Blog Post

Investment in London’s roads is badly needed but how can we pay for it?

The transport world is abuzz with predictions of the end of private car ownership. In this vision of the future, people will pay as they go to use shared vehicles, from cars to private taxis, bikes to scooters. However, we are far from seeing the obsolescence of cars, and roads will still need to carry shared vehicles, delivery fleets and buses, as well as increasing numbers of pedestrians and cyclists.

This means that London’s roads need to be maintained and improved, and investment is desperately needed. There’s a backlog of potholes to repair, dangerous junctions to reconfigure, pavements to be widened and cycling lanes to install, to ensure the safety of drivers, pedestrians and cyclists alike.

But the road network has never been a priority for funding – playing second fiddle to the tube and railways.

Who is responsible for London’s roads?

Highways England – the national agency that operates and maintains England’s major roads  –  is only responsible for the motorways within the Greater London boundary, which comprise less than 0.5 per cent of London’s total road network. Transport for London (TfL) manages the 580km-long strategic road network (the red routes). This represents just four per cent of the total road length, but it carries 30 per cent of all traffic in the capital. The remainder – a dense network of local roads – is managed by local authorities – and funded by a mixture of grants and local revenues such as parking.

As transport is an area devolved to the Mayor of London, budgets for the capital’s strategic roads are managed by TfL. This means that any central government allocations, such as the £420 million for local roads maintenance announced in the 2018 Budget, do not apply to London. TfL used to receive an annual grant from central government to help cover operating costs, but this has now come to an end. It is often assumed that driver taxation is used to pay for road maintenance. However, Vehicle Excise Duty (VED) and fuel duty, which are collected by the Treasury, go towards general taxation.

Financing London’s roads

TfL of course has other sources of income. The Congestion Charge (CC) provides some, but only £156 million of the £725 million TfL spent on road maintenance in 2017/18 came from drivers paying the CC. The remainder needs to be made up of tube and bus fare revenues. This means that London’s roads are not self-financing and there is a de facto imbalance between the relative contributions of road and public transport users.

However, CC income has seen a five per cent drop this year alone, as fewer chargeable vehicles are entering the zone. Only half the drivers entering the zone are liable to pay the full £11.50. Cabs and ultra-low emissions vehicles are exempt, while residents get a 90 per cent discount. Fare revenues are also falling, due to declining ridership on both the tube and buses, the Mayor’s fares freeze and the new Hopper bus fare. To add to TfL’s fiscal woes, the delay of opening Crossrail means millions of forecast fare revenues will not be forthcoming.

Is there a better way?

The Mayor’s Transport Strategy raised the possibility of replacing the CC with a more sophisticated road pricing scheme that reflects the impact of individual journeys. Rather than a small proportion of drivers paying a large CC, all drivers would pay a fair share. This has the potential to make London roads self-financing and enable TfL to guarantee a good level of service for road users, with well-maintained roads and improved journey times.

However, the raison d’être of any road pricing regime should be to deal with the congestion and pollution caused by driving. A new system could charge drivers on the basis of distance, as well as local congestion and pollution levels, applying a “user pays, polluter pays” principle, encouraging people to reduce overall car usage and to make informed, sustainable travel choices.

Ultimately, it could help bring the future vision for our city – one where car ownership obsolete and people can walk, cycle or use public transport to reach most destinations – within reach.

Read our Report on Road user CharGing


Silviya Barrett is Research Manager at Centre for London. Follow her on Twitter