UK Commission for Integrated Transport

World review of road pricing: Phase 1 - lessons for the UK

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World review of road pricing: Phase 1 - lessons for the UK (Adobe Acrobat - 158kb)

Background information on road user charging schemes worldwide

Introduction

CfIT has long been active in encouraging the UK Government to consider road pricing as a mechanism to tackle the country's congestion problem. It published its recommendations on the introduction of a national road pricing scheme in its Paying for Road Use report in 2002.

Following this, the CfIT Congestion Charging Website was launched as a factual resource to provide objective information on the concept of road pricing and to illustrate that pricing was already a practical reality in many places across the world.

CfIT has been asked by the Department for Transport to update this resource by conducting a review of existing road pricing schemes worldwide. (This may later be extended to proposed and planned schemes also).

The objectives of this review are to:

Provide a factual and easily accessible database summarising the main features of schemes currently in operation;
Examine whether there are lessons to be learnt for the UK work.

At present, the review includes 22 case studies of road pricing practices across 14 countries (see Annex 1). Further studies will be added as information becomes available.

In this paper CfIT discusses some of the key themes that have emerged while undertaking the review which it believes will be of interest and relevance for decision-makers within the UK.

Background to Road Pricing in the UK

The UK currently has three road pricing schemes in operation - Durham's small access charging scheme introduced in 2002, the much larger central London congestion charging scheme introduced in 2003, and a new tolled section of the M6 motorway opened in 2003. In their different ways, all three have proved themselves to be highly successful initiatives, meeting the objectives set out by local policy makers and the Highways Agency. London has reduced congestion inside the charging zone by 30% and reduced traffic levels by almost 20%. Durham has seen a reduction of 85% in vehicular traffic - from over 2000 to approximately 200 vehicles a day and the M6 reports improved journey times with public and transport industry support.

After many decades of discussions and studies within the UK these applications of road pricing, which finally give real insight to what the concept means in practice, were made possible by Government legislation introduced in 1999 and 2000 - the Greater London Authority Act 1999 and the Transport Act 2000. The Government had originally set out its stall on road pricing in its 1998 Transport White Paper 'A New Deal for Transport' which stated that the Government would empower local authorities to take the decision to introduce a scheme of congestion charging, at their own discretion, if they felt such a measure was required to solve their local congestion and other transport problems. Crucially (as we will see later in this paper) local authorities would be given the power to use the revenues for transport improvements in their own areas.

At that time, it was envisaged that around 20 cities might swiftly implement these powers for congestion charging or the related workplace parking levy. Whilst this has not been the case, this is hardly surprising given the high level of political contention that surrounds the policy of road pricing. It is not the number of schemes in operation in the UK that is of importance, but their success. London has not only established itself as a leader within the UK, but as a world leader in congestion charging. Indeed, it is precisely the fact that road pricing schemes across the world continue to be successful in producing benefits (only one operational scheme - Trondheim - has to date been terminated) that, collectively, has helped engender a new confidence in political administrations everywhere.

In June 2005, the Government declared that the UK needed a radical overhaul of the way we pay for road use. The Secretary of State for Transport underpinned this new agenda by seeking and securing cross-party co-operation on road pricing as well as subsequently announcing a ground-breaking new initiative to establish a Transport Innovation Fund whose intention was explicitly 'to help local authorities develop local charging schemes'. (Hansard, 21.6.2005) and in 2006 the first seven areas to receive development funding under this scheme were announced (West Midlands, Tyne and Wear, Greater Manchester, Bristol, Cambridge, Durham and Shropshire), all of whom have announced their intention to carry out studies on local pricing applications. It was also around this time that the London Mayor confirmed his intention to extend the central London charging scheme westwards.

The Government appears to be approaching road pricing from the perspective of 'how' rather than 'if', which CfIT fully supports.

