Congestion Charging: What Sydney can learn from London

In a submission to the Unsworth inquiry into public transport in Sydney, Mr. Gary Glazebrook (a Transport Consultant) promoted the idea of a $6 daily entry toll to the Sydney central business district (CBD). He proposed that this toll would be collected using the same scheme that is in place in the City of London (effective from February 19, 2003) and that the revenue would be earmarked to build light rail and a series of park and ride facilities adjacent to the entry points to the tolled zone. A number plate registration scheme will be used (as in London) to register and check compliance of vehicles entering the charging zone. He argues that this will have a significant influence on the levels of car use and traffic congestion in the Sydney CBD.

Although I support the notion of efficient pricing, this particular proposal is in danger of missing the mark It appears to be a natural response following on from the London scheme; however, it is lacking in a full appreciation of exactly what has happened in London over the first 6 months of the scheme and the extent to which the scheme can be easily exported to other situations, including the rest of London (what is known as the scalability case). I have just returned from presenting a paper at the first international conference on congestion charging (convened by Imperial College London, August 18-21). This note offers a commentary on what has happened in London, lessons learnt and the challenges we face in trying to make the London experience scalable.

The London Scheme

The London charging scheme which came into force on 17 February 2003 involves a £5 daily entry fee to the charge zone between 7am and 6.30pm, Monday to Friday, excluding Public Holidays. The charging zone bounded by the Inner Ring Road is a small area in the city of London in which very few people actually live. The scheme operates with a paper based system using Automatic Number Plate Recognition (ANPR) technology, via cameras located at cordon entry points or in mobile locations throughout the charging area.

Before its commencement, the charging scheme was predicted to:

• Reduce traffic volumes in the heart of the capital by between 10-15 per cent year round, i.e., to school summer-holiday levels all year round;
• Reduce congestion by 20-30 per cent, journey times shortened and delivery times made more reliable;
• raise £1.3 billion over the first 10 years for re-investment in all forms of transport in London, including roads, buses, local streets and railways; and
• pay back set up costs within 18 months of starting.

To be eligible for entry one has to register a vehicle and the number plate becomes the basis of compliance with the charge debited to an agreed account. There are a range of exemptions and discounts. Exemptions apply to certain alternative fuels, breakdown and recovery vehicles, health service workers, motorbikes and mopeds, military vehicles, emergency services, taxes, minibuses and public transport vehicles. Residents of the zone receive a 90 per cent discount (i.e., pay £0.50 or 50p). Freight vehicles pay the full daily charge.

It was initially anticipated that most registrations and payments would be made through a labour-intensive call centre; however, 38 per cent of payments to date are through retail outlets, 24 per cent over the web, 18 per cent as SMS messages with the balance of 20 per cent through a range of other sources including the call centre. Over 900,000 individuals have registered for discounts and/or exemptions. If someone enters the area without having paid then they are given until midnight on that day to pay, otherwise they are automatically issued with a fine notice for £80, reduced to £40 if paid within 14 days.

What are the major findings to date? Currently there are over 100,000 payments per day made on entry to the zone which includes 11,000 fleet vehicles. Before the introduction of the charge, the average speed of all traffic was 13 kph; it is now 17 kph. There has been a 20 per cent reduction in total vehicle trips per day throughout London with a 16 per cent reduction of traffic in the charging zone. Congestion has decreased by 31 per cent as measured by travel time. This is due to 150,000 fewer car trips into, out of and through the charging zone. 10-20 per cent of these trips have diverted around the zone with the greater percentage of the balance (50-70 per cent) switching to public transport. This adds approximately 90,000 to 130,000 passenger trips across the charging day to public transport.

The public transport switching translates into a 14 per cent increase in patronage with bus journey speeds increased by 33 per cent and a 14 per cent annual growth at the present. The growth in motorbike use is also of interest: combined with the increased speed, motorbike use has resulted in greater exposure to the risk of driving faster.

