Road pricing; a question of when, not if?

Falling fuel duty revenue has been highlighted as an - or possibly the - most important issue to do with the transition to electric vehicles (EVs). Worries about this within the Treasury - which obviously has a lot of power within Government - could, through its policies, speed up or slow down EV uptake in this country, which then further speeds up or slows down our efforts to tackle air pollution and climate change caused by transport emissions.

Regardless of worries though, the direction of travel on this is clear, and EVs will come to dominate passenger transport in the UK. This directly impacts fuel duty receipts: should the Chancellor decide not to ‘fix’ the fuel duty escalator (it’s been stuck at the same level since March 2011) then receipts are estimated to be £17 billion in 2030, down from about £28 billion today. Therefore, the question is not “if” fuel duty needs replacing, it’s “when”, and “how”.

GPS Pricing

Road pricing is one obvious answer, but any new scheme would take at least 5 years - and probably longer - to implement. Following ECIU’s last blog on this topic there has been more interest in road pricing, and in one particular version of it. The Association for Consultancy and Engineering, a corporate membership body for the engineering sector, published a report specifically calling for ‘dynamic road user pricing’. It said:

GPS pricing (as I will call it, and focus on in this piece) has many benefits, and a few downsides. It involves a GPS responder sending the location of every vehicle every few seconds whilst it is in motion. The roads are then ‘priced’, and the price of the road varies by type of roads, locations, and time of day. By varying the price, the volume of cars on the road should be decreased (or increased) to desired levels. GPS pricing therefore has the ability to tackle head-on congestion, air pollution, greenhouse gas emissions and road safety, whilst replacing the lost revenue from fuel duty. No other road-pricing scheme can tick all these boxes.

Congestion

According to transport data firm Inrix’s 2018 edition of its global traffic scorecard, congestion cost UK drivers an incredible £37 billion in 2017. The UK is the 10th most congested country, and London is the 7th most congested city in the world. In fact, in 2017 drivers in London spent an incredible three days stuck in peak hour congestion. It’s not just a London problem though - drivers in all of the top (bottom?) 25 congested UK cities spent more than a full day (24+ hours) stuck in peak time traffic. It’s not just a big city problem either - Kidderminster, Leamington Spa and Chesterfield all make the top 25.

Congestion is a funny thing though, because it is only caused by one car (although there are usually lots more than this). The road network of every area has a specific capacity (lets say 1000 cars). Any number of cars up to that capacity and the system works fine. Just one car over (ie the 1001st car) and the area becomes congested. Think of a set of traffic lights. If all the cars queueing can get past the lights when they are green, that is not congested. If the end of the queue cannot, that is congested.

So to combat congestion, you only need to combat the excess, or marginal cars, and GPS pricing does that using pounds and pence. Charge a specific amount to drive in a specific area at a specific time, and some drivers will not want to pay. This is adjusting price to demand. Since the supply of roads can not be changed quickly, it is the demand that shifts. The crucial point here is that there is no upper limit on how much could be charged by the system - it depends on drivers' willingness to pay.

In theory road prices could also go negative - if you’re trying to attract drivers to drive at certain times, then the best way would be to pay drivers to do so. In reality, it would mean that the UK’s cities would all have different congestion price rates. Drivers in Birmingham might pay 10p a mile, whilst Londoners might pay £10. Or vice versa. What should happen in all areas though is that congestion is eased to the extent that it ceases to be a problem.

Tackling congestion helps cure a major concern for business: the lack of predictability of travel times, which obviously especially affects logistics and delivery companies. These companies (currently) allow extra time to account for unreliable networks which may cause late delivery. However on days when delays do not happen, drivers get back to base early, but they cannot deliver more goods. This increases delivery charges to the end consumer. This obviously affects a large - and growing -proportion of the population (for example, there are some 8 million Amazon Prime subscribers in the UK now - all of which get free delivery for anything they order).

Tackling congestion is also a way to tackle air pollution. Air pollution spikes are caused by a large volume of cars constantly stopping and starting. Put simply, air pollution costs lives and money. A lot of lives and a lot of money - specifically 40,000 lives and more than £20 billion annually (although it needs to be acknowledged that not all air pollution comes from road traffic).

Fairness, and safety

Perhaps more fundamentally though, implementing GPS pricing would also mean that those who use the roads most pay more than those that don’t. The English strategic road network is vast, but also requires vast amounts of money to maintain it - some £3.1 billion in 2016/17. A lot of this spend is fixed - for instance, over 8000 miles of cuttings and embankments needs regularly pruning, regardless of the volume of traffic on the road. However, some costs are directly caused by both the volume of traffic, and the weight of that traffic. Heavier vehicles damage the road more than light vehicles. And vehicles that drive more miles damage the roads more than those that drive less. GPS pricing could neatly ensure (by adding a multiplier to the price based on weight) that heavier vehicles pay their dues. And all vehicles that are driven more, pay more.