Outline of UK Government Progress on Road Pricing

Progress	Timeline
Government's Transport White Paper announces discretionary powers for local authorities to implement congestion charging.	July 1998
Powers are enacted in Government's Transport Bill, with hypothecation of revenues for transport for 10 years.	November 2000
Ministers ask DfT to undertake Road User Charging Feasibility Study.	July 2003
Secretary of State for Transport delivers speech at Social Market Foundation Seminar outlining the benefits of road pricing - the strongest positive Ministerial speech of its kind on the issue.	June 2005
Government sets up Transport Innovation Fund to award financial support to local authorities willing to explore viability of introducing road pricing.	July 2005
Government creates Road Pricing Liaison Group.	November 2005

Lessons for the UK

As illustrated earlier in the paper, the UK Government is now pro-actively looking in to the feasibility of changing the way we pay for road use in the long-term, through the introduction of a national scheme of road pricing, as well as supporting and encouraging local authorities to introduce smaller schemes of their own in the shorter term.

From its World Review of Road Pricing, CfIT has drawn out some key lessons which it believes will be of interest and relevance for national and local policy makers involved in this field.

From the evidence gathered so far, CfIT has formulated some 'high-level' conclusions.

1. We can say with confidence that road pricing has moved out of the realm of a purely theoretical hypothesis of interest mostly to academics, and into the realm of practical application being pursued in an increasing (though still small) number of places. As a result, evidence is no longer confined to theory, models and forecasts, but also includes surveys, counts and results.

2. While the selection of appropriate technology remains a continuing and important interest, its availability is no longer the substantial constraint that it once was when the first serious reports on road pricing in the UK were published back in the 1960s (e.g. Smeed Report 1964). Although it remains the case, of course, that one can always assume better technology will be available in ten years' time than is available today. This will probably always be true. Now, the main hurdle to be overcome for the successful introduction of any large road pricing initiative is acceptability - both of a public and a political kind. Hence the detailed design of a scheme, its relationship with other aspects of transport policy and its use of revenues, must all be considered in terms of the bearing they have on levels of acceptability.

3. There are a variety of different objectives behind the introduction of road pricing in a given area, but these fall broadly into two main groups: i) to provide funding mechanisms to pay for the 'financial' costs of investment and maintenance of road or other transport infrastructure, and ii) to provide management mechanisms to improve efficiency of traffic flows and reduce their 'social' costs such as congestion, pollution and accidents. Many motorway toll schemes, especially involving privately owned or operated roads, fall into the former, and many urban schemes initiated by public authorities fall into the latter, though there are overlaps and hybrids.

4. Pricing is not the only tool used to pursue transport improvements. Many of our case study areas do not use a pricing mechanism in isolation from other measures such as reallocation of road space and restricted access etc. And there are many cities not in our list of case studies that are pursuing similar objectives using these other means, rather than through pricing.

The more detailed lessons fall in to 13 categories, all of which represent important considerations for policy makers wishing to implement a road pricing initiative:

Scheme Objective
Careful Preparation & Planning
Culture of Road Pricing
Role of Leadership/Champion
Hypothecation of Revenue for Transport
Up-front Investment in Public Transport
Intelligent Technology
Usability and Interoperability of Technology
Provision of In-Car Kit
Public Information Campaign
Enforcement
Fairness & Equity
Exemptions & Discounts

1. Scheme objective

In the UK there is a tendency to view road pricing mainly as a tool for demand management, stemming from a recognition that the provision of sufficient additional road capacity to 'match supply to demand' would be unfeasible or undesirable. While pricing is undoubtedly an extremely effective tool for managing demand of the private car, this is by no means the rationale behind the introduction of all road pricing practices across the globe.

In London, the primary declared aim of the scheme was to reduce congestion, whereas in Trondheim (Trondeim's cordon scheme has been terminated since this report was compiled), the scheme was initially about finding a quick way of raising the low levels of public funds available for road infrastructure. Pollution reduction was the objective for Santiago de Chile's road pricing scheme, while the charging scheme on San Diego's Hot Lanes on the Interstate 15 was aimed at encouraging behavioural change (i.e. getting more people to join the car sharing scheme on I-15), which in turn related to the reduction of congestion and, for some, emissions.

Whatever the aim, the common experience was that pricing was only acceptable if this objective could be seen as the solution to an already accepted problem, and a sufficiently widespread acceptance that other existing policies are not capable of solving it (nor will they be able to in the future).

The congestion problem in London was tangible and the need for a 'radical' solution was generally accepted by the public and the political and business communities to varying degrees.

The same is true for Switzerland where increasing HGV traffic volumes had led to such chronic congestion on the North-South routes that a national referendum came out in favour for introduction of a national Heavy Vehicle Fee. Similarly in Rome, the environmental pollution caused by high congestion levels inside the historical city was clearly damaging both health of citizens and cultural heritage of city and so there was general acceptance of the need to tackle the problem.

