Urban Congestion a Charging Solution - 25 June 2001

Introduction
This report provides a record of the fourth event in the "Scotland’s Well-being" public policy seminar programme for 2000-2001, held at the Royal Society of Edinburgh on 25 June 2001. 

The Royal Society of Edinburgh sees the report as making a positive contribution to informing the policy decision-making process. But the report is not the end of that contribution. Rather, the Society sees it is an impetus to further consideration, discussion and development of policy initiatives and implementation.

Background Context
Traffic congestion is a serious problem - it impacts on the economy and environment of our cities; and on the quality of life of those who live and work in them. On present trends congestion can only get worse. UK traffic is projected to increase by 50% over the next 30 years. In Scotland, and elsewhere, policy makers and politicians are increasingly asking if and how traffic growth on such a scale can be accommodated.

Road user charging is one possible approach to tackling the problem of urban congestion. The principle is simple enough. By charging for the use of road space when traffic congestion is at its worst, drivers are discouraged from using their cars. But the practice is altogether more difficult. No one likes to pay more for their journeys and drivers are largely unconvinced that public transport alternatives work. There are also wider impacts, for example, in relation to business and local economies.

The Transport Scotland Act 2001 enables Scottish local authorities to introduce road user charges to tackle urban traffic congestion. Similar powers exist in England & Wales.

The City of Edinburgh Council is actively considering introducing a charging scheme. Charging schemes already operate in Norway and Singapore and several other cities in Europe are also understood to be close to implementing such schemes.

Public debate on road user charging has covered a wide range of issues, including:

• Impact on the urban environment

• Urban accessibility

• The need for transport improvements in advance of charging

• The use to which revenue from charging is to be put

• Exemptions and concessions

• Geographical boundaries

• The level of charge

• Enforcement

This is not, however, an exhaustive list of issues. Rather, it serves to provide a sense of the broad parameters of public debate so far. The speakers and participants considered and discussed these and other issues.

Report
Introducing the discussion, the Chairman, The Rt Hon Lord Ross, PC, FRSE, Vice-President, the Royal Society of Edinburgh, said that traffic congestion was a serious problem that impacted on the economy, the environment and the quality of life. Present trends indicated that it would get worse with a 50% increase in UK traffic in 30 years. The task of government and policy makers was to identify and implement solutions. Road User Charging (RUC) was a possible solution that had stimulated considerable debate over whether and how it could be put into practice. The seminar's aim was to focus on whether RUC could be put into practice and would meet the challenges that government and policy-makers face. The seminar should provide impetus towards future discussion and would act as an ongoing public forum on the RSE web-site.

Presentations
Ms Sarah Boyack MSP, Minister of Transport and Planning, said it was important, after identifying and before implementing solutions, to explain the aims, and win support for it. People have to understand and agree it beforehand.

Urban congestion charging is part of mainstream transport planning throughout the western world. There are other places where it has been identified and is being implemented. Several cities have already begun to implement or already have charging systems: Bergen, Oslo, Trondheim and Singapore. Many more are actively considering it: Rome, Genoa, the four major cities in the Netherlands, London, and Edinburgh. It is seen as a pragmatic response to the problems of ever-increasing traffic levels in our cities.

Urban Congestion
There has been a growing realisation that congestion is causing real harm to the economic and environmental fabric of our cities and the daily lives of those who live and work in them. Congestion presents a familiar litany of problems:

• Increased journey times

• Lack of transport reliability for businesses

• Threat to competitiveness

• Restrictions on economic growth

• A cost to the UK economy running into billions of pounds every year

• Unacceptable level of road casualties, particularly amongst children

• Environmental and health impacts - one estimate is that 15% of all deaths in Austria, France and Switzerland relate to traffic use

• Journeys in congested cities cause high costs which are not reflected in current tax regimes

Something has got to be done to protect our cities and our economies. The statistic that suggests traffic will increase by 50% in the next 30 years is a horrifying one. We cannot accommodate that level of increase either in large or smaller cities. RUC targets journeys in the areas where there are the greatest problems. We need to emphasise where the problems are worst, in our urban centres, and where there is a strong argument for RUC.

Accessibility
RUC should not be seen as anti-car. In Scotland cars play an important part in peoples' lives, particularly in rural areas. In inner cities, however, other options do exist or can be put in place, and they will help in delivering better public transport. It is the "unthinking" use of the car that has to be addressed - 80-90% of cars congesting roads at peak periods have one occupant only. Those are the trips that have to be tackled. The Scottish Executive has launched a campaign asking motorists to think about why they use their cars, and whether there are alternatives to car use. Charging will only work as part of an integrated transport strategy. It has to be introduced sensitively, with the emphasis on improving accessibility to public transport for everybody - not just those who own cars.

