TfL imposing the Congestion Charge on private hire vehicles would make London more congested and polluted, says independent study
Drivers, investment and competition all also hit, according to Oxera research
- TfL proposal on Congestion Charge Exemption based on ‘not credible’ data, argue Oxera, saying it would be no help to city centre traffic and could worsen jams around the edge of the zone.
- Pollution would increase as customers shift to the city’s older black taxi fleet.
- Drivers could be hit with a £250 a month bill.
- Industry likely to scale back investment in cleaner vehicles to pay charge.
- Retaining the exemption for black taxis could fall foul of competition law.
- Addison Lee proposes alternative policies to deal with congestion and pollution, including a £1-a-day increase in existing charge and a network of rapid chargers to meet demands of an electric fleet
Transport for London’s (TfL) proposal to impose the Congestion Charge on Private Hire Vehicles (PHV) is based on flawed analysis, works against the policy’s stated objectives of reducing congestion and pollution and will hold back the industry’s investment in cleaner, more environmentally sustainable vehicles, according to independent research commissioned by Addison Lee Group (ALG).
Oxera Consulting’s research shows that far from reducing congestion, the removal of PHVs exemption would have no impact on traffic within the charging zone – the impact described as ‘indistinguishable from zero’ – and could unintentionally increase traffic as drivers congregate on the zone’s boundary, only entering the centre when a fare becomes available.
The study describes TfL’s idea of “specialisation” to reduce traffic – whereby PHV operators separate their fleets into vehicles operating inside and outside the zone – as ‘implausible’, given the high proportion of journeys that start or end outside the zone and its’ impact on vehicle optimisation. This theory is at the heart of TfL’s projection of a 6% reduction in PHV traffic, the evidence for which is described in the research as ‘not credible’.
Costs will have unintended consequences
Oxera’s research shows that the costs of the proposal will have to be borne by one or a combination of the following, all with unintended consequences:
- PHVs increasing their prices to passengers.
- PHVs absorbing this change in its entirety.
- Drivers absorbing their costs.
Passengers, faced with higher PHV fares, would be likely to switch to older, more polluting black taxis, which remain exempt from the charge under TfL’s plans despite, on average, emitting twice as much nitrogen oxide and three times as much particulate pollution as PHVs. The retention of the exemption for black taxis may also fall foul of State Aid and Competition Law concerns.
If the cost was borne by drivers, Oxera estimate that it would cost them up to £250 a month, and that this would fall disproportionately on the BAME and mixed driver community, which make up 92% of PHV drivers, compared to just 12% of black cab drivers.
By taking money out of the private hire industry – the charge is likely to cost Addison Lee £4 million a year – the cost would disincentivise moves by the entire industry to shift towards electric.
ALG are proposing an alternative policy designed to deal with pollution and congestion:
- Raise the Charge overall by £1 to £12.50, which would be raise a similar amount to TfL’s proposals to remove the exemption, reduce traffic by 1% and protect PHV investment.
- Install a network of rapid electric chargers in London to help the PHV industry meet the current ULEZ requirements for low-emission vehicles by 2020. In earlier independent research funded by ALG into London’s charging network, it showed that to support just 25% of the capital’s PHVs, a network of over 2500 rapid chargers would be needed. There are currently 100.
- Limit black taxi licences to 10 years rather than the current 15.
This would be alongside ALG’s ongoing investment of £60m to the end of 2019 in cleaner vehicles to comply with TfL’s Ultra Low Emission Zone (ULEZ), which Addison Lee fully supports.
Andy Boland, Chief Executive, Addison Lee Group, said: “Addison Lee is fully on board with TfL’s objectives of tackling congestion and improving air quality in London, and is investing £60m to meet the existing ultra-low emission zone policy. However, independent analysis suggests that far from helping to meet these objectives, imposing the congestion charge on private hire vehicles would make matters worse. We believe our proposed policy of focusing on ULEZ and closing its loopholes, a small increase in the overall charge and a proper rapid charging network would be fairer, simpler and more effective.”
He added: “It’s an exciting time for our industry as we invest in new forms of transport – including electric power, autonomous vehicles and ride-sharing – all of which will contribute to a cleaner, more accessible city. Imposing this charge would hold back that progress and would create an unjust imbalance between private hire drivers and taxi drivers.”
The full Oxera report can be viewed at: www.oxera.com/publications/addison-lee-ccz-report
Oxera advise companies, policymakers, regulators and lawyers on any economic issue connected with competition, finance or regulation. We have been doing this for more than three decades, gathering deep and wide-ranging knowledge as we expand into new sectors. We have a reputation for credibility and integrity among those we advise, and among key decision-makers, such as policymakers, regulators and courts. Today we have offices in Amsterdam, Berlin, Brussels, London, Oxford, Paris, and Rome, and are able to advise our international clients in a highly flexible way, including providing advice in several other languages.
Every question that we are asked is different, which is why one-size-fits-all analysis, however rigorous, is not enough. The insight we provide to our clients comes from never tiring of thinking harder each time; a continual readiness to use innovative approaches; and a realisation that you have to look beyond the narrow confines of any given subject to understand the bigger picture of which it is always a part. If you have a business-critical question about anything to do with competition, financial, regulatory or quantitative economics, we can provide a compelling answer.
About Addison Lee Group
Addison Lee Group is the world’s largest managed premium car service business and counts more than 80 percent of the FTSE 100 as customers. It was the first UK ground transport business to launch a booking app, and the company operates 5,000 of its own vehicles and provides up to 30,000 rides a day in London alone. Owned by The Carlyle Group, Addison Lee provides exceptional customer service through innovative technology combined with experienced driver and customer service teams supporting car, chauffeur and courier needs. Addison Lee has 24/7 customer support from its Contact Centre via phone, email and social media. As well as journeys in London, Addison Lee customers can book its’ managed service in New York and across the US and use its’ digital channels to book travel in over 100 cities.
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