Is car ownership worth it for city dwellers?

Red lights ahead. Image: Aviva.
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For city dwellers who are fortunate enough to have access to good public transport, a car might be anything from a luxury used for road trips to the countryside to a burden, costly to park and cumbersome to navigate around congestion zones and heavy traffic. For most, it’s probably somewhere in between: used for occasional errands, such as trips to IKEA, and otherwise not really needed.

In an age where most people in their 20s and 30s would rather give up their car than their smartphone, the question is whether or not our cities are geared up for this transformation. We’re at a point in human evolution where people, especially young people, want to have a say in how they move about. Do they drive or not? There’s been a significant transformation over the past few years around ownership models.

On-demand services are ubiquitous for generations of young city dwellers and anything beyond that feels awkward and full of friction. Music, movies, food and commerce have all embraced the change and have come out the other end relatively intact and efficient. The good news is that there are alternatives focussed on relieving the urban burden of car ownership, whilst also being good for both the pocket and the environment.

One of these options is the subscription model: this includes car clubs. Companies like Enterprise, Zipcar, and E-Car charge a membership fee to join and then allow users to collect and return cars that are parked in various locations as and when they are required. All of the costs of owning a car – including tax, insurance, and maintenance – are typically included in the membership and hourly rates, although some companies also charge a nominal mileage fee. Other operators like Drover give subscribers the chance to swap their vehicles throughout the ‘membership’ period, and even include a BP fuel card.

The costs of ownership and car clubs compared

The costs of owning a car can be substantial: the average car costs UK drivers £162 a month, excluding any refinance payments, according to research by KwikFit. That goes up to £388 if you factor in the costs of buying the car – on average people pay £10,511 for cars purchased in cash and £15,438 for cars bought on finance.

How much it costs to join a car club will depend on what type of user you are. Zipcar, which claims to be the UK’s largest and most flexible car sharing service, offers either a monthly membership of £6/month with rates of £5/hour or £44/day or an annual membership of £59.50/year and the same hourly and daily rates. Fuel and congestion charge are included.

Bluecity says it is London’s first point to point car sharing system that is powered by 100 per cent renewable energy. It charges £5/month plus 19p/minute, with a minimum charge of 20 minutes. While they don’t require petrol, naturally, they will need to be plugged back in. Congestion charge is included as well.

Sharing cars

There are many challenges to owning a vehicle when living in a city. Sharing the pain of ownership could be a viable alternative for some people. Several councils in the UK have adopted lift sharing schemes. By sharing a vehicle with others and matching up journeys, users can share the costs as well as make new friends.

It’s pretty obvious that, by having less cars on the road, emissions would reduce too. In Norfolk, the county council and Liftshare set up a free-to-use lift sharing service for anyone who lives, works and travels in and around the county. They’ve even created a website to match up drivers with passengers. The CO2 saving is calculated along with the cost of the journey and contributions to the ride are shared with the other passengers. What’s more, members of the schemes can get access to priority parking bays reserved with participating organisations

Which is the way forward for cities?

For ultra-low vehicle users, buying a car is an uneconomic choice. The moment you buy a car, it begins to depreciate, and most of the time, it just sits there on the kerb, driveway, or garage.

Of course, if you need constant access to a car, or if your area doesn’t have a fleet of hire cars, you won’t just be able to give up on the ownership model. According to the RAC, car clubs work best in urban areas, and even so, usage is low. But there are many people who can reconsider their relationship with private transport, and that will have a big impact.

Most of us buy a car with the worst-case scenario in mind – thinking about that one trip where we have the whole family, all the suitcases, and all the shopping in the vehicle, and you’re moving across the country. That’s the one trip we have in the back of our minds when we go shopping for a vehicle, and we end up doing that trip maybe once a year – but the rest of the time we’re using it either on our own or to drop the children off at school, which means we’re over-purchasing in some cases.

A sensible option would be to think about what kind of car we need for one or two people and light goods – and what kind of storage we really have for the car – and buy that. And we can hire, or lease, or subscribe to the larger vehicle for that one big journey where we need to put all the suitcases and the kids and the dog and the kitchen sink in the car all at once. That would make much more sense, rather than having that huge, expensive vehicle that was depreciating massively, parked up near your home, not doing what it was designed for – which is full occupancy.

