Tuesday 23 January 2024

Does London's ULEZ expansion help or hinder better road pricing in the UK?

Greater London Ultra Low Emission Zone (ULEZ) coverage area

To say that the Mayor of London's expansion of the Ultra Low Emission Zone (ULEZ) to all of the territory of greater London under his authority has been controversial is an understatement.  For some it is a necessary response to climate change and the effects of local air pollution on public health, for others it is an impost on those who cannot afford a newer vehicles with benefits that are questionable, given that most vehicles comply with it already (hence it cannot have much of an impact).  Even Leader of the Opposition, Labour Leader Sir Keir Starmer has refused to back it.

The ULEZ started by being parallel to the London Congestion Charge in inner London, was expanded to the A406/A205 North and South Circular Roads. Its coverage of all of London includes rural areas and rural roads, as well as outer suburbs.

For a start it is important to be clear that the ULEZ is not road pricing. It is fundamentally a regulatory instrument that requires permits for vehicles that do not comply with the zone, in order to enter or drive within it. There is no relationship between the ULEZ and either the costs of providing road infrastructure or demand for it.  The fee is set at a level to dissuade use and generate revenue, and it is blunt. It doesn't matter if you drive a EURO 0 diesel van in crawling traffic beside a school or a EURO 3 petrol car at 3am on the motorway like A12 East Cross Route, you pay the same, even though objectively the local air quality impact is vastly different.  Although a vehicle scrappage scheme has been set up in parallel, owners of vehicles outside London are not eligible even though many cross into the zone.  Some categories of vehicles have exemptions, such as historic vehicles (e.g., vehicles built before 1973) vehicles registered to carry disabled people (until 24 October 2027), wheelchair accessible vehicles, drivers on specific disability benefits.  Those travelling to hospital appointments deemed unfit to use public transport can also apply for a refund. 

Vehicle scrappage scheme

All London residents can apply for up to £2,000 for scrapping a car or up to £1,000 for scrapping a motorcycle. For wheelchair accessible vehicles there is a payment of £10,000 to scrap or £6,000 to retrofit to the ULEZ standards. The scrappage scheme has been claimed by over 37,200 individuals or entities, which has cost £120m. The total budget for the scheme is £160m.  The biggest criticism of it, is that £2,000 will not come remotely close to buying a new vehicle, although it might come close to buying one that barely crosses the ULEZ standard.  However, it is unclear if the ULEZ standard advances (so EURO 4 petrol cars are no longer compliant), if people who took the £2,000 for scrapping a non-compliant vehicle, can claim it again if their latest vehicle is also non-compliant.  

ULEZ  impacts

There are a range of claims about the impacts of the ULEZ. 

Compliance rates for the ULEZ are reportedly 95% meaning the proportion of vehicles that meet the ULEZ standard. Of note, Heathrow Airport claims 7% of its employees drive non-compliant vehicles (and Heathrow is located just within the boundary of the ULEZ

The BBC claims this indicates revenue of around £23.6m per month. This is not inconsiderable, and certainly backs some claims that ULEZ is about revenue more than it is about environmental outcomes.  Van compliance is much lower than the average, with around 86.2% compliance.  However, City Hall claims it will generate no net revenue by 2026-2027, presumably as the costs of operating it are not exceeded by the fine and fee revenue generated (as it is expected few non-compliant vehicles will enter the zone). 

One claim is that ULEZ will reduce the number of cars on London roads by 44,000. Fewer cars means some people won't own a car anymore, which reduces their mobility. For some, London's ample public transport network and expansion of cycleways provide alternatives that may be reasonable for most trips, with carshare schemes plugging the gap. If people choose to give up owning a car because the cost isn't worth the benefit, and alternatives meet their needs, that's all very well, but if they are choosing to give it up because of the cost of ULEZ makes it unaffordable, it is clearly a policy measure that is pricing poorer households out of car ownership (because wealthier ones can afford a car that meets the standard).  

The Mayor of London has published a report on the first month after the introduction of the wider ULEZ. Its findings include:

  • 77,000 fewer non-ULEZ compliant vehicles per month identified than before its expansion (a 45% reduction), with a reduction of 48,000 unique vehicles identified overall (which may indicate non-compliant vehicles not being used, but compliant vehicles may be used more in some cases).
  • 96% of vehicles driving in Outer London meet the ULEZ standard (86% of vans).
  • On an average day only 2.9% of vehicles driving in the ULEZ pay the charge, 1.7% are registered for a discount or exemption and 0.2% are issued a Penalty Charge Notice.

What isn't clear is the impacts on air quality.

What about road pricing?