Concerns about the impact on local economies have to be addressed, but the point is made that the direction in which the economy is heading at the moment, because of congestion, is also bad. The "do nothing" option is not good for us and what we need is successful cities in which people want to live and work. RUC may have a role in achieving that success. Scotland is not alone in thinking that. Places like Rome and London are just two of the cities looking hard at achieving it. There is huge pressure out there to build new roads. But we know from experience that road building to tackle capacity won't tackle long-term congestion. The answer must be a more sensible use of road capacity, and a balanced package of public transport improvements, targeted road improvements, where appropriate, and congestion charging. There is a range of options to be considered.

Funding Opportunity
The other opportunity RUC can provide is the creation of much-needed new funds to invest in transport - whether improvements to public transport or the infrastructure. Last year's Spending Review included record levels of funding after decades of under-investment in transport. Yet even these increases will not meet the huge bills needed to improve vital public services. Long-term investment is needed to get Scotland moving, and improvements to transport infrastructure take time. The scale of potential improvements that would be available from ring-fenced revenues from charging would allow the delivery of a step-change in public transport in Scotland, producing changes in 10 rather than 50 years. Current levels of funding would not allow the step-change that people want. The system of RUC may not be perfect yet, but it seems to offer the kind of adult choice that local voters can respond to.

Policy
The genesis of RUC as an option dates back to 1998 and the Labour Government's White Paper, Travel Choices for Scotland, which set out a vision for: a modern, integrated transport system to equal any in Europe that fully reflected the commitment to social inclusion, to the environment and economic well-being of Scotland. Where it was appropriate, urban congestion charging was part of that vision. In July 1999 the Scottish Parliament was established, and assumed legislative and executive responsibility for many transport issues from the UK Government in Westminster. In February 2000 proposals for a Transport Bill included congestion charging. The Bill gained Royal Assent a year later and achieved cross-party, though not unanimous support following heated debates.

Nearly everyone signed up to the Executive's policy objectives:

• To improve journey times to work

• To improve journey reliability for business

• To improve air quality in our cities

• To return the streets to the people - making urban environment a safer and more pleasant place in which to live, work and shop

• To fund a step-change in public transport, providing services that are comparable with the best in Europe

The Act explicitly provides that 100% of the net revenue from charging will be ring-fenced for local transport improvements. Full transparency of accounting arrangement - so that motorists and businesses will be able to see where their money is going. The Executive has given three key assurances:

• Fair treatment - to ensure that those who pay benefit

• Public transport improvements before charging, with more to follow

• Full additionality - the revenue raised from charging will be in addition to normal expenditure on transport

Public Acceptability
Introducing a congestion charging scheme will never be easy. There are, for example, numerous technical difficulties. But the fact that successful schemes do exist shows that they can be overcome. However complex such issues, they come second to convincing the public about the merits of any scheme. Winning hearts and minds can be made easier if the carrot comes before the stick, ensuring that significant public transport improvements are there, on the ground, before charging begins. That is why there is a public transport fund, with strategic investments up to the year 2004. The aim is to continue the Fund in the next spending review. It will support initiatives that:

• Deliver on widely accepted local or regional transport solutions

• Contribute to a vision of a modern, safe, reliable and integrated transport system

• Allow new opportunities and lever in private investment

• Pave the way for the introduction of congestion charging

Cities in Scotland considering charging also have the opportunity to bid for new public transport projects to deliver in advance of charging through the Executive's Public Transport Fund. This provides £150 million for public transport in the period to March 2004

Consultation
It is possible to win support for congestion charging where there has been full discussion and where people have engaged in the debate. Consultation is not a one-off process. It has to be genuine and ongoing. It will only win that support where it meets the aims and aspirations of local communities. A recent EUROPRICE study came to the same conclusion. That looked at the extent and type of consultation undertaken in seven cities in Europe so far and reviewed its effect on the acceptability of road pricing in each city. Among many useful observations, one stands out: the cities that consulted most, received greatest support for charging. Edinburgh has already undertaken extensive consultation.

