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February 15, 2007

Road Pricing

Yes, even more:

But the fact is that congestion pricing is conservative economics at its best. For decades, conservatives have championed market-oriented solutions to highway problems as a means to allocate scarce resources. Congestion pricing gives consumers the opportunity to decide when it is in their economic interest to ride crowded roads, and whether the price charged for a given trip is worth their travel time savings.

In the former Soviet-bloc states, the standard way to allocate scarce goods was to set the purchase price low enough for everyone to afford, but to make consumers wait in long lines to buy them. The real price depended on what value consumers placed on their time.

February 15, 2007 in Your Tax Money at Work | Permalink


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"Congestion pricing gives consumers the opportunity to decide when it is in their economic interest to ride crowded roads"

So what's this poxy stupid government going to do if a significant proportion of the working population decide it's just not in their economic interest to keep on driving (and hence working)?



Posted by: zorro | Feb 15, 2007 1:52:39 PM

There's an old but wise adage from Roman times: Hard cases make bad law.

Posted by: Bob B | Feb 15, 2007 2:02:29 PM

"In the former Soviet-bloc states, the standard way to allocate scarce goods was to set the purchase price low enough for everyone to afford, but to make consumers wait in long lines to buy them."

Isn't that the way the NHS is run?

Posted by: Josh | Feb 15, 2007 2:23:33 PM

The other problem here is that over the course of this Government, the public have been systematically and highly effectively educated in how to dodge stupid laws, at the same time as which the police have been progressively crippled.

Added to this the Government has demonstrated repeatedly that it is utterly and completely incompetent at implementing any project involving technology more complex than a pocket calculator.

So, now we have road pricing. Completely dependent on a sat-nav system that hasn't gone live yet, based on EU best practice project planning (from the organisation that has yet to submit even vaguely accurate accounts), and to be implemented on a scale never before tried, and in the UK in a place with absolutely rubbish public transport.

This is a recipe for pissing away hundreds of billions of pounds to achieve a system which will drive business away from these shores for a long time, and which is most unlikely to ever achieve its stated aim. It will however provide useful employment for hundreds of hackers, crooks and makers of hookey electronics.

Oh, and this is truly a worthy legacy for Mr Blair; unworkable, feckless, overbudget and stupid.

Posted by: Dr Dan H. | Feb 15, 2007 2:32:06 PM

Over on The Times, Matthew Parris writes: "and that if the public really do think we can carry on offering free road space to a growing number of cars, the public are simply wrong."

Sadly, they have not published my comment there, and failed to realise that I don't do stuff at around 3am just to be ignored. So I hope you do not mind, Tim, getting this "second hand as new".

Firstly, Mr Parris's view seems to ignore the fact that petrol and vehicle taxes fund vastly more than the money spent on roads. Thus the road space we have is not free, but exceptionally expensive.

Secondly, the number of motor vehicles is growing faster than the population, presumably as our prosperity increases. However, the population is finite, the number of cars that can be driven at any one time is finite, and so only a finite amount of road (and parking) is required: it's just somewhat more than the amount we currently have.

Mr Parris will have, to preserve the logic of his case, to find some other cause not to build roads. That, I predict, is quite likely to be something to do with CO2. But he should beware there too: the dream of materially damaging anthropogenic global warming is well past its prime as a sound basis for policy.

The logic is for the government to build the roads and car parks that the nation obviously needs, with the money we already pay. That is the solution to road congestion; everything else is puff.

Best regards

Posted by: Nigel Sedgwick | Feb 15, 2007 2:49:12 PM

How will the charging work? Presumably the price has to be set once you are on the road, as you couldn't really set off and then find you were being charged more. But clearly the price will alter, so if it were to drop whilst you were on a road, would it make sense to drive off the road and then back on it, to gain the lower price?

Posted by: Matthew | Feb 15, 2007 3:19:13 PM

"Isn't that the way the NHS is run?"

The NHS has advanced since then - that's how it used to work. Clinically optimal treatments are now being denied to the old and to AIDS suffers:

"Doctors deny older people treatments they would offer younger patients, according to a study."

"An annual survey of medical professionals working in sexual health services has revealed they are not being prioritised despite rising infection rates. The research shows that prescribing restrictions are becoming more common, with over a third of clinicians reporting that restrictions for HIV drugs were either already in place or had been discussed."

