Road Pricing: A Study

6. How can the disadvantages and obstacles be neutralised?

6.1 Conversion strategies are needed to overcome obstacles

In this section we consider how the issues raised in section 5 might be addressed by identifying various means of mitigating them in a coherent manner. These are referred to as "conversion strategies" and are summarised in the Table 6.1 below.

Each one is further described in section 6.2.

Table 6.1: Potential Conversion Strategies

6.2 Building greater public understanding

6.2.1 Establish the fiscal basis for road pricing

Road pricing continues to be unpopular with large sections of the population largely from a lack of knowledge and understanding and fear of the cost implications, based on the perception that road pricing will be additional to VED and fuel duty. Whilst it is understood that no decision on either the level of charges or any offsets have been made, the fear of additional tax burden overhangs public perception.

Accordingly, to encourage private sector participation, the Government will need to establish public trust in the reasons for the introduction of road pricing schemes, the safeguards that will be applied and how schemes will be implemented in terms of the potential costs to the motorist and the fiscal offsets.

6.2.2 Understand and influence the privacy and confidentiality rules

In light of the growing concern about the 'big brother' state, the Government needs to address concerns about data collected via road pricing being used for other purposes. This clarification of personal road pricing data ownership is in the context of the Identity Card scheme and sharing of medical data which both highlight government intentions to implement major schemes applying new technology to areas of citizen activity which have hitherto been largely private.

Whilst reassurance has to be given to the public, some consideration should be given to data being made available for other purposes, such as insurance. A primary concern for most insurers will be access to the data, rather than collection of the data itself. The preferred solution for most insurers would be for the individual customer to control the distribution of the data and a commitment that such data will be made available to third parties within confidentiality safeguards for that data.

The Department needs to work closely with interested organisations, such as the ABI, AA and the RAC, and civil liberties groups, such as Liberty, to gain early and clear agreement on data ownership and confidentiality and so encourage active participation.

6.2.3 Show how fairness for all users will be achieved

In the interest of fairness, road users need to know that road pricing will apply to all vehicles using the roads, including those not registered in the UK. Hence the Government needs to make clear how non-compliance will be identified and penalised. Any compliance regime must be fair to all users and account for differences in schemes.

There needs to be a robust dispute resolution process to ensure that any dispute that may arise over the accuracy of the charge can be dealt with efficiently and effectively. The Government must specify what the dispute resolution process will look like. The WG would advocate an independent adjudicator, perhaps similar to the Financial Services Ombudsman.

The WG believes that this dispute resolution process will be a significant influence on public acceptability and hence needs to be demonstrated at an early stage.

6.3 Clarifying what is needed from both sides

6.3.1 Understand and influence the definition of responsibilities

The Government needs to decide whether the motorist will be responsible for paying the charge, or whether a contract will exist between Government and the private sector company collecting the road user charge. The arrangement chosen by Government will influence which organisations get involved in helping to deliver road pricing.

Crucially, the Government needs to set out where the legal obligation to pay the road usage charge lies. Understanding whether the relationship will be between the motorist and Government, or the Government and organisation collecting the charge on its behalf, will likely be fundamental for many businesses in determining whether or not they want to get involved in delivering road pricing.

The WG believes that the obligation to pay the road usage charge should lie with the motorist and that confirming this, and the division of responsibilities, is a pre-requisite for encouraging engagement in a road pricing market.

6.3.2 Understand and influence the requirements and specifications

At present there is no public statement defining road pricing requirements, in terms of accuracy, data content, taxation offsets or interoperability between various schemes. It is clearly essential that an understanding of what is required is developed so the industry can propose solutions.

To achieve this, the Government needs to clarify the level of accuracy required and the data that will be collected for road pricing. To provide a balance, notice should be taken of what all users (including those who wish to use data) want. For example, insurers would like access to the time of day a vehicle travels, its speed, mileage, location, and the road type it is travelling on. Additional information around hard braking and acceleration, vehicle roadworthiness, seat belt and central locking usage and who is driving the vehicle at any given time would also be desirable, although it is recognised that these are not data items that road pricing systems would collect and a clear mandate from the driver would be required.

