IN MAY 2000, “Red Ken” Livingstone was elected Mayor of London. The post was new – different from the ancient but ceremonial Lord Mayor of the financial district – and the veteran left-winger had what seemed like an radical policy up his sleeve: congestion charges.

In fact, the idea of taxing people to drive into the city centre had been kicking around for decades, and Livingstone was inspired by what might now be called neo-liberal economics. “I nicked the idea off Milton Friedman”, the mayor cheerfully admitted.

Three years, one court battle and a huge amount of controversy later, the congestion charge went live in 2003. It involved a £5 levy for driving into a relatively small area of central London between 7am and 6.30pm on weekdays, with exemptions for taxis, emergency vehicles and people living inside the zone.

Leaving aside some supposedly temporary pandemic tightening, the scheme remains the same in its essentials today – Mayor Boris Johnson scrapped an expansion of the charging zone, but increased the rate – and is widely hailed as a success. In the 2021 mayoral election, no serious candidate proposed scrapping the charge (unless to replace it with an even more ambitious scheme).

The idea has been moving closer to home: last week, the Oireachtas budgetary oversight committee recommended that the Government examine the introduction of congestion charges to help pay for the cost of climate change. 

So could it work here? In terms of reducing traffic, absolutely.

“It is incontrovertible at this stage that congestion charging is an effective policy from the point of view of reducing congestion”, says Pete Lunn, head of the Behavioural Research Unit at the Economic and Social Research Institute. In London, using figures from just the first year of the scheme, traffic in the zone fell by 15% and congestion (time spent in a vehicle queue) by 30%. Air pollution was down 12%; greenhouse gas emissions, 19%.

A Department of Transport report in March 2021 found similarly positive results in other congestion charging cities, such as Milan and Stockholm. “There is”, it concluded, “very strong evidence that congestion charging delivers reductions in traffic volumes, improves air quality measures and reduces the levels of CO2 from transport emissions”. As such, the department recommends looking into similar schemes in Dublin, Cork and perhaps Galway.

 Climate context

The idea isn’t entirely new in Ireland either. The economist Edgar Morgenroth, for one, recommended it in an ESRI paper 20 years ago.

But it’s climbing up the agenda with the steady build-up of experience elsewhere and increasing worries about the environment (not actually a big selling point for London’s original scheme). The European Commission plans to effectively ban new petrol and diesel cars from 2035. In Ireland, the goal is 2030. 

“Congestion charging has been around for a long time as an idea that is primarily about improving air quality in cities and reducing traffic congestion”, Lunn says.

“There is now a bigger reason to do this, which is that traffic in cities is one of the largest [climate] polluters that we’ve got to tackle. Our behaviour has to change over the next 10 to 20 year”. EU-wide, cars and vans account for about 15% of all CO2 emissions.

“Climate change is a game-changer”, agrees Lucy Sadler, a consultant and expert on “urban access regulations”. Congestion charges are only one member of this wider family of measures that encourage people to stop using cars in cities.

Its cousins are things like low emission zones, where vehicle levies are based not on physical presence in a city centre, but on how polluting they are. London now has one of these as well, and in October will expand it to cover an area 18 times the size of the congestion zone. Oslo’s scheme mashes the two together: the greener the vehicle, the lower the entrance tax.

There’s also the nuclear option of putting up physical barriers to block off streets to cars entirely. Dublin and Cork have recently been pedestrianising some city centre streets, but compared to somewhere like Barcelona that’s small sangria: the Catalan capital’s “superblocks” scheme sees cars diverted around entire neighbourhoods.

It now plans an expansion that would cover most of the central Eixample district: in Cork City terms, it would be the equivalent of something like pedestrianising the whole of the Island.

Sadler’s consultancy runs a website, which is supported by the European Commission, showcasing the various schemes in place around European cities. An accompanying map demonstrates that Ireland is unusual in Western Europe having hardly any urban access rules (the one that shows up is Dublin City Council’s ban on heavy goods vehicles).

So a congestion charge alone would, in a sense, be quite unambitious, given the range of possible schemes and the climate change imperative.

So it’s a no-brainer?  

