Cost

London congestion pricing annual O&M costs are estimated at £92 million.


January 2006
London,United Kingdom


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.

When the program was initially implemented it was projected to have the following costs and revenues over an eight year period (2000-2008) which included three years of development and five years of operations
    Total (NVP)
    Per Operating Year
    Start up costs
    £180 million
    £36 million
    Operating costs
    £320 million
    £64 million
    TOTAL COST
    £500 million
    £100 million
    Charge revenues
    £690 million
    £138 million
    Penalty revenues
    £110 million
    £22 million
    TOTAL ANNUALIZED REVENUE
    £800 million
    £160 million
Recent reports have indicated 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.

Overall, since the program inception, roughly half of the revenues generated have been spent on overhead costs (project development, equipment, and operations) leading some critics to argue that there may be more effective ways to collect money. Currently, the pricing program is not considered optimal because:
  • The fee is not based on the number of miles a vehicle is driven within the charging area.
  • The fee is not variable between congested and non-congested periods.
  • The fee does not vary by location and level of congestion on particular roadways.
  • The system has relatively high overhead costs.
  • Transit services (particularly the London Underground) are crowded and unreliable, but improving as a result of upgrades made possible with revenues from congestion pricing.
Notes:
See Also:

Central London Congestion Charging: Impacts Monitoring - Fifth Annual Report, July 2007. (http://www.tfl.gov.uk/assets/downloads/fifth-annual-impacts-monitoring-report-2007-07-07.pdf)

Central London Congestion Charging: Impacts Monitoring - Fourth Annual Report, June 2006. (http://www.tfl.gov.uk/assets/downloads/FourthAnnualReportFinal.pdf)

Central London Congestion Charging: Impacts Monitoring - Third Annual Report, April 2005. (http://www.tfl.gov.uk/assets/downloads/ThirdAnnualReportFinal.pdf)


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Source

London Congestion Pricing: Implications for Other Cities

Author: Todd Litman (Victoria Transport Policy Institute)

Published By: Victoria Transport Policy Institute

Source Date: January 2006

URL: http://www.vtpi.org/london.pdf

System Cost

Annual cost of congestion pricing: £92 million.

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Cost ID: 2007-00127