Early steps to explore and define the requirements should be initiated to provide industry with the information to consider whether and how best to engage with road pricing. The requirements should be as standardised as possible to maximise inter-operability.

6.3.3 Encourage a single consistent market for services

To encourage business commitment, the road pricing requirements placed on vehicle manufacturers, service providers and others should not be unique to specific schemes or the UK. Within the UK the Government should ensure that requirements both for schemes and data access are harmonised between schemes to ensure that there is full inter-operability.

In addition, the Government should seek to influence, through active engagement at the European level, the widest possible adoption of practical common standards in Europe as foreseen by the European Electronic Toll Service Directive.

The WG understands that this is a line of engagement the Department is actively engaged with and fully supports and encourages such actions to establish a consistent market for road pricing services.

6.4 Use local schemes to clarify requirements

6.4.1 Early activity is needed to enable solutions to be investigated

With so many unanswered questions, it is essential that experience is gained as soon as possible by both sides (business and Government) to establish the "right answers". This is planned by the Department in two ways:

• Local schemes, developed as part of the Transport Innovation Fund programme, will help inform Government decisions on aspects of road pricing schemes.
• Road pricing demonstrations that are planned to investigate the market delivery of service based distance charging.

Investing in the development of such projects is essential to increase the understanding of what is required, but industry needs to develop arguments for investing in such work. This means that at the beginning there is a need to encourage participation and innovation in the systems and services that will help to deliver the early local as well as wider scale solutions in the future. The WG notes the DTI's Innovation Platform may offer "matched funding" for some developments and we believe such moves are essential to demonstrate the business opportunities that may be available.

Until the business opportunities are clear, the IT and Business Services industry would support pilot exercises provided that government was willing to pay the whole price of them. Any long-term future payoff is dependent upon political and other uncertainties and weighs against any investment decisions.

6.4.2 Helping the definition of the market and inter-operability

The Government needs to clarify how the systems, services and data collected via road pricing will be approved to make sure that road user trust (see 6.2.2 above) is established. This needs to include the form any accreditation and certification regime would take, how companies would gain (and lose) such approvals and how this would apply to all schemes, including the local schemes planned initially.

Once it is clear what data will be required for road pricing and the degree of accuracy necessary (see 6.3.1 above), equipment suppliers, insurers and others will be able to explore standards for common industry equipment that is inter-operable to make it easier for customers to switch between service providers. Only then will a market approach be able to function properly.

The use of early schemes should help shape this, although the issue of transition to more advanced technologies may remain since the schemes envisaged by TIF authorities seek to extend current technologies which may not be practical on a larger scale.

6.4.3 Helping the definition of the regulatory and disputes regime

The establishment and operation of the initial local schemes should seek to simulate the long-term regulatory regime and enable a full analysis of the potential risks and liabilities involved in the scheme, and allocation of responsibility to appropriate parties, to be carried out. Although elements of this process should come out in contractual discussions, it is essential that the Government does not impose inappropriate liabilities or responsibilities on the private sector.

Generally speaking, private sector companies operating on an outsourced basis do not take on liability to third parties for the services they provide and we would expect potential service providers to want this to be the case here; if it is not, they would want indemnities from the Government for liabilities caused by matters within the Government's control, which is unlikely to prove attractive to Government.

The proposed local schemes will also allow the accumulation of cases of dispute which will progressively test the current legal conventions. It will be important that lessons are learned from this early phase prior to roll-out on a wider basis. The projected timescale for expansion allows this to be achieved, provided that proper attention is paid to the cases as they emerge.

The early local schemes will thus allow potential issues to be addressed prior to large-scale roll-out.

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