Forum topic: Road charging in London - is it inevitable?

A regular update just received from Fox Lane & District Residents Association (FLDRA), who have researched the matter, indicates road charging in London is inevitable and is required to balance HMG’s loss in fuel duty as more vehicles switch to electric. Fair argument, except what happens to those driving outside of London? Unless they too have some fuel tax replacement fee then the implication is London’s drivers are paying for the UK’s resultant tax gap (possibly alongside equivalent schemes in other large cities). Maybe that’s “levelling up (or down)”. I struggle to see a scenario under the present government (I use the term loosely) in which the mayor is afforded revenue from such a London car charging scheme. Prima facie more thinking is required: just exactly why and the several hows.

As argued by the Social Market Foundation think tank, road charging needs to be brought in nationally as soon as practicable. Electric vehicles are more expensive to buy but significantly cheaper to run (both because their "fuel" (electricity) is taxed at a much lower rate than petrol or diesel and because they are mechanically more straightforward, reducing maintenance). As a consequence, delay in switching from fuel taxes to road charging would have unfortunate consequences:

• Tax revenue from petrol and diesel sales will fall significantly as people switch to EVs


• Wealthier people will switch first and their motoring costs per mile will be significantly less than that of people who can't afford an EV. Consequently, they are likely to increase the amount of driving they do, increasing congestion.


• If too many people switch to EVs before road charging is introduced and get used to cheaper driving, an important government revenue stream will be disappearing but it will be politically difficult or impossible for a government to then compensate for this by bringing in road charging, increasing driving costs for people who've already switched to electric.
  

This is explained much more cogently in this May 2022 report: Miles Ahead - Road pricing as a fairer form of motoring taxation .

Turning to Karl's point about London vs the rest of the UK:

London has a unique problem because of the collapse in TfL fares revenue which is threatening big cuts to bus and eventually tube services.

In recent years there's been a bizarre situation whereby road maintenance in London has effectively been funded by tube and bus passengers, whereas elsewhere it is funded by the government. London does not get any of the money from taxes on fuel and driving, even though much of that driving is happening in London. Prior to the pandemic, government support to TfL was being phased out (Boris Johnson agreed to this when he was mayor, but the impact has been felt by his successor), meaning that the primary source of money for all road schemes in London has been tube and bus fares, which were actually providing the necessary surplus to pay for roads. The pandemic has caused passenger revenue to fall disastrously. The government has been providing rescue packages but, it seems, is no longer willing to do so, at least not for much longer.

So TfL urgently needs an alternative source of revenue if it is to carry on funding road and bridge maintenance, improving junction and crossings safety, providing safe cycling infrastructure and active travel schemes, and more besides. Though most of this work is carried out by boroughs, the funding for it is almost all provided by TfL. A London-only road charging scheme could be introduced and would kill two birds with one stone:

• Help reverse the perverse situation whereby fares from more climate-friendly forms of transport (tube, buses, trams) are subsidising the provision of roads in London used by far less climate-friendly forms of transport (cars, vans, lorries).


• By varying charges by times of day, locations etc, road charging could reduce London's terrible congestion, with its multitude of negative consequences.

Let's face it, road space in London is a very scarce resource (the evidence for this is chronic congestion throughout the capital) and scarce resources lead to high prices. So there is an argument for road pricing in London to be brought in initially on top of national motoring taxes. Eventually, smart road pricing would replace existing motoring taxes nationally.

Thanks Basil, a thorough explanation. Completely perverse that bus and tube users are paying for road repairs in London but there is ongoing evidence of the absence of any government joined up thinking, and added to an apparent government willingness to use TfL, and hence our transport, as a means to undermine Mayor Khan, so no real surprise. When we hear (repeatedly just now) of the UK’s need for productivity and growth we can think of the friction (cost) caused by such conflict vs that which would occur from collaboration and alignment of mission. The climate would benefit too.
I’ll pick up the “road space in London is a very scarce resource”, but only from the perspective of the driver who can’t drive where they wish to any time without congestion and ultimately park wherever it is they happen to end up. With roads taking up a reported 80% of all public space in London that seems anything but scarce to me, at least for those not viewing it from behind a steering wheel. I see an awful lot of road wherever I look

Right on cue, as if following this thread on PGC, today’s Times’ main business section comment article focuses on UK productivity and highlights a comprehensive system of road pricing as one of a handful of ways forward: in this case cost to vary per mile based on time of day, traffic levels and location. Its implied conclusion - it’s not that we don’t have enough road, we simply don’t use the present tarmac optimally.