Role of Scottish Executive
To provide matching financial support to assist local authorities develop their charging proposals, with confidence and let them develop sensible policies, and get them right. A two-stage approval process has been designed, with Ministers approving a charging scheme in principle and in detail. The in-principle stage ensures that the proposed scheme is on the right lines and gives comfort to local authorities and their partners so that they can have confidence in their future work, giving them the time and energy to work up realistic schemes. Edinburgh is working on a practical agenda at the moment, hoping to seek Executive approval in principle later this year.

Charging Elsewhere
Edinburgh is not alone. In the UK, Bristol and Leeds are well advanced, and in London, the Mayor has signed up to a charging scheme before his first term of office comes to an end in 2004. In Oslo and Trondheim charging schemes have been working smoothly and with local support for years. They have lessons for Scotland. Electronic charging is not rocket science. They made it work, they made it straightforward for the business community and for motorists. It has given them targeted investment in local transport and a practical response to congestion and air quality problems. Charging is not of course an answer in itself. It must be part of a wider package of transport improvements.

Norway's experience suggests that if you get the arguments right, and you've done the work, citizens and businesses will accept charging if they can see practical benefits in terms of public transport, less pollution, safer streets. It is an agenda everyone can sign up to. In Norway it is part of the landscape, not loved perhaps, but not resisted either. The potential exists for it to work also in Scotland with well worked out schemes, properly justified and with public transport and infrastructure improved. Edinburgh has been leading the way in looking at how charging can help them achieve the aim of an integrated transport system to match the best in Europe and meet the needs of the city's growing economy.

Conclusion
RUC requires tough decision and long-term thinking. It is not an easy step to take, but the do-nothing option is not the right option either. It is the right thing to do. The argument has to be won - hearts and minds have to be won. The Executive's role is to provide leadership, vision and support. The costs of congestion are high, with consequent costs for the economy, for communities, and for drivers suffering delays and inefficient use of road space. That is the problem to be focussed on, and charging as part of an integrated approach, with new investment is part of the solution. That is the challenge that faces us in Scotland and in Edinburgh.

Professor Christopher Jensen-Butler, Professor of Urban and Regional Economics at the University of St Andrews, said that traffic regulation had different and sometimes conflicting goals:

• Traffic planning - the number of cars you want inside your city or in certain areas of the city

• Revenue generation

• Internalising external costs (getting motorists to pay for transport improvement)

Those goals can be combined, though not always happily.

Internalising External Costs
Individuals make transactions in order to increase their satisfaction. They continue to consume until their satisfaction is maximised. Economists use marginal concepts to find this point: i.e. the value and cost of the additional unit of consumption.

Individuals will only contribute so long as satisfaction is maximised. When all individuals behave so as to maximise their satisfaction, total satisfaction (welfare) in society is maximised. As Adam Smith pointed out in his Invisible Hand of the Market, individuals undertake transactions in competitive markets until their satisfaction cannot increase. At this point there is also a social optimum and welfare is maximised. But this assumes all costs and benefits are taken into account at the time of the transaction. If there are costs which the parties to the transaction do not pay, then someone else pays - that is the subsidy. This means that the pursuit of individual satisfaction will not necessarily lead to a social optimum. There is an external cost. Market breakdown follows if there is a divergence between the sum of private costs and the social cost.

Congestion: An Example of External Costs
If roads are close to capacity, then each additional vehicle will slow down total traffic flow. What determines the individual's decision to enter the road is his or her private costs, which is the average cost of using the road with that number of cars. The new driver ignores costs inflicted on all other users (delays and co-ordination). Thus there is a divergence between individual and social costs - too much to be consumed at too low a cost. This is a market breakdown.

The social optimum is at point B. You get there by imposing a tax of that amount from A to B. This has three effects: 1) It reduces traffic flow, 2) It raises the price paid, and 3) It provides government revenue. The same argument applies if external cost is environmental damage which can be assumed from increasing use of the road.

The Full Costs of Transport
The private costs; tickets, petrol, depreciation and maintenance, tolls, infrastructure costs where they are not covered or incorrectly covered by fares and tolls: construction, operation and maintenance. External and non-marketable goods: time, safety, environment, corrections to market prices, congestion. One problem is that most motorists are not even aware of the private costs. They tend to think of the time they are saving, but there are all sorts of other things such as depreciation.

External Costs and Traffic
These are quite substantial. Estimates from OECD countries in 1995 show:

• Emissions 0.4% of GDP (excl. global warming)

• Congestion 2.0% of GDP

• Accidents 1.5% of GDP

• Noise 0.2% of GDP (UKGDP 1999 £891bn)

• Emissions (OECD) (transport emissions as % of total)

• NOx 51%, CO 81%, SOx 3%, Particulates 8%, HC 45%,

• - CO₂ 31%. Note: Global v local issues.

