When Time Is Money: Impacts of the Congestion Charge

December 19, 2019 |
5 min
When Time Is Money: Impacts of the Congestion Charge

The congestion charge is a controversial move by city governments—taxing drivers for using private cars in congested urban areas. 

Nobody likes taxes, and the congestion charge might have unintended consequences like increasing social inequality and overburdening aging public transport systems. However, initial results from major cities that have implemented smart city technologies like London, Singapore, and Gothenburg show that congestion charges can have a huge positive impact on traffic, public transport, air quality, and even public health. 

Read on to discover how the congestion charge works, the pros and cons of applying it in more cities, and the surprisingly positive results achieved by cities that have taken the plunge.

In this article:

What Is the Congestion Charge and How Does It Work?

Congestion charges are taxes imposed on drivers depending on their vehicles aimed at reducing traffic and discouraging the use of certain cars. This is typically in the form of a daily fee applied to those who drive in certain areas, usually imposed during the workweek when traffic is most problematic. Congestion charges have been introduced into various major cities, such as London, Singapore, and Gothenburg.

Each city has adopted a slightly different pricing scheme, but they largely follow the same logic. Using London as an example, drivers can pay the £11.5 charge in advance, or £2 more if they pay on the same day. 

Once the payment is made, the license plate of the driver is added to a list. Cameras across the congestion charge area compare the license plates of drivers with those listed. If a driver does not pay the charge, they will be subject to a Penalty Charge Notice (PCN) ranging from £80-£240. There are exceptions for certain groups of drivers, such as NHS workers, those residing within the congestion charge zone, and disabled drivers.

Congestion Charge Pros and Cons

Arguments in favor of the congestion charge include:

  • Encouraging the use of public transportation: More commuters using public transportation means more revenue will be generated to be invested in the public transportation system. Additionally, the funds collected from the congestion charge can also be contributed to public transportation initiatives.
  • Reducing travel time and improving productivity: Traffic is expensive since workers lose valuable time commuting.
  • Reducing pollution: Fewer cars means less pollution. Polluted air poses serious health concerns, increasing death rates as well as healthcare costs. For cities tackling air pollution, congestion charges can hold the key to improved air quality.
  • Encouraging transport innovation: Solutions such as micro-mobility and self-driving electric cars, will become more appealing as driving traditional cars becomes more expensive.
  • Reducing public spending on road infrastructure: Fewer drivers on the road will lower the demand for road funding, as there will be less wear and tear. It will also reduce the need for new roads and highways, opening up funding for other programs.
  • Lowering road-related deaths: Road accidents are naturally reduced with fewer drivers on the road.
  • Increasing quality of life: Less traffic, less pollution, and better public transportation all help to increase the quality of life for the residents of the charging zone.

Arguments against the congestion charge include:

  • Increasing social inequality: A flat fee congestion charge disproportionately affects poorer people who cannot afford to pay the charge. Those who can afford the charges will benefit from emptier roads and faster travel times.
  • Inadequate public transportation: The public transportation system may not be able to handle a drastic increase in the volume of passengers. Moreover, many cities do not have a sufficiently developed public transportation system. Cities may need to build additional infrastructure to avoid overcrowding and ensure public transportation provides a suitable alternative to cars.
  • Implementing and maintaining the infrastructure: A congestion charge scheme requires funding and advanced technology to operate effectively.
  • Evasion: The public may be reluctant to pay additional taxes, leading to evasion of the congestion charge and criminal or illicit activity.

Impacts of a Congestion Charge

Evidence from cities that have already introduced a congestion charge shows that this measure has largely been successful and has a widespread impact. 

The use of public transportation increased substantially across cities. In London, 37% more commuters used public transportation in the charge zone. In Gothenburg, ticket sales increased by 7.5% after the congestion charge was introduced. It is estimated that at least two-thirds of this growth was directly attributed to the charge. 

Discouraging the use of cars has also resulted in the flourishing of micro-mobility. In Portland, survey results indicated that 34% of micro-mobility riders opted to use electric scooters instead of driving or using a ride service. 

Potential innovation in transportation extends beyond electric scooters. From self-driving electric cars to high-speed underground pods, to eventually flying taxis, moving away from traditional cars will open up creative high tech transportation solutions

Congestion charges have significantly reduced traffic and improved emergency services. 

In London, traffic was reduced by 15% and journey times improved by 30%. In Gothenburg, the congestion charge has reduced traffic by 12%. 

Moreover, since the introduction of congestion charges in London, victims of cardiac arrests are three times more likely to survive. A major contributor to this improvement is reduced traffic time.

Air pollution has also decreased substantially. Air quality in Gothenburg improved by 5% in the inner city following the implementation of the congestion charge. Other cities with congestion charges experience similar results. 

In London, researchers found that levels of nitrous oxide (exposure to which has health implications) have decreased in the charge zone. The researchers concluded that expanding the charging zone could potentially have widespread health benefits

Is it Time for the Congestion Charge in Your City?

The congestion charge is a controversial policy change, but one that can have a dramatic and measurable impact on cities. To evaluate if now is the time to promote a congestion charge in your city, consider these questions:

  • Which parts of the city are congested? A congestion charge may be most effective in the city center, on main roads within the city, or on roads connecting the city with other urban areas. 
  • Do you have adequate public transport? Inadequate transport options will effectively force many residents and visitors to pay the congestion charge, and will increase social inequality.
  • Is the local culture supportive of regulation? Populations in Germany, Brazil, or India may react very differently to the imposition of a congestion charge. Consider if local residents would be in favor of the charge, and test your hypothesis with surveys.
  • What is your technological maturity? A smart city with an extensive IoT sensor infrastructure may be able to easily implement a congestion charge, while a city lacking basic traffic management systems would have to build a technology foundation from scratch.
  • What would be the ongoing administration cost? Given the city’s technological capabilities, how much would it cost to manage the congestion charge, and would the projected earnings cover the cost?

