What follows is the text of a talk I gave at the beginning of November 2002 to a group of fellow London libertarians on the subject of congestion charging. Having re-read it I can't say there is much I would change but I seem to have seriously underestimated both the amount of bureaucratic incompetence and the amount of charge dodging we are likely to see.

Before I forge ahead I should perhaps begin with a caveat. I am not really an expert on roads. It all started about the beginning of the year when I wanted to get in contact with a few people in the rail industry and felt that I might be taken a little more seriously if I had a title. I asked Brian [Micklethwait] if I could become the LA's Rail Spokesman but he thought it better if I call myself Transport Spokesman. "But I don't know a thing about roads" I said. "Don't worry about it" he replied "Make a joke out of it by saying you were forced in to it." So, here I am.

In February 2003 London will become the first major city in the western world to have a congestion charging scheme. A ring will be erected around central London. As cars pass through this ring a camera will record their number plate numbers. In order to avoid a fine drivers will have to either pay in advance or pay the same day. The charge will be £5. The charge will be levied from 7am to 7pm. Non-payers will be liable to a fine of £80, falling to £40 for early payment and rising to £120 for non-payment.

Congestion charging is an idea whose time has come. Or rather it is an idea whose time has come around again. Tolling, for that is what it is, is a old as the hills and is used to pay for bridges and tunnels the planet over. What is new is the idea of subjecting whole cities to the discipline. It has come at a time when old solutions to congestion, such as building roads have fallen out of fashion on grounds of efficacy and at a time of increasing environmental concerns.

The first scheme that I am aware of in modern times was in Trondheim, Norway. That was a fairly modest scheme - the aim was not so much to reduce congestion as to raise revenue for new roads. It is still there and it has been extended to other cities in Norway and seems reasonably popular, possibly because it has had little effect on the number of journeys made. It does, by the way, pay for new roads.

The biggest scheme in current existence is that in Singapore. It is an altogether far more daring proposition. Firstly, Singapore is vast. It has a population of 4m versus the 140,000 of Trondheim. Secondly, being the lovers of gadgets they are the Singaporeans were determined to implement a state-of-the-art scheme all of their own. In their system every car has an electronic box. Every driver has a card. It is a little bit like a top-up card for a mobile phone. You go down to the newsagent, top up the card and put it in your box. As you drive around Singapore you drive underneath gantries which record the fact (via your car's electronic box) and charge you accordingly. This charge varies according to which road you use and time of day. In comparison London's scheme is like something out of the Stone Age.

Not only has Singapore's scheme been on a vastly different scale and technological level but it has also been tremendously successful. I understand that congestion in central Singapore has been vastly reduced. One acquaintance tells me that a queue 100 yards long is regarded as a serious jam. Mind you, another acquaintance tells me that jams do exist and certainly wasn't about to extol its virtues.

He also tells me that there are other ways in which Singapore restricts car use. The main one is by the government deciding how many new cars are "needed" and auctioning off that number of permits. Hence a fairly modest car like a Honda Civic ends up costing £90,000.

The great advantage of London's scheme over what has gone before is that it does introduce at least some element of the price mechanism into the allocation of a scarce resource. It will force some people to ask themselves whether their journey at that time by that means is truly necessary. And for that reason (and pretty much for that reason alone) it should be welcomed.

The scheme's weaknesses, however, are manifold. This is not even a pseudo-libertarian scheme let alone a full-strength anarcho-capitalist privatisation. And it is precisely because it isn't that muddled thinking has been allowed to prevail and problems are likely to arise.

For instance, take timing. The morning peak ends at about 10am. No allowance is made for this. If you have been clever enough to arrange to start work when the roads are reasonably clear you get no credit for your ingenuity.
The scheme is very prescriptive. At the same time as introducing congestion charging, Ken is also increasing the number of bus lanes and stepping up the policing of them. To me that defeats the whole object. If the charge was any good then you wouldn't need special bus lanes because London's traffic, including buses, would move freely.

There are a number of exemptions. These include two-wheelers, vehicles which use LPG or have more than 9 seats and a few others. There is also a refund scheme for employees of the NHS and the fire service.
The charge also does not appear to be high enough to make sufficient of a difference. Although, it is a while since I last parked a car in London for a day, I seem to remember that it costs at least £20 to do so. On the internet I found one car park charging nearer £40 per day. OK, so most people have a company parking space but it is best to remember that a parking space also costs money to the company - a cost reflected in their rent. I would be surprised if it wasn't of at least the same order of magnitude. Now, for the vast majority of people who enter central London they will be availing themselves of one of these two options. £5 on top of this is not going to make that much of a difference. To some, for sure, but not for most. No wonder we are getting more bus lanes.

Strangely enough the £5 charge is substantially higher than that in either Singapore or Trondheim.

The real weaknesses of this scheme lie on the supply side. In a truly free market dyanamic entrepreneurs would think "Ah, here we have a lucrative market. Let's see if we can supply some more roads". So more roads would get built. Don't laugh.

In fact, it is perfectly possible to increase capacity without building new roads. People often complain about rat runs. I don't blame them under current circumstances. But imagine if nearby residents had a choice to either close the rat run or charge for it. Sure, many would say "Thanks but no thanks - I'll take my peace and tranquility" but many others would be only too pleased to cash in. This would also not appear to be an option.

It is a common complaint of the sheme's opponents that congestion charging will be good for the rich and bad for the poor. They're right. If other aspects of London's transport were left to the free market they would be wrong but they aren't so they're right.

What do I mean by that? Well, take for instance buses. In a free market there would be a bonanza. Not only would there be a newly created market for bus services as people were priced out of their cars but also bus services themselves would become a whole load more attractive as less congestion led to faster and more reliable services to say nothing of the potential of higher-class (for want of a better expression) services. But in London you can't just run a bus. Oh no. You have to win a franchise. And franchises are only awarded every so often. And they're highly prescriptive. You will run this bus at these times on this route charging this fare.

Almost exactly the same applies with black cabs although mini-cabs may be able to take up some of the slack.

But jitneys face a far worse problem. What is a jitney, I hear you ask? A jitney is a sort of bus but without either fixed stops or even a fixed route. Hell, even the fare is sometimes up for negotiation. Never heard of these? Well, that's not entirely surprising as they were banned in London and most other places in the 1920s after substantial lobbying by the bus companies. They could make an enormous difference, not only to passengers but also to the many not-so-well-off entrepreneurs who would be running them. But they won't be allowed to so yet another problem is likely to go unsolved.

To sum up, Ken's Congestion Charging Scheme will have mixed effects. The less-well off are likely to suffer. It will make getting around the capital slightly easier for the better off. It will introduce the principle of road pricing even if in a watered down form. The danger is that people will blame the problems that emerge on pricing rather than the many forms of supply side regulation which will be the real culprits.