Congested Pockets

Almost five years ago, I argued that London’s Congestion Charge was merely a wealth transfer from London commuters to the administrators of the charge. You know what? I was right:

Capita, the company that set up the system and operated it for the Mayor, was said to have been given a £250 million contract over five years, but the Mayor refused to reveal the details. Then it emerged an extra £31 million was paid to Capita in the first year, raising concerns that costs would reduce revenues promised by the Mayor. Last year Capita was paid £130 million, more than 60 per cent of the money taken in by the charge over the year.

What about congestion? TFL’s own spin figures suggests that congestion is down by a paltry 16 percent overall. However, as The Bow Group has shown, most of this relates to a drop-off in people entering London after 11am. There has been precious little effect on congestion in the rush hour. And journey times – where the real economic benefit of reduced congestion should appear – have not been affected.

Once again, an environmental tax, disguised as a market mechanism, has failed to achieve its own objectives, while making some people rich at the expense of commuters. Diffuse costs, concentrated benefits, indeed.

Cross-posted from The Really Inconvenient Blog.