Blow, L.; Leicester, A.; Oldfield, Z.; (2003) London's congestion charge. (IFS Briefing Notes BN31 ). Institute for Fiscal Studies: London, UK.

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Abstract

On 17 February 2003, one of the world's largest and most ambitious plans to tackle urban congestion began, with the introduction of a congestion charge for central London. It is hoped that this £5 daily charge for many vehicles entering the Inner Ring Road charging zone will significantly reduce the level of congestion faced by those travelling into and out of central London both by private and by public transport. In 2001, almost 1.1 million people entered central London during the morning peak hours of 7.00a.m.-10.00a.m.,1 of whom around 150,000 (13.7%) used private transport. Whilst the total number of people entering during the morning rush hour has scarcely changed since 1991, there has been a small shift towards public transport: in 1991, 16.8% of people used private transport. Nevertheless, average traffic speeds in central London have fallen slightly over the last decade, with the average morning peak-period traffic speed for 2000-03 just 9.9 mph, compared with a peak of 14.2 mph in 1974-76. During the evening rush hour, average speeds are even slower, at just 9.6 mph. In evidence to the House of Commons Transport Committee,3 David Begg of the Commission for Integrated Transport argues that around 40% of the total national level of congestion occurs in Greater London. Transport for London suggests that "there are now no longer any "peaks" or "off-peaks" of traffic volume between 7am - 6.30pm" and states that there are now on average three minutes of delay for every mile that a vehicle travels inside the charging zone. This Briefing Note aims to provide a guide to the workings of the London congestion charge. We begin in Section 2 by describing the economic case for congestion charging, showing why congestion can be thought of as an urban example of the well-known overuse of common resources to which there is free access (the so-called "tragedy of the commons"). In Section 3, we move on to look at the details of the proposed charge for London, examining how it fits in with the economic framework we develop and discussing some of the work that has already been carried out to try to predict the likely effects of the charge. Section 4 looks briefly at the issue of what may happen with the projected net revenues from the charge, which are legally bound for the first 10 years to be spent on transport within Greater London. In Section 5, we discuss some of the empirical evidence regarding transport in London and present evidence on the potential distributional effects of the congestion charge, since one of the oft-cited criticisms of charging is that it will impact upon the poorest most severely. Section 6 goes on to look at the experience of congestion charging elsewhere around the world.

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