Factsheets - No.9: Paying for Road Use Case Studies
Molly runs her two small children to school twice a day in Bristol. She pays 30p a day in congestion charges, that is £60 over the school year. She does, however, save £1.50 every other week when she fills up with petrol. Molly discusses the cost of the school run with the other parents and they decide to set up an informal car-sharing group. On average Molly now only needs to do the school run every third day, when she also takes her neighbours' children in the car. This idea catches on and the school Governors decide to set up a more formal system. Overall trips to the school reduce by 30% considerably reducing the local congestion and pollution.
Molly finds that she doesn't need the car with her all the time, as she no longer has to pick the kids up every day and now she is able to go to her computer class in the bus.
Paul commutes daily into Central Manchester from Altrincham, a distance of 10 miles. The journey normally takes an hour in the morning, though sometimes it can take more than 80 minutes. Back in the evening the traffic is typically not as bad, so the average journey time is 45 minutes, though again it can take an hour. Paul has to spend £6 a day on parking charges near his office. The congestion charge would be £3.00 there and back. There would be a reduction in petrol costs of £6 a month. Paul would save about 10 minutes a day on average and there would be fewer really bad journeys when the traffic gets heavily clogged up. Over a year Paul pays £675 in congestion charges, offset by a £66 fall in fuel tax on his commuting journey but he and his wife save around £100 through reduced fuel costs for leisure journeys.
Paul is now paying £500 a year more. But with the improved journey conditions Paul finds his car commute much less stressful and he saves about 5 working days a year that would otherwise be spent sitting in traffic jams.
Having had their first child, Paul's wife Sarah decides to give up work. As money is tighter, Paul decides instead to use the Metrolink light rail system to get to work. He gets an annual ticket costing £832, but he saves £625 in car running costs, £1320 in parking charges, and the £675 congestion charges. Overall he is £1840 better off.
Louise, an IT consultant, makes a 95 mile journey, mainly along the M1 motorway, from Rugby to Sheffield every Monday morning. She sets off at about 8am to travel to the regular team meeting. The motorway is quite congested, and she incurs a congestion charge of £7, partly offset by a £1.40 reduction in fuel duty. The average journey time is reduced by a small amount, but the journey time is now much more predictable because the motorway is less prone to extremely heavy traffic and serious flow break-downs. Consequently the meeting can now start 30 minutes earlier and she can still be confident of arriving on time. The journey to her first client is not quite so congested but there is a charge of £4.50, with a £1.40 saving in fuel duty. Louise makes the journey 40 times a year and she pays an extra £350, but saves over three working days a year on the road. Since Louise charges her clients £100 per hour, she is able to generate £2400 extra income for her company a year.
Peter, a retired bank manager, drives 140 miles from Norwich in East Anglia to Dudley in the West Midlands to visit his daughter. He makes the journey in the middle of the day, mostly along trunk roads. The trip is relatively uncongested so there is only a 10p charge along a short section of the route. He makes the journey there and back once a week. If, as a result of the introduction of charges, fuel duty is reduced, Peter would be £190 better off in a full year. On the other hand, if VED were to be abolished as well as a smaller reduction in fuel duty, Peter would be about £180 better off.
Derek is a travelling salesman who drives around 30,000 miles a year for his firm. Derek's work takes him all around the North East, including Newcastle and other congested areas, mainly during the working day. With his present pattern of travel he would incur £1,800 in congestion charges and save about £600 in fuel tax. Time spent travelling would be reduced by over 40 hours - 5 working days. This would increase his productivity considerably. He can make lots more calls and be able to predict when he will arrive for appointments with greater certainty. Derek earns an extra £2000 for his company and his commission goes up.
In fact, once the charges are introduced Derek changes his pattern of travel to avoid the highest charged times, while still managing to take on extra clients. As he now drives less in congested conditions, Derek finds his job less stressful than before.
The productivity savings are just as great as had originally been predicted. Derek's company covers the cost of his charges, but they are still overall £1,000 better off.
Joanne commutes from Brighton to Croydon each week to her job as a recruitment executive. There is serious congestion at the Croydon end of the trip, so her 43-mile journey takes an hour and a half. For the return journey, the congestion charge will be £14. Joanne will have to pay an extra £2,300 in congestion charges (less reduced fuel costs), but because of the improved journey quality, she will save five working weeks over a year in reduced travelling time. Joanne can now get to the office half an hour earlier each morning and because she works flexi-time, she decides to leave 10 minutes later each evening, allowing her to have every other Friday off. This means that her congestion charges are now £2070 and Joanne also appreciates the extra time this gives her with her family, and her employer has noticed that her work has improved as a result.
