Proper pricing for transport infrastructure and the case of urban road congestion.

For transport systems the issues of pricing, service quality, funding and investment in urban areas are inextricably interdependent. The paper first argues that no policy can be set for any of these aspects of transport in isolation from any other. Transport planners and urban policy-makers can choose to tolerate congestion, or build new capacity or introduce road user charging. These issues are explored and analysed in the context of London—Europe's most obviously resurgent city and the one with the most recent experience of road pricing in the form of the Congestion Charge. However, despite the evidence that in the centre, where it applies, the Congestion Charge has had broadly the effects economic theory would predict, there is still a growing problem for the rest of London and the UK caused largely by the combined effects of rising real incomes and the improving fuel efficiency of cars which reduces the impact of fuel taxes. This suggests a growing pressure for a national system of road pricing. To date ‘prices’, in the form of fuel duty (over £0.50 out of each £0.80 for a litre of fuel) have been set on the basis of historical precedent or political expediency. The paper sets out a regionally based model to analyse the implications of setting alternative levels of congestion charging and environmental taxes covering the whole of England. This includes modelling the implications for other transport modes and the net changes accruing to drivers and the Exchequer. Having presented the implications of some alternative policies, the paper discusses a number of the issues of political economy that would have to be resolved. While there seems to be little alternative to user charging in some form sooner or later, the sooner it can be introduced the more good it can do. However, the difficulties are real, less tractable than some people appear to believe and they have to be identified and dealt with. Perhaps the most significant unresolved problem is not the technical feasibility of such a system of national road pricing, but finding an appropriate, accountable and acceptable method for overseeing and administering the funds such a system would generate. [ABSTRACT FROM AUTHOR]