London mayor Sadiq Khan has threatened to introduce a charge of £3.50 a day for drivers coming into the capital if ministers do not 'play fair' over Vehicle Excise Duty (VED).
He called on the Government to allow the capital to keep the £500m raised annually from VEC from London-based drivers, which City Hall said was spent almost exclusively outside London, leaving Transport for London TfL to fund maintenance its roads from its ‘fare-dominated’ income.
Cars head into London on the A13, July 2020
City Hall said TfL officials have been asked to investigate the feasibility of a new Greater London Boundary Charge, which would apply only to vehicles registered outside London that are driven into the capital.
It pointed out that the mayor has broad powers to introduce road user charging schemes to fund the Mayor’s Transport Strategy.
The move follows publication of what officials called an ‘independent’ review of TfL’s long-term future funding and financing options, commissioned by Mr Khan.
Officials said initial estimates suggest a charge of £3.50 a day could reduce the total number of weekday car trips across the Greater London Authority boundary by 10-15% and raise around £500m a year.
Mr Khan said: ‘Ministers have failed to play fair by Londoners when it comes to financing our world-renowned transport system. It is high time they did so.
‘It is not fair on London that our drivers should subsidise the rest of the country’s roads and get nothing in return. ‘If ministers aren’t prepared to play fair, then we will need to consider other options to address this unfairness.’
The report estimates that TfL has an annual funding gap of around £2bn, resulting from the impact of the pandemic on fare revenue and on ‘challenges’ that preceded it.
It finds that ‘TfL as an entity is worthwhile and should be preserved’ but that it ‘needs to show that cost control is at the forefront of the organisation’.
Among ‘recommended funding options for wider examinations’, it lists as contributing a possible £1.5bn ‘wider road user charging, a council tax ‘precept’, a VAT supplement/slice and government grants for major renewals and specific projects.
Smaller-scale options that could contribute £500m are: to review fare concessions – ‘mainly for 60-plus’ – service changes and efficiencies, 'small' fare increases and a slice of VED.
‘Second choice' options include a 25% increase in underground fares covering Zone 1 – ‘this would undermine the economy’ – a more ambitious road user charging package (this could be considered later), and a council tax precept requiring a more fundamental review of the system.
‘Options to avoid’ include a significant reduction in service levels ‘as this would impact mainly buses’.