Why can't London increase the Congestion Charge to the point where congestion is reduced to reasonable levels?

Question

According to the Wiki article about the London Congestion Charge:

In 2013, ten years after its implementation in 2003, TfL reported that the congestion charging scheme resulted in a 10% reduction in traffic volumes from baseline conditions, and an overall reduction of 11% in vehicle kilometres in London between 2000 and 2012. Despite these gains, traffic speeds have also been getting progressively slower over the past decade, particularly in central London.

From the perspective of economics this doesn't make much sense - if London truly wants to eliminate traffic jams in downtown London, shouldn't they be slowly increasing the congestion fee until the task has been accomplished? Is this caused by political cowardliness or would it simply be inefficient to charge cars 50 pounds per day just to avoid traffic jams?

I am particularly looking for quotes from the government of London in regards to why the fee could not be increased.

Answer 1

London Traffic Congestion / Pollution control measures

In just over ten years, the Congestion charge increased from £5 to £11.50 a day with an additional £10 Toxicity-charge for older/more polluting vehicles and now the additional ULEZ charge to be brought in in 2019.

The ULEZ is expected to cause a 20% reduction in road traffic emissions and will be extended to the North and South circular from 2021.

From Wikipedia

TfL say

Although the Congestion Charge has been effective in reducing the number of cars entering central London, we've seen a 12% increase in the number of motorists being issued with PCNs in the last five years.

So they are increasing the fines in the Penalty Charge Notice.

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if London truly wants to eliminate traffic jams in downtown London, shouldn't they be slowly increasing the congestion fee until the task has been accomplished?

Unfortunately London isn't a single coherent entity. Different people and organisations using London have conflicting needs.

Part of TfL's remit is to enable workers to travel in London. Less congestion really means either fewer workers travelling or major infrastructure developments and improvements. Having fewer workers in London is not a politically acceptable solution, even if you achieve it by increasing charges.

Answer 2

Increasing the fee higher and higher makes that only the rich can use cars. And guess where the rich work and thus drive? At banks in the City of London.

At some point, it will be so expensive nobody could travel into the City anymore. Congratulations, you just scared a significant portion of UK's GDP and tax income out of the country!

Answer 3

It's quite possible that congestion charges are ineffective at increasing traffic speeds. As fewer cars are used, more people may be sharing cars or using buses. In either case, the single vehicle makes more (shared car) or longer (bus) stops in traffic and reduces the speed of the remaining vehicles on the road.

Alternately, it may be that foot traffic (crossing the road) is causing the slowdown of automotive traffic. And of course, congestion charges don't address foot traffic at all unless they cause people to avoid entering the city. The general idea is that they should be shifting people to alternative modes of entry (e.g. public transit or shared vehicles), not keeping people out entirely.

If congestion charges do not increase traffic speeds, then it would be pointless to try to use them to accomplish that.

Answer 4

So, for the purposes of this answer, I am defining a "tax" as any time a citizen gives money to the government coffers for a service provided by the government. In this case, the tax is the Congestion Charge and the service provided is the right to drive in London.

In economic theory there is a concept called the Laffer Curve which is the idea that there is a magic number that you can tax someone for any service where you will receive the most income revenue for for the percentage of dollars taxed (Arthur Laffer, the guy who thought it up, said this was 20% tax rate but he was talking about income taxes. For other taxes, the curve may rise or fall depending on variables. For our purposes, a tax of X will be assumed to be the appropriate value for the the taxed service). A tax below X will net you less income because you can acceptably raise it more for the service. Any tax greater than X will also net you less because more people will find work around solutions to avoid paying that price.

Now, there are a lot of people who complain that the curve is not a good model either because it is too simple and taxes are much more complicated OR that an X of 20% is too low. In the case of the former, for an equal fee to all people regardless of income differences, the simplification is not disputed (rather that such a simplification is viable). In the case of the former we can debate where X lies on the curve until the end of the world and after, but to paraphrase Jack Sparrow, we still are agreeing that the concept is sound in principle and are merely haggling over an acceptable price.

Now, with that out of the way, with regards to the London situation, the fact that the problem persist shows that the current fee assessed is indeed too low, as it's not discouraging enough people from working through alternative means. It be that a daily Tube fee is still more expensive than the exchange for driving for the same amount of time over the time period the fee is valid for (That is if the tax is X to drive from the suburbs to the city center for a month but the subway is 2X for the total payment for each daily use, than it is still in the best interest to go into the city by car than train, because you're paying less in the long run. Even at the same price, the car is beholden only to your schedule and you can sit the entire way, you can course correct for any traffic issues, and sing as loudly and as badly as you want, you don't trigger your claustrophobia anxiety, or you just plain hate being close to people at all, all things that will not happen on mass transit and cannot be properly valued for the cost to each individual is too different.).

Another example of a successful use is that in my locality, we have speed cameras randomly placed on roads. If they catch you, you will receive in the mail a ticket asking for a the Tax for tripping the sensors or a summons to court if you wish to contest it. The requested tax was carefully calculated so that it would generate revenue for the government BUT not so much revenue that people would wish to go out of their way to pay it (and avoids any points added to the license, so you can do it as much as you want and have no reason to go to court). It helps that among the citizenry, it's an open secret the cameras were installed purely to get money and not to better behavior of the motorist, so they are seen as more the tax you pay to drive faster. If they charged a cent more, than we'd have open rebellion (or a whole lot of junior legislators... again, all depends on how much over X they charge us). It also stops people who are looking to challenge it in court. In a healthy democracy, steps to avoid paying a high tax include (among taking my ball and going home) electing the politician who says I'll get rid of those high taxes (even if he has the complexion of an orange clown.). Again, this factors into the pricing of a fee. How much can I ask them to pay before they decide to leave, kill me, or worse, elect the person running against me (a fate worse than death in democratic governments)!

I will say this though, if you live in a major world city with a subway and a city center that is not congested at all hours of the day, I submit that you are presently in an apocalypse scenario. I live in a different city, with both a subway system and a congested city center. The only difference is my city has not yet begun to charge me to drive down town if I so need a reason to do so (slow suicide by stress cutting years off my life is probably the only reason I would do this... or the subway doesn't service the part I'm going too at all). And before you ask, I won't tell you which city I live in/near... I don't want you giving them ideas.