Congestion mitigating benefits of cordon charging in London enabled taxi drivers to cover more miles per hour, service more riders, and decrease operating costs per passenger-mile.

January 2006

Summary Information

Congestion charging in London improves efficiency, reduces pollution, and raises revenue for transit improvements. Championed by the Mayor of London, the program requires motorists to pay a fee of £8 per day to drive within the inner city of London on workdays between 7:00 AM and 6:30 PM. Motorists can buy a prepaid weekly, monthly, or annual pass and save 15 percent, or buy a daily pass and pay full price. Residents receive a 90 percent discount; however, motorcycles, licensed taxis, vehicles used by disabled people, some alternative fuel vehicles, buses, and emergency vehicles are exempt.
Fees are collected from approximately 110,000 motorists each day (98,000 individual drivers and 12,000 fleet vehicles) and payments are made via the Internet, by phone, at automated payment booths, and at designated retail shops. The program requires motorists to pay by the end of the day, or be fined £80. The fine is reduced to £40 if paid within two weeks, but increased to £120 if not paid within a month. Enforcement is achieved using a network of fixed and mobile video cameras that record images of vehicles in the congestion charging zone. Optical character recognition (OCR) technology and Automatic Number Plate Recognition (ANPR) computer systems interpret and decipher the license plate numbers and map them against a pay list. If the system shows a payment is outstanding, the image is checked manually to confirm the vehicle make and model matches the license registration before a penalty is issued. Images of vehicles in good standing are removed from the system.

In February 2003, when the program was initially implemented, the daily charge was set at £5 and the system was projected to generate £138 million per year in charge revenues and £22 million per year in penalty revenues. However, recent reports have shown that charge revenues are much lower than expected, and penalty revenues are much higher. Data from the 2004/05 budget year indicated total revenues of £190 million (£118 million in fees and £72 million in fines), with an overhead cost of £92 million and a net revenue of £97 million. Data from the 2005/06 budget year indicated that when the daily charge was increased from £5 to £8 in July 2005, net revenue increased to £122M per year.

Although the program remains politically sensitive, independent evaluations have shown that the pricing program is an effective congestion reduction strategy and an efficient way to generate revenue for transit improvements.

The introduction of congestion charging in London included a five-year monitoring program. The following productivity and efficiency benefits were highlighted.
  • Bus ridership increased by 14 percent and subway ridership increased by about 1 percent.
  • Taxi travel costs declined by 20 to 40 percent due to the reduced delays which enabled taxi drivers to cover more miles per hour, service more riders, and decrease operating costs per passenger-mile.
Environmental Update: In 2005, the city reported that changing traffic conditions and use of low emission vehicles in the charging zone contributed to a 13 percent reduction of NOx emissions and 15 percent reduction in total particulate matter (PM10) - compared to the levels reported in 2002 and 2003. Impacts at the perimeter of the charging zone were neutral.

See Also:

Central London Congestion Charging: Impacts Monitoring - Fifth Annual Report, July 2007.

Central London Congestion Charging: Impacts Monitoring - Fourth Annual Report, June 2006.

Central London Congestion Charging: Impacts Monitoring - Third Annual Report, April 2005.

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London Congestion Pricing: Implications for Other Cities

Author: Todd Litman (Victoria Transport Policy Institute)

Published By: Victoria Transport Policy Institute

Source Date: January 2006



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congestion pricing

Benefit ID: 2008-00585