And dentists are mostly opting out of the NHS:

"Three in four dentists are not accepting new NHS patients due to local financial struggles, a survey suggests. BBC News revealed last month that many NHS trusts predicted a funding shortfall this year, leaving dentists with no money to treat patients."

Remember this just a year ago?

"Ms Hewitt told the BBC: 'Improving financial management does not mean compromising services for patients. Any action that the NHS takes to reduce deficits should not lower the quality of care provided to patients.'"
Report filed 27 January 2006

"the NHS is enjoying 'its best year ever' according to Health Secretary Patricia Hewitt."
Report filed 22 April 2006


Posted by: Bob B | Feb 15, 2007 3:26:37 PM

Nigel Sedgwick:

Aren't you an accomplished mathematician of some sort? I seem to recall coming across your name some years ago in connection with a math-knowledge problem I had.

Posted by: gene berman | Feb 15, 2007 3:31:52 PM

"How will the charging work?"

We don't know as yet because the government hasn't made firm proposals. But we do have this from Alistair Darling when he was transport minister a couple of years back:

Otherwise, we have this useful round-up of how road pricing schemes operate in countries around the world from Prof Oswald at Warwick University and colleagues:

Posted by: Bob B | Feb 15, 2007 3:56:38 PM

In the Blue corner: Mighty Market - "if done well, this can succeed".

In the Red Corner: Princess Toni - "New Labour, New Britain. Tough on congestion, tough on the causes of congestion. I have a dossier. Goo-goo-guh-joob."

Posted by: dearieme | Feb 15, 2007 3:57:09 PM


The thing is, that just isn't true.

If you have a good job that you do well, your employer may well be happy to let you work different hours (if s/he isn't, then s/he is an idiot and you'd be better off elsewhere) [*].

If you don't, then you can easily get another low-skilled job somewhere more easily accessible. Or you can move house to somewhere walkable/cyclable/bussable to your work. Or you can decide that none of these options are appealing, and you can stay where you are and pay the charge...

Everyone has a choice over where to live and where and when to work. Why do people continually delude themselves that they don't?

[*] the exception is for City type jobs that require you to be at your desk during the market's opening hours. Even with one of those, you could always come in earlier and read books (or blogs) if the congestion charge really impacted you.

Posted by: john b | Feb 15, 2007 6:07:22 PM

There are all sorts of problems with road pricing, not least of which is the cost of collection. As we have seen with the London congestion charge, most of the money raised is eaten by administering the scheme, so taxes would have to be much higher to raise the same amount of money as fuel taxes.

Fuel taxes are cheap to administer, hard to avoid, are roughly proportional to use and encourage fuel economy. Limited congestion charges in certain places could augment them and then we'd have the best compromise solution.

Incidentally, Nigel Sedgwick repeats the old assertion that road taxes raise much more than is spent on the roads. This is only true if you ignore other costs incurred by road transport, such as policing, the cost of accidents, noise, pollution, etc., etc. . In fact, independent studies generally say that currently cars roughly pay their way and lorries are undertaxed (Lorries damage the roads thousands of times more than cars). However, even this ignores the fact that roads are a valuable asset and were they commercially run, the owner would be looking to get a return on the asset value. At present, people who use roads very little (but equally own the asset, through the government) are effectively subsidising those who use them heavily. It is important that we don't subsidise them because this is an economic distortion encouraging excessive road use.

Cue Nigel Sedgwick telling me I'm mad, but providing no coherent counter argument...

Posted by: HJHJ | Feb 15, 2007 8:27:34 PM

HJHJ writes that the figures do not support my claim.

Well, from the following DfT Report, I find for 2004/05 in England:

Table 7.15: Total revenues from fuel tax and road tax is £M27,789.

Table 7.13: Total expenditure on road construction and maintenance is £M6,003.

The difference of £M21,786 amounts to: about £464 for each of the 47 million adults in the UK, or about £M6.8 for every road death, or about £80,400 for every person seriously injured or killed on the roads.

I'm not convinced that the government spends this much on "policing, the cost of accidents, noise, pollution", but I am open to being convinced by a more informed and thorough analysis than mine above.

In the meantime, I think I'll stick with something a bit over 22% of petrol and road tax income being spent on road transport.

