Not everyone has to pay the charge; there are a number of discounts and exemptions as part of the scheme. Residents who live within the charging zone will receive a 90% discount; providing they can give appropriate verification that they do in fact own the vehicle, they will then be subject to a £10 administration charge to register with the TfL. Disabled badge holder will receive a 100% discount but they will have to register and pay the £10 fee. Others receiving a 100% discount are certain NHS vehicles and firefighters’ operational vehicles. There are also a number of exemptions from the charge, which do not have to register with TfL either. These are motorbikes, Black cabs and mini-cabs. Also exempt from the charge are Emergency Service vehicles, NHS vehicles exempt from vehicle excise duties, buses and coaches. There are a number of other types of vehicles that are exempt or receive a 100% discount for the charge (TfL, 2001, Congestion Charging: Who will pay?).
They’re will be a fine for the registered keeper of any vehicle which has been caught in the charging zone without having paid the charge will be penalised by the amount of £80, this will go down to £40 for payment within the week, or it will rise to £120 if the fine is not paid on time. However, motorists will be able to pay the charge at the normal rate of £5 before 10pm on the day and at a rate of £10 from 10pm till midnight (TfL, 2001, Congestion Charging: Penalties).
The scheme will be enforced by a number of powerful and highly technological camera’s which will be situated a in and around the congestion charging zone. There is an initial set up budget of £200 million, and £100 million worth of traffic management measures. The scheme is set to raise around £130 million a year, which is by law, should all be spent on transport improvements within Greater London. After rounds of public consultation over a ten-week period starting in July 2001, the London Mayor has decided to go ahead with the proposed scheme, and without any glitches should go ahead on the 17th February 2003 (TfL, 2001,Congestion Charging: Fact Sheets: ).
The scheme itself has many benefits along with drawbacks to road users, residents, businesses motorists and the environment. All of these will be affected and care and consideration should be taken when considering the significance of the charge on the various groups.
The largest and foremost benefit of the scheme would be the reduced amounts of congestion in the key zone, i.e. Central London. Even though there are many motorists who consider their trips through central London vital, there will be a number of motorists who will avoid the zone during the charging hours, because they do not need to make that trip. The estimated level of reduction in vehicles passing inside the zone would be 10-15%, with a 20-30% reduction in the in the levels of congestion. This would then aid in the speeding up of traffic, which is estimated to increase by 10-15% (TfL, 2001, congestion charging- benefits). The levels of traffic now cause negative externalities, where Marginal Social Costs (MSC), public costs, is greater than Marginal Private Costs (MPC), costs to the individual. The motorists only take into account the cost of petrol and time taken for the trip, MPC. This does not take in to account the levels of pollution, noise and other people’s time that their vehicle is effecting, MSC. With the charge leading to the above levels of reduced traffic the size of the externality is reduced as the individual driver is bearing more of the cost. The charge that the Tfl have brought in is in relation to the size of the externality caused by the driver therefore getting closer to the social optimum in road use and traffic congestion.
Traffic congestion in London being at its worst ever is also costing industry in and around greater London millions of pounds every year. In a study Alan Griffiths & Stuart Wall (2001), estimate that if traffic were reduced then London’s economy would be better off by £1m a day. This would be a major boost for a city that at the moment looks unattractive and is sometimes over looked in favour of other cities because of the traffic congestion and the additional costs to business because of it. The scheme would also improve business efficiency and reduce the time employees and deliverers spend on the roads, and would spend less on fuel consumption (Greens on the GLA, 2001).
The TfL expect the scheme to raise around £130 million a year, with a ten year investment plan to plough it all in to transport improvements. This would no doubt improve public transport, namely buses and the underground, in many areas with improved and new routes planned and an increase in the number of buses and trains. There are investments planned in all areas in public transport, including implementing more safety regulations (TfL, 2001, Congestion Charging: Public Transport Improvements). This all has to occur fairly swiftly as the demand for the use of public transport will be stretched.
The congestion charging scheme also has many consequences to it. With the reduction in congestion in the charging zone, there will be an obvious increase in traffic around the surrounding areas of the zone. The TfL are expecting there to be a 5% increase in traffic levels on orbital routes. This would raise the externalities, and the difference between MPC and MPC will increase.
There is also an issue of this being like just another tax and being regressive in its cause, therefore benefiting the rich and adversely affecting the poor. The rich will be able to pay the tax with no qualms, and will actually benefit from paying it as the people less able to pay the tax will be forced, not to drive in the zone.
