Type of Measure: New IdeasSpecific
Sub-Measure Description: Economic Instrument - Market Based
Principal Sector: Transport
Main Emission Target: Air PollutionCO₂GHGₛ
Policy Focus: AirClimate
Status of Implementation: Ongoing
EU Climate Relevance: Non-ETS

Summary

The London Congestion Charge has applied to a 22 km2 area of Central London, since 2003. The charge of £11.50 as of 2019 is levied on motor vehicles operating in this area between the hours of 07:00 and 18:00 on weekdays. After immediate implementation, the number of vehicles in the charge zone dropped by 15%, and initially the speed of travel in this area increased by 17% (Prud’homme and Bocarejo, 2005). The travel speed has been in steady decline since then, partially due to an increase in cars choosing to pay the fee, but also due to the change in bus corridors which was implemented along with the charge in 2003. In relation to air pollution, the charge has had a positive impact in improving the air quality for the congestion charge zone, however this area makes up approximately 1% of London’s total air pollutants and therefore there is little to no effect on improving the air quality in the Greater London area. (Prud’homme and Bocarejo, 2005). The congestion charge is an example of a monetary incentive designed to create a behaviour change in consumers, in this case the desired change is a modal shift away from fossil fuelled passenger vehicles.

Since 2003, the London congestion charge has been increased several times, initially starting at just £5 and increasing firstly to £8 in July 2005, £10 in January 2011 before rising to £11.50 in June 2014 where it remains in 2019. In the context of positive interest rates, these increases are necessary in maintaining the deterrent effect of the charge when compared to alternative modes of transport. Each incremental step-up in the charge, has been shown to reduce the number of vehicles in the congestion zone, though the efficacy of these increases are subject to diminishing marginal returns.

Detection is carried out by Automatic Number Plate Recognition (ANPR) technology, which records car license plates and the time of their entry to the congestion zone. This is matched against the registry database to assess whether the toll has been paid. When it has not been paid or the vehicle is not registered, the license is referred to the Driver and Vehicle Licensing Agency and penalty notices are sent to the registered owner of the vehicle.

Currently low emission vehicles and electric cars, as well as London taxis and private hire vehicles designated as wheelchair accessible are exempt from charges. Those living within the confines of the congestion charge zone qualify for a 90% residents discount.

The congestion charging policy had an immediate impact on average travel speeds and congestion, but travel speeds have since, slowly returned to pre-charge levels. This is in part due to a restructuring of the bus network within London which was brought in at the same time as the charge. These dovetailing policies, have had the desired effect in that they stimulated a substantial modal shift in the London transport sector. Between 2007 and 2017, the number of trips made on bicycle during the morning peak hour (08.00-09.00) more than doubled, making it the most common transport type. The frequency of Cars and taxi’s during the same period has significantly decreased, as has the number of vehicles overall (City of London, 2018). The initial charge contributed to a 3-minute time savings for cars in the charge zone and 6-minute time saving for buses (Santos and Bhakar, 2006). It is likely that in order to establish a further reduction of traffic levels in the city a substantial increase in the congestion charge will be necessary. The challenge to this type of a measure is largely that any increase which would be large enough to have an effect would not be supported politically.

The congestion charge contributes 4.1% of Transport for London’s total income with the net income figure of £146.7m spent on improving the cities transport in line with the mayors strategy. This strategy targets 80% of trips to be walking, cycling or public transport by 2041. The congestion charge contributes to achieving this reduced dependency on motor vehicle trips by monetarily disincentivizing such trips and by improving the infrastructure in different modes of transport. By law, increases in revenue raised by the congestion charge are required to be re-invested in transport in London. While the charge may be seen as costly for individuals, it has been largely perceived as a favorable measure on the whole because of the subsequent reduction in traffic congestion. There is a large decrease in air pollution in the congestion charge zone, but this decrease is minor in the context of the Greater London area.

The congestion charge operates as a monetary incentive to encourage low-emission and electric vehicles as well as non-motorized means of travel. This additional co-benefit may allow for a greater reduction in air pollutants if it influences a greater uptake of EVs in London more broadly.

References

BBC News Uk London Congestion Charge. (2019). Retrieved 3 October 2019, from: http://news.bbc.co.uk/2/shared/spl/hi/uk/03/congestion_charge/exemptions_guide/html/works.stm
City of London. (2018). Traffic in the City 2018. London: City of London. Retrieved from: http://democracy.cityoflondon.gov.uk/documents/s91800/Appendix+1+-+Traffic+in+the+City+2018.pdf

Leape, J. (2006). The London congestion charge. Journal of Economic Perspectives, 20(4), 157-176.

Mackie, P. (2005). The London congestion charge: A tentative economic appraisal. A comment on the paper by Prud’homme and Bocajero. Transport Policy, 12(3).

Morton, C., Lovelace, R., & Anable, J. (2017). Exploring the effect of local transport policies on the adoption of low emission vehicles: Evidence from the London Congestion Charge and Hybrid Electric Vehicles. Transport Policy, 60, 34-46.

Prud’Homme, R., & Bocarejo, J. P. (2005). The London congestion charge: a tentative economic appraisal. Transport Policy, 12(3), 279-287.

Santos, G., & Bhakar, J. (2006). The impact of the London congestion charging scheme on the generalised cost of car commuters to the city of London from a value of travel time savings perspective. Transport Policy, 13(1), 22-33.

Santos, G., & Shaffer, B. (2004). Preliminary results of the London congestion charging scheme. Public Works Management & Policy, 9(2), 164-181.

Tonne, C., Beevers, S., Armstrong, B., Kelly, F., & Wilkinson, P. (2008). Air pollution and mortality benefits of the London Congestion Charge: spatial and socioeconomic inequalities. Occupational and Environmental Medicine, 65(9), 620-627.

Transport for London. (2019). Annual Report and Statement of Accounts 2018/19. London: Mayor of London.

Reference this

Policymeasures.com (2020). Congestion Charging in London. Available at: https://policymeasures.com/measure/congestion-charging-in-london/. Last accessed: 23-02-2020.