Analysis of Road Pricing in the UK

This paper addresses the issue as to whether road pricing is the only acceptable method of dealing with the excess demand for road space not just in the U.K. but elsewhere. This writer disagrees: road pricing is not only the sole acceptable method – there are several others we shall briefly elaborate in this paper – but is also at this point in time neither feasible nor acceptable, as a recent survey of public opinion in the U.K. showed (RAC, 2004, p. 9).

We begin with a brief discussion of transport supply and demand to explain how road space and transportation modes interact in our analytical scheme, cite factors that influence our efforts to arrive at a workable solution, and then discuss other alternatives.

Walking is the simplest means of personal mobility, and when the purpose of such action is to move from one place to another, it is known by another term: transport. Mobility and transport depends on several factors ranging from the anatomical, like having two legs, to the external, like having a path on which to move or transport one’s body. Mobility and transport have been amongst the important factors that determined human development, and whether we like it or not, these are subject to the economic law of supply and demand.
The development of transport supply and demand has given rise to the complex system of transport infrastructures, modes of transportation, and the propensity for personal mobility we enjoy today. We take mobility as part of a natural ability to be where we want to be, and take it against our privilege any obstacle that restricts this freedom in any way.

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This is why transport has become subject to the laws of supply and demand, for whereas the demand for mobility continues to increase with human development the supply of transport infrastructure that makes it possible is limited. Fig. 1 shows the effects of developments in transportation in increasing the speed of mobility.

Economists (Rodrigue et al., 2006) define transport supply as the capacity of transportation infrastructures and modes, generally over a geographically defined transport system and for a specific period of time. Transport demand is the expression of transport needs, regardless of whether those needs are satisfied fully, partially, or not at all. Both are commonly quantified in terms of capacity (infrastructure), frequency (services), and networks, as in the number of passengers, volume (liquids), or mass (freight) that can be (supply) or needed to be (demand) transported per unit of time and space.
Transport demand is generated by the economy – persons, institutions, and industries – that generate movements of people and goods and can vary depending on the quantity of passengers (or freight increases) and the distance over which these passengers (or freight) are carried. For the movements of people, the location of residential, commercial, and industrial areas determine the transport demand.
Determining the variables of transport supply and demand helps support our answer to the question this paper aims to answer. Amongst these variables, the more relevant to our discussion are the so-called modal supply and transport demand.

One example of modal supply is the capacity of the road used for transport. Roads have a maximum capacity of vehicles it can accommodate per unit of time. Another is the number of cars, buses, lorries, motorbikes, and pedestrians allowed to pass through these roads. The supply of one mode influences the supply of others, so the transport supply for buses is inversely proportional to that of lorries since both share the same road infrastructure.

Transport demand is expressed at specific times that are related to patterns of economic and social activity. In many cases, transport demand such as commuting is stable and recurrent; whilst in some cases such as when an accident occurs it becomes unstable and uncertain. Several other factors such as demographics, modal preferences, and business conditions (use of Just-in-Time manufacturing) affect transport demand.

Transport supply and demand are mutually interrelated, interacting until a point of equilibrium is reached between the quantity of transportation the market is willing to use and the quantity being supplied at a given price level. Other considerations specific to the sector affect the supply and demand relationship, such as entry cost (price of a car or a bus), degree of economic activity (more lorries that deliver goods), and the level of government intervention in public transport systems (roads, trains, buses).

Experience has shown that transport demand is variable in time and space whereas transport supply is fixed. When demand is lower than supply, transit times are stable and predictable, since infrastructures can support demand. When transport demand exceeds supply for a period of time, there is congestion with significant increases in transit times and higher levels of unpredictability. A growth of transport demand increases the load factor of a transport network until transport supply is reached. Speed and transit times drop.

Another concept to consider is the variation of demand in response to a variation in cost, also known as the elasticity of transport demand. Transport cost variations have different consequences for different modes, but transport demand has a tendency to be inelastic, which means that in most cases the demand for travelling is unaffected by changes in the cost. People often travel for reasons that far outweigh any changes in entailed costs.