• Congestion (time costs, co-ordination costs)

• NERA £7 billion 1996

• - UK 1990 Piercon London, peak 18.1 ECU/100 pass. km

• - UK1993 Newberry total UK cost £19.1 billion

There is a global and a local issue here. Some emissions are global, others may have an effect on a street corner in Edinburgh. Congestion costs in the mid-nineties were estimated at from £7 billion up to £20 billion. Since UK GDP in 1999 was just under £900 billion, this is not just peanuts.

Principles for Regulatory Policy
There is a need for regulation. The market cannot take care of our problems. What principles should we look for?

• Efficiency moves society closer to a welfare optimum. Low information requirements (costs should be low)

• Low administrative costs

• Equity - no groups hit hard, especially low income

• Dependability - effective under uncertainty

• Adaptability

• Dynamic incentives - in addition to raising prices and revenue, it induces behavioural change

• Politically acceptable

There are various policy measures other than road tolling which can be used to regulate traffic, including fuel taxation, parking tax, and car pooling, which all have disadvantages. Subsidising public transport is also part of the strategy. But road tolls are the critical issue here.

Principles
Converting time to monetary units. There is then the problem of at what level will the rates be? Changes should be possible in toll rates, reacting to under-capacity (day-time and night-time rates). It is inescapable that traffic diversion is not possible. Clear collection principles and low collection costs are, therefore, needed.

Issues
There can be conflict between revenue and internalisation goals. The classic case is in France where motorway tolls are so high, they have forced heavy traffic off the motorways on to smaller town and country roads so as to avoid the tolls. Distribution - are they regressive? Do they hit low-income families hardest? Do they spread environmental costs to other areas? Can public transport bear the increased pressure? Diversionary routes for through traffic can be costly too. Is it a city centre problem? No - there are traffic jams on the outskirts of cities as well.

Road Pricing
There are generally three types of classification:

• You pay for entering an area or a network

• You pay for accumulated points

• More sophisticated systems involve paying for vehicles, variable and continuous

In Denmark there is a "Star Wars" system, where every metre of road in the country is tolled and every car is monitored continuously via satellite-based technology, There is a meter in the car, and the tolls can vary depending what sort of road you are on, what sort of car it is, what time of day it is and how congested the road is. You pay at the end of the month. Ideally the system is tax-neutral. There are alternative goals for road-pricing. You can relate the various types to:

• Traffic planning

• Revenue generation

• Internalising eternal costs

Only the "Star Wars" version fulfils all these objectives. Some of the other ones do need amending.

• System must be user-friendly, easy to understand and fair

• It must offer anonymity

• Must be interoperable with other systems

• Be cheap to install and run

• Must be reliable and secured against abuse

1998 Denmark: GB pence /km

Off peak in urban areas reduces tolls to 2/3 for cars and vans

• US estimate (Litman) 1990, peak, urban: 24.6 GB pence/kilometre

This is all very complicated, and most people would say that we do not want a system like that. But do we? There are estimates of the real costs of transport and what sort of tolls we would have to pay if all the external costs were internalised. If they are not internalised, then someone else is paying them. So these are quite substantial tolls. That is not a guess, it is based on firm analysis, so some people are paying for it. But even that is not certain. Whether you pay 80p, £1 or £2 to cross a toll barrier could pale into insignificance if the gulf-stream turns around and the temperature drops.

Tolls depend on:

• Type of area

• Quantity of traffic

• Type of road

• Type of vehicle

• Distance and duration of trip

• Number of passengers

• Purpose of trip

• Environmental damage

Revenue Generation and Road Tolls: Issues
Using general taxation would be less regressive, fairer. Revenue neutrality: implies reducing other forms of taxation by same amount as congestion or environmental taxes. This will cause people to substitute away from activities which become more expensive involving environmental damage or congestion and towards activities which become less expensive. If road tolls were UK general, using the "Star Wars" approach, you could reduce income tax. The net result would be less environmental damage/congestion and more work and tax revenue. This is called the "double dividend." It is difficult to do with a local scheme. Ring-fencing revenues makes tolls politically more acceptable, though not necessarily more efficient. What about the loss of revenue in fuel, vehicle, registration taxes and VAT etc?

There is a conflict between revenue raising and anti-pollution goals. In order to meet the environmental goals, then road tolls or taxes would be much higher. There will be different effects in different regions and cities

You reduce congestion but the environmental effect is not very marked. Variable tolls in Copenhagen and elsewhere do give a bigger reduction.