Evidence from Norway showed how the lack of clarity over the aim of one of the major schemes led to suspicion amongst the public that the toll's aim was to restrain car use which then led to opposition. However when the actual aim - raising funds for transport improvements - was marketed better, public opposition subsequently reduced since much of the public were of the view that more investment was needed in transport.

In addition to successfully identifying a single main objective, there has been rather complex experience of how to tackle the issue of multi-aim schemes. On the one hand, it is clear that where a scheme designed to reduce congestion will also improve air quality or safety, there is scope for broadening support. But on the other hand, the danger of multiple objectives is that they may confuse the issue and reduce the effectiveness of the main or original intention. London very consciously promoted the scheme as purely about congestion reduction, with revenue as a subordinate question. In the event, that proved to be wise, especially when one considers that surveys undertaken by the Government Office for London prior to the introduction of the charge showed over 90 percent of Greater London residents thought that there was "too much traffic in London."

A final observation that emerges very clearly from the review is that objectives are not necessarily stable: a scheme that started with one intention may evolve into a different emphasis over time. Indeed, it is one of the strengths of using pricing as a tool that it is flexible and may be restructured to meet changing conditions. Norway and France, for example, are both looking at using their current pricing regimes which were originally introduced to raise funding, to instead manage demand and reduce congestion.

2. Careful preparation and planning

Whilst sufficient planning and preparation is clearly motherhood and apple pie if a scheme is going to work in practice, it is of as much importance in achieving the political go ahead in the first place. Politicians are only too aware of the controversy that comes with the introduction of road pricing and the potential fall out come election time. Therefore plentiful and robust modelling, analysis and forecasting provides them with a strong platform from which to 'make the jump' knowing they have an armoury of facts to make their case.

Hungary's experience showed the importance of the consideration of traffic diversion issues and the establishment of reliable traffic forecasts. One of the unforeseen problems of Hungary's nationwide HGV charging scheme was the diversion of lorries on to the parallel free roads which caused immediate congestion. Similarly, in towns along the "old road", high traffic loads caused traffic jams, an increase in accidents, a fast deterioration of road quality and a decrease in living conditions of local residents. Hungary also over estimated the demand for use of the tolled sections with only 55% of the estimated amount of traffic thought likely to use the M1-M15 motorway road actually doing so between 1996 and 1999. Detailed modelling and forecasting enabled places like London and Austria to minimise these problems.

3. Culture of road pricing

Many of the countries this review looked at had a long-standing, ingrained culture of tolling, which typically pre-dated current policy interests, and was usually focussed on commercial and funding objectives. Italy opened its first tolled motorway road back in 1925 although it did not start granting concessions to public and private companies for the building, operation and maintenance of tolled motorways until 1955. Also in 1955, France introduced legislation again allowing use of tolls to finance motorway construction and maintenance. Interestingly, so entrenched is the culture of motorway tolling in France, that UK tourists too have become accustomed to the charging regime, understanding the choice between paying for a faster journey to their holiday destination or else taking a slower route free of charge. Japan introduced the legislation back in 1952 to allow tolls to be used for the same motorway programme as Italy and France.

The importance of road pricing as an entrenched feature of the societal framework is that it allows a much smoother implementation path for the introduction of more complex pricing schemes such as cordon or area-wide schemes, and the broadening from commercial to wider economic considerations. Norway is a good example of a country with a long tradition (dating back to 1929) of using road pricing to finance road infrastructure such as bridges, tunnels and toll roads, which then went on to introduce Europe's first toll cordon around a city centre, in Bergen in 1986. Today, the four largest cities in Norway have toll cordons, something for which transport professionals have credited the country's tolling tradition.

4. Role of leadership / champion

A frequently stated success factor in road pricing schemes covered in this review is the need for an influential champion.

Usually these champions are elected politicians who carry forward the pricing project, trying to harness support and foster consensus for the plans, as was the case with London and San Diego. While standing for Mayoral election in London, Ken Livingstone's political manifesto was the only one to include a promise to introduce congestion charging, something which he went on to deliver once successfully installed in office. It was the Mayor of the City of Poway in San Diego, Jan Goldsmith, who originally proposed the high occupancy toll (HOT) lane demonstration project, called the Interstate 15 Congestion Pricing & Transit Development program.