Of course, cars aren’t the only way to move around in cities. Walking, cycling, scooting and public transport generally have a place and should be considered as part of the overall mix of mobility. In London’s Mayor, Sadiq Khan, set out his vision for the city in his Transport Strategy and reaffirmed the aims that, “London must become a city where walking, cycling and green public transport become the most appealing and practical choices for many more journeys”. He went on to describe how, “… sustainable transport choices not only support the health and wellbeing of Londoners, but also the city as a whole by reducing congestion and enabling the most efficient use of valuable street space”.

We need to make sure we’re using the right vehicles for the right purpose, so that ultimately, we can have fewer vehicles on the road – and not as many larger SUVs, which are the more polluting cars. Ultimately, we’re aiming for a more sustainable future, which will include more electric vehicles, but there are a lot of things to consider before we can get there. People need to have a way of storing cars and eventually charging electric cars, and in the interim a subscription model is a good way of reducing the number of vehicles on the road.

Andreas Mavroudis is Senior Mobility Futures Manager at Aviva.


As EU funding is lost, “levelling up” needs investment, not just rhetoric

Oh, well. Image: Getty.

Regional inequality was the foundation of Boris Johnson’s election victory and has since become one of the main focuses of his government. However, the enthusiasm of ministers championing the “levelling up” agenda rings hollow when compared with their inertia in preparing a UK replacement for European structural funding. 

Local government, already bearing the brunt of severe funding cuts, relies on European funding to support projects that boost growth in struggling local economies and help people build skills and find secure work. Now that the UK has withdrawn its EU membership, councils’ concerns over how EU funds will be replaced from 2021 are becoming more pronounced.

Johnson’s government has committed to create a domestic structural funding programme, the UK Shared Prosperity Fund (UKSPF), to replace the European Structural and Investment Fund (ESIF). However, other than pledging that UKSPF will “reduce inequalities between communities”, it has offered few details on how funds will be allocated. A public consultation on UKSPF promised by May’s government in 2018 has yet to materialise.

The government’s continued silence on UKSPF is generating a growing sense of unease among councils, especially after the failure of successive governments to prioritise investment in regional development. Indeed, inequalities within the UK have been allowed to grow so much that the UK’s poorest region by EU standards (West Wales & the Valleys) has a GDP of 68 per cent of the average EU GDP, while the UK’s richest region (Inner London) has a GDP of 614 per cent of the EU average – an intra-national disparity that is unique in Europe. If the UK had remained a member of the EU, its number of ‘less developed’ regions in need of most structural funding support would have increased from two to five in 2021-27: South Yorkshire, Tees Valley & Durham and Lincolnshire joining Cornwall & Isles of Scilly and West Wales & the Valley. Ministers have not given guarantees that any region, whether ‘less developed’ or otherwise, will obtain the same amount of funding under UKSPF to which they would have been entitled under ESIF.

The government is reportedly contemplating changing the Treasury’s fiscal rules so public spending favours programmes that reduce regional inequalities as well as provide value for money, but this alone will not rebalance the economy. A shared prosperity fund like UKSPF has the potential to be the master key that unlocks inclusive growth throughout the country, particularly if it involves less bureaucracy than ESIF and aligns funding more effectively with the priorities of local people. 

In NLGN’s Community Commissioning report, we recommended that this funding should be devolved to communities directly to decide local priorities for the investment. By enabling community ownership of design and administration, the UK government would create an innovative domestic structural funding scheme that promotes inclusion in its process as well as its outcomes.

NLGN’s latest report, Cultivating Local Inclusive Growth: In Practice, highlights the range of policy levers and resources that councils can use to promote inclusive growth in their area. It demonstrates that, through collaboration with communities and cross-sector partners, councils are already doing sterling work to enhance economic and social inclusion. Their efforts could be further enhanced with a fund that learns lessons from ESIF’s successes and flaws: a UKSPF that is easier to access, designed and delivered by local communities, properly funded, and specifically targeted at promoting social and economic inclusion in regions that need it most. “Getting Brexit done” was meant to free up the government’s time to focus once more on pressing domestic priorities. “Getting inclusive growth done” should be at the top of any new to-do list.

Charlotte Morgan is senior researcher at the New Local Government Network.