The raising of revenue is the most controversial and unexpected outcome. One of the strong arguments for congestion charging in London promoted by the Mayor of London, Ken Livingstone, is the hypothecation of revenue raised for investments back into transportation, especially public transport. The amount of revenue raised in the first six months is nowhere close to what was projected: the charging scheme has been too successful in discouraging car use. In addition, the administrative costs of the scheme have been much higher than anticipated. 67 per cent of revenue raised has been consumed by costs of administering the scheme. Thus the net revenue is relatively small in terms of any re-investment back to public transport. It must be recognised however that the additional patronage using public transport has delivered sizeable increases in funds through extra fares collected that can be used to improve on services given the new level of pressure on public transport capacity. This is to be encouraged (especially in the longer term), otherwise there will be some defection back to the car. Furthermore, although the amount of fines has been larger than anticipated (a windfall financial gain), with many disputed or not yet paid, the administrative burden involved in the fine collection process is sizeable.

The use of number plate recognition, while supported as the easiest way of introducing the charging scheme in a setting that has not yet taken on board electronic tolling (as exists widely in Sydney with full interoperability), has resulted in a range of headaches in administration. Although it was initially argued that the presence of number plates would make it easier and less costly to link the charging process to these plates with optical identification, there is a growing view (unofficially) that electronic tagging may be the way in the future. Its rejection in London is linked to the absence of electronic tolling in the region and the increased expense in starting from scratch. This may turn out to be a bad decision.

Scalability to the rest of London

Given the success of the scheme in the City of London, there is active talk of extending it to the rest of London. Unfortunately, this is not the simple exercise of changing the zonal boundaries. The rest of London has a different profile of offices and residences and would require substantial exemptions through 90 per cent discounts to residents. Given that a lot of residents use cars in London, the gains are likely to be far less than experienced in the City. The move from number plate identification to electronic tagging will have to be taken far more seriously given the high administrative burden of the current system, which might be streamlined to some extent as a result of the accumulated experience.

Furthermore if indeed there was a sizeable increase in the switch to public transport, the pressure on the public transport infrastructure would be potentially catastrophic without early immediate investment.

Congestion Charging in the Sydney Context

Will congestion charging limited to the Sydney CBD work? Congestion is at its worst on approaches to the CBD and so will we be able to have much impact on it by charging in such a narrow zone as the CBD? Much of the traffic moving in the areas adjacent to the CBD does not go through the proposed CBD charging zone. With an 80 per cent commuter modal share in favour of public transport in peaks with trips terminating in the Sydney CBD, the balance of 20 per cent of commuter passenger trips by car that terminate in the CBD are in vehicles that are company cars with permanent parking. There is very little casual parking and indeed the sensitivity to price will be very low indeed. So unlike London we might anticipate a far greater continuation with car and a more positive outlook for revenue raising. But investing this in light rail and park-n-ride suggests it will not be a good investment. What is needed is a more serious effort to use the money to improve the door-to-door travel opportunities for public transport from deep into suburbia. With congestion charging limited to the CBD (which has less than 15 percent of all jobs), we will in time see a move of jobs out of the CBD to other locations where such charging is not in place. This shows the downside of not taking a systemwide view and focusing narrowly on the CBD. There is an interesting paradox here – congestion charging limited to the CBD will, in the long term, induce the relocation of offices. These jobs will relocate to locations where public transport is not so good and where greater circumferential travel is required, encouraging the growth in car use. The systemwide impacts will be counter productive.

Concluding Comments

The success of the London initiative as the first congestion charging program in a major European city is important for Australia in demonstrating the political feasibility of pricing. This strong political commitment is crucial. Sydney is well placed to benefit, especially given our advanced capability in interoperable electronic tolling and associated administrative support systems in the supply chain. What we must ensure however is that any congestion charging system is not selected for the convenience of an appealing cordon such as the CBD, but for broader systemwide efficiencies. A more considered approach is required to the Glazebrook proposal.