We all want better public transport, but how are we going to pay for it? After years of cuts, city authorities in the UK can struggle to find the money needed to support local economic growth by focusing or creating inclusive communities. That’s why our latest report on how cities can finance inclusive growth policies recommends that places try something new – a Workplace Parking Levy.
British cities don’t have many options when it comes to raising money. Council tax is not flexible and hasn’t been updated in England and Scotland since 1991, and business rates devolution won’t come into place until 2020 at the earliest. While cities abroad are often allowed to experiment with taxation, such as when Berkeley in California introduced a soda tax, cities in the UK aren’t allowed to unless Parliament has said so.
However, one of the few things cities in England and Wales can do to raise revenue is to introduce the Workplace Parking Levy (WPL). This is levied on employers for each car parking space they provide (those with 11 or more parking spaces), and they can choose to either pay it or pass it down to employees.
As our recent report argued, the WPL is one way cities can generate funding for policies to extend prosperity to more people – in this case, by improving public transport and therefore increasing access to opportunities for more people. But it is also essentially a tax on something that nobody likes – congestion. By encouraging commuters to carpool or switch to public transport, it reduces congestion and its costs to business and residents. The reduction in traffic also improves carbon emissions and air quality.
The benefits for public transport
This benefits that WPLs offer can be seen in Nottingham, where the introduction of a WPL of £387 per parking space has raised £9m a year with minimal running costs. As such, it’s no surprise that Cambridge and Oxford are both in the process of introducing a Workplace Parking Levy too. About half of all spaces are paid for by employees of businesses in Nottingham, therefore giving them the incentive to leave their car at home and use other forms of transport.
Moreover, the money raised by any WPL has to be spent on improving transport, to increase options for commuters. For example, Nottingham has used the revenue it has gained from its WPL to fund most of its £220 million commitment to expand the city’s tram system, which was matched by an additional £432 million of central government investment.
Freeing up land
Unlike the congestion charge, the WPL has a bonus effect of making more land available for other uses. Some employers will reduce the amount of car parking spaces they have to reduce their total cost, in the short term creating empty space. In the long-term however, this frees up valuable city centre land for other uses, such as green space or new residential and commercial buildings.
For instance, the University of Nottingham has expanded onto land that was previously used for university car parking before the levy was introduced. Rather than using expensive land in city centres to leave cars unattended and stationary for the working day, the WPL encourages the use of land for people.
The need for consultation
However, a note of caution: building support for the WPL requires careful planning. Not only does that involve auditing and managing a database of all the car parking spaces in workplaces across the city, it also means demonstrating how the revenue will be used to fund an ambitious plan for investment. A good start could be to use the WPL to finance new initiatives that make the most of the new powers city leaders have gained through the Bus Services Act.
Councils should listen to sceptical business owners about their most pressing public transport needs, and use the WPL as a tool to solve them. This kind of consultation led to Nottingham using some of WPL’s funds to improve connections to London by renovating the central train station. The city also continues to use this revenue to subsidise the local bus network, therefore helping connect employees to their jobs.
Exemptions can also help win support. Spaces reserved for disabled people and the emergency services are exempt, while exempting firms with fewer than eleven spaces reduces costs for business and the council.
With pressure growing on local government funding and finance, cities need to begin thinking creatively about how to drive and pay for inclusive growth. In cities with lots of congestion, the Workplace Parking Levy is a fair and efficient way to raise the money needed to improve the local economy