Why road pricing?

1. A well designed local road pricing scheme has the potential to reduce congestion significantly in the local area. These areas can expect to see reduced journey times, improved journey time reliability and significant improvements in public transport provision. This is good for all sectors of society whether they be shoppers, workers or business.

2. On a more national level the recent Eddington Transport Study gave strong backing to congestion-targeted road pricing. It found that well designed pricing schemes stand out above all other transport interventions, given their substantial potential to contribute to welfare and GDP. Analysis of one road pricing scenario - a national scheme - suggested congestion could be some 50% below what it would otherwise be in 2025 and annual benefits were estimated at £28 billion by 2025, including £15 billion worth of GDP benefits. The costs of implementing such a scheme would of course need to be accounted for, nonetheless there is clear potential for significant net benefits.

3. Although Government is currently looking at the feasibility of introducing a national road pricing scheme around the middle of the next decade, we do not need to wait for a national scheme to begin accruing some of the benefits Eddington proposes. That is why we have been focussing our efforts and resources on local schemes where congestion is already, or soon will be, a problem. As Eddington suggests local road pricing pilots will be invaluable in learning lessons for the design and implementation of any future national scheme.

4. Of course local schemes need to be well designed, hence the production of this guidance. This means we will be looking closely at the extent to which the schemes can help us to develop more sophisticated and widespread road pricing schemes. This includes demonstrating the benefits of road pricing as part of building public acceptability, as well as improving our understanding of scheme design, technology, and systems.

What else is Government doing?

5. The roads remain our principal means of transport whether for use by cars, buses or lorries, and because of their flexibility they will remain so. As we become more prosperous and our population grows, people wish to use these roads more. Urban centres are congested with traffic at peak times, as are many areas of our road network. This imposes a cost on us all in wasted time, wasted fuel, delayed deliveries and so on.

6. Our strategy for the road network has tended to focus on three key elements:

• providing more road space where that makes sense;
• improving the way roads are managed; and
• promoting smarter journey choices.

7. We already have a large programme of new build, but we cannot keep building new roads. In urban areas there is very often no space for new roads at the most congested places. Outside our towns and cities there are limits to the amount of road building people are prepared to accept for environmental reasons. There will of course still be a place for improving the roads and increasing capacity in some places but this often fills up quickly, therefore we have to think more about making the best use of what we have.

8. Good traffic management can help ensure that the maximum number of people can complete their journey in a reasonable time. Traffic management measures can range from simple changes to priority at junctions through to sophisticated phasing of traffic lights, or interventions such as the Highways Agency's traffic control officers who help restore traffic flows after incidents on the strategic road network.

9. There is considerable scope to encourage people to make smarter travel choices. The car is often the most convenient means of transport, but with a little encouragement people can find it attractive to change their travel habits, whether through car-sharing, using public transport or simply travelling at less congested times.

10. Even with the approaches described above, on current trends we will not stop congestion getting worse. That is why we believe road pricing offers the best potential to manage demand for road space.

How is the Government supporting road pricing?

11. In 2004 the Government commissioned the Road Pricing Feasibility Study to look at road pricing. Formed of key stakeholders such as the AA, RAC, Transport 2000 and key academics, it concluded that a road pricing scheme could cut congestion by as much as half.

12. The Department's subsequent Future of Transport White Paper acknowledged the study's findings and set out a strategy to test demand management measures, such as road pricing, where congestion is already a serious problem, by providing support for some local road pricing schemes. These schemes would be designed in a way that allowed the technology from pilot schemes to inform the debate for any future national road pricing scheme. A national road pricing scheme could then potentially follow sometime in the middle of the next decade.

13. The Secretary of State therefore announced the creation of the Transport Innovation Fund (TIF) to support:

• the costs of smarter, innovative local transport packages that combine demand management measures, such as road pricing, with measures to encourage modal shift, and better bus services;
• local mechanisms which raise new funding for transport schemes; and
• regional, inter-regional and local schemes that are beneficial to national productivity.

14. Money from the TIF will become available from 2008/09 and ultimately up to £200 million per annum will be made available to support TIF schemes involving demand management measures, such as road pricing, if suitable packages are developed by local authorities. If high quality schemes to a higher value emerge then further funding may be made available.

15. As the development and appraisal of such packages is a complex and costly process for many local authorities, the Government offered financial assistance to a limited number of local authorities to help with scheme development in advance of substantive congestion TIF funding. In July 2005 it was announced that up to £18 million was set aside between 2005/06 and 2007/08. The first allocations of these were made to seven areas in November 2005 following a bidding process, a further three were given funding in November 2006.

16. Government has been working closely with these leading local authorities, plus London and Cardiff, to pull together knowledge and experience on the traffic problems in these areas and work out what role pricing can play.