Survey of residents (Odeck and Brathen 1997):

Attitudes to the Oslo toll ring show 65% negative (37% very) in 1989 before the introduction; 55% negative in 1995 after introduction.

Reasons for being positive

Funds generated for road construction

Traffic limitation in city

Environmental reasons

Those who use roads should pay

Reasons for being negative

Unfair to motorists

Expensive way of fund-collection

Revenues re-used for other purposes than transport

Delays

The most negative

Frequent car users

Frequent toll point passers

Close-in residents.

The most positive

Younger respondents

Higher educated

Other results

Males slightly more positive

Income does not affect attitude to tolls

Those who changed their behaviour

Regular car users

Men

Inner city dwellers

High income groups.

Marketing the Oslo Toll Project
Marketing aimed to; raise public awareness of intentions re investment and congestion and demonstrate advantages of the system in relation to other options. Tolls must be part of a wider integrated transport planning scheme, including public transport. Frequent toll-point crossers should get discounted tolls. Need to be very wary of equity issues. Public participation in the planning process is vital.

Long-term Effects

• Changes in prices of goods and services

• New commuting patterns

• New shopping patterns

• New patterns for tourist trips

• New land use patterns

• Adjust land and property values? You may get cheaper land outside a toll-ring and more expensive inside, neatly compensating any toll system

• New patterns of transport flows

• New economic relations with the rest of the UK and import and export markets

• Changes in income, employment, taxation, consumption by area

If the idea is to reduce congestion, then you will also induce behavioural change. Road-pricing changes motorists' behaviour and introduces new traffic patterns. Looking at price changes for private consumption and changes in real disposable income in different Danish counties the effect in the Greater Copenhagen area and the other ones are in between. With 5p/km in urban areas, and 1p/km in rural areas, the effect is to induce changes in disposable incomes, unevenly, across the country, of the magnitude of 1% - that is a lot of money. We are changing the economic geography, and this will have long-term effects for Scotland as well

Mr Alex Macaulay, Project Director, the New Transport Initiative, City of Edinburgh District Council (CEDC), said he was dealing with the real world, and they were not thinking of introducing RUC without a good reason. There had been an increase of car ownership over the last 15 years of around 50%. Accelerating growth and employment :

• 1990 forecast: 13,000 increase from 1992-2005

• 1999 forecast: 30,000 increase by 2015

• Current unemployment is 3.5%, well below the Scottish national average

• Population growth forecast: 50,000 by 2015, uniquely in UK.

It is a success story, despite pockets of deprivation within the city, but it brought with it serious growth pressures. The City Council in 1999 realised these must be addressed with radical new thinking. Could it deliver an ambitious new transport vision for Edinburgh? Doing nothing was not an option.

So CEDC embarked on the New Transport Initiative, which has been seen as a euphemism for road pricing, but is much more ambitious than that. The work programme is in two phases:

• Phase One involved deciding on key choices, especially on funding

• Phase Two - develop chosen strategy to implementation

Phase One was initiated in Summer 1999, and reported in Spring 2001. Key choices were analysed and presented to the public in a major consultation exercise, based on options in the transport white paper.

Two options were available for injecting new investment:

• Road User Charging

• Workplace parking levies

Three illustrative options were developed, analysed and presented to the public:

• Major investment programme based on income we would like to achieve from road-pricing

• Medium investment programme which would not achieve as much but would grow at same speed as workplace parking levies

• No new charges, no new investment, with very limited improvements

The results of the public participation were remarkable. But before going ahead CEDC put a number of caveats on the council's involvement, similar to the Executive's own conditions for RUC. It would only be done on the basis of:

• Ring-fencing

• Additionality

• Transparency of accounting

• Significant up-front investment in public transport

The results of the 1999 consultation were a surprise. Managed to get 60% support from a statistical sample of residents within the City for Option One (a major transport investment strategy funded in part by RUC). The Autumn 2000/Jan 2001 updates using; a Citizen's Panel questionnaire and on-going street interviews with drivers who have driven into the city centre, all of whom would have to pay, both showed the level of support was above 50%.

So support for the scheme seems to be holding up. What caused concern were some other surveys amongst business people showing increasing business concern about the effect of RUC and the Council's ability to deliver. The scheme is being advanced in partnership with:

• Neighbouring local authorities (SESTRAN) whose co-operation is essential for making the scheme work

• The Scottish Executive which is very supportive

• Other cities in Europe which are progressing RUC schemes -- Bristol, Copenhagen, Genoa, Helsinki, Gothenburg, Rome, Trondheim

• DETR Charging Development Partnership with which CEDC has Observer status.

