The first blogs of this TfL series explored different public transport funding models: one mostly focused on land development (Hong Kong) and another based on local income contributions (Paris). Both models allow transit authorities to be less dependent on their respective farebox, but neither of them directly tackles other urban mobility issues, such as car congestion and poor air quality.
Unlike these cities, Singapore simultaneously diversifies its sources of income and tackles car use. So what lessons can London take from the ‘Singapore Model’?
Singapore raises significantly more revenues from car use than London
Singapore has decades of experience dealing with car use. The city-state’s existing electronic road pricing system started in 1998 and is the successor of the congestion charge, introduced in 1975. The current system – instead of charging a fixed fee when driving into a designed area like the previous system and London’s congestion charge – is a way of road pricing, which charges different amounts depending on the time of the day, vehicle size and specific route. Evidence shows that electronic road pricing has been effective in reducing congestion and improving air quality.
This system has raised a lot of money. The revenues it generates are the equivalent of roughly 10 per cent of the local transport authority’s income (150 million Singapore dollars a year), which is significantly higher than the 4 per cent raised by the congestion charge in London (in 2019).
In addition, the certificate of entitlement (COE) complements road pricing by focusing on car ownership. The COE is a 10-year permit that allows residents to own a car in Singapore. It is purchased under auction and varies by vehicle type. In February 2020, the average cost of a COE for cars up to 1600cc was on average £16,800 (for a 10-year permit) and even higher for cars with larger engines. Since then, COE prices have more than doubled; the revenue collected from COE’s auctions (2019) was higher than all of the local transport authority’s revenue sources, meaning levies on transport are being used to fund not just transport but other services too.
London has taken steps in this direction, but it may be difficult to raise the necessary revenue
From the three systems analysed so far, London’s revenue-raising tools are closer to the ‘Singapore Model’. First, the city introduced congestion charging in 2003 and its price has since increased from £5 to £15. The Ultra Low Emissions Zone (ULEZ) was introduced in 2019 and further expanded in 2021.
More recently, the Mayor of London has been considering possibilities, including a ‘boundary charge’, expanding the ULEZ to cover the whole of Greater London, or implementing a daily Clean Air Charge for most vehicles.
The existing policies have been effective at tackling congestion and poor air quality. The big problem for London however is that they have not raised anywhere near as much Singapore (and most recently, income generated from the latest ULEZ expansion has been lower than expected).
This is the case for two main reasons. Firstly, moving from the flat road-use fees charged by existing systems in London to a variable price charge, like in Singapore will requires large investment. In Singapore it cost the equivalent of £72 million in 1998 prices and took time to implement – any revenue uplift wouldn’t happen overnight.
Second, beyond resident parking permits, there is no charge in London for the space occupied by vehicles when they aren’t moving. This is the big revenue raiser in Singapore. London has been politically brave in introducing the road charging schemes it has in place currently but introducing a charge for car ownership would likely be very difficult.
Singapore shows that there are extra levers that London can, in principle, pull to increase its revenues from these sources. The question is whether the politics would allow the Mayor of London to go down this route.
This blog is part of the TfL series, where the Centre for Cities explores different Mass Transit System funding models around the globe. The final piece of research of the series will set a range of policy recommendations, based on the models analysed.