New plans being considered after Boundary Charge ditched

Vehicles entering London would have needed to pay charge from 2023. Picture: David Martin

The Mayor of London has announced plans for the consideration of a daily road charging scheme for London and a possible expansion of the Ultra Low Emission Zone (ULEZ) this Tuesday (18 December).

Sadiq Khan says ‘a simple and fair’ system could be introduced to replace the existing Congestion Charge and ULEZ.

The announcement comes after it was confirmed that his proposal for a Greater London Boundary Charge would not be proceeded with. Under this scheme vehicles would have been billed for £3.50 every time they entered London.

The potential approaches under now consideration are extending the Ultra Low Emission Zone (ULEZ) even further to cover beyond the north and south circular roads to cover the whole of Greater London. Alternatively ‘clean air charge’ could be introduced across London for all petrol and diesel vehicles.

The Mayor says this would be ‘a simple and fair scheme’ where drivers pay per mile, with different rates depending on how polluting vehicles are, the level of congestion in the area and access to public transport. Subject to consultation, it is likely there would be exemptions and discounts for those on low incomes and with disabilities, as well as consideration around support for charities and small businesses.

Sadiq Khan has asked Transport for London to start exploring how the scheme could be developed while acknowledging the technology to fully implement such a scheme is still years away from being ready.

The Mayor’s announcement also mentions the Greater London boundary Charge as an option contradicting statements made by outgoing TfL chief financial officer Simon Kilonback. He told a meeting of the London Assembly’s budget and performance committee last Friday the charge has now been “ruled out” according to TfL.

The controversial plan to charge drivers to drive into London was proposed in December 2020 by Sadiq Khan as a potential way of raising around £500 million a year for TfL, with the Government having ruled out devolving money raised through Vehicle Excise Duty to the capital.

Despite opposition to the plan from Transport Secretary Grant Shapps, TfL confirmed in October last year that the charge was “still an option” and was included in a list of revenue generating plans sent to the Government’s spending review.

Mayor of London Sadiq Khan reiterated that the boundary charge was “one of the options” being considered as a source of income for TfL at a meeting of Mayor’s Question Time in December.

But now Mr Kilonback says, “We are at a very critical point with Government around thinking about what are the options beyond the council tax increases that the mayor has discussed and put forward, and what he will determine in terms of fares very shortly, to generate at least £500 million- [a year].

“Right now, we need to get some feedback from Government as to what they will support having ruled out the Greater London Boundary Charge, having ruled out the devolution of Vehicle Excise Duty and having ruled out also looking at new taxes.”

He added, “The Secretary of State for Transport has been very clear that he does not support the introduction of the Greater London Boundary Charge and does not support, or will not consider, the devolution of Vehicle Excise Duty.”

A report to City Hall concludes that a new system of charging would need to be introduced to ensure the capital met its net-zero target for emissions by 2030. This would require a 27% reduction in car vehicle kilometres by that time.

The Mayor said , "We have too often seen measures to tackle air pollution and the climate emergency delayed around the world because it's viewed as being too hard or politically inconvenient, but I'm not willing to put off action we have the ability to implement here in London".

He said that any measure that emerges after consultation could potentially be implemented by as early as May 2024.

The Federation of Small Businesses London Infrastructure Lead, Michael Lloyd, said, “Following the Mayor’s announcement today on road usage, many small businesses will be second guessing their vehicle options to in the short term as there are a range of proposals being mooted surrounding the current Ultra-Low Emissions Zone. We await to see the detail of what concessions small businesses might receive if there are modifications and extensions to the Zone and potential boundary charges.

"However, it is clear that we need to remove non-essential journeys from our roads and support businesses undertaking essential business journeys - many businesses simply cannot switch their Heavy Goods Vehicle or their Light Goods Vehicle as the cost is too prohibitive. Over half of our members say there should be a demand managed road pricing scheme and that the current charging structure should be removed and so it is vitally important that small businesses are included in any future consultation on this issue before 2030.

Sadiq Khan has already announced that the mayoral portion of council tax paid by Londoners will increase by an average of £31.93 a year from next April in a bid to help restore TfL to financial sustainability.

But Mr Kilonback on Friday said that the planned council tax increase will only bring in around £172 million a year after three years, while potential changes to TfL fares would bring in around £60 to £80 million.

He said that this would still leave TfL to find “about half” of the £500 million of additional revenue a year it requires.

While fares for TfL services could rise by as much as five per cent this month, the Mayor of London and TfL are also considering measures such as changing the fares structure in London, increasing the cost of an Oyster Card deposit from £5 to £7 and scrapping free travel before 9am for Londoners who hold a Freedom Pass or 60+ photocard.

Mr Kilonback told the London Assembly on Friday that TfL would need to look at “what is next after the expansion of the Ultra-Low Emission Zone” to raise additional funds, but stressed that schemes to manage emissions and congestion on the road “cannot be designed to maximise income”.

It was revealed at Friday’s meeting that compliance with the Ultra-Low Emission Zone since it expanded in October is at around 92 per cent, compared to the 87 per cent originally estimated by TfL.

This translates to around £300 million of revenue less than TfL had estimated.

Written with contributions from Joe Talora - Local Democracy Reporter

January 18, 2022