National Road Pricing

1
National Road Pricing Revenue and Equity Issues

• Terence Bendixson
• Secretary, Independent Transport Commission
• 26 October 2005

2
Disclaimer!

• I am grateful to Professor Stephen Glaister,
  Imperial College
• London for the use of these preliminary results
  from work in progress
• These results offered here are
• subject to correction

3
Definition of road charging

• Charges that vary by time and place to reflect
• Congestion
• AND
• Environmental damages
• Noise
• Additional accident hazard
• Local air pollution
• Global emissions
• (Global emissions are best addressed by simple
  fuel duty).

4
Big issue What happens to the revenues?

• Possible uses
• Reduce fuel duty and/or tax disc (tax revenue
  neutrality)?
• Improve public transport alternatives?
• Improve road maintenance and road capacity?
• Defray the investment and operating costs of the
  pricing system?
• Other local or national public expenditure
  purposes?
• You cannot spend the money more than once!

5
Revenue additional road pricing
London
6
Revenue neutral road pricing
London
7
Electoral wards, traffic change in various area
typesRevenue neutral
Small urban
Large Urban
Cent. London
Outer Lon
Medium Urban
Outer conurb.
Rural
Inner Lon
Inner conurb.
Big Urban
8
Electoral wards, traffic change in various area
typesRevenue additional
Large Urban
Small urban
Cent. London
Outer Lon
Medium Urban
Outer conurb.
Rural
Inner Lon
Inner conurb.
Big Urban
9

• Note an increase in traffic is a reflection of
  lower costs
• It is a social benefit assuming roads
  correctly priced
• But under a revenue neutral scenario
• urban dwellers will, on the whole, be worse off
• To prevent this revenues must be held locally

10
Big issues to resolve for a practical policy

• Who will get reductions or exemptions?
• What happens to the revenues?
• What is the meaning of a national scheme?
• Governance?
• The case for more road capacity?
• Several Whitehall departments are affected DfT,
  HMT, ODPM, DeFRA, DTI, DCA
• Successful delivery will require clarity and
  leadership.

11
Congestion and environmental charges additional
to fuel duty. Additional revenue (2010) 16bn
pa
12
Congestion and environmental charges reduction
in fuel duty Revenue neutral