number of key differences. Its principal purpose is to ensure a fairer system of taxation, rather than to seek to influence traffic flows and congestion. LRUC will also involve a much smaller population of vehicles (c 500,000) than would a national road pricing scheme (c 26 million). Moreover, haulage operators are already operating in an environment more amenable to technology based charging; they are already required to use tachographs; and many haulage firms already make use of sophisticated on-board telematics and fuel monitoring systems for their own management purposes. LRUC has never been designed as a trial run for national road pricing, though it is expected to provide important insights into the procurement, technological, operational and other issues that would arise in any future national road pricing scheme.

Are there other measures which could reduce congestion more effectively?

  29.  Road pricing is one tool which can help manage the road network more effectively. There are a number of other policies which can also reduce congestion, and we need to establish the right package of measures for the area in question.

  30.  Our goal is a road network that provides a more reliable and freer-flowing system for all motorists and road users, with informed choices about how and when to travel. However, the issues, especially congestion are complex—there is no "magic bullet" solution. To this end we are developing targeted solutions with local authorities.

  31.  We are improving the road network through investment, introducing new approaches to managing traffic, and influencing demand.

  32.  A number of new approaches have been/are being introduced to help manage traffic. These include:

    —  The Traffic Management Act 2004—local authorities have been given a road network management duty, this includes new powers to manage local roads. Local Authorities are being encouraged to develop Local Transport Plans (LTPs) matched to local circumstances.

    —  From April 2004, to help keep traffic flowing and improve journey reliability and manage congestion, the Government is trialling the introduction of Traffic Officers in the West Midlands—this move has been well received. It is now intended that Traffic Officers be introduced nationally over the next two years.

    —  In looking at existing capacity, the Government is piloting Active Traffic Management on the M42—which includes variable speed limits and hard shoulder running; the Government is also looking to introduce carpool lane pilots (High Occupancy Vehicle lanes) and the testing of variable speed limits. The Government is also considering new ways to the minimise effects of roadworks.

    —  It is important to improve the provision of transport information. Initiatives such as the National Traffic Control Centre and the first Regional Control Centre have already been launched and the Government is currently testing on-stream information systems that will provide up-to-date road traffic information and journey planning information (for all forms of transport).

  33.  The discussion document "Smarter choices: changing the way we travel" (published July 2004) showed that influencing demand can significantly impact on traffic.

  34.  School travel plans, workplace travel plans and personalised journey planing can help to prompt people to consider, and take up, alternatives to the routine use of their car, especially for journeys at peak hours.

  35.  Demand management such as road user charging locks in the benefits of other measures. The key to reducing congestion is to remove a relatively small volume of traffic at congested times and use demand management to prevent space thereby freed up being filled up by new traffic.

November 2004





 
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