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Congestion Charging

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Alan Jumaily 9th December 2003 Congestion Charging 1. The congestion charge was put into place to correct a number of failures. One of the main failures without the congestion charge was that there were a number of negative externalities involved with congestion in Central London. A main external cost was that the number of cars in the area led to a very high level of pollution. This had negative effects on the whole economy in London. People would avoid London in terms of things like shopping because of how bad the pollution was and they would stay in the shopping areas of where they live. Also, this pollution leads to respiratory illnesses such as asthma and this costs the NHS a lot of money each year at the expense of the taxpayer. It also costs the economy in terms of days lost by workers due to all of these illnesses and over a period of time, these costs can really add up. Another negative externality is that with increased congestion come longer journey times. A study showed that the average journey time from different points in London were 45.9 minutes before the congestion charge. ...read more.


However, this may not be a very good idea because things like the London underground have very limited capacity and so if too much people start using it, it would become very crowded and so people may again move to using their cars again. The congestion charge may have also been a way to generate revenue so that the Government can for example correct its failure to invest properly in public transport. They can also use this revenue to correct failures in other public sector areas such as health care and education. Overall, the congestion charge has been done for many reasons including trying to get rid of negative externalities such as pollution and also for raising revenue and increasing demand for public transport. 2. Looking at all the data, the congestion charge seems to have been relatively successful. It as removed some of the externalities explained earlier. Average journey times have decreased from 45.9 minutes to 39.4 minutes due to traffic speed increasing by up to 15%. This means that less time will be spent in traffic and so there is less wasting of petrol and less loss of wages with lost time. ...read more.


However, this decrease in sales could be due to other factors. Inflation may have increased by more than real income and so people have less spending power. One other explanation could be that the hotter than usual weather means that people will spend less on winter clothing because they do not need it that much. Overall, looking at the figures, I can say that congestion is falling and it is not being displaced outside of the zone. Journey times are decreasing slightly and many firms feel the charge is working. However, we can never say that these figures are brought about only from the congestion charge yet we know that the charge is working with other factors, but are the effects of the charge as good? Sales are down in many shops in the area and the economy will be affected more in the long term. The tube will become more crowded every day yet the standard of service will improve. There are many arguments and contradictions to this issue and it can never be easy to weigh them up against each other. However, I can see from my arguments that the congestion charge is creating more disadvantages than benefits for the London economy. ...read more.

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