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.
- In May 2003, members of the London First business group were surveyed, a group of approximately 500 business. The results indicated that 69 percent of respondents felt that congestion charging had no impact on their business, 22 percent reported positive impacts on their business, and 9 percent reported an overall negative impact. Many industries supported the charge because its direct costs were offset by savings and benefits, such as faster delivery times.
- Immediately after the program was implemented, many smaller businesses in the city center were more skeptical. In March 2003, a survey found that many goods retailers in the area thought the pricing program reduced sales.
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