While we cannot conclude that having a charismatic, popular and determined politician is an absolute pre-requisite for the implementation of road pricing, it is clear that they can significantly affect the lead in times to introduction and the overall levels of acceptability.

While it is more usual for the champion to be a single figurehead such as a politician, leadership has also been shown to have come from officials in transportation departments. For example, the Norwegian Public Roads Administration is widely credited as having taken the initiative with the road pricing agenda and established a political consensus with three main political parties as well as building high level of trust with local politicians in Bergen, Trondheim and Nord-Jaren.

In Orange County, California, ownership of the tolled motorway lanes on State Route 91 passed from a private company to the publicly owned Orange County Transportation Authority (OCTA) in 2003 who implemented the more innovative policy of congestion management, which encouraged commuters to carpool and to commute when there is less traffic.

5. Hypothecation of revenue for transport

The classical theoretical arguments for road pricing treated the use of revenue as a separate issue that could be ignored, by assuming that any pricing regime at all would bring benefits, and their nature did not matter. That view has now almost completely disappeared. It is more or less universally accepted that public acceptability of a new road pricing system will depend on public approval for the use of the revenue. Indeed, Anthony May in his paper, "One Step Forward, Two Steps Back? An Overview of Road Pricing Applications and Research Outside the United States" cites one study that found acceptance ratings for a proposed pricing scheme rose from 35% to 55% once the scheme included a commitment to dedicate revenue to transport rather than the general public coffer.

A number of areas have adopted this approach. In the UK, the Greater London Authority Act 1999 stipulated that all monies raised from congestion charging scheme in London be hypothecated for transport purposes. Surveys undertaken by the Government Office for London showed that the proportion of residents thinking that road user charging would be "a good thing for London" increased from 53 to 67 percent when it was proposed that the revenues of the charging scheme would be invested in transport improvements. Similarly, the Transport Act 2000 stated that all monies raised from local congestion charging schemes be spent on transport - legislation which saw Durham choose to use its use its revenue on public transport by funding a local bus service to and from the charging zone.

Pricing in Japan, Hungary and Austria was introduced to create a revenue stream for further expansion of their tolled motorway networks as well as for their maintenance and operation. Revenue from the Hot Lanes on Interstate 15, San Diego must be used solely for transit improvements on the I-15 corridor as is the case on the State Route 91, Orange County, California.

In the same way that ring-fencing revenues for transport usage rather than it 'disappearing in to Government coffers' plays well with the public, it seems that channelling revenues in to public transport in particular, increases levels of both public and political acceptability.

The Public Roads Administration in Norway found that buy-in amongst local politicians for local charging schemes was increased if they were made aware of what they stood to gain i.e. how the revenue would spent be on local transport improvements, particularly public transport improvements. In Oslo, public opinion surveys conducted by phone on The Oslo Package - the agreement on the way the cordon scheme should be used to generate investment for transport in Oslo - showed that more people were supportive of the Package if it contained a high share of investments in public transport. In Bergen, 50% of the revenue from its cordon scheme was earmarked for public transport (with this share planned for financing a tram) and a large part of the revenue from Nord-Jaeren's cordon scheme was used for funding local rail. Research carried out following the introduction of a new pricing structure on the crossings over the Hudson and East Rivers in New York and New Jersey found that 64.7% of respondents thought that toll revenues should be used to support public transport. However in Germany and Switzerland, surveys of commercial transport organisations found that the only acceptable use of revenues from the Heavy Goods Vehicle charging schemes was for the maintenance and construction of the road network.

Revenue from the Hot Lanes on Interstate 15, San Diego have been used to fund a new express bus service that has improved accessibility and service along the I-15 corridor. In Switzerland, two thirds of revenues are earmarked for financing national railway projects and the third for financing road construction and maintenance.

Almost £90 million of the £130 million of revenue raised from the congestion charging scheme in London was spent on public transport improvements in the first year and as mentioned earlier, revenue from Durham's access charging initiative is used to fund a frequent bus service to and from the charging area.

