Blog Post

Do Londoners have enough financial incentives to give up their car?

Exploring what pushes people to switch how they travel and why combining carrots and sticks is crucial to success.

Imagine you work in the Mayor’s office, or the Department for Transport. You want to encourage more people to switch from using cars to using ‘sustainable travel’: cycling, public transport, ‘micromobility’ (such as scooters), or walking. How do you do it?

When people are choosing whether to use their car or travel a different way, one of the key things they’ll think about is the cost. If you want more people to use sustainable travel, you can make it cheaper – a positive financial incentive. You can also make driving more expensive – a negative financial incentive.

But which financial incentives will make the biggest difference? That’s what we’ve been exploring in our new research. We found that:

  • You need to combine positive and negative incentives need to work together – a ‘carrot and stick’ approach.
  • As well as the incentives themselves, you need to make sure they’re well communicated – so it’s easy for people to compare costs and make choices.

Incentivising people to use sustainable modes of travel

Promoting sustainable modes of travel – such as cycling, public transport, or ‘micromobility’ like scooters – is one of the Mayor’s top priorities.

To achieve this, there are already many incentives in place in for Londoners to use sustainable modes of transport:

  • Public transport concessionary schemes can encourage people to use public transport
  • The Ultra Low Emission Zone (ULEZ) charge discourages people from driving polluting vehicles
  • ‘Try before your bike’ schemes can incentivise cycling
  • Subsidised cycle hangars enable people to store their bikes in a safe and affordable space

But this isn’t enough.

We’ve done some research to find ways that policymakers can further incentivise Londoners to use sustainable modes of transport.

Policymakers can make incentives more effective by combining policy together into coherent packages. They can also make it easier for people to know which incentives exist and what they could save by switching away from cars.

Combining policies together

We found that the ‘carrots and sticks’ approach to transport policy, where financial incentives and disincentives are combined, is an effective way to encourage sustainable travel.

Combining policies is effective because:

  • It increases public acceptance. For example, in 2003 Ken Livingstone introduced the congestion charge to reduce the number of cars driving through central London – this was a ‘stick’. The ‘carrot’ was the creation of 300 additional bus routes to provide affordable alternatives to driving and to make the congestion charge more acceptable to Londoners.
  • It makes schemes feasible. Policymakers could use this approach to fund incentives for active travel and public transport. For example, Nottingham council imposed an annual tax on car parking spaces provided by employers to help pay for an extension to the city’s tram and upgrades to its central stations.
  • It ensures fairness. Additional charges to motorists often pose legitimate concerns for people on low incomes. But there are ways to offset this negative effect. For example, the Mayor’s scrappage scheme, that offers a grant payment to low-income Londoners to replace their non-ULEZ compliant car, addresses the difficulty that some people face with upgrading to a new vehicle.

Communicating about travel costs and financial incentives

Incentives can only work if people know about them – this is obvious, but isn’t easy to implement.

There are many routes and modes that people can take to go from A to B. But comparing the cost of travelling by each mode isn’t easy – let alone the need to consider potential discounts that few people are aware of, such as using Railcard discount with the Oyster card.

It’s also important to let people know about any new incentives (or disincentives) before their introduction. For example, people aren’t going to get rid of their car overnight if a local authority were to raise the price of residential parking permits. People would need to be made aware of this change before to have time to adapt, which would make the increase more effective in changing people’s behaviour.

Here are some ideas on how communication about travel costs can be improved:

  • Transport for London put up an interesting webpage showing that the total cost of owning a car can be higher than people may think. This type of information could be shared more widely.
  • Apps (like ‘mobility as a service’ providers) can provide more information about the comparative cost of driving.
  • Targeted information campaigns for people who have recently moved to a new borough can help inform residents about ways to go around when they register for their council tax. It’s easier for people to develop new behaviour than to change their habits.


Financial incentives are a good way to influence the way people travel. But they’re only effective where alternatives to driving are possible.

What’s possible will be different for every family or household. For example, policymakers will need to provide more transport options for Londoners who live in Outer London for these incentives to be fully effective.

In our new report, we’ve modelled the impact of new potential financial incentives on 9 different typical London households. Explore the report here.

We’re also keen to find out more about the needs and challenges faced by people who travel for work, such as districts nurses and tradespeople. Get in touch on if you’re interested in supporting this project.