Factors that Influence our Decision

The elasticity computed by the equation shown in Fig. 2 refers to the variation of demand according to the variation in price. Higher elasticity means traffic in the transport system is influenced by changes in cost (Rodrigue et al., 2006).

At the equilibrium point, the full transport supply capacity has been reached and congestion takes place, marked by an increase in traffic, lower speeds, longer transport durations, missed appointments, wasted time, wasted fuel, increased environmental pollution, and delivery delays, not counting the effects of physical stress on drivers and passengers. A study estimated the cost of congestion to be ?10-20 billion annually. Increased traffic also results in higher incidence of accidents, some fatal, although the U.K. has one of the best safety records in the world (RAC, 2004, p. 3).

Congestion takes place when the demand curve starts moving to the right whilst the supply curve stays fixed. This happens when the number of vehicles passing through a fixed supply of roads increases. It can also happen when the supply of roads decreases, as when a portion of a major thoroughfare like the M6 is closed down for repairs. With an increase in traffic leading to congestion, the only way to keep the equilibrium point at the same or lower price (which is what consumers want) is to increase the supply of roads, but there is a limit to the number of roads that can be built, for several reasons.
Roads are expensive, take time to build, and there may not be enough space for new roads. Increasing existing road capacity by constructing an upper level or widening what exists has environmental costs that most people are not willing to bear (DfT, 2003, p. 25).

Another factor to consider in looking at possible solutions is the desire of people to travel freely, whenever and wherever they want, at a reasonable price and with the least inconvenience. They also want to have the greatest options available to choose from.

These are the key factors that guide our investigation into possible alternatives to addressing the problem of excess demand for road space: demand and supply are interrelated, minimal costs and time to implement, minimal environmental damage, and lastly, non-diminution of people’s freedom to travel and to choose the mode of travel.

We limit our search to two sets of alternatives – demand- and supply-side solutions

What are the Alternatives to relieve congestion?
Demand-side Solutions
Road pricing is a demand-side solution where charging people who use congested roads by raising the cost of transport will, it is hoped, result in an inverse change in behaviour, thus lowering the volume of traffic. This is a case of controlling the upward pressure that the demand curve is exerting on the fixed supply curve with a price increase.

Other demand-side solutions designed to reduce or control the increase in demand for transport are the following (DfT, 2003, p. 15):

Improved Space Planning

Better planning must encourage travelling by public transport within traffic areas that are most susceptible to congestion. An example is having an efficient city transport system and sufficient parking spaces outside the city so that travellers can leave their cars and avail of public transport within the city to reduce congestion. The problem, however, is that the benefits of better planning now will take time to show its effects, and due to the urgent nature of congestion in several parts of the U.K., other solutions need to be considered.
Another solution is to reduce the demand for travel by car or public transport, sharing cars on the way to work/school, bus quality partnerships, cycling, walking, and teleworking.

Walk or Bike, Neither Ride nor Drive, Work at Home

The DfT estimates that car sharing on the way to work and school can reduce traffic by more than 1 to 2 percent; bus quality partnerships will increase ridership by 20 percent; cycling to school or work showed a decline in car use by as much as 25 percent in some pilot schools; and teleworking could reduce car commuting by 6 percent by 2015. This can also be considered a two-sided strategy, since increasing the incidence of walking and cycling will require investments in the transport supply in the form of lanes for these modes of transport.

Keep commuters informed

Another measure that was used by some countries like Singapore is to keep commuters informed of the traffic situation in the congested areas. This will help them plan their trips well so as to avoid getting caught and adding to traffic congestion by leaving the office or home earlier or moving the venue or time of the meeting. The U.K. is planning to install a similar system (DfT, 2003, p. 27).
These measures are designed to increase transport efficiencies by decreasing the number of cars running at below its full passenger capacity, increasing the carrying capacity of roads (instead of two cars with eight passengers, it can have a filled bus with fifty people), and reducing the number of people who need to travel by car because they decide to work from home or travel by bus or using their own feet.

