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National congestion charging could raise £16 billion

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18 July 2004

A national congestion charging scheme in England could raise £16 billion per year according to a report published by the Institute for Public Policy Research (ippr), ahead of the Government's review of its Ten Year Transport Plan.

The report argues that the money raised should be used to abolish road tax and pay for road and public transport improvements, rather than pay for a cut in fuel duty. The introduction of a national congestion charging scheme on this basis could see low income rural drivers pay less, because they save more in road tax than they pay extra in congestion charges.

For example:

A low mileage rural motorist in the North West could save around £3 per month.
While an average suburban motorist in the South East could pay around £32 extra per month.
But a high use business motorist based in the West Midlands might pay around £55 extra per month.

Car owning households in Britain currently spend on average about £180 per month on running one or more cars, including petrol, tax, insurance and servicing. The comparable cost for a low-income car owning household is about £110 per month. These figures exclude purchasing costs.

The ippr report is based on computer modelling and shows that a national congestion charging scheme would cut traffic overall by about seven per cent and reduce carbon emissions by up to three million tonnes per year, helping to combat global warming. But if the money were used to cut fuel duty, then road traffic would increase by about five per cent overall and carbon emissions by about two million tonnes per year, undermining the Department for Transport's new target to cut greenhouse gas emissions. This is because reductions in traffic on congested roads would be outweighed by the growth of traffic off-peak and in rural areas.

Tony Grayling, ippr Associate Director and report author said:

"Motorists should pay for the costs of congestion and pollution they cause but motorists on low incomes should not be unfairly penalised. The money raised from a future national congestion charging scheme should be used to abolish road tax and improve public transport.

"Rural drivers would pay less while those in urban areas would pay more. But all motorists would benefit from less congestion, a better environment and improved public transport.

"Contrary to popular myth the UK's drivers are not the most heavily taxed in Europe - that accolade belongs to motorists in the Netherlands. British motorists pay similar levels of tax overall to drivers in France, Italy, Ireland, Finland and Denmark.

"It is likely to take at least a decade to develop a national congestion charging scheme for cars, based on Global Position Satellite (GPS) technology. Meanwhile, the government should introduce tolls on motorways when they are widened and promote more urban congestion charging, like the central London scheme.

"But road tolls should not be used as an excuse for building new roads, which causes damage to the environment and generates more traffic. The government should think twice about its proposal to build a new tolled motorway between Birmingham and Manchester."

Notes to Editors:

In the Fast Lane: fair and effective road user charging in Britain by Tony Grayling, Nathan Sansom and Julie Foley.

ippr commissioned Stephen Glaister and Dan Graham of Imperial College London to forecast the effects of a national congestion charging scheme if it were introduced on all roads throughout England in 2010. The forecasts were made using a computer model of England's transport system, developed for the Independent Transport Commission.

Average difference in £ per month by region and driver

Region/Low-mileage rural motorist/typical suburban motorist/ High -use business motorist

North East -3/ 21/ 50
Yorkshire and Humberside -3/ 23/ 33
East Midlands 1/ 31/ 56
Eastern 0/ 17 /40
South East 4/ 32/ 61
London n/a/ 86/ 141
South West -2/ 6/ 26
West Midlands 0/ 30/ 55
North West -3/ 16/ 41

The table is based on the following assumptions:

Low-mileage rural motorist: Vehicle Excise Duty for 12 months for: Fiesta Pre-2004½ Model Year 1.3i 3 & 5 Door (14 inch tyre) is £105.00. VED Band: A. Engine Capacity: 1299. Transmission: M5. Fuel Type: Petrol. CO2: 147 g/km. Euro Standard: * III

Driving 5,000 miles per annum on the following roads: 10% trunk, 10% urban, 80% rural.

Typical suburban motorist: Vehicle Excise Duty for 12 months for: Mondeo Pre-2004½ Model Year 1.8i SCi 16V 4/5 Door Saloon (16 inch tyre) is £145.00. VED Band: C. Engine Capacity: 1798. Transmission: M6. Fuel Type: Petrol. CO2: 173 g/km. Euro Standard: * IV

Driving 10,000 miles per annum on the following roads: 50% trunk, 25% urban and metropolitan, 25% rural.

High-use business motorist: Vehicle Excise Duty for 12 months for: E-Class (W210) Saloon E 240 is £160.00. VED Band: D. Engine Capacity: 2597. Transmission: M6. Fuel Type: Petrol. CO2: 271 g/km. Euro Standard: * III

Driving 20,000 miles per annum on the following roads: 65% trunk, 30% urban and metropolitan, 5% rural.

Contacts:

Matt Jackson, ippr Media & Web Officer, 020 7339 0007 / 07753 719 289

Richard Darlington, ippr Media Manager, 020 7470 6125 / 07971 851 145

Tony Grayling, ippr Associate Director, 020 7470 6116 / 07855 386 477