Beyond extending the operating hours of the central London congestion charge, there has been no changes to policy on road pricing in London since 2011 when the Western Extension was scrapped. Mayor Sadiq Khan has claimed there are plans to introduce distance-based road pricing in London, according to the Evening Standard.  Expanding road pricing in London has been discussed for some time, but it hasn't been advanced largely because:

  • Nobody (since Ken Livingstone) has been willing to spend political capital on making a cogent and consistent argument for wider road pricing across London;
  • The objectives of such a scheme have not been well defined. Mayor Khan's primary transport policy objective has been around local air quality, not congestion;
  • The options for road pricing across London have a significant upfront cost (in roadside infrastructure and potentially in-vehicle technology);
  • Central government has been keen to leave it as primarily a local matter, and for the Mayor of London and Greater London Authority to take the risk in advancing road pricing, rather than lead from Westminster.
London's geography lends itself to two broad options for more road pricing:
  • Zonal based boundaries, pricing for driving across parts of London (but not within zones). This would have the advantage of being relatively simple to understand, but would significantly disadvantage people and businesses needing to drive across multiple boundaries. In particular, businesses located adjacent to a boundary may feel aggrieved if part of their customers face a charge, which their rivals on the other side of the boundary do not.
  • Distance, time, location based pricing.  This is considered by some to be the best option because it offers unparalleled flexibility, and can address issues such as "rat-running" and can be set up to encourage more use of arterial routes over local roads.
Zonal boundaries can be implemented with Automatic Number Plate Recognition (ANPR) cameras, as has  been done for the ULEZ, but depending on the number of zones (there aren't obvious boundaries in some parts of London, and borough boundaries often make little sense from a road network perspective), it would involve a lot of images and a lot of processing, to distinguish between vehicles crossing different boundaries at different times and directions.

Distance/time and location based charging (once called TDP (Time Distance Place) pricing) would require some form of telematics.  Traditionally the thought has been that devices would need to be installed in vehicles to enable this, but the options of Original Equipment Manufacturer (OEM) telematics are beginning to emerge, along with self-installed GNSS dongles that plug into EOBD (OBDII in Europe) ports in newer vehicles or even mobile phones with apps. The latter options would still require location of some ANPR cameras to ensure vehicles drove with such systems operating.

However, the key question still to be answered is why do it?

Congestion, revenue and the environment

There is little doubt that road pricing on a wide scale in London could be transformative for the city's transport networks, productivity and environmental impact.  It could significantly reduce traffic congestion by spreading demand by time of day, route and mode, and in doing so would increase the capacity of existing bus services, and increase fare revenue across public transport.  However, to improve congestion would require taking a different approach than what happened with the central London scheme. In central London much road space was reallocated to other modes, which improved access by those modes, but rendered delays for much traffic to be little better than before, after the reallocation of road space.  It is understandable in the context of reducing car traffic, but for freight traffic (which mostly has little chance for modal substitution), it means they are paying to use road space with little improvement in the level of service provided.

Wide scale road pricing should change that. If there is plenty of excess capacity that might be well used for cycleways or footpaths, then reallocation of road space could be considered (bus lanes are less important if road pricing is introduced, unless there is desire to implement bus rapid transit). 

Most of all, to improve congestion there should be targets set for improved travel times, and for a change in approach and policy regarding congestion.  For decades congestion has been seen both as a problem, but also a tool to constrain traffic growth. However, congestion is a reflection of inefficiency and a very poor use of precious space.  Having consistently flowing traffic mean there is more usable capacity, and so those that pay get a better level of service as a result.  This has rarely been part of the narrative discussed around road pricing in London.

Revenue is important, and almost always the key focus, and plenty will be generated, but it will be key to consider carefully what to do with it. It seems unlikely that Londoners will back road pricing as "just another revenue source", without it making a difference for those who pay it.  Whether it be fixing the continuing backlog of road maintenance, or fixing intersections or corridors that have historic bottlenecks or poor design affecting congestion and safety, road pricing needs a commitment that at least some of the money will be used to ensure London's roads are fit for purpose. It could support undergrounding the Hammersmith Flyover addressing resilience and revitalising public space and land for other purposes, for example.

The environment would win out of road pricing regardless, as less congestion and less motor traffic, with more use of public transport and active modes all improving local air quality and reducing CO2 emissions. So there will be overall benefits environmentally, and the social benefits should come from improving mobility of bus services and accessibility more generally, as long as pricing matches demand and capacity, and is not punitive.  

What hope is there for such pricing?

Given the backlash on ULEZ, regardless of merit, it seems likely that the political appetite to introduce wide scale road pricing in London is likely to be low, certainly before the 2024 general election. After that, the next Government may have more appetite to advance it, knowing that unless it is advanced in London, it seems unlikely to get public support to be advanced in cities or regions which have inferior public transport options.

There remains a revenue issue from electric and hybrid vehicles which isn't going away, which might be solved in the short term by imposing higher Vehicle Excise Duty on such vehicles, but it is clear the appropriate medium term answer is some form of road user charging (RUC).  

However, whether it be revenue replacement with RUC or reducing congestion with congestion pricing (and generating revenue), the fundamental problem with road pricing in the UK remains the toxicity of the politics around an issue that for too many looks like a way to extract money from road users, with little to no talk about improving either the infrastructure  (which outside the national network is in woeful condition) or improving travel times from less congestion.

Until a political leader can communicate clearly about this, and ignore Treasury resistance to hypothecation of road pricing revenues and ignore political calls to treat pricing as a tool to make driving simply more expensive and less convenient, then it will continue to languish.

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