Chapter 3: A next generation scheme for London

Green Light: Next generation road user charging for a healthier, more liveable, London

Chapter 3: A next generation scheme for London

We have already suggested that new technologies offer the chance to replace the current complex, limited and blunt patchwork of charging regimes, with something simpler, smarter and fairer. As we emphasised in the introduction, London in particular is in prime position to create the world’s first truly integrated transport system – one which allows city authorities to charge drivers on the same model as they charge bus and train passengers, and provides drivers, passengers and businesses with a single portal on which to plan and pay for all their journeys.

We now turn to describing the details of a scheme that could be effective and implementable, but also an attractive proposition, and how the road user charging component of it could work.

Charging structure

Road user charging schemes can be thought of as running across a spectrum from static cordon-based ones to fully dynamic. As already explained, cordon-based schemes charge a flat fee for driving within a specified charging zone. These schemes have the merit of being easy to understand and relatively simple to operate, but, as we have seen in the case of existing London schemes, they are insensitive to the amount a driver actually contributes to congestion and pollution. A car that drives for a few metres on a quiet road within the zone is charged the same as one that drives all day on the most congested routes.

Distance-based schemes, on the other hand, charge drivers per kilometre driven and can be varied on the basis of any number of factors to take into account the full environmental and network impacts of a journey. With a fully dynamic scheme, the charge is adjusted throughout the journey according to actual vehicle emissions and the real-time congestion and pollution levels along the route taken. This would most accurately reflect the actual full costs of a journey, as there can be significant differences between vehicles’ certified emissions performance and the emissions under actual driving conditions. 63 However, a fully dynamic scheme would be less predictable as the driver would only be aware of the final cost they have incurred once the journey is over, so they would not be in a position to make an informed choice about whether to travel or by what mode.

Against that background, we argue that the Congestion Charge, ULEZ and other London charging schemes should be replaced by a scheme which charges drivers according to the distance travelled and impact, but with the price set before the journey begins, based on typical levels of congestion and pollution along a recommended route. This is termed a distance-based static variable charge scheme. If the price is determined before the journey starts and traffic is reduced on busy roads at peak times, there would be no need for drivers to seek quieter local roads to avoid congestion or pollution hotspots.

The scheme would operate all day every day – like the ULEZ – but pricing journeys on the basis of typical congestion and pollution levels at the time in question, so that night time or weekend travel would be cheaper than at peak times. Charging levels can be reviewed and altered in line with changes in congestion and pollution levels and against transport and environmental policy objectives.

Table 1 describes some of the main types of road user charging schemes, with the one we propose highlighted in blue.

Design principle 1: London’s existing charging schemes should be replaced by a distance-based scheme, with charges set in advance and varying according to vehicle characteristics and recently observed local congestion and pollution levels at given times

A new user platform

London’s transport leaders have an impressive track record when it comes to commissioning cutting edge, user friendly design. They now need to extend that record by creating a single multimodal London transport platform – a simple integrated website and app for all London’s road and public transport users.

The multimodal platform, which is referred to as City Move in the report, needs to have a variety of functions. It should allow users to:

  • Register for a personal travel account that links Oyster, contactless and driver details.
  • Explore journey options, comparing costs and benefits (monetary, time, environmental, health) across the full range of modes (private car, car club, car-sharing, ride hailing, bus, tube, train, bike hire, cycling, walking).
  • Pay for journeys across the full range of modes, through a variety of payment mechanisms, including pre-pay, pay as you go and monthly billing.
  • Keep track of their journeys and payments, to analyse long-term usage and calculate costs and benefits of alternative ways of moving around.

City Move would facilitate road user charging by enabling the user to enter the journey details in advance, calculating a recommended route, verifying the journey and making an automated payment. The platform could proactively suggest alternative journey options that could save time and/or money or promote healthy activity. For example:

  • Travel an hour later and it would be cheaper;
  • Share the ride to split the cost;
  • Walk, cycle or drive to the nearest train station, then take the train and it would be faster;
  • Cycle and it would make you fitter and save emissions, etc.

City Move could also provide drivers and car owners with other related services, including:

  • Signposting available parking spaces and local parking regulations;
  • Automatic payment of parking charges;
  • Bookable drop-off/pick-up and loading bays.

Although there are a multitude of privately-operated apps that currently offer such services, including those in a single TfL platform would further simplify the process for drivers and would allow for better integration of the city’s mobility services. Private operators would have the opportunity to integrate the TfL offer with other services.

Design principle 2: The scheme should operate through a single London transport platform, City Move, that allows users to compare, plan and pay for journeys across the full range of modes, including tube, train, bus, car, cycling and walking. The platform would proactively suggest cheaper, faster or healthier journey options and offer a number of added driver services.