6. Up front investment in public transport

Pre-empting any potential capacity problems caused by car restraint measures is an important strategy, both for the scheme's practical success as well as its perceived success. The delivery of tangible improvements conveys crucial messages to the public, primarily that the scheme is not about preventing the public from travelling (and 'infringing' civil liberties), but about encouraging a switch in travel behaviour towards the use of more sustainable modes. Making this viable by the provision of real and practical alternative modes to the car either before, or at the same time as the launch of any new charging regime has been shown to be a necessary 'sweetener'.

A number of urban areas with the aim of reducing congestion or managing demand have pursued such a strategy. In London, the Mayor made a commitment to improving public transport prior to introducing congestion charging. The Capital's strategic transport body, Transport for London, focussed heavily on improvements to the bus network, providing 300 new buses and 6 new bus routes, increasing the frequency on existing routes and introducing larger buses (replacing single-decker with double-decker and new articulated vehicles). These improvements produced an extra 11,000 extra spaces on buses during the peak hour which was more than sufficient to carry the forecast number of passengers using the bus service following the introduction of congestion charging (approximately 7,000 additional passengers in the morning peak hour).

Although Cardiff has yet to draw up detailed plans for its proposed scheme, it has given a commitment to improving public transport prior to the introduction of any charging regime.

In Stockholm, public transport was extended to coincide with the start of its road pricing trial, providing 197 new buses and 16 new bus services to provide fast alternatives for travelling in to the city centre at peak times. Increased frequencies on existing bus, underground and commuter train lines were also implemented where possible.

7. Intelligent technology

Dynamic technology with the capability to vary charge levels can play an important role in public acceptability through ensuring the charge being levied directly reflects what the driver is actually being charged for. Therefore a scheme designed to reduce congestion, for example, that has the ability to charge a lesser fee for those willing to drive outside peak times or on non-congested roads is better able to generate support than a scheme where a flat fee is applied regardless of traffic conditions. Otherwise it leaves itself open to accusations of being nothing more than a 'money making' scheme. Systems used in Singapore, Orange County in California and the Port Authority of New York and New Jersey, Chile and Toronto all operate with a policy of variable charging.

Another benefit of technology with in-built flexibility is that it allows for the evolution of scheme objectives over time without rendering the current kit obsolete. The systems used in Orange County in California and the Port Authority of New York and New Jersey allowed them to moved on from fixed to variable pricing as their transport objectives changed. Hungary, Norway and France are also currently considering a move towards variable charging.

8. Usability and interoperability of technology

It appears common sense to conclude that if new technology is to be widely accepted by users its introduction must be not be seen to bring with it onerous and intrusive responsibilities that monopolise additional time and concentration of the driver. Instead it must have an enabling effect, allowing the driver a seamless and convenient journey.

Electronic Toll Collection (ETC) facilitates such a journey experience and is now widely used in many of our case studies such as Melbourne, Singapore, Trondheim, Italy, Toronto, San Diego, Rome and Orange County. Many more areas currently plan to progress towards ETC from their current manual basis. In areas using ETC, drivers have benefited from the ability to drive non-stop, or at least use non-stopping lanes rather than the manual payment booths.

In America, the same piece of in-car kit (electronic tag called E-ZPass) that is used for the Port Authority of New York and New Jersey river crossings is accepted across many states on the eastern side of the country, including New York, New Jersey, Pennsylvania, Delaware, West Virginia, Virginia, Maine, New Hampshire and Massachusetts. The same applies in Chile, Norway and Japan where the same electronic tags can be used for all tolling projects across the whole country. In France, the same tag can be used on all motorways, even though they are run by over 10 different concessionaire companies. In Switzerland, the On-Board Units (OBU) used inside the HGVs can be used for travelling on the Austrian tolled network of motorways, although the Austrian OBU can not be used to pay the Swiss HVF as it has no connection to the tachograph. Italy's Telepass system has wider uses than toll payment on its motorways. Telepass can also be used to enter city centres that have Limited Traffic Zones (LTZ) for managing high density traffic and pollution, as well as for payment in large parking lots such as commercial centres and airports instead of the traditional ticket system.

9. Provision of in-car kit

The British media has tended to report the technological element of road pricing with hostility, raising both the issue of civil liberties and the additional financial burden involved for the motorist i.e. having to buy the in-car equipment.

