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Ex-Mayor Livingstone

Road pricing will lead to waste

Treasury logoSir Rod Eddington’s transport report is published today, follow link.

It is a joint veture between the Treasury and the DoT. Beware the Treasury’s involvement. Eddington gives the thumbs up to road pricing although not as wholeheartedly as you might expect. He does give a wholehearted endorsement of economically sensible investments in transport so hurray for that. But back to road pricing.

Contrary to the Mayor’s spin the London Congestion Charge has a £60 million deficit after three full years of operation. Follow link for details.

Transport for London, the shower responsible for the Congestion Charge, are also taking the lead in London-wide congestion charging. They reckon to be able to collect £3 billion in charges. This would be OK too if some other tax was reduced by £3 billion but read a quote from Michele Dix, director of congestion charging at TfL: “It would generate £3 billion gross and net revenue of between £1 billion and £2 billion.” It is a shame that she can’t refine her cost estimates more accurately than to the nearest £1 billion. Why does she think that it is acceptable to tax people to this extent and then lose anywhere from a third to two thirds of the money in collection costs?

It is all very well moving to road pricing if it is an effective and cheap to collect tax like fuel duty that allows us to lower direct taxation. But if its costs go barmy it just adds up to terrific waste.

If TfL is capable of wasting every penny of CC income then the same thing is likely to happen with a London-wide or national road pricing scheme.

One reply on “Road pricing will lead to waste”

If road pricing proves as unprofitable as congestion charge it will have been an absolute disaster. There’s still a lot of work to do to control costs – although the absence of a 90% discount for residents will help the national scheme. If it is not revenue neutral, it should not be done.

A lot is said about congestion charge being popular, but in my opinion this is because most people surveyed don’t have to pay it. A tax paid by someone else is always popular, but it’s support will not survive the transition to a national tax which affects us all. Inheritance tax was well thought of until rising house prices brought large numbers of voters into its grasp.

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