London is an increasingly congested city, and with the population expected to continue to grow by as much as 2 million over the next twenty years, congestion is only likely to get worse, with negative consequences for liveability, air quality, carbon emissions, and economic competitiveness.
One policy however could make a substantial contribution to reducing congestion on London’s roads: pay-as-you-go congestion charging (road pricing). Though the case for congestion charging has been more popular on the left than the right, it is founded on good market principles – one of the first people to argue for it was the Chicago-school economist Milton Friedman. Road pricing is simply an economically efficient way of allocating an increasingly scarce resource (road space). For that reason, the theoretical case for road pricing is now accepted by most economists and the policy is supported by a wide array of business organisations.
Smart technologies are making road pricing ever less costly. And it should not be difficult to design a scheme for London which actually reduces the costs of using a car for some car owners – those that use a car infrequently, or on non-congested roads.
One simple idea might be for the Mayor to refund to all car owners the cost of their annual vehicle tax, while introducing road pricing at the same time, perhaps paid for via the Oyster Card. Those that make little use of their cars could well find themselves better of at the end of the year than currently.
Similarly, discounts could be offered on less polluting, greener vehicles. Integrating congestion charging with the Oyster Card would allow people to make a direct calculation as to the costs and benefits of using the car versus other means of transport. Indeed, the mayor could go futher, promoting a London travel card (or a London travel account – cards could soon be superceded by smart phone accounts) for use on public transport, private cars, car clubs and even cabs and taxis.
The principle that we should pay more to travel at busier than quiet times, or more popular than less popular routes is already well established - notably on the railways. While the Congestion Zone covers less than 2 per cent of London's roads, it has been widely accepted, and demonstrated that road charging can be effective. And while congestion charging schemes have been rejected in referendums held in Edinburgh and Manchester they have passed the test of public opinion in other cities like Stockholm. The key seems to be to introduce the scheme first and once it is established and it has been tried and tested by the public, only then hold a vote on whether to remove it.