Priced off the road: against extending London's congestion charge

The congestion charge is one of the most progressive examples of road pricing. Here’s why extending it would be regressive. 

It pays to begin with a history lesson: the congestion charge was launched – against a wave of substantial political opposition across the board – by Ken Livingstone, in 2003. Responsible for substantial reforms in his time as the first Mayor of London, Livingstone saw backlash for the congestion charge from across the political spectrum, not just from taxi drivers or private car users but theatre workers and the Samaritans. Livingstone was himself a prominent part of Labour’s Militant faction and leader of the Greater London Council when the Thatcher administration saw it as an enfant terrible deserving of abolition. This provocative background has left the congestion charge tarred with a red brush. But road pricing is not a left-wing policy; it was first suggested by Milton Friedman. For related reasons or not, road pricing is not nominally progressive - at least, not in principle.

In the public domain, there is a general preference for burdens that are shared equally as opposed to those that are levied on specific parts of society, deservedly or not. Congestion on the roads is a burden that falls equally on the shoulders of each road user; a passenger on a bus on the congested Euston Road is just as likely to encounter delays as a private car user or a taxi driver. By comparison, a congestion charge is not charged equally – bus passengers and cyclists do not pay, but private car users and taxi drivers do. Taxi passengers might see an increase in price, but the cost may be absorbed by the taxi company. Regardless, the burden is no longer equally distributed but placed on the shoulders of private car users, specifically those who choose to travel into the central zone. So this does not seem like a progressive form of taxation: it is the imposition of a price on a scarce resource, such that it is allocated to those who are most prepared to pay for it. Those who cannot afford to pay the congestion charge on a regular basis are priced out of driving in Central London. The congestion charge affects all road users equally: regardless of whether you are driving a pokey VW Polo or a top-of-the-range limousine, you pay £15. There are certain exemptions for those living inside the congestion charging zone or hospital patients too ill to travel by other means, but these are relatively narrow parameters.

Therefore, road pricing is not a progressive policy because it is not targeted at specific groups. It is, in principle, the transport equivalent of a flat tax. In practice, however, things can be different. While congestion and road traffic are carried equally by all road users, the impact in practice depends on the type of area in which road pricing is implemented. In the suburbs, as services and amenities are more spread out, private car use is likely to be more widespread. This means that the impact of road pricing in a suburban neighbourhood would be likely to be more equal across the adult population. Comparatively, implementation in a city centre would only impact the road users that either:

a) have to drive in the centre of town owing to their work or lifestyle requirements, or

b) prefer to use a private car as opposed to taking public transport.

I would argue that a) is a group almost exclusively made up of goods vehicles, taxi drivers and those too ill to travel by other means. Meanwhile, b) includes those that enjoy sufficient privilege to afford private car use in central London. Given the ubiquity of public transport options within the current congestion charging zone, the choice to continue using a private car is one likely to only be taken by those who can express a consistent preference for travelling alone, and all the creature comforts that provides. Parking spaces inside the zone already charge a high price for regular use, and the convenience of a parking space in Central London is most appealing to those who work in the City or other jobs in the centre with unpredictable hours and short-notice changes. In other words, it is a luxury good. Therefore, road pricing in Central London is a more progressive policy option than in other areas – perhaps more progressive than in any other part of the country – because the road users it affects are likely to be, on average, those of higher incomes that can afford the luxury of private car use in Central London.

While a progressive taxation policy is not necessarily a good in of itself, in this instance, the practical implication of the current congestion charge is to reduce traffic from unnecessary journeys (from those who do not fit a) or b) above and therefore may choose public transport in response to road pricing) and generate revenue from those that continue to travel into the zone. For the richest, demand for private car use is likely to be inelastic i.e. it will not substantially change in response to the price of the good. This means substantial revenue generation from those that are likely to be on high incomes or, in the case of goods vehicles and taxis, can carry increased costs onto their customers with little substantive impact. This is because their customers (shops in central London and travellers who regularly travel by taxi) are also likely to have inelastic demand for goods supplied and taxi journeys respectively. The current congestion charge levies a road price on those who insist that their journey is necessary while cutting out additional journeys to keep the roads clearer for buses and cyclists. It’s easy to say this with foresight, but the current policy has proved both progressive and effective.

Extending the congestion charge to the North and South circular roads would reverse this change. It would affect ten times as many road users and stretch into the suburbs. The effects would be distinct but equally grievous in north and south. North of the river, the North Circular is largely a dual carriageway road with a central reservation and a 50mph limit; it is not a porous boundary. In the south, the road is less formalised, more a rolling together of different roads that total a “ring road” but do not really fit that spec. Living on one side of the South Circular or the other is not an especially precious divide. In both instances, boroughs with substantial urban populations are bisected by the circular roads, at a scale that is simply not the case within the current congestion charge zone. While those living inside a newer larger zone would likely still benefit from the 90% exemption, the amount of people likely to cross the circular roads on a semi-regular basis – especially in the south – would see a substantial levy on suburban occasional car use, which is not just the habit of a privileged few. Moreover, car use in outer London does not fall into the near categories of a) and b) detailed above. As bus and rail services are less widespread in some outer boroughs, the use of a private vehicle can be the most efficient means of travel for a substantial minority. This means that extending the congestion charge over this area would not have as substantial an impact in reducing road traffic (thereby freeing up road space for e.g. buses and cycles, which are more space efficient).

At the heart of the issue is the arbitrary nature of the dividing line. That is not to say that there is a less arbitrary option; the Greater London boundary, for example, is extremely porous in its north-western and southwestern corners. In sum, it is not clear what the benefit of extending the congestion charge area would be beyond revenue generation; even then it is the most brute-force means of implementing such a measure. The suggestion of smart pricing should be considered more carefully as part of any options assessment to extend the congestion charge.

While it is generally accepted that we have reached “peak car” in central urban areas, the extension of a blanket congestion charge zone within the circular roads of London would see a multitude of groups included in a policy that is far less targeted in terms of its ability to reduce traffic congestion. This proposal could be construed as a bad example of national government trying to impose executive measures on the Mayor of London without due process or consideration. Even if the aim is cast as revenue generation, an extension of the congestion charge does not have carte blanche.