The preferred package envisaged £600 million over ten years, including:

• Light rail network £250m

• Conventional rail £130m

• Bus services and infrastructure £90m

• Road safety & environment £80m

• Higher maintenance standards £50m

If successful RUC would provide investment, not just in public transport, but "softer" areas, such as walking, cycling, and improving maintenance of roads for motorists. The options for charging examined to date in detail are:

• City centre cordon, roughly round the World Heritage Site

• City bypass cordon

• Combination of the two

• A range of times of operation with related charges:

• 12 hours (7am - 7pm) £1

• Morning (7am - 12noon) £2

• Peak period(7.30-10am) £3

The basic assumption is that if RUC is introduced based on a cordon, then you pay once per day for crossing that cordon. Then you can cross it as often as you like without incurring an additional charge (it is a one charge per day system). If there is a double cordon option, you can cross both cordons for the same single charge (two for the price of one). The technology is based on vehicle number plate recognition that does not require major fitting out of cars, since camera technology is now efficient enough to enable this to be accurately carried out.

On evidence provided by transportation models CEDC decided to look at a combination of the two cordons. Key to it is that for those who would cross the city centre cordon, only 20% would come from outside the city, 80% would come from within. So the two cordons have different markets and would operate very well in tandem.

Dealing in partnership systems has a price to pay. CEDC has been trying to get agreement over the best way forward. SESTRAN partners have concerns over equity. Everyone on a city by-pass cordon who enters the city would have to pay, while those who live within the city could move around between the two cordons without paying yet both of them contribute equally to levels of congestion. We have now, therefore, agreed that in addition to the city cordon scheme, and the combination scheme, we would look at a city wide area licence.

The basic objective is to address the equity issue, so that those who stay inside the city would pay as much as those coming in from the outside. Another major survey will test the issue. Concerns over the long-term include:

• The scale - £500m - £1bn over 10-20 years

• The complexity

• Local government staffing constraints

• Short-term concerns include:

• Political uncertainty

• Statutory procedures

• Short term funding

CEDC has, therefore, decided to set up a specific delivery company, called Entico, with the following objectives:

• To plan, procure and implement transport projects

• Raise funds for projects from Government, partnerships, congestion charging.

• Implement RUC

• Seek strategic and operational partnerships with the private sector

It is a big, complex project and it needs to have the freedom to have the necessary resources targeted. A separate company is the best way of achieving that. It would be; 100% owned by CEDC, non profit-making (any profits would be recycled into transport investment), responsible to CEDC and the SESTRANS strategic board and controlled by a board of directors, with major private sector representation, including those with a proven track record in transport. Annual approval of its business plan would be made by CEDC (as the sole shareholder). So, CEDC has control not only of strategy, but also, annual delivery of targets. CEDC thus has a vehicle for effective delivery of the scheme.

There will be a two-stage approval process. First, the principle: design and development of the package, consultation, and agree outline scheme. Submit to Scottish Executive for approval in principle. Then the detail: design and development of details, consultation and public inquiry. Submit to Scottish Executive for detailed approval. A public inquiry would follow. Everyone in and around the city will have the opportunity of commenting on the scheme before it goes to the Executive for detailed approval. Introduction of the scheme is not envisaged before the third quarter of 2005.

RUC is a difficult decision for CEDC, which is not yet irrevocably committed to it, and will not have to make the final decision for a couple of years. However, it is committed to planning for its possible introduction. In some respects it is a case of damned if you do and damned if you don't, but CEDC recognises that doing nothing is not an option.

Questions

The first question queried the suggestion that RUC was economically regressive. Since congestion was inefficient and resulted in extra costs, and since RUC relieves congestion, it should be expected to have a progressive effect. Frequent car users are generally higher income earners, they are required to pay more for the use of their cars, and the revenue from that is invested in public transport which is used by the poorer part of the population. This suggests that the effect of the charging would be progressive.

Professor Jensen-Butler responded by saying that road tolls are like VAT which is generally considered to be a regressive tax. It looks like a proportional tax but it is not, because poorer families save a smaller proportion of their income than rich families. Paying VAT is therefore regressive, and RUC in this sense is regressive. It can be confusing when it comes to the question of who pays the costs of congestion. Many trips in many cities are made by relatively low income families, but public transport tends to be radial, and heavy industry does not take place in the inner cities. So it's over-simplistic to say that by improving public transport, poorer families benefit at the expense of the richer. He conceded, however, that it is perhaps more complicated than he had originally suggested.