Individual account

The multimodal account should be individual, rather than attached to vehicles. This would allow a more flexible, targeted and fair approach to charging. For example, existing exemptions or discounts, such as for disabled Blue Badge holders, could be extended to other underprivileged groups. 64 These could then be applied across modes.

Individual accounts would enable two people using the same vehicle at different times to pay through their respective accounts. However, each vehicle should be charged based on its use of the road, regardless of the number of persons transported, promoting ride sharing. When several users share a vehicle, any registered drivers among them would be able to pay for the journey via their account. The City Move platform could also enable the main user registering the journey to add passengers and to give the option to split the charge. Either way, all passengers would still have the benefits of live updates on traffic conditions and public transport status updates for multimodal journeys. In cases of non-payment, the vehicle owner would be charged. Abuse of the account could be prevented by smart security features such as two-step or fingerprint authentication.

The platform would also work for car hire, car clubs and ride hailing. For car hire and car clubs, as the individual customer is the driver, the charge should be applied to the customers’ accounts. For private hire vehicles and taxis, the charge should be applied to the operator and potentially passed on to the customer via the fare. Passengers can pay the fare and the added charge directly when ordering the service via the app, while the operator would still be liable to pay the fees when not carrying passengers (or when carrying cash-paying passengers).

Design principle 3: The multimodal account should be linked to the individual, rather than the vehicle, enabling a fairer approach to charging, including targeted discounts and options to split the charge between passengers.

Objectives, pricing and spending

Road user charges, like other transport charges, should be set with reference to transport and environmental objectives, including objectives relating to:

  • Traffic reduction and modal shift;
  • Journey speeds, time and reliability;
  • Legal requirements and health impacts of carbon dioxide emissions and roadside pollution;
  • Equity and accessibility.

These objectives and related performance targets should be defined by the Mayor and responsibility for achieving them should lie with the relevant delivery authorities.

The precise levels of road user charges would be reviewed annually, along with all other transport charges, against these objectives and performance targets. The charging levels should be calculated with reference to four factors in particular:

  1. A base fee, dependent on the vehicle class and size, that covers basic road maintenance;
  2. A graduated emissions fee dependent on the vehicle’s emission standards;
  3. A local impacts fee reflecting the local congestion and pollution levels at a given time of day, based on recently recorded data;
  4. The extent of alternative transport options –drivers who live in areas, or travel at times of day, poorly served by public transport would be charged less.

The bill should be itemised by journey and the separate components broken down, so the pricing structure can be easy to understand, consistent and transparent. The pricing structure could be linked to the existing public transport fare zone structure, which would also relate to the available travel alternatives. The congestion and air pollution ‘heat maps’ on which the pricing is based should be clearly signposted on the TfL website.

All income raised from any charging scheme should be directed into meeting the objectives the scheme is designed to achieve. Charges should not be used to generate general revenue. The first priority should be to make the maintenance of London’s roads self-funding and tackling the backlog in road maintenance for the benefit of all road users. Any additional revenue should be invested in public transport, walking and cycling and associated environmental and public realm measures.

Design principle 4: Charging levels should be set to achieve specified objectives and reviewed annually against these. Revenue should be directed exclusively to meeting these objectives, and spent on London’s roads, public transport and associated environmental and public realm measures.


The scheme would be delivered through three technological components:

  • A website and smart app would allow drivers
    to create a travel account, review travel options by comparing the costs and benefits of driving against other options, and plan and pay for their journey.
  • Satellite GPS enabled smartphones or in-vehicle devices would allow for the accurate tracking and charging of vehicle trips. All new cars now come with satellite navigation integrated as standard and 85 per cent of UK adults now own a smartphone. 65
  • Road-based Automatic Number Plate Recognition (ANPR) cameras would be used to strengthen enforcement. As ANPR cameras are already used in the CC Zone, there is good existing coverage within central London and the emergence of lightweight portable cameras for random checks makes enforcement relatively easy.

TfL already has a Journey Planner facility, a customer account platform for managing Oyster and contactless journeys, as well as account and pay-as-you go platforms for CC, LEZ and ULEZ charges. The new platform could be an integration and an extension of these existing platforms.

We recognise that some users may be concerned about the privacy implications of linking GPS tracking to a personal account. However, most consumers now use a variety of GPS-enabled smartphone applications, and countless private companies are already collecting such data with user permissions. People also tend to trust public authorities such as TfL with their data more than they do private companies – demonstrated with the widespread usage of Oyster and contactless cards on public transport. Nonetheless, TfL will need to be transparent and clear about the data collected, how it is used and how it is protected.

Drivers would be encouraged to create a travel account by offering a discount on charges or other incentives. Those who did not want to open a travel account for any reason (such as infrequent visitors to London, foreign drivers, or those with privacy concerns) could be offered the option to pay a set daily fee online or at a retail outlet.

Design principle 5: The scheme should be built around three technologies: (1) a web platform and a smartphone app for user registration, journey planning and payment; (2) in-vehicle satellite navigation or smart app for journey verification; and (3) roadside cameras for added enforcement.

