2: Congestion charging in London

Taxing congestion raises revenues for London while changing behaviour, making it an efficient form of taxation, and one ideal for large cities.

London’s Congestion Charge (CC) is an £11.50 daily charge for driving a vehicle within the central London charging zone between 07:00 and 18:00, Monday to Friday. There is an ongoing debate about extension of London’s congestion charge and ways to improve it.81

Revenue generation and investment82

The CC will raise £174 million net in 2017/18 – 3 per cent of Transport for London’s (TfL) operating income, and 21 per cent of non-fares operating income. This does not include the revenue raised by encouraging people to ride public transport.

£75 million (43 per cent of revenue from the CC) is spent on TfL’s bus network.

Impacts

  • The CC raises most of its revenue from individuals in the richest quintile, who are more likely to commute by car. The overall impact is disproportionately progressive as it expanded and subsidises public transport used most by low income residents.83
  • Traffic fell by 21 per cent between 2002 and 2008, while delays fell by 30 per cent and public transport usage increased 18 per cent over the same period.84
  • Environmental benefits included a 16.4 per cent decrease in CO2 and 13.4 per cent decrease in NOx in the first year.85

Public support was initially low and declined prior to introduction of the CC, but rose following its implementation (a pattern also seen in international cities with road pricing). The percentage of Londoners opposed to it fell from 72 per cent to 36 per cent five years after its introduction. 86

Footnotes

  • 81 For example, Quilter-Pinner H and Laybourn-Langton L, (2016) Lethal and Illegal – London’s Air Pollution Crisis London: Institute for Public Policy Research
  • 82 Transport for London (2016) TfL Mayor’s Budget 2017/18
  • 83 Blow L, Leicester A, and Smith Z, (2003) London’s Congestion Charge London: The IFS
  • 84 Asian Development Bank and Deutsche GIZ (2015) Introduction to Congestion Charging – A Guide for Practitioners in Developing Cities
  • 85 Transport for London (2006) Impacts Monitoring – Central London Congestion Charging
  • 86  Asian Development Bank and Deutsche GIZ (2015) Introduction to Congestion Charging – A Guide for Practitioners in Developing Cities