A further question asked how revenues from the RUC scheme in Scotland could be used for the benefit of motorists from outside the Edinburgh area who would nevertheless be paying when they went into the City.

Professor Jensen-Butler cited the Danish case, and said a national scheme such as this was tax /income neutral so that every family gets back by reduced tax what they are paying in road taxes. Because the cost of using roads has gone up, and you have the choice of using public transport, you can use an RUC scheme for everyone's benefit provided it is applied on a national basis. It is difficult to apply to a local tolling system. A national system produces the "double dividend" effect referred to earlier, something not available with a local system.

The next question queried whether, on the evidence presented so far, a RUC scheme would produce meaningful environmental improvement by way of pollution control. At what point would it achieve this end.

Mr Macaulay said that their surveys had suggested a general reduction of around 5% in emissions. Very low reductions in traffic, say 10%, at peak periods would improve traffic flow, and make a significant reduction in pollution. During peak periods, local levels of pollution go very high, so relatively low reductions make a significant difference.

There were two final questions. The first asked about the impact of RUC on business, and questioned whether it would reduce the number of shoppers. The final question queried whether there was a conflict of interest in CEDC's role as investor in public transport and sponsor of RUC.

Mr Macaulay said there had been a scoping exercise to estimate the economic impact of RUC, and interviews had taken place with key people in business and retail, asking their views. The general feedback was that RUC would be unlikely to make any significant impact on the way businesses operated within the city. He accepted that the sample was a small one, and CEDC had commissioned a local economic impact model that would interact with a transport model and translate changes in accessibility into projection on jobs in the city. That would be ready in October.

Some independent research projected in London that there would be an increase in floor rentals both in the business and retail sector, because RUC would reduce traffic levels and improve access. Doing nothing projected a two or three percent reduction in floor rentals caused by increased congestion. A real life study in Trondheim showed no measurable difference in retail activity. It was a serious issue, but the signs from elsewhere are relatively positive.

In answer to the second question Mr Macauley said his figures showing reduction in traffic were pure levels of reduction arising from Edinburgh's road pricing scheme. You then take the considerable investment in public transport, and you expect significantly better results. Was there a commercial conflict for a private company called Entico, which is given the job of introducing road pricing and also investing significantly in public transport? The key issue on that is that Entico is a non-profit making company with the council as the only shareholder. The company's role will be spelled out in some detail by the Council. It is there as the vehicle for the Council's transport policy. It has to operate within that environment in a commercial way. A normal company's objective is to maximise profits. Entico will only be able to operate within the confines of its business plan which is reviewed and approved by the Council, which will decide whether it is in line with its transport policy. There is thus a double level of control through ownership and approval.

Discussion : Discussion revolved around three issues:

The main points that emerged were:

• RUC can help reduce dependency, but not break it. It can succeed, but only if improved public transport comes with it. It must be part of a package. The scale of charges and the period of time over which it was phased in were vital considerations.

• CEDC's system for Edinburgh, based on cordons, sounded rather crude. Many trips would not cross the cordon. It focussed on car use, not freight. The debate on RUC should encourage the most rational use of freight.

• Driving up the cost of motoring should decrease the pressure on cities, but for it to have maximum success it would have to be introduced nationally, and not just locally. The charges would have to be sufficiently high to make a difference to pollution levels, traffic speed etc.

• Some reservations about making toll charges too high: if you set them at a level where they deter, you free up capacity, and ease congestion, which may simply encourage other motorists to take advantage of that capacity a sort of transport vicious circle.

• Breaking the habit of car use is notoriously hard to do. It depends on long-term investment in public transport. RUC may help by affecting, not just traffic flow, but key decisions, such as buying a house or a car. Breaking the habit may be difficult, but it has already started to happen. Car use has plateaued, and use of public transport has risen. The structure of pricing and fares has to be looked at overall. RUC is not just about investment in big schemes, but about changing attitudes towards the use of the car.

• If RUC is phased in, the overall effects will be small and traffic volumes will continue to increase. There is less local dissent. In Singapore high charges have had a dramatic effect, while in Norway relatively low charges have not had much effect on car use, so far. Over time, however, there can be significant effects, but we are talking about a lengthy time-scale, possibly 30 years.