Delay Repay

Drivers, especially commercial drivers, attach a high value to journey time reliability to enable better planning and scheduling. Delays can be costly to individuals and businesses, which then have implications for the wider economy. As discussed, objectives and performance targets for any charging regime should include one relating to journey time and delays. By reducing overall traffic levels on London’s roads, the scheme would be able to improve journey time reliability for drivers who pay the charge. To formalise this benefit, TfL should explore the possibility of offering users a guaranteed level of service.

At the point of registering a journey, drivers would be quoted the charge amount but also a realistic journey time estimate. If this is then exceeded by a certain margin, drivers would be issued with a partial or full refund, similar to the system of Delay Repay on the rail network. 66

The journey time quote would be calculated based on a recommended route taking into account any roadworks, traffic accidents or tailbacks. This route would need to be followed for the journey to be eligible for a refund. The GPS capability would verify the route and the journey time taken, as well as detecting any unusual delays or periods of non-movement to prevent drivers trying to claim a refund, for example, for making a stop on route. 67

Design principle 6: The scheme could offer a level of service or ‘delay repay’ guarantee, with drivers getting a partial or full refund where a journey takes significantly longer than expected.

Mobility Credits

The multimodal user platform could also create a system of Mobility Credits – credit that can be used to pay for a number of travel options, including public transport, bike hires, car clubs, private hire, etc. as well as road user charges. Mobility Credits could be used to reward certain choices or to encourage changes in travel behaviour. For example, boroughs could offer residents credits as an incentive to give up their parking permits or developers could offer them in lieu of a parking space in new developments. 68

In the context of road user charging, users could be offered Mobility Credits for:

  • First registering for an account (promoting take-up of the app);
  • Choosing public transport, walking, cycling or mixed modes for a journey that they used to make by car;
  • Giving up a car or scrapping an older more polluting vehicle.

As the system of Mobility Credits becomes established, it could also be used by public authorities to promote active travel. For example, GPs could offer credits to patients who meet set walking and cycling targets.

Design principle 7: The scheme should include a system of Mobility Credits to promote uptake of the app and to encourage healthier and greener ways of moving around.

The business offer

The needs of businesses are different from those of individual travellers, and the scheme should offer a separate business interface. Business account options should suit different sizes and types of businesses. A business should be able to manage its whole fleet from a single account, and the business interface could offer some additional features, such as information and booking for servicing and loading bays. For large businesses and fleet operators, the business account could be linked to commercial Fleet Management Systems.

The scheme needs to support London’s freight industry, while encouraging efficient supply chains. A distance-based scheme would promote the use of a smaller number of fully loaded vehicles to minimise total mileage, while varying the charge by vehicle emissions standard would promote the use of smaller zero tailpipe emission (e.g. electric) vehicles, especially for last mile deliveries in more central congested areas.

One price incentive to encourage retiming and consolidation of loads could be cheaper rates for pre-booked delivery slots outside of peak times. These slots would appeal to several types of freight users that have regular scheduling and relatively efficient utilisation rates in terms of volume carried, including the major parcel and logistics operators, distribution networks of large retailers, and some construction traffic. This would need to be accompanied by other measures to enable consolidation, retiming and use of alternative modes, such as facilitating delivery coordination, reviewing the London Lorry Control Scheme and promoting the use of rail and the river for freight.

Design principle 8: The scheme should offer a dedicated business account that easily manages all commercial vehicles. Cheaper pre-booked delivery slots outside of peak times could encourage retiming and consolidation.

green light, road user charging, city move,

  • 63 Ricardo (2019). Real-world emissions in the London ULEZ,
  • 64 Some literature suggests charging levels could be linked to social, as well as vehicle, characteristics, for example for senior citizens, key workers or different income groups. See for example, Walker, J. and Pickford, A. “Types of road pricing, and measuring scheme cost and performance” in Walker, J. (ed) (2018). Road Pricing: Technologies, economics and acceptability, The Institution of Engineering and Technology, p. 79.
  • 65 (2017). UK smartphone penetration continues to rise to 85 per cent of adult population.
  • 66 A journey time guarantee was proposed in Volterra and Jacobs’ Wolfson Prize shortlisted entry: Volterra and Jacobs (2017). Pricing for Prosperity.
  • 67 There are a number of other practical issues that would need to be addressed to prevent abuse of the system. For example, only longer journeys may be eligible for a refund to prevent drivers seeking compensation for shorter journeys that exceed the estimate by under 10 minutes. If an accident beyond the highway authority’s control happens on route, this may also make the journey ineligible for a refund.
  • 68 Barrett, S., Colthorpe, T., & Wedderburn, M. (2017). Street Smarts: Report of the Commission on the Future of London’s Roads and Streets. London: Centre for London