The M25 area road price plan - a power play from Mayor Ken?

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Transport for London is pitching to make London the testbed for large-scale road charging with a plan to "halve"* congestion within the M25 area. Government modernisers poised to welcome the latest radical initiative from Mayor Ken Livingstone, Prophet of the Congestion Charge, should however take a deep breath and prepare to count their fingers - this one could cost them dearly.

TfL's plan anticipates a variable charging system with the highest cost being incurred in areas of highest congestion. The scheme, which could be in place by 2015, would be controlled via satellite and tag and beacon technology. TfL director of congestion charging Michelle Dix says the cost of running the scheme would be £500m to £1 billion, and that with a projected revenue of £3bn, that would leave £2bn that could be invested in London's transportation system. Ah, but would it?

You might reckon TfL's previous track record on congestion charge costings tended to indicate a vivid imagination, but if we leave that aside we can still spot a very large snag associated with that £2bn - the Treasury might not be entirely enthusiastic about donating it all to London's transport system.

The current, very limited, London Congestion Charge is a 'per use' one levied on top of all other road-related taxes. The limited scope and limited number of people affected means this is pretty much sustainable (although, as we've argued in the past, it's of doubtful value or relevance), but wider scale or even nationwide road road pricing is an entirely different matter. The Labour manifesto says it will consider road pricing, but the likelihood is that if it goes ahead, it will do so on the basis of switching from the current taxation system to a road pricing one. The fairly heavily Blairite Institute for Public Policy Research recommended road charging a while back, but pointed out that switching over on a revenue neutral basis wouldn't stop congestion growing. To do this, real tax levels would have to go up. That, however, sounds like a tough decision too far to us - if it happens, at least initially the switch will be presented as revenue neutral.

So if the London scheme would, as Dix says, go ahead as part of a national programme it would be accompanied by at least some reduction in existing national motoring taxation; it would not be a case of London simply levying an additional £3bn from the locals, and the money levied would belong to the Treasury, not London.

Subject, of course, to negotiations - and TfL's proposed scheme is clearly an opening shot in these negotiations. Ken Livingstone lobbies hard for more of the tax levied on Londoners to be spent on London, and the clear sight of £3bn a year being taken from London and only £X billion being given back would be a powerful PR weapon for London's Master of Manoeuvre. Central government should therefore be aware that any wide scale London road pricing pilot will come with a free power play attached.

In the more immediate future, slightly less dramatic technological contributions to London traffic management proceed apace. TfL is to run a trial of tag and beacon technology in Southwark, with a view to going live with a full scale scheme based on this by 2009. Tag and beacon uses an in-car device combined with roadside beacons to log movements and levy charges and (as we believe we may also have mentioned in the past) is potentially simpler to operate than the number plate recognition (ANPR) system the current Congestion Charge uses. TfL's plans envisage the use of tag and beacon as "a medium term solution to improve the operation of the [existing] scheme and reduce the administration involved for regular drivers" and also floats the possibility of migration from the current ANPR system to "a newer technology" if trials of GPS, tag and beacon and mobile phone prove this is "feasible and desirable."

Tag and beacon is to be deployed on a wide scale anyway, with TfL's 2005 plan committing to combating the effect of traffic growth on "bus services outside the Congestion Charging zone" by the use of bus lanes and "beacon-based detection equipment to give buses priority at traffic signals." TfL will also be investigating the feasibility of converting this detection system to GPS. Note that this means TfL will be starting to acquire a tag and beacon network across much of Greater London, which adds an infrastructure carrot to the road pricing one it's currently dangling for the next government. Note also that if you ever thought you were imagining that lights turned green as soon as one of Ken's bendy buses thundered towards them, you possibly weren't. And when the show goes fully live, it seems lots of other 'special cases' could feel the benefit too - Met speeding campaign heads in a hurry, perhaps, or busy prime ministers pining for a more discreet 21st century ZIL lane. There'll be hell to pay if it turns out you can hack it... ®

* What TfL measures when it measures congestion is not necessarily what you'd assume it measures. The headline numbers it habitually uses relate to the shortening of journey times, not to the level by which numbers of vehicles have been reduced. So, for example, the 30 per cent reduction it claimed after the first year of the charge was actually derived from an 18 per cent reduction in vehicle numbers. Please yourself as to which you reckon is the most valid measure.

Related stories:

Congestion charge planned within M25 area
Fire-breathing bus attacks South London
Munich faces RFID-controlled congestion charge

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