Mr Macauley said the intention in Edinburgh was that road-pricing would be index-linked. He accepted that the scheme as envisaged at the moment was crude, but it was only Step One of a longer process. The aim was "an evolution of acceptability." The aim was to target congestion, to deter travel in those areas where it was worst, by charging higher rates. There is no UK specification for RUC hardware. Yet the system must apply not just in Edinburgh, but nation-wide. The next phase envisages a Global Positioning Satellite scheme.

Professor Jensen-Butler said that Copenhagen had piloted a scheme with 500 cars, which suggested that if you want to internalise transport costs, then the toll level has to be much higher than is envisaged at the moment. There must be a degree of tax neutrality you cannot just have higher tolls without tax compensation charges and investment in a proper public transport system.

The main points that emerged were:

• Any RUC permit should involve an incentive to use public transport. Consultation was important. High charges might hit the lower-paid, and the chosen scheme must not penalise those going to work.

• The scheme must be transparent. There should be an awareness campaign, and it must be equitable and fair. Charges must be responsive to different sectors of society. The more local, the more responsive

• Additionality: revenue raise must not be a substitute for transport investment. Freight needs careful examination -- there is an argument for not charging freight at all.

• The credibility of the scheme must be raised. It needs to be seen to work faster. Tax-breaks should be considered to help with investment in transport. The scheme needs leadership, a champion. Different cities need to have compatible systems.

• Keep it simple. Government should be seen to be encouraging better motoring behaviour, safer routes to school, sustainable transport systems.

• Competition through deregulation could derail any RUC scheme. In London it is being looked at again. Needs to be reconsidered here.

Mr Macauley said that public reaction was based on perceptions. Quality had to be improved, that included quality across the board, including such things as shopping. There was an image of Edinburgh as anti-car. Yet traffic was no worse in Edinburgh than Glasgow. The more roads you build, the more traffic you generate. An Edinburgh survey had shown that the top transport priorities were heavy and light rail networks. Those were longer-term aspirations. In the next three or four years the major investment will be in buses. There had to be a degree of realism.

On freight he said that the current thinking was to treat trucks the same as cars, with the same £3 charge for each. Ideas about the impact on freight have been addressed. Crossing the cordons several times a day will mean paying just once a day. It does not make a great difference to freight traffic.

Sarah Boyack, said the present policy was to try to make deregulation work. Looking at mechanisms to allow local authorities to work in partnership with private companies. In Edinburgh there is a pilot scheme to allow ticketing between different companies, incentivising public transport, making it more attractive to the public. People hate changing buses. The watchwords of RUC had to be transparency, additionality and fairness. People had to be won over. The Scottish Executive will not move in to dictate the level of charges. There must be a level playing field between different cities in Scotland. There must be a quality service in Edinburgh.

The main points that emerged were:

• The main difficulty to overcome is to persuade the public that there is a credible scheme and that it can work. You need to have a robust delivery system, and a good explanation of its function and purpose.

• Public scepticism needs to be turned into making the scheme acceptable. Investment must be seen to make a difference. There must be an ability to respond to changes, and a willingness to pay.

• Attention should be given to the mundane matters that affect drivers - the technology will have moved on by the time it is implemented. It should be flexible and user-friendly. Thought should be give to protecting traffic wardens against abuse.

• It should be equitable -- nationally and locally.

• There is a need for leadership at local and national level if the scheme is to succeed. Experience of RUC round the world is not greatly encouraging so far - schemes have so often failed. One conclusion is the need for EU research.

• There is still an area of mistrust, and a fear that it will be hostile to business. There will be opposition whenever a scheme is to be introduced. It is important to identify potential opponents and bring them into the process and form committees' etc.

• Credibility is linked to deliverability. A process of education is required. The system has to be accurate. Can the technology be trusted?

• There are practical difficulties to be confronted about exemptions for the disabled, hire cars, freight etc.

On opponents, Professor Jensen-Butler cited the instance of Fife and the commuter-belt for Edinburgh. Motorists already pay a toll for crossing the Forth Road Bridge. They may have a legitimate grievance in claiming that there has been no pay-back for them in terms of investment.

Sarah Boyack, said there was a need to look at the transport infrastructure over the next 10-20 years, and issues such as this would be part of it. Evidence from various sources, including the business community would be taken on board. There had been massive developments in Edinburgh over the past 15 years, and she was delighted that Edinburgh Council had now taken a lead in examining RUC. They would be working in partnership with the business community in looking at transport strategy.

Alex Macaulay agreed that it was important to bring opponents to any scheme on board and to form partnerships if RUC was to be made to work.