Parking levy alternative to congestion charge

Copyright: David Lawson

Published: Property Week 2007

It is not long since the UK media was peppered with terms like ‘Red Ken’ and ‘loony left’, as the controversial London mayor Ken Livingstone staked his political future on the massively unpopular congestion charge. Today, almost every major city in the western world is considering following suite, stoking up similar disputes.

 Yet there is an alternative which may prove less controversial. Nottingham, one of the economic powerhouses of the Midlands, is planning a levy on businesses that provide private parking for employees and visitors as a way of cutting commuting. It says a parking tax would be cheaper than road charging, which involves millions installing cameras and loses almost half of all income to administration costs. 

  Cambridgeshire has still found reasons to reject a levy but Bristol and Manchester have kept the door open to a hybrid system of road and parking charges. So if the Nottingham experiment appears to be working, a levy could spread like wildfire across the UK.

  Response in Nottingham has been relatively muted.  ‘This has been hanging over us so long that people tend to think it will never happen,’ says Edward Hine, a partner with local commercial agent Fisher Hargreaves Proctor.  But the council put its plans to an informal public meeting last month and if this finds no major pitfalls, government approval could son be sought to start charging a levy of £185 per parking space by 2010.

   This is bound to unleash fears that employers and shoppers will flee the city in droves.  Anything that adds to occupation costs in the centre is bound to have an impact, says Hine. This would be eased if the city invested heavily in public transport.

  Ironically, the whole point of the levy is to help pay for a £400m expansion of a pioneering tram and bus system. ‘The problem is they have got this the wrong way around,’ he says. ‘The public transport should have come first.’

   The period between the levy being imposed and completion of the transport upgrade could mean the city will suffer compared with surrounding centres like Leicester. As long ago as 2001 an independent study accepted there would be an initial problem but insisted that neither a levy nor road charging would have much long-term effect.  Late last year the city commissioned a team to reinforce this message and plan implementation.

  Chris Pickles, a director of Turner & Townsend Management Consultants, which headed the team, says it was important to produce a solid business case and  detailed procedures for implementation, such as how the levy would be imposed, who will be charged and how it will be collected and enforced.

   One key message was that ambitious transport improvements could not take place without the levy. It will raise £9m -£12m a year towards the 25% contribution required from the local authority. The rest will be part of a PFI.  The team has proposed charging organisations providing 10 or more parking places, leaving more than 3,000 small employers exempt. Emergency services, disabled spaces, fleet vehicles, loading spaces and motorcyles will also be excluded.

   Parking charges will represent less than 0.5% of turnover for 95% of businesses affected and will not have a significant impact on investment and location decisions, according to consultant PwC, a member of Pickles’ team.  Any adverse affect on inward investment will be offset by the transport improvements, it says. City centre retailers will also be relieved to hear that customer parking will be exempt. The alternative of a congestion charge would drive shoppers out of town.

   There are bound to be questions why business is shouldering the whole burden. But commuting is the source of most cities’ problems, says Pickles. A parking levy focuses on that group compared with the universal burden of road charges. The government has recently announced that local authorities can raise a special business rate for such projects but the council says it cannot wait for new laws to drag through Parliament and then be implemented.  Plans including two new tram lines are on a tight schedule. But that does not preclude an extra business rate being used for further improvements.