Whatever your final decision, every major city should seriously consider a congestion charge or similar measures, as a powerful means to reduce congestion, improve air quality and achieve the overarching goal of sustainable urban transportation. 



Learn More About Smart City Technology

There’s a lot more to learn about smart city technology. To continue your research, take a look at the rest of our blogs on this topic:

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Many cities around the world have already started solving their transportation problems by embracing mobility-related innovations. These are municipal “operating systems” that collect data from across the city and enable smarter city management and communication between city government and citizens.

Read more: Smart City Mobility: 7 Major Cities Getting It Right 

Smart Cities, Smart Villages, and Everything in Between

Some smart city initiatives involve major investments in infrastructure such as sensors and data platforms. But smart city principles can also be implemented by simpler means, such as mobile applications and sustainable energy innovations. This article explains how to harness new technologies to improve the quality of life and make smart city technology successful in residential areas large and small.

Read more: Smart Cities, Smart Villages, And Everything In Between

Smart Urban Mobility: A Quick Start Guide

As city populations explode and private car ownership soars, city transport is unsustainable, not just from an environmental perspective. Quality of life and economic growth will also be severely hurt if current trends continue.

Forward-looking cities are learning about and actively implementing smart mobility solutions. These might take the form of smart transport infrastructure, mobile apps, and digital services that allow more efficient use of existing transport methods, and completely new transport methods like autonomous vehicles.

Read more: Smart Urban Mobility: A Quick Start Guide

How to Build a Smart City Transport System in 3 Phases

Transport in smart cities can make a big difference in the way people commute in dense urban areas and can help municipalities save costs, provide better service to citizens, and better manage safety and security.

Smart city transport uses electronic, wireless, and Internet technologies to provide access to smarter, safer, and faster travel between two points in a large city, and provide richer information and greater control over traffic flows for city authorities. 

Read more: How To Build A Smart City Transport System In 3 Phases

Big Data for Smart Cities: The Lifeblood of Smart City Services

Smart city initiatives are dependent on big data. Internet of Things (IoT) infrastructure creates massive data streams that must be tamed, analyzed, and harnessed to create smart city services. Big data platforms, shared by city officials, the private sector, and citizens, help cities transform data into insights that can improve quality of life.

This article explains how big data is used in smart city projects and helping cities provide new services and improve quality of life.

Read more: Big Data For Smart Cities: The Lifeblood Of Smart City Services

What Mobility as a Service Means for Consumers, Cities, and Transport Providers

Mobility as a Service (MaaS) solutions integrate all stages of the journey of a commuter, including booking, trip planning, e-tickets, and payments. MaaS solutions offer a user-friendly application that enables commuters to travel via train, bus, and taxi.

MaaS systems include a mobile app, which acts as the front-end, big data infrastructure that collects data from travelers and uses it to optimize services, and physical devices including the Internet of Things (IoT), Connected Vehicles (CVs) and Autonomous Vehicles (AVs).

Read more: What Mobility As A Service Means For Consumers, Cities And Transport Providers

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Read more: Smart City Bike Services: Economic, Environmental And Societal Impacts

Smart City Car: Connected, Intelligent, Integrated

The combination of connected cars and advanced traffic management systems in smart cities create a seamless driving experience for commuters. Connected cars collect and share real-time data about roads, pedestrians, surrounding vehicles, and cyclists. Smart cities can use this information to provide citizens with improved transportation services, such as efficient incident response, traffic optimization, and re-routing.

Read more: Smart City Car: Connected, Intelligent, Integrated

Smart City Location and Geospatial Technology

Geospatial technologies help cities with a variety of applications, from finding the fastest route to pinpointing the exact location of an emergency call. Geospatial technologies gather data in a simple manner that improves health care, law enforcement, and government efficiency.  This article explains how smart location technologies work, and how they can benefit smart cities.

Read more: Smart City Location And Geospatial Technology

Smart Transportation: Benefits and Real Life Examples

Smart transportation is one of the main ways smart cities are improving the daily lives of citizens and improving sustainability. One of the main goals of smart transport systems is to reduce the reliance on private cars, make private transport more attractive, and incentivize city residents and visitors to switch from private to public transport.

Read more: Smart Transportation: Benefits and Real Life Examples

When Time Is Money: Impacts of the Congestion Charge

Congestion charges are taxes imposed on drivers depending on their vehicles aimed at reducing traffic and discouraging the use of certain cars. This is typically in the form of a daily fee applied to those who drive in certain areas, usually imposed during the workweek when traffic is most problematic.  Discover how the congestion charge works, the pros and cons of applying it in cities, and the positive results achieved by cities that have.

Read more: When Time Is Money: Impacts of the Congestion Charge

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Mike Fowler
| July 10, 2020
Regard the London congestion charge you can open an account with them thereby you are covered in case you forget to pay. BUT BEWARE. I registered online and opened an account on the day I started a job in the charge area. When I finished filling in the form and hit send I recieved a letter back saying I now had an account and they gave me a number to use to access it to pay at the end of the month. That was on June 17th. So I carried on going into London in the knowledge that at the end of June I can go to my account and pay what I Owed. Oh No!! 2 weeks later I received 4 fines in the post. Contacted them and what they had NOT told me in the email letter was that you have to enter your bank details so they can take it automatically.
I ended up with fines totalling £320.
DONT GET CAUGHT. As far as I'm concerned it is a deliberate omission just to get extra money out of the public.

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