PERSPECTIVE: Road Pricing is Part of the Answer for Us

Recent letters to The Birmingham Post have expressed concerns that congestion charges are about to be implemented with damaging consequences for local businesses.

The letters have also homed in on the lukewarm attitude of businesses to the concept of road pricing.

Equally, your correspondents have acknowledged that with congestion costing the region some pounds 2 billion per annum, doing nothing is not an option.

As chairman of the West Midlands Business Transport Group (WMBTG) as well as chief executive of Birmingham Chamber and the only private sector representative sitting on the steering group looking at the region’s options for reducing road congestion, I recognise these concerns.

Sorting out our transport infrastructure is a massive priority for business and in the Chamber we have done a great deal of listening to the views of our members.

Broadly, our members recognise that reducing road congestion requires a mix of solutions, not least being much improved public transport and additional road capacity.

In addition, and of particular significance, a British Chambers of Commerce survey late last year revealed that between a third and a half of businesses surveyed reported they would consider road pricing as part of the solution, providing the circumstances were right.

Let me nail my colours to the mast. I think road pricing has a role to play in reducing road congestion.

Or, as Sir Rod Eddington – former chief executive of British Airways – put it last autumn when announcing the findings of his nine-month study into the UK’s transport ills: "Road pricing is a no- brainer."

Well, it is a no-brainer – but with some important caveats.

Price on its own is not the answer. Birmingham Chamber and the WMBTG have made very clear that before price can come into the equation, we need a number of tests to be met.

They include:

Significant prior investment in public transport, to give drivers a choice;

Any scheme must be judged to improve and not worsen the region’s competitiveness;

The charges must be variable;

Revenues raised must be ploughed back into our local transport infrastructure, and any introduction of price must be in the context of a wider, national pricing strategy.

You start to get a sensible, joined-up congestion-busting strategy when you set these pre-conditions alongside the "quick wins" campaign that business has been championing

- making better use of existing tarmac by improving traffic flows through simple measures such as improved traffic light sequencing and re-positioning white lines.

Let’s get a little more into the detail of what sort of pricing solution might work in the West Midlands?

In the long run, a distance-based scheme variable by time and place, carries the maximum benefits.

Individual drivers will be free to make choices about the routes they use, understanding the costs up front.

The scheme allows maximum flexibility as to where and when to apply price and at what level.

However, because all vehicles need to be wired-up for such technology, it is difficult to see such a scheme coming in quickly.

In the short term, a solution using cameras – tag and beacon – is the only practical tool we have.

It is unlikely that a London-style cordon will meet our local requirements – a cordon used in that way is a very blunt instrument and makes the whole of central London a priced area.

With no competitor city to worry about, London can afford to do it, but what we need is a solution proportionate to our problem.

We understand to a fine grain of detail where traffic congestion is in the region.

Predominately, it is on the motorway box around Birmingham and at peak hours on the main arterial routes in the region.

So work is being done to identify how these corridors of congestion can be eased by more of a "rifle-shot" solution.

Whatever we do has to pass the test of reasonableness and credibility.

We know where the congestion is and we need to demonstrate that we are solving the problem in the right way.

We are working hard to understand and model the consequences of road-pricing for our business base.

On the one hand, freeing up our roads will introduce over pounds 2 billion into the region’s economy, which is the cost of congestion annually.

Very attractive in the context of an overall pounds 100 billion regional economy. On the other hand, there will be costs to be picked up.

Who pays? Can the region’s businesses pass additional costs on or do they absorb them because of their improved productivity?

What will it mean for jobs? Will employers look to relocate out of the region or will the West Midlands become a magnet for inward investment because we have a reputation for easy, enj oyable journeys?

We are planning to model these economic outcomes by working with real businesses, some very intensively, spending one or two days getting into very practical detail.

This is the next step in what has been a long process of dialogue between the public and private sectors.

Our intention is to have completed this work before the end of the summer, so that our politicians can have some understanding of the consequences for business of introducing price, ahead of deciding whether to trial some solutions, remembering that no solutions can be embedded without the pre-conditions being met.

Is all this just another stealth tax? I can say that the work is dominated by the need to solve our congestion problems, not raise tax.

This is evident at every turn in the development of the project and by the level of transport expertise invested in the analysis.

Equally, we have to recognise the dire state of transport investment in the UK over the last 30 years.

We have a massive investment gap to make up and the money has to come from somewhere.

The politicians need to make clear the priority they place on transport.

The money may be found from a combination of the growth of GDP in the country; efficiency savings and how we divide the existing cake up.

Is it time for transport to jump ahead of health and education, for example?

We need a much more intense debate, but my own view is that road- pricing has the potential to raise additional funds and local businesses might be prepared to pay, if they see the money raised is being reinvested in our local transport.

Another option is to make the exercise revenue neutral – reduce funds raised from items such as road tax and fuel duty to net out the funds raised from road-pricing.

While this delivers congestion benefits it does not produce new money for transport. This debate needs further airing.

There is evidence to show a perfect correlation between growth in GDP and growth in the demand for travel.

We can reduce the need to travel by getting smarter about where we build our houses in relation to employment, and efficient transport brings reduced transport costs, access to wider pools of labour and better access to customers and suppliers – as well as improvements to the environment.

If we get it right in the West Midlands first, we can become famous for being the best region in the country to set up and run a business.

There are no easy answers, but the prize is a big one.

We must push on with our work and then ask the people to decide, informed by the facts.

It will be one of the most important decisions we take.

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