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Blair’s Budget Cuts Undermine Benefit of London’s Pricing Scheme

01 Jun 2006

Posted In: Managing Traffic Demand,

London, which has suffered from a lack of investment in transit infrastructure for decades, attempted to remedy the situation by dedicating 100% of the revenue from its successful congestion charging program to transit improvements. However, Blair's budget, issued in December, undermines this benefit by cutting the Government's allocation to Transport for London by an amount nearly identical to that raised by the congestion charge.

The budget cuts £125 million for the next two fiscal years (2004/5 and 2005/6), while Transport for London projects that the congestion charge will raise £130 million each year. The budget for 2005/6 is £200 million less than in both of the previous two years.

Though TfL anticipated cuts in the next budget cycle after a Comprehensive Budget Review last year, this political wrangling will leave a projected £500 million deficit in 2005/6. The move also sends a disappointing message to other cities interested in modeling congestion charging programs after London’s.

Despite the blow to Mayor Ken Livingstone’s transit investment plan, the congestion pricing program is still continuing to impress observers with its successes.  Transport for London continues to report a 20% reduction in automobile traffic in the area covered by congestion pricing.  Bus riders have benefited from more reliable and faster service.

London cyclists are also raving about the benefits of the plan.  Bike paths have been expanded around the city, and free bike path maps have become available in public libraries.  While data is not yet available about increases in cycle commuting, at least one company has seen sales jump since the charge was put into place.  Dahon California Inc., a leading folding bicycle manufacturer, reported in an April press release that UK sales have jumped 40% from the same time last year.