From our Swindon correspondent:
From the Evening Telegraph
Sadiq Khan has been forced to hike the congestion charge to £15 a day to help fill a financial black hole in London’s transport system caused by coronavirus, the Evening Standard can reveal.
When the congestion charge was first introduced into London, one of the disappointments by the local government was that it didn’t raise as much money as expected. Because something they hadn’t really considered is that some people change their behaviour when a thing is taxed. Maybe many can’t avoid it, but some will.
The point of a congestion charge is similar to the point of parking charges. It’s to allocate a scarce resource better, and the best way to do that is to charge people for it. Yes, you spend the money on the local residents, but it’s not supposed to fill financial black holes.When you start thinking like that, you get into all sorts of problems. If a town centre charges more than it needs to, you risk people not coming to your town. Maybe they go elsewhere for their shopping (this happened with Swindon under Labour) which has economic effects. But you’re also into Laffer territory, where your total parking take falls. You might make more per shopper, but you reduce the number of shoppers.
In the case of London, re-introducing the charge, while also having buses as a bit risky probably means a lot of people will carry on working from home. £15 to go into the office + parking each day?
What would have been a better idea would have been to just told the transport unions that they’re going to have to take a short-term haircut. No money coming in, take it or leave it. That’s most of the cost of the rail network: the drivers and staff.
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If you take the bus/cycle/walk instead of driving because of the congestion charge, is that tax avoidance, and if not, why not?
Sadiq is increasing the price of doing something fewer people actually pay to do. It's going to be a bit like hiking the prescription charge in an area where hardly anyone pays it. This is not going to work out well. If the purpose of the charge is to reduce congestion, to make traffic flow a little more predictably, and the roads a little emptier for the walkers and cyclists then it should be a charge on all vehicles entering the zone, which would have to include the disabled ( sorry guys ), EVs, and other exempt categories.
"The point of a congestion charge is similar to the point of parking charges. It’s to allocate a scarce resource better, and the best way to do that is to charge people for it. "
Did it to allocate a scarce resource better? Not sure about that. My experience of the introduction of both London's congestion charge zones is not much happened to the density of traffic. But the average value of cars using them rose. Very noticeable at th4e start when traffic volumes dropped. Definitely discernable as volumes crept back up to their previous levels.
Not hard to work out why. The limit on driving in Central London before the CCZ's was the time journeys took. Time is money. The higher paid's time has greater value than lower paid. Congestion dropped, it was quicker to move around, the gap was filled both those could be more productive with their time driving.
You'll get the same if he puts the fares up again. Those who can afford to will travel in Corona free safety.
Sure it's a good first order solution to allocating scarce road space. It's the second order effect needs looking at. Who do you price off the road? It's the people who don't have the earnings to pay the CCZ charge. The people provide the services make a city functional. But can't pass on the cost to the wealthy or large businesses. It makes it more difficult to get a plumber. Businesses who sell goods their customers need to collect in a vehicle lose trade or become unviable. You lose a suppliers of specialist goods & services. Somewhere along the way you lose the benefits a city provides that's the attraction for business in the first place. Cures your congestion though.