Chapter 3 set out design principles for a new system of road user charging, while Chapter 4 examined its anticipated impact. This chapter looks at how a new scheme could be implemented in London, and its relation to national policy or schemes in other parts of the country.

Phasing

As described, the scheme would operate at all times of day and night. As a rule of principle, the charge should cover all motor vehicles using the roads. However, the Mayor may choose to exempt certain vehicles or user types (e.g. emergency vehicles and taxis) from some or all of the fee elements of the charge. As the account would be personal and multimodal, the platform could potentially be used to extend charging to other modes. The new distance-based charging scheme should eventually cover the whole of London, replacing all existing schemes affecting the highway network, but exact phasing would be a matter of political consideration.

The Mayor of London already has all the regulatory and legislative powers required to implement the scheme we recommend. We propose that the next Mayor of London should ask TfL to develop options for a new approach to road user charging, with a view to introducing the first version of a scheme by the end of the 2020-2024 Mayoral term.

Any new scheme would require the development of an integrated platform with sophisticated back office functions, new technological capability and robust testing before going live. In preparation for implementing the scheme, the Mayor and TfL would need to:

• Determine scheme parameters. TfL and the Mayor would first need to decide the basic scheme parameters, including charging structure, technology, user interface and payment methods, any exemptions and benefits, etc.
• Develop the user platform and back office functionality. TfL would then need to develop the technology that the scheme should be based on, including integration of the Journey Planner, Oyster and contactless user account and road user charging account systems into a new multimodal platform – as well as the application programming interfaces (APIs) required to integrate it into external platforms.
• Upgrade GPS accuracy and 5G network connectivity. Before implementing the scheme, TfL needs to ensure that there is sufficient coverage and capacity within the satellite networks and the 5G connectivity required for operating the system – across the areas that the scheme covers in any given period of time.
• Pilot the scheme within the existing CC zone. The new scheme and the associated platforms could initially be trialled in the existing Congestion Charging area. This will provide TfL with an opportunity to refine the technology and observe user response to the platform. Take-up of the trial could be incentivised by offering a daily cap at the level of the existing daily charge (similar to contactless ticketing), meaning that no users would pay more than the current combined Congestion Charge and ULEZ charge (if liable for the latter). This might have the impact of temporarily increasing congestion (by drivers that may have otherwise been deterred from making short journeys) and reducing revenue (from drivers that would otherwise have paid the full CC and ULEZ charges), but it would ensure the scheme and the technology behind it worked in practice.

Once the scheme design is ready, the platform should be launched across the whole of London, but there should be gradual extension of the charging regime.

• Launching the platform across the whole of London. Once the technology has been tested, the platform should be extended across the whole of London. This means that any local traffic restriction measures can be signposted through the journey planner website and app from day one. TfL should also encourage local authorities to roll local parking regulations and payments (and other mobility services) into the scheme – without changing the way in which prices are set and revenue is collected by local authorities. Launching the platform across the whole of London from day one would provide all drivers that sign up to it the opportunity to benefit from a simplified experience and from the range of incentives on offer, such as mobility credits for integrating public transport and road user charging accounts, etc.
• Gradual extension of distance-based charging. Charging could be extended gradually, with the new distance-based charging regime initially replacing the existing CC and ULEZ before being expanded into other areas of high demand and poor air quality, such as busy town centres, congested corridors or airports. The scheme would only be expanded to areas of relatively lower congestion and air pollution, and limited access to alternative transport modes – like much of outer London – once tangible improvements to public transport and streets for walking and cycling are delivered. Nevertheless, drivers in unaffected areas would still be encouraged to sign up to the scheme, so that they can benefit from its incentives and features, and so that they avoid the risk of being penalised for unknowingly entering an area that does incur a charge.

Relevance to other cities

National government largely views the management of congestion and pollution as a matter for individual cities. A number of cities across England are required
to produce clean air plans as part of the government’s Clean Air Strategy, and Clean Air Zones (CAZs) are one of the tools they can use. ⁷²

While the majority of cities tasked with creating plans recognise the need for charging schemes, in their implementation of CAZs many are opting for a set daily charge that applies to vans, trucks and buses only and not to private cars. ⁷³ These schemes not only face the challenges of London’s current cordon-based schemes, but also could be argued to impact on those users (such as businesses) who are least able to reduce usage or switch modes and to penalise public transport.

Charging private car users may be more politically controversial. But a distance-based scheme that reflects actual usage, improves journey time reliability and delivers other benefits, could improve public acceptability. London can lead the way trialling a scheme that can be used by other cities in their strategies to reduce congestion and improve air quality and health impacts. Close coordination between cities would also ensure technological compatibility wherever possible, and help minimise discrepancies for businesses, such as in the freight and logistics sectors, that travel across the country.

National reform

What should the relation between the new approach to road user charging we are recommending for London and national taxation be?

The fundamentals of the national regime of road user taxes, centred on VED and Fuel Duty, have been in place for decades and are looking increasingly antiquated. These taxes do a poor job of ensuring the costs of driving reflect its impact. Many experts and campaign groups have argued these taxes should be replaced by a national system of distance-based road user charging. ⁷⁴ London, moreover, does particularly badly out of the present system. Hardly any of the income raised through national road taxes that is hypothecated for roads goes to London’s roads. And London is excluded from various funds that central government provides to other cities to help them manage congestion and pollution, such as Clean Air Zone implementation funding or the Transforming Cities Fund.

There are no signs that the government plans to revise road taxes in the short term. But with revenues from Fuel Duty projected to decline fast over the next 10 to 15 years, as drivers switch to cleaner hybrid and electric vehicles, the government is likely to be forced to move to a system of distance-based road user charging. Some have suggested it would also be required as part of a national regulatory regime for autonomous vehicles in the not-too-distant future. ⁷⁵

We argue that, while national government should replace existing road taxes with a pay-per-distance system of road user charging, it is vital that any reforms by the government work with, rather than in conflict against, road user charging schemes in London and other cities, so that drivers do not find themselves paying twice – once to the city and then again to the Treasury. One option would be for central government to replace VED and Fuel Duty with a flat-rate per mile scheme (possibly variable for major and minor roads), with cities left to address the local aspects of congestion and pollution with regional or local road user charging schemes. In the meantime, the government should at least ensure that London can access Clean Air Zone funds and others on the same basis as other cities
and regions.