Fleet special: road pricing

For some time now the government has been paving the way for a new approach
to solving the evils of road congestion based on road pricing. This is a policy
that covers a range of ‘per use’ schemes, from city congestion charging, such as
that in London, to toll roads and tolls on the access points to major arterial
routes such as bridges and tunnels.

Sir Rod Ellington’s report on future transport policy, published by the
government in December 2006, recommended the widespread use of road tolls,
coupled with a huge investment in public transport as a way of avoiding gridlock
on UK roads, and added further momentum to the road pricing debate.

The response so far from businesses and private motorists has been
surprisingly favourable. But a positive response is almost always coupled to a
demand that if such a scheme were to be introduced, other road travel taxes,
such as excise duty and the tax on fuels, should be scaled back or abolished.

Unfortunately, this looks unlikely to happen in the short term and company
fleet managers could find themselves stuck with their existing road tax and fuel
bills as well as a raft of additional, localised tolls imposed by numerous
county councils on an experimental basis.

The reason for this being the most likely outcome is quite simple. As Richard
Bindless, policy advisor for the British Chambers of Commerce, points out, the
government has already prepared the way for such an outcome. It has given local
councils both the power and starter funding to launch pilot road pricing schemes
on their own initiative.

This was done as part of the
Innovation Fund
initiative launched in December 2005. This scheme made up to
£18m available over three years to local authorities prepared to invest in ‘bold
new schemes, including road pricing’ to tackle congestion in their areas.

So the country could see a rash of local road tolls springing up within the
next two years. It seems very likely that the government would treat these
schemes as mere pilots and would not want to change existing fiscal policy
unless, and until, it decided to launch a grand, all-encompassing national road
pricing scheme ­ an initiative that Bindless and others put at least 10 years

This means that for at least the better part of the decade ahead, UK fleets
are going to be faced with layers of road charges as a gratuitous additional
cost on top of their existing fleet running costs. However much UK businesses
want to see congestion driven off UK roads, none of them are likely to be
thrilled with an outcome that gives them the worst of all possible worlds ­ more
charges with, in all likelihood, no clear benefit.

This important because the apparently overwhelming endorsement given to the
idea of road pricing as a solution to our congested roads by
British Chambers of
members in a poll carried out by the BCC in July 2006, is often
cited as clear evidence that business is in favour of road pricing.

Bindless emphasises that despite the 87% ‘yes’ vote given to the concept of
road pricing in the survey, BCC members were quite clear that they were not
giving unqualified approval to the idea. In short, they want something in
return. In particular, they want the abolition of existing forms of road use
taxation when the new regime comes into place and demonstrable proof that road
pricing really does cut congestion.

In simple terms, of course, one can always control demand by raising the cost
of a service or raising the cost of access to a benefit (such as road use). Keep
raising the cost and eventually the numbers using the service fall away.

From a politician’s point of view, this opens up some fascinating
possibilities when road pricing is factored into transport policy making. It
opens the possibility of securing a new revenue stream at the same time as it
reduces road use, which also has the useful side benefit of cutting the amount
of money that has to be spent maintaining existing roads and building new roads.
This is one reason why road pricing is often condemned by its opponents as
offering politicians the chance to cut spending on roads.

The downside for politicians is that, taken too far, road pricing would fuel
consumer dissatisfaction to levels that would threaten the electoral chances of
the party responsible for implementing it. Controlling demand by pricing it out
of existence generates considerable heat.

Those against road pricing in any guise tend to cite arguments of this
nature. There are also plenty of additional anti-road-pricing arguments. The
Association of British Drivers, for example, puts forward a number of these in
its ‘call for a referendum on road user charging’. Dismayed by statements in
December 2006 from Tory party leader David Cameron backing road pricing, the ABD
issued a press release slamming road pricing as a policy of ‘roads for the

By itself, that label probably would not alarm many fleet managers, who might
be quite ready to pay a bit more up front for the right to use uncongested
arterial roads to get their goods and personnel to where they need to be. If
‘the rich’ in this argument turn out to be businesses which find that road
pricing gives them a favourable trade-off between cost and benefit, then we can
expect fleet managers and company boards to be enthusiastic proponents of road
pricing despite any protests from groups like the ABD.

However, the ABD is not just arguing for an egalitarian roads-for-everyone
approach in its battle against road pricing. It argues that “the huge costs
involved in setting up and administering [a road pricing system] means that such
a system cannot be cost-neutral”. A national road pricing scheme, it is widely
thought, would have to involve some kind of in-car black box technology, which
monitors road usage and provides the data for billing the motorist. There are
enormous costs associated with getting such a system off the ground.

Paul Watters, head of roads policy for the Automobile Association, points out
that the government’s own feasibility studies into road pricing state that the
cost of setting up a national road pricing scheme could easily run to £50bn. The
annual administration costs of running such a scheme could reach a further £20bn
or more. ‘One has only to recall that big national IT projects have a habit of
running at least five years late and coming in two or three times over budget,
so £50bn could be a very conservative figure,’ he says.

The ABD and others are appalled by the idea of that level of spend on an
unproven and, as they would argue, deeply flawed concept.

The ABD argues that, to date, councils have caused far more traffic
congestion than they have cured. ‘We have had years of deliberate
congestion-causing measures in our cities ­ hundreds of new traffic lights,
obstructive bus lanes and road closures,’ says Watters.

The problem for road pricing enthusiasts is that while the policy seems to
offer a huge amount of flexibility to fine tune initiatives, its success is
based on the idea of pricing frivolous or non essential journeys off the roads.

A negative consequence of road pricing could be an unpredictable surge in
demand for unpriced or lesser priced rural roads, which could end up taking far
more traffic than they were ever designed for.

This debate has plenty of time to run and it is quite possible that the
longer it does, the louder the opposition to road pricing will become. It is
interesting to note that Bristol City Council, the founding member of a
consortium of eight European cities looking at road pricing initiatives, has
quietly relegated road pricing to no more than an obscure reference in its
current road transport policy report.

Edinburgh, another in the consortium, fell rather embarrassingly on its face
when it asked its citizens to give their assent to the introduction of
congestion charging. The idea was rejected by a massive 133,678 votes to 45,965.

Last year also saw the formation of The Car Party, which straps itself as
“the world’s first pro-car political party”, created “to support the cause of
the beleaguered motorist in the UK”. It is indicative of the kind of shrillness
that we are likely to hear as the debate heats up in the coming months.

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