Best regards

Posted by: Nigel Sedgwick | Feb 15, 2007 11:33:27 PM

Shorter John B comment: "Of course it'll work, if you & your employers totally rearrange your lives, homes & businesses to suit the policy."

I think I can see a tiny flaw there, anyone else...?

Posted by: JuliaM | Feb 16, 2007 5:42:58 AM

"Firstly, Mr Parris's view seems to ignore the fact that petrol and vehicle taxes fund vastly more than the money spent on roads. Thus the road space we have is not free, but exceptionally expensive."

But the point is that those taxes take no account of congestion. Someone using a litre of fuel on an uncongested road pays the same as someone using a litre on a congested road.

Posted by: Richardr | Feb 16, 2007 2:48:17 PM

"or about £M6.8 for every road death, or about £80,400 for every person seriously injured or killed on the roads"

Last time I checked the cost/benefit analysis of a life was in the region of £1m. So road deaths account for £3bn of your total, leaving £68k per serious injury, which doesn't sound obviously insane depending on how serious the injury is - and that's assuming you attach no monetary value to people killed by pollution.

JuliaM: if people believe the situation under road pricing will be unsustainable for them, they have plenty of other options. If they do not believe this, then they can carry on doing what they do now but pay the extra fee. Either way, the suggestion that they *have* to do whatever they're doing is rubbish.

Posted by: john b | Feb 16, 2007 4:05:11 PM

(sorry, meant to say "any of the costs of pollution" above)

Posted by: john b | Feb 16, 2007 4:06:12 PM


A link for you. It's from the Adam Smith Institute (hardly fans of high taxation or an anti-motorist group). Although I don''t entirely agree with its assessment and conclusions, you can see that even accepting the 'headline' figures you give, when you take everything into account it is not at all clear that road transport is generally overtaxed:


Neither does it (or you) address my point that the government should be seeking a reasonable return on the roads as a valuable asset, for the benefit of all taxpayers.

Posted by: HJHJ | Feb 16, 2007 4:07:02 PM

"...the suggestion that they *have* to do whatever they're doing is rubbish."

Lol! Not half as rubbish as the socialist, stars-in-my-eyes fairytale that the people will fall into line and make massive changes to their businesses and lives because their masters in Govt decree it...

I seem to recall the Soviets tried that...how'd that little experiment work out, again? Please remind me!

Tim adds: But the Soviets failed because they refused to use prices as the incentives for behaviour change. Remember? Markets work.

Posted by: JuliaM | Feb 16, 2007 5:31:26 PM

"Markets work."

Hmm, no sorry. Not buying it. The behaviour change is just too big, in this case.

Tim adds: I think you miss the point. We know we need to change the behaviour. OK, now, what's the best way of doing that?

Posted by: JuliaM | Feb 16, 2007 7:04:49 PM

"We know we need to change the behaviour. "

Hmm, I'm not so sure we do.

But if we do, there are a few things to try before needing to resort to road pricing to try to achieve the impossible..

Posted by: JuliaM | Feb 17, 2007 8:34:11 AM

I think that Tony Blair is cracking up. This system is not only discriminatory but unworkable

Posted by: Harry Smithson | Feb 18, 2007 12:24:10 PM

I am concerned about the fact that in all the talks about getting cars off our roads,we seem to by pass the fact that we may be letting the well off just have the freedom of the roads.
We cannot just put in road pricing and think this will give you a 30 min run across London.
I feel all we are doing is letting the rich people of this country have right of way.
Our tube network can not take more it will never be able to cope with the demand.
It was not designed to cope with the amounts of
People using it now let alone within the next 5-10 years. At the moment we all know how long its
going to take to get across London so leave a little earlier.

The thing that puts a spanner in the works is the pollution side of things and this will only be met when the oil companies release all the patents they have brought up of individual inventors that have given us cleaner driving vehicles. Maybe the government needs to change the laws in this area.

We could be looking at providing small one seated electric cars but they must be able to travel over 100 miles on one charge before they are really useful and of coarse the cost of the vehicles need to come down to around three or four thousand pounds.

I am convinced that within a few years people like myself on an average wage will not have the pleasure of being able to jump in a car or motorbike because the fat cats
Will have priced us off the road while they sit back with a cigar on driving around like they own the place, in all lets think of a better and fairer policy of reducing traffic.

Posted by: g2005 | May 23, 2007 12:23:49 PM