The situation prior to the charging was that:
- London suffers from the worst traffic congestion in the UK and is amongst the worst in Europe.
- Drivers in London spend 50% of their time in queues.
- Every weekday morning, the equivalent of 25 busy motorway lanes of traffic tries to enter Central London.
- It has been estimated that London looses between £2-4 million every week in terms of lost time caused by congestion.
Ken Livingstone, London’s Mayor, hopes to cut traffic by 15%, leading to a 25% reduction in traffic delays. The net proceeds are expected to be around £120m a year, which will be used to improve public transport.
Because of congestion in London the government has taken over/ intervened because it was a case of market failure. It failed because the roads/ resources weren’t being managed causing inefficiency and pollution. This congestion charge has been set up to erect that problem because London is the capital and a thriving city. These improvements may seem a bit steep e.g. £80 fine, but they have got to show they are serious so that the scheme is not taken for granted. This scheme will make certain people better off it won’t work for everyone. People who NEED to come into London to work will appreciate the changes because it will mean they will get to work quicker and work longer hours.
Roads are seen as public goods because you can’t charge people for its use if they are there everyone benefits.
This scheme should drastically reduce traffic in London because a social cost is being added to their private costs. If you add £5 to someone’s private cost they will think about their actions.
One of the problems that will arise is that not everyone can pay the market price, so the system can be inequitable. In some cases inequity of this sort is unavoidable. The fact that people cannot all have everything they want is part of the basic economic problem of scarcity.
There are benefits for those with particular needs such as the disabled and taxi drivers. These need benefits to live a normal life and keep the norm going. Because if taxis and mini-cabs stopped working people who had to travel to work, business meeting or wanted to get directly home would have to use some other means of transport. Also it will encourage them to keep working and disabled people to keep coming into London and not feel restricted.
This scheme will also show what the commuters and stakeholders think of the efficiency of roads in Central London. Because if they are satisfied or think that they are getting their value for their money e.g. less traffic, good maintenance they will be willing to keep paying and perhaps more people will see that the scheme is efficient.