Many countries and cities have circumvented such negative PR by providing the in-car equipment free of charge. This cost has either been absorbed by the public authority itself or by the private operators of the charging scheme.

In Santiago de Chile and Stockholm, the electronic tags are distributed free of charge by the private operators of the toll roads, while in Germany, Trondheim and Switzerland it is distributed freely by the public authority. When Electronic Road Pricing was introduced in Singapore in 1998, the Land Transport Authority fitted the On Board Units free of charge for an introductory period only.

10. Public information campaigns

Public opinion surveys conducted in areas that have implemented road pricing schemes clearly demonstrate the vital importance of communication with the public.

Marketing and a substantial public information campaign for the I-15 HOT lane project in San Diego generated widespread public support and actually created increased carpooling because of increased public awareness of the "value" of carpool lanes.

In London there is generally a good appreciation of the key operational details, such as the level of the charge, availability of payment channels, and times when charging applies. However, in other cases there does appear to be a gap between the amount of information disseminated to the public and the amount actually absorbed. Evidence from the EUROTOLL project indicates that in France, only 29 per cent of A7 users knew that the A75 was an alternative for long trips between Paris and the Mediterranean coast.

In some instances, lack of information is seen as a factor in lowering public acceptance. In Norway, as is the case with many road pricing schemes, public hostility that existed towards the future implementation of the cordon schemes in the big cities dissipated somewhat after introduction. However, the extent to which opposition was reduced in Bergen and Trondheim as compared with Oslo can partly be explained by the lack of a promotional campaign.

In Trondheim, polling showed that while 72% of people were opposed to the cordon toll ring a year before its introduction, this figure dropped to 48% a year after the launch in 1991 and was reduced further to 36% by 1996. In Bergen, 54 per cent of the population were against compared with 36.5% one year later. Polling in Oslo, however, showed a smaller reduction from 70 % in 1989 to 64% 1991.

11. Enforcement

All the charging schemes predictably have enforcement measures in place. Whilst this is essential for the scheme's practical success, its contribution to achieving public acceptability should not be underestimated. It is clear that strong and transparent enforcement is desired by those who pay the charge on the grounds that they need to know that those who do not pay will be punished.

Melbourne's City Link which operates an electronic toll system is also underpinned by a camera based system. This duality was not deemed necessary on technological grounds, but that the public would more easily accept a tolled road if it was clearly demonstrated that payment evasion was kept to a minimum.

12. Fairness & equity

Fairness and equity are understandably key concerns for politicians considering introducing road pricing, mostly on moral grounds, but also for their impact on public acceptability.

A key element of Japan's motorway tolling programme is that all citizens should be allowed equal access to the network, regardless of where they live. Tolling, therefore, is a means to raise sufficient revenue to build new roads in rural areas, as well as areas with the kind of terrain that makes roads construction costly. This policy is based on cross-subsidisation so that the revenue raised on more profitable sections of the network such as urban areas is invested in to other less profitable sections. Tolls are also set on what the Japanese government views as an equitable basis, that is to say, equal tolls are set on all routes regardless of costs or traffic levels of the individual segment of road. Whilst tolls are set in order to cover the cost of highway construction, because of the concern with 'fairness', toll levels are never set at an unreasonably high level.

Tolling on motorways tend to operate mainly in the North of Italy as recognition of the fact that income levels in the South are much lower than in the industrialised North.

Evidence from Hungary showed tolls have to be set at a socially acceptable level - too high and the toll roads will not relieve small settlements and towns of through traffic as intended.

13. Exemptions & discounts

The provision of exemptions and discounts for a pricing scheme has an important impact on both public acceptability and scheme effectiveness. Common sense dictates that the more concessions, the higher the level of public acceptability. Perversely though, it can also threaten the practical viability of the scheme. For example, objectives to raise revenue or reduce congestion are clearly much harder tasks if discounts or exemptions are given to a high number of the population.

Many schemes provide exemptions for disabled drivers, public transport vehicles, Emergency Vehicles used by fire, police and ambulance services, police and military vehicles, low emission vehicles and taxis.

A decision to allow London's cordon scheme to provide residents living inside the cordon a 90% discount from the charge was made with minimising opposition in mind. Stockholm's cordon scheme, however, does not offer the same concession to residents. Stockholm's residents living inside the cordon are not charged until they pass a cordon point.