June 01, 2006

Blair’s Budget Cuts Undermine Benefit of London’s Pricing Scheme

The budget cuts £125 million for the next two fiscal years (2004/5 and 2005/6), while Transport for London projects that the congestion charge will raise £130 million each year. The budget for 2005/6 is £200 million less than in both of the previous two years.

Though TfL anticipated cuts in the next budget cycle after a Comprehensive Budget Review last year, this political wrangling will leave a projected £500 million deficit in 2005/6. The move also sends a disappointing message to other cities interested in modeling congestion charging programs after London’s.

Despite the blow to Mayor Ken Livingstone’s transit investment plan, the congestion pricing program is still continuing to impress observers with its successes.  Transport for London continues to report a 20% reduction in automobile traffic in the area covered by congestion pricing.  Bus riders have benefited from more reliable and faster service.

London cyclists are also raving about the benefits of the plan.  Bike paths have been expanded around the city, and free bike path maps have become available in public libraries.  While data is not yet available about increases in cycle commuting, at least one company has seen sales jump since the charge was put into place.  Dahon California Inc., a leading folding bicycle manufacturer, reported in an April press release that UK sales have jumped 40% from the same time last year.


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