The government, however, must ensure that these alternative modes of healthy and environment-friendly forms of transport are pleasant and safe.

Supply-side Solutions
Increase investments in public transport
The public and private sectors can be given incentives to invest in public transport like buses or trains (both heavy and light rail), stations, and bicycle and walking lanes. The DfT claimed (2003, p. 8) that much had been done to cope with the increasing congestion.

Better Roadwork Management

Roadworks are a common source of congestion. Better management can mitigate the negative effects of roads that are dug up or faulty scheduling of repairs that are made at a time when the road network can least afford it (e.g., during peak hours) as in Fig. 3.
Planned maintenance can also be done more efficiently to reduce the time that a major thoroughfare is out of commission, decreasing the already strained transport supply situation.

More efficient road use

Experiments in the Netherlands (DfT, 2003, p. 36), the U.S. and several other countries like Sweden, Japan, and Singapore (DfT, 2003, p. 50-52) showed that road capacity can be increased without taking too much additional space by speeding up traffic on some lanes of major motorways using express lanes, ramp metering, and hard shoulders.

Better Incident Management

Accidents happen, and when they do they cause congestion because of their effect of lowering the supply of roads. Incident management enables accident sites to be cleared as fast as possible, and there are many ways of doing this (DfT, 2003, p. 26).

Other Technology-based Alternatives

The government is exploring alternatives that rely on technologies currently in development, such as autonomous cruise control (ACC) that allow cars to follow at a fixed distance, intelligent speed adaptation (ISA) that limits the car to the legal speed limit, keeping cars in a lane through detection of magnetic road marks, and real time navigation that allows drivers to monitor traffic conditions ahead of them (DfT, 2003, p. 29).

Why are they pushing road pricing?

Despite all these alternatives, the government seems bent on implementing road pricing, which has been under study since 1964 in the U.K., encouraged by the experience in London that showed a 30 percent decrease in congestion (RAC, 2004, p. 14).
The level of technology is projected to improve such that by 2014, at the earliest, a national scheme for road pricing may be in place. The government cites three “theoretical benefits” of road pricing: enhances promotion of alternatives and therefore promotes personal choice, reduces relative cost of journeys in uncongested conditions, and reduces potential problems of diversion in charging for existing roads (DfT, 2003, p. 37).

The main problem as we already mentioned is the lack of public acceptability.


Balancing transport supply and demand is tricky, but there are several alternatives open to the riding public. Whilst the government (DfT, 2004, p. 8) continues to push for road pricing public debates to get the public to accept it at some future date, we propose that in view of its low level of acceptability, efforts be directed instead towards promoting acceptability and the full implementation of alternative demand- and supply-side solutions.

A concept worth considering is the tipping point, that magic moment when an idea, trend, or social behaviour crosses a threshold, tips, and spreads like wildfire, resulting in a phenomenon that can solve the problem in a way that is acceptable to all and in a manner that dry statistics and government studies cannot predict (Gladwell, 2000).

Rather than continue the 40-year effort of forcing the road pricing scheme down the throats of an unaccepting and unwilling public, the U.K. government may be better off promoting other environment-friendly, efficient, and fair measures that enhance economic growth without having to add another burden to ordinary taxpayers.

Who knows what the human imagination can think of in this period of rising petrol prices? If the campaign of the government for alternative schemes to road pricing works out beyond all expectations, it may happen that we can do more with our existing transport infrastructure. Technological advancements may likewise result in a larger portion of the population deciding to work from home and using the Internet to get more things done.


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Figure Captions
Figure 1. Effect of transport systems development on travel time between London and Edinburgh
Figure 2. Transport supply and demand curve, with formula of elasticity
Figure 3. Congestion during peak demand conditions
Figure 1.
[Source: Janelle, 1968 cited in Rodrigue et al., 2006]
Figure 2.
[Source: Rodrigue et al., 2006]
Figure 3.
[Source: Rodrigue et al., 2006]

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