RAC Foundation Pricing, planning and new technology. Are they alternatives? Sir Christopher Foster RAC Foundation for Motoring 23July 2004 To the Conference on Reducing the Impact of Vehicles on Air and Environment Quality in Cities, Mexico City

Pricing Objectives Let me start with pricing. Wherever adopted its objectives can be: 1. To alter behaviour 2. To raise money 3. To give signals for investment, development, but also disinvestment, contraction 4. To compensate losers 2 and 3 most important in private sector 1 and 4 more important in public sector But they can clash

The Smeed Committee on Road Pricing My introduction to RP was a member of this committee – in 1962, the first anywhere? - with Alan Walters, Michael Beasley and Gabriel Roth. Discussion threw up various problems: The inter-urban toll road: MC < AC In cities: the respective roles of planning and pricing Should one price to reflect current demand and supply? What social costs?

Why so slow? Slow development of technology: a response not a cause? Better management of existing roads through traffic engineering: bought 40 years but is much more left? Catchment area problems: easier in islands Belief that one could: invest one’s way out of the problem by more roads or public transport (without pricing to divert) or deter traffic by not investing or plan one’s way out without demand management: very slow or do it through new forms of transport

The nature of political resistance Greatest problem to overcome is political resistance Features just listed are important but also Huge uncertainties about technology and behavioural reactions Common belief that pricing is for private not public sector Frequent preference for controls Parking: non-optimal side-effects Land use changes: often very slow or evaded Concerns about the poor And public misunderstanding in the Polls

How acceptable is road charging? ‘In the future would you be willing to pay tolls to drive in city centres?’ NOP Automotive Survey March 2002 YES No UK 43% 55% Scotland 36% 62% London 39% 61% age % 69% age % 50% social class AB 58% 40% social class C2 38% 62%

How acceptable is road charging? ‘How acceptable would road tolls be to you if there were equivalent reductions in fuel duty?’ NOP Automotive Survey March 2002

How acceptable is road charging? ‘ How acceptable would road tolls be to you if roads improved to guarantee better journey times?’ NOP Automotive Survey March 2002

How acceptable is road charging? ‘ How acceptable would road tolls be to you as part of a package of better roads, public transport and traffic management?’ NOP Automotive Survey March 2002

Spending the revenue Which is the top priority for spending the money generated from the tolls?’ Road maintenance 19% Better roads e.g. road widening and bypasses 32% Public transport 34% Public services 12%

General Poll Findings 60% felt it would be fairer if motorists paid tax according to amount of time they drive in congestion rather than tax on fuel and tax discs. Only 22% argue that tax on petrol is a better way of restraining traffic than a charge or toll for using congested roads. 69% disagree with the concept of fuel tax rising by a given annual %. 58% think that if charges are introduced for using congested roads there should be concessions for those on low incomes. 52% think that the use of satellites to monitor the location of cars is an infringement of personal liberty.

Opinion in post congestion charge London 6 Months after the scheme began more than 50% of London residents supported or tended to support the scheme, compared to around 30% who oppose or tend to oppose it. A full copy of Congestion Charging: 6 Months On can be found on the TfL website at:

How does one overcome resistance ? Public discussion Dissemination of information from existing schemes Build up knowledge of elasticities demand modal and other substitution Modelling: do nothing scenario allowing for congestion then for congestion charges Simulating effects of improved bus and other public transport altered traffic engineering new investment to re-direct traffic flows land use changes, if any, to aid decongestion

2.2% 4% 6% Annual Increase in Motoring Charges Projecting the 10 Year Plan High Option No increase in congestion Do Nothing after 2010 (Average speeds fall by 0.6% pa) Capacity AC D E F B Possible combinations of increased capacity and motoring charges in UK

Success depends on elasticities. They depend on availability of substitutes: buses, almost always cheapest option, and busways, trams other public transport less transport-intensive land use solutions Planning for Congestion Charges

Environmental Improvement Economics: a very different role from tackling congestion pricing and regulation often a constraining influence scenario and targeting within a well-defined model structure needed at national and local levels any (indicative) quotes from forecast plans, not the other way round need to use economic criteria Inducing new technology the key already moving fast competition between manufacturers vital pluses and minuses of it necessarily being a global development