Road Pricing on the Basis of Congestion Costs: Consistent Results from Two Historic U.K. Towns

Abstract

The idea of road pricing as a function of congestion costs in the United Kingdom (U.K.) was put forward in a seminal report published by the U.K. Ministry of Transport in 1964. After 35 years, little has been done and the reasons behind this delay are mainly political, as the failure to implement congestion metering in Cambridge at the beginning of the 1990s shows. The subject has taken on a new urgency now that the U.K. government has announced its intention to authorize local councils to introduce road charges. Road pricing has a strong theoretical basis, but congestion costs must be quantified before it can be implemented. For that purpose, a simulation model is used. The social costs of congestion are measured by the deadweight loss and calculated from the difference between the marginal social costs and the price actually paid by trip makers. An exercise was done for two similar towns, Cambridge and York, and potential road charges differing by only 8 percent on average were obtained. This seems to strengthen the idea that finding road charges in a few cases, each one characteristic of a larger set of towns, would allow the provision of guidelines to local councils. In that way, fair road prices could be established across the U.K. The use of revenues from public-accepted road charges is also discussed.