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					       RAC Foundation

Pricing, planning and new technology.

Are they alternatives?
                Sir Christopher Foster
              RAC Foundation for Motoring
                          23July 2004

  To the Conference on Reducing the Impact of Vehicles on Air and
               Environment Quality in Cities, Mexico City
         Pricing Objectives

     Let me start with pricing. Wherever adopted its
     objectives can be:

1.   To alter behaviour
2.   To raise money
3.   To give signals for investment, development, but also
     disinvestment, contraction
4.   To compensate losers

        2 and 3 most important in private sector
        1 and 4 more important in public sector

     But they can clash
          The Smeed Committee on
          Road Pricing

My introduction to RP was a member of this committee –
 in 1962, the first anywhere? - with Alan Walters, Michael
 Beasley and Gabriel Roth.

Discussion threw up various problems:

   The inter-urban toll road: MC < AC
   In cities: the respective roles of planning and pricing
   Should one price to reflect current demand and supply?
   What social costs?
         Why so slow?
   Slow development of technology: a response not a
   Better management of existing roads through traffic
    engineering: bought 40 years but is much more left?
   Catchment area problems: easier in islands
   Belief that one could:
       invest one’s way out of the problem by more roads
       or public transport (without pricing to divert)
       or deter traffic by not investing
       or plan one’s way out without demand management: very
       or do it through new forms of transport
                The nature of political resistance

   Greatest problem to overcome is political resistance
   Features just listed are important but also

       Huge uncertainties about technology and behavioural reactions
       Common belief that pricing is for private not public sector
       Frequent preference for controls

            Parking: non-optimal side-effects
            Land use changes: often very slow or evaded
            Concerns about the poor

And public misunderstanding in the Polls
          How acceptable is road

    ‘In the future would you be willing to pay tolls to
     drive in city centres?’
               NOP Automotive Survey March 2002

                                YES         No
    UK                          43%         55%
    Scotland                    36%         62%
    London                      39%         61%
    age 17-24                   31%         69%
    age 65+                     47%         50%
    social class AB             58%         40%
    social class C2             38%          62%
            How acceptable is road

   ‘How acceptable would road tolls be to you if there were
    equivalent reductions in fuel duty?’
              NOP Automotive Survey March 2002
            How acceptable is road

   ‘How acceptable would road tolls be to you if   roads
    improved to guarantee better journey times?’
             NOP Automotive Survey March 2002
             How acceptable is road

   ‘How acceptable would road tolls be to you as part of a
    package of better roads, public transport and traffic
              NOP Automotive Survey March 2002
            Spending the revenue

   Which is the top priority for spending the money generated
    from the tolls?’

          Road maintenance                  19%

          Better roads e.g. road widening
          and bypasses                      32%

          Public transport                  34%

          Public services                   12%
     General Poll Findings

60% felt it would be fairer if motorists paid tax
according to amount of time they drive in congestion
rather than tax on fuel and tax discs.
Only 22% argue that tax on petrol is a better way of
restraining traffic than a charge or toll for using
congested roads.
69% disagree with the concept of fuel tax rising by a
given annual %.
58% think that if charges are introduced for using
congested roads there should be concessions for
those on low incomes.
52% think that the use of satellites to monitor the
location of cars is an infringement of personal liberty.
      Opinion in post congestion
      charge London

6 Months after the scheme began more than 50% of
London residents supported or tended to support the
scheme, compared to around 30% who oppose or tend to
oppose it.

A full copy of Congestion Charging: 6 Months On can be
found on the TfL website at:
           How does one overcome
           resistance ?
   Public discussion
   Dissemination of information from existing schemes
   Build up knowledge of elasticities
      demand

      modal and other substitution

   Modelling:
      do nothing scenario

      allowing for congestion

      then for congestion charges

   Simulating
      effects of improved bus and other public transport

      altered traffic engineering

      new investment to re-direct traffic flows

      land use changes, if any, to aid decongestion
      Possible combinations of increased
      capacity and motoring charges in UK
     Annual Increase in
     Motoring Charges

            6%    B

            4%                             No increase in

           2.2%                D                  F

                  A                                           C      Capacity
Do Nothing
after 2010                Projecting the                    High
(Average                  10 Year Plan                      Option
speeds fall by
0.6% pa)
            Planning for Congestion

   Success depends on elasticities.

   They depend on availability of substitutes:

       buses, almost always cheapest option, and busways,
       other public transport
       less transport-intensive land use solutions
            Environmental Improvement
   Economics: a very different role from tackling congestion
      pricing and regulation often a constraining influence

      scenario and targeting within a well-defined model
       structure needed at national and local levels
      any (indicative) quotes from forecast plans, not the
       other way round
      need to use economic criteria

   Inducing new technology the key
      already moving fast

      competition between manufacturers vital

      pluses and minuses of it necessarily being a global

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