But the congestion charge makes her think about whether to try the train again now that rail services are reckoned to be more reliable than they were when she switched to using her car for this daily journey. Joanne's annual season ticket costs her £2,200, but she saves £2,150 in running costs, £860 in parking charges and is not now paying congestion charges. As she is able to work on the train with her laptop, her boss has agreed that she can now have every Friday off, as long as she meets her deadlines. Overall she is £2880 better off.
Joe drives a milk tanker 50,000 miles a year in the North of England, collecting milk in rural areas. He never drives in congested city centres nor on a busy motorways, but he does drive through some busy town centres and trunk roads and so he pays around £500 a year in congestion charges. However, because of his mileage he gains from a significant reduction in his fuel costs, over £4,500 in a full year. His overall operating costs are reduced by about £4,000 a year. This extra profit allows Joe to expand his business by buying another tanker and employing another driver. He takes on more customers, but is still able to spread the workload a bit, meaning that Joe can take an extra holiday with his family.
Sarah lives in a village in the East Midlands and works in a medium sized town which is around 16 miles away. There is not much congestion in the area and the congestion charge is small. Over the course of the year, she spends around £60 in charges for this journey, but saves around £200 in lower fuel costs.
Barbara lives in a small village in the south west of England. She doesn't drive a great deal, under 3,000 miles a year, mainly for short trips in or near the village. Occasionally she travels further distances but, as Barbara is retired, she can avoid travelling at busy times of day. She does pay some congestion charges amounting to around £14 a year, though these are more than compensated for by £100 or more savings a year, if the congestion charges were used to fund reductions in VED.
Bill drives an articulated lorry from Southampton Docks to Luton, starting in the afternoon and arriving in Luton just after 6pm. Most of his journey is along motorways, the M271 and M27 in Hampshire the M3 towards London, round the M25 and then up the M1. Traffic is particularly heavy on the M25 and the M1 at this time of the day. The congestion charge is £21, though the charging scheme reduces traffic flow so that the average journey time falls by 20 minutes. In addition, the variability of the journey time is reduced because the system is less prone to chronic congestion. This is particularly important for Bill as he must reach Luton by 6.30pm to meet the customer's deadline.
The reduced traffic flow means that while Bill previously had to leave the docks at Southampton with 45 minutes in hand, he now only needs to allow a margin of 15 minutes. Now he can set off 50 minutes later than before. In addition fuel duty for the journey is reduced by £8. Bill makes this trip around 30 times in a year. While he pays £630 in congestion charges, he saves £240 in fuel duty and reckons the journey time and reliability savings are worth £750 to his haulage business.
The congestion charges also encourage him to rearrange his schedules to make the trip earlier in the day when the M25 and M1 are less congested, and when the congestion charge will only be £4, adding to his profitability and reducing pollution.
Ahmed's lorry is used by a distribution business based in Yorkshire. It runs some 55,000 miles, all around England, about average for this type of medium-size artic. It incurs congestion charges of some £3,600 in a year, but this is more than offset by fuel duty savings of £4,400, a net saving of £800. Overall journey times are reduced by 3 per cent and there are further benefits from greater certainty in collection and delivery times.
Stan drives an articulated lorry 120 miles from Liverpool Docks to Coventry, setting off at around 8.30 am on a weekday. This is a motorway journey, and the main section involves the very busy M6 through Cheshire and Staffordshire. The congestion charge is £10.50, but average time saving is 10 minutes and there is a saving of £9.40 in fuel duty. Before the introduction of the congestion charge the journey time is very difficult to predict because high traffic volumes can trigger serious traffic jams. After charging has been introduced the situation is much improved, and Stan is able to leave Liverpool 35 minutes later than before and still be sure of reaching Coventry in time for his delivery. In the course of a year Stan makes this trip 50 times, he pays £530 in congestion charges, but £470 less in fuel duty. Overall his employer pays £60 a year more, but the time saving (29 hours in total) is worth £600, more than compensating him.
Return to: Paying for road use index