It’s not all pedestrian utopia, though. Potential problems identified by the Department of Transport include increased traffic on roads around any restricted zone, and fewer people going shopping within it. Without dismissing those concerns out of hand, they didn’t end up being big problems in London, according to the official monitoring reports. But any successful scheme would need to show that it would reduce the number of car journeys overall – not just push them onto orbital routes.

Morgenroth told The Journal that city centre shopkeepers are right to worry about customers heading to out-of-town shopping centres instead, and suggests charging for parking there to ensure a level playing field.

The ESRI’s Miguel Tovar Reaños worries about the distributional impact of universal environmental levies like congestion charges; in other words, the fact that it’s a relatively bigger financial hit for poorer drivers. He singles out a Swedish study of the charges in Gothenburg and Stockholm.

It found that, as Tovar Reaños puts it, “low income households pay proportionately more – it’s regressive by nature. That’s something to take into consideration”. No matter the economic and environmental logic, if something involves regressive taxation, it can all too easily turn out like water charges: protests, finger-pointing and Russell Brand all up in your public policy.

The difference with congestion charges is that it generates surplus cash. You can soften the blow by handing some of it back to those most affected. “Quite often when these kinds of schemes are introduced there has to be compensation for the people hit hardest”, Lunn says. “You can do that kind of redistribution. The crucial thing is that you do it in a way that doesn’t distort the incentives”.

If you want to go easy on, say, people living in the congestion zone, better to give them a Local Property Tax rebate — “don’t change the fact that they’re charged for use of the car, because that’s what creates the environmental benefit”.

Reliance on compensation and exemptions does mean there’s less money available for another obvious use of it: public transport spending. That can be redistributive in itself, since the less well off tend to be more reliant on public transport. London ploughs its surplus money into the buses and Tube.

 Winning over the public

That said, investment in public transport and cycle lanes has to be frontloaded rather than follow afterwards. Giving people a viable alternative to the car that they can switch to immediately is crucial: “London pump-primed its public transport before the congestion charge came in”, says Sadler, who was the city’s head of air quality at the time. “So would any good practice scheme”.

That’s particularly important in Ireland: Tovar Reaños has done research showing that there’s “very little substitution between public and private transportation” here. Increase the price of petrol, for example, and the number of people switching over to public transport hardly budges

All this suggests that hitting drivers with charges or other access regulations without providing a decent alternative would be putting the cart before the horse. Once you’ve got, say, a €2 billion BusConnects plan firmly in place, then you might reasonably start putting the squeeze on recalcitrant motorists.

But a compensating boost in greener transport isn’t likely to be enough on its own. Edinburgh (2005) and Manchester (2008) both sold their charges as part of transport investment packages, but saw the proposals heavily voted down at local referendums. Sadler and other experts say that taking the public with you requires plenty of other spadework.

This includes conversations with interest groups way before any formal consultation and directing the scheme at a “known problem”. In Livingstone’s London, “no-one disagreed that there was a pollution problem to solve”, whereas in Jerusalem residents believed that their air quality was fine and had to be shown otherwise.

The other potential Livingstone lesson is that opposition fades after the fact. Sadler cites an “acceptance curve”: support typically drops as the launch date approaches, but rises once the scheme is in place. Once cars are off the street, she says, hardly anyone ever wants to go back.

UVAR Guidance: User Needs and Public Acceptance UVAR Guidance: User Needs and Public Acceptance

That probably explains why the Edinburgh and Manchester schemes went down in flames: the votes were held ahead of time. Stockholm (2007) did it the other way around: a six-month trial followed by a vote. Before the trial, approval rates were as low as 21%, whereas 53% voted to retain the charge afterwards.

“As a behavioural economist, one thing I can tell you is that people have a really strongly inbuilt bias against change. They find change threatening”, Lunn says. “But when it comes to these big environmental policies where we’ve got to do them and they are going to make a substantial difference, policy-makers have to be brave and take that conservatism on”. Livingstone, for what it’s worth, was handily re-elected. 

This work is co-funded by Journal Media and a grant programme from the European Parliament. Any opinions or conclusions expressed in this work is the author’s own. The European Parliament has no involvement in nor responsibility for the editorial content published by the project. For more information, see here.