Congestion pricing in London decreases inner city traffic by about 20 percent and generates more than £97 million each year for transit improvements.
Date Posted

London Congestion Pricing: Implications for Other Cities

Summary Information

Congestion charging in London improves efficiency, reduces pollution, and raises revenue for transit improvements. Championed by the Mayor of London, the program requires motorists to pay a fee of £8 per day to drive within the inner city of London on workdays between 7:00 AM and 6:30 PM. Motorists can buy a prepaid weekly, monthly, or annual pass and save 15 percent, or buy a daily pass and pay full price. Residents receive a 90 percent discount; however, motorcycles, licensed taxis, vehicles used by disabled people, some alternative fuel vehicles, buses, and emergency vehicles are exempt.
Fees are collected from approximately 110,000 motorists each day (98,000 individual drivers and 12,000 fleet vehicles) and payments are made via the Internet, by phone, at automated payment booths, and at designated retail shops. The program requires motorists to pay by the end of the day, or be fined £80. The fine is reduced to £40 if paid within two weeks, but increased to £120 if not paid within a month. Enforcement is achieved using a network of fixed and mobile video cameras that record images of vehicles in the congestion charging zone. Optical character recognition (OCR) technology and Automatic Number Plate Recognition (ANPR) computer systems interpret and decipher the license plate numbers and map them against a pay list. If the system shows a payment is outstanding, the image is checked manually to confirm the vehicle make and model matches the license registration before a penalty is issued. Images of vehicles in good standing are removed from the system.

In February 2003, when the program was initially implemented, the daily charge was set at £5 and the system was projected to generate £138 million per year in charge revenues and £22 million per year in penalty revenues. However, recent reports have shown that charge revenues are much lower than expected, and penalty revenues are much higher. Data from the 2004/05 budget year indicated total revenues of £190 million (£118 million in fees and £72 million in fines), with an overhead cost of £92 million and a net revenue of £97 million. Data from the 2005/06 budget year indicated that when the daily charge was increased from £5 to £8 in July 2005, net revenue increased to £122M per year.

Although the program remains politically sensitive, independent evaluations have shown that the pricing program is an effective congestion reduction strategy and an efficient way to generate revenue for transit improvements.

The introduction of congestion charging in London included a five-year monitoring program. The following mobility benefits were highlighted.
  • During the first few months of the program, automobile traffic declined by about 20 percent in the charge zone (a reduction of about 20,000 vehicles per day). Public transport (particularly buses) handled most of the mode shift, along with taxis, motorcycles, bicycles, and walkways.
  • Overall, peak period congestion delay inside the charging zone decreased by about 30 percent after approximately one year after the system was implemented.
  • Average traffic speed during charging days (including time stopped at intersections) increased 37 percent, from 8 mi/hr (13 km/hr) prior to the charge, up to 11 mi/hr (17 km/hr) after pricing was introduced.
  • On peripheral roadways, traffic increased by 10 percent; however, overall journey times did not increase, in part because traffic signal systems were adjusted to accommodate the expected shift in traffic.
See Also:
Central London Congestion Charging: Impacts Monitoring - Fifth Annual Report, July 2007.

Central London Congestion Charging: Impacts Monitoring - Fourth Annual Report, June 2006.

Central London Congestion Charging: Impacts Monitoring - Third Annual Report, April 2005.
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