Tuesday, 29 January 2013

London consults on changes to congestion charge

Transport for London is consulting currently on a series of changes to London's congestion charging scheme.   All of them affect a relatively small number of users, and the net effect is likely to be a modest reduction in traffic, an increase in revenue and reduction in costs.  Below I summarise the proposals and my view on them.  The deadline for submissions is 8 February 2013, and they can be made here online.   

1.  Creating a new Ultra Low Emission Discount to replace the Greener Vehicle Discount and Electric Vehicle Discount : The purpose behind this is three-fold, one is to simplify the discount for environmentally vehicles into one category, another is to tighten the scope of the discount, in part because the congestion charge is a congestion charge, not an environmental charge, and finally to make the discount technology neutral, by being based on an emissions standard, not a fuel.  However, the discount is seen as part of a whole package of measures to encourage those who wish to drive in central London to use vehicles with the lowest environmental impact.

The change will mean that from 1 July 2013, all vehicles of less than 3.5 tonnes which emit 75g/km of CO2 or less and meet the Euro 5 standard for air quality, will gain a 100% discount from the congestion charge.   To obtain it, there is a £10 annual registration fee.

The effect is that all vehicles currently under the Electric Vehicle Discount (pure electric and plug-in hybrids) would qualify for this discount, but most vehicles under the Greener Vehicle Discount would not.  That emissions standard effectively excludes all pure petrol and diesel vehicles, and all hybrids, although it is expected that this will change as engine technology continues to improve.

As a transition, all vehicles eligible for the Greener Vehicle Discount up till 28 June 2013 (the registration cut off date) would retain the current 100% discount for two years (till June 2015), unless the owner sold the vehicle (the new owner would not retain eligibility).

One report suggests that 19,000 vehicles will have to pay from 2015 when the transition ends.  Motortorque mentions that cars like the Fiatv500 have been advertised as not being subject to the congestion charge, and will no longer be able to be marketed accordingly.  According to FleetNews, the British Vehicle Rental and Leasing Association supports simplifying the discount, although it considers the cutoff level to be too low, although "Fleet operators at least have some warning this time, but they should remember that a vehicle that qualifies for a 100% discount could lose it at any stage".

Note that it is a discount, not an exemption, making it easier to remove.

The DailyMail says that this one change will generate an additional £2 million a year.  

My view

The primary purpose of the congestion charge is to reduce congestion.  Road vehicles take up road space, and so any discounts or exemptions should be minimised.  With the exception of the disabled (who have their own discount), there are many alternatives to bringing a car into central London during the times the congestion charge operates.  It has intensive rail, underground and bus services, and still has considerable congestion.  A discount to encourage ultra-low emission vehicles is not necessarily inconsistent with that, but must be kept particularly focused, and preferably address not just CO2, but noxious emissions given that central London has a high concentration of pedestrians exposed to such emissions.  In short, I approve of this change, and do not believe that owners of other low emission vehicles, who are demonstrably not on low incomes, should continue to access central London's scarce road space, with no charge.

2.    Removing the option to pay the charge in shops and petrol stations:  From the start, users of the congestion charge have had the option to pay in various retail outlets.  The reason was to ensure that nobody would have difficulties in finding a way to pay.  Since then, new options have emerged (motorists can register to autopay, whereby their vehicle number plate, once detected, automatically deducts the charge from an account or credit/debit card), and the proportion of motorists paying through retail outlets has dropped to 6%.  It was 35% as reported in the 2nd annual Impacts Monitoring report in 2004.   Autopay, online payment, phone and text message based payments are now most popular.  The retail option costs more, as it includes a payment to the retail outlet for handling the charge.  However, there is no difference in cost paying by this means.

The effect of dropping this option (there remains an option to pay by post oddly), is to eliminate an easy way to pay by cash.  Clearly, the purpose of dropping retail payments is to save money.

My view

There is a portion of the population which is "unbanked", and functions without bank accounts.  Whilst the congestion charge remains a government dictated levy, it is unreasonable for people who do not have access to other payment options to be unable to pay.  The answer to the cost of retail outlets is to impose a surcharge on paying by that means.  This would dissuade those for whom the retail option is a convenience, rather than a necessity, would raise revenue to cover the additional costs and provide an additional disincentive to driving into central London for those without bank accounts.   Other entities incentivise use of lower cost payment channels, there is no reason for TfL to not follow.

3. Increasing the penalty charge from £120 to £130:  The sole reason given for this simple move is to bring it into line with other penalty charges in London, which have also increased.  The penalty charge applies if someone does not pay the congestion charge, and is halved if payment is received within 14 days.  The penalty charge is a critical part of the scheme, although is now a far smaller proportion of revenue than it was originally.  In the early years, there was talk of it being nearly half of all net revenue, but that would be far from the case today.

My view

The penalty charge level for this and indeed all London penalty charges is onerous, and I doubt whether there is a higher deterrent effect at £130 compared to £100 or indeed £65.  As such, it really is about revenue, capturing the ignorant and the lazy.  If the increase parallels a new campaign of publicity about the presence of the congestion charge and what it means, I would support it.  London has a significant transient population, many of whom would not have been around when the charge was introduced (that includes me). It is appropriate to maintain a campaign about the charge to reduce the numbers of people inadvertently facing penalties.

Conclusion

None of the measure proposed are particularly radical, but there are some subtle tweaks that should be included with two of them.  It is important for Transport for London to note that while reducing congestion and reducing costs (and increasing revenue) are all key objectives, customer service is another one, and a few minor improvements for an otherwise easy to use scheme, could make a worthwhile difference to some users.

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