February 21, 2003
On Monday, London tamed the private automobile by subjecting it to market discipline: Vehicles began paying £5 per day in congestion charges to enter central London between 7 a.m. and 6:30 p.m. on weekdays. Congestion all but disappeared.
By Tuesday, with positive reviews of London’s transportation experiment pouring in, London’s mayor announced his intention to expand the congestion charges to Heathrow airport and other congested areas. Three dozen municipalities inside the U.K. and some outside told their planning staff to proceed with similar plans to control traffic that they, too, had been developing.
If London’s grand experiment succeeds – and despite modest glitches, so far it has exceeded all expectations – other cities will soon follow. Traffic congestion, arguably the single-greatest ill that afflicts cities, is poised to come to an end.
London isn’t the first city to regulate its roads through pricing mechanisms. Singapore, Rome and Oslo, as well as some smaller cities, also employ levies to improve traffic.
But London is the first great city to let the marketplace regulate a dense and immense urban area – eight square miles of central London – and it is the first great city to do it in a big way, and with a big public mandate.
Ken Livingstone, the notorious radical “red” mayor of London, ran for office in 2001 on a pledge to charge vehicles for their use of congested roads, both to raise revenues for public transit and to encourage drivers with ready options to consider them – a switch by a small minority is all it takes to obtain great relief for the majority.
The public, recognizing traffic congestion for the economic and environmental evil it is, seized onto his plan and voted him in. Public opinion polling in recent weeks shows a majority of Londoners continued to favour congestion charges, despite ever shriller alarms from the opposition Tory camp as tolling day neared. Internet polls taken after Monday’s launch show two-to-one in favour.
Opponents of his scheme had predicted chaos and gridlock immediately outside the zone, as drivers tried to avoid entering the tolled area. That didn’t materialize, largely because traffic planners successfully adjusted traffic lights to smooth traffic flows. Opponents also predicted that property values would drop immediately outside the zone – a survey of the Royal Institution of Chartered Surveyors showed half its members believe that extra traffic risks reducing the value of property.
But if more traffic harms a few properties just outside the tolled area, many central Londoners reason, less traffic could boost the value of their real estate within the zone, giving them a financial reason to favour Mr. Livingstone’s plan. These central Londoners have another financial reason, too: Those living within the congestion zone receive a 90% rebate on their congestion charges.
Commuters entering central London also have self-interested reasons to favour the congestion charge system: About 85% come via public transit; at no cost, they can now get to and from work in less time – early surveys found travel on some routes were 80% faster. Most of the balance, who come by car into central London, are affluent and value their time far more than they value the £5. On any journey, according to a London transportation study, cars in central London were stationary for 40% of the time.
The traffic jams that prove so irritating at a personal level more resemble an open wound for society at large. London congestion has cost the national economy an estimated £4-billion a year, much of it due to the high cost of making shipments into, and within, London. Those costs may soon be slashed. Without congestion, trucks can make more deliveries at less cost per shipment, lowering the overall cost of products for customers – for a typical truck and driver, saving just 15 minutes in traffic more than covers the congestion cost. The London Chamber of Commerce and Industry puts the cost to business of London congestion at £1.2-billion a year. Transport for London, the city’s public transit company, estimates that London’s small companies alone lose more than £100-million a year to congestion.
London plans to reduce the number of trips into central London by 10% to 15%, generally because people will switch to public transit or otherwise shed their car-dependency. According to the automobile insurance industry, in the six weeks prior to the introduction of the congestion pricing scheme, the number of cancelled policies has surged almost 10%, as people made other transportation arrangements. Other former car commuters have kept their cars but have switched their “social and commuting” insurance policies to low-mileage “social use only” policies. Meanwhile, sales of scooters have risen and people will be relying on shared taxis, shared rides and telecommuting, as well as public transit.
As far-reaching and space age as London’s reforms may seem – a network of some 700 cameras daily check every car’s plates against their payment record – in reality the congestion system employs second-best technology that can only regulate traffic crudely, by large areas. Mr. Livingstone recognized the need for accurate, route-by-route pricing but he also knew he could not wait the 10 years required to implement a sophisticated system. After decades of decline, London’s population has been rising, and is forecast to swell substantially. “London is now one of the great cities closest to gridlock,” he explained. “We have to act now.”
But the sophisticated system will come. In future, London plans to use global positioning satellites to charge cars fitted with digitized on-board maps, based on the congestion on each route at each time of the day. With such a system, there would be no congestion zone, and thus no potential losers among those who own real estate just outside the zone. About the only losers will be companies such as NCP, a large parking lot operator, which announced a 14% decrease in parking charges in central London in anticipation of fewer drivers requiring its services. Once congestion pricing works optimally, and economic efficiency determines the best use of land, companies like NCP may find themselves converting surplus parking lots into buildings.
Until that optimal day in the future, Mr. Livingstone will press on with the congestion zones of the present. But political concerns come first. Mr. Livingstone won’t expand the congestion zone system until after the next election in 2004 – to capitalize on the zone’s popularity, and his opponent’s opposition to them, he will again make congestion charges part of his re-election plank. Monday was “one of the best days in traffic flow we have had in living memory,” Mr. Livingstone enthused, firing an early salvo in his campaign for re-election, and letting the electorate of a great city know that it is about to become greater still.
Lawrence Solomon is the Executive Director of the Urban Renaissance Institute, a division of Energy Probe Research Foundation. Lawrence Solomon is also a director of PEMA, a non-profit with a patent pending on satellite tolling technology.
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