Could more cities charge employers for parking spaces to help fund local infrastructure?

Look at all that lovely, empty space. Image: Getty.

As government budget cuts continue to bite and competition for funding increases, it’s becoming harder for UK cities to secure the money needed to build or maintain good quality infrastructure. For example, Sheffield’s Supertram network faces a £230m funding gap, and could close unless transport executives can raise the funds to renew the network.

But if central government won’t provide funding, there are other ways for city authorities such as Sheffield to generate income for much needed transport infrastructure. One idea is a workplace parking levy, which is a charge placed on all workplace car parking spaces within a specific boundary.

The premise is simple: each year, the business who owns that space must pay the local authority a set amount of money. Businesses may chose to pay this themselves, or pass the charge on to their employees through car parking fees. The money collected from the levy is used to help fund transport projects within the local area, while also encouraging commuters to shift away from cars and onto other modes of transport.

Pioneer cities

After being adopted in Australian and Canadian cities, the levy was first introduced to the UK in 2012 in the city of Nottingham. During its first year, the charge raised £7m and has continued to raise funds since. The money has allowed Nottingham to keep up its contributions to the Private Finance Initiative (PFI) that was used to pay for an expansion of the city’s tram network, along with other important transport improvements.

Currently, the cost per space stands at £402 per year, although there are some notable exceptions to the charge: businesses with fewer than 11 spaces don’t have to pay, and there’s no charge for emergency services and disabled parking.

Other cities have begun to follow Nottingham’s path. Both Oxford and Cambridge have made steps towards introducing their own versions of the levy to fund transport improvements.

Manchester considered the levy as a tool to help improve the city’s air quality, although a proposal was recently rejected by the city council on the basis that the levy would need to be applied across the whole of Greater Manchester to work. Sheffield made a small reference to the potential use of a levy in its recent draft transport vision, although it’s not clear how well developed these plans are.

Together with colleagues from the universities of Nottingham and Southampton, I’ve undertaken research which included interviewing a range of key people from Nottingham’s city council, the local tram operator, the Chamber of Commerce, as well as politicians and managing directors of several Nottingham-based businesses, to find out what made Nottingham’s workplace parking levy a success.


Recipe for success

For one thing, Nottingham is a politically stable city. Labour are the dominant party within the local council and have been since 1991, so councillors are less concerned about suffering electoral losses in response to a poorly received policy, and more confident about implementing more radical ideas.

Nottingham’s boundary is also tightly drawn, which meant that deciding where to apply the charge was more straightforward. Manchester’s experience shows that larger cities may have more difficulty in determining who is subject to the charge.

Initially, some businesses saw the charge as a “tax” on them and opposed the policy; media reports at the time warned of businesses leaving the city and moving to nearby economic centres, such as Derby. But there is no evidence to suggest that these worries have materialised in the longer term.

Identifying a piece of infrastructure, such as a tram system, that will be built using funds from the levy also appeared to be an important argument to “sell” the charge to sceptics. So although there was opposition to the workplace parking levy, there was also a lot of support for the tram expansion and the benefits this could bring.

An opportunity to invest

The workplace parking levy offers cities an opportunity to collect and invest large amounts of money in their own infrastructure; or to leverage even greater amounts of money from other sources, which might otherwise be unfeasible.

For Nottingham, a large part of its success is based on the fact that it preemptively used the money raised through the workplace parking levy to leverage significant finance from the UK government, through the PFI deal. To secure these funds to pay for the tram expansion, Nottingham agreed to commit to repaying 35 per cent of the value of the PFI (estimated at £187m). The council has used the levy on an ongoing basis to help it meet these costs.

The experience of Nottingham and other pioneer cities shows that while the workplace parking levy is based on a rather simple premise, introducing one is not a simple process. There will undoubtedly be opposition; the local authority may need to work hard to emphasise the benefits, in order to adopt the policy. And of course, every city and town is different, so there’s no single path to success.

But as local authorities continue tightening their belts in response to ever more challenging budgets, it may not be long before we see more places taking steps to introduce their own workplace parking levy.

The Conversation

Stephen Parkes, Research Associate, Sheffield Hallam University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 
 
 
 

What's actually in the UK government’s bailout package for Transport for London?

Wood Green Underground station, north London. Image: Getty.

On 14 May, hours before London’s transport authority ran out of money, the British government agreed to a financial rescue package. Many details of that bailout – its size, the fact it was roughly two-thirds cash and one-third loan, many conditions attached – have been known about for weeks. 

But the information was filtered through spokespeople, because the exact terms of the deal had not been published. This was clearly a source of frustration for London’s mayor Sadiq Khan, who stood to take the political heat for some of the ensuing cuts (to free travel for the old or young, say), but had no way of backing up his contention that the British government made him do it.

That changed Tuesday when Transport for London published this month's board papers, which include a copy of the letter in which transport secretary Grant Shapps sets out the exact terms of the bailout deal. You can read the whole thing here, if you’re so minded, but here are the three big things revealed in the new disclosure.

Firstly, there’s some flexibility in the size of the deal. The bailout was reported to be worth £1.6 billion, significantly less than the £1.9 billion that TfL wanted. In his letter, Shapps spells it out: “To the extent that the actual funding shortfall is greater or lesser than £1.6bn then the amount of Extraordinary Grant and TfL borrowing will increase pro rata, up to a maximum of £1.9bn in aggregate or reduce pro rata accordingly”. 

To put that in English, London’s transport network will not be grinding to a halt because the government didn’t believe TfL about how much money it would need. Up to a point, the money will be available without further negotiations.

The second big takeaway from these board papers is that negotiations will be going on anyway. This bail out is meant to keep TfL rolling until 17 October; but because the agency gets around three-quarters of its revenues from fares, and because the pandemic means fares are likely to be depressed for the foreseeable future, it’s not clear what is meant to happen after that. Social distancing, the board papers note, means that the network will only be able to handle 13 to 20% of normal passenger numbers, even when every service is running.


Shapps’ letter doesn’t answer this question, but it does at least give a sense of when an answer may be forthcoming. It promises “an immediate and broad ranging government-led review of TfL’s future financial position and future financial structure”, which will publish detailed recommendations by the end of August. That will take in fares, operating efficiencies, capital expenditure, “the current fiscal devolution arrangements” – basically, everything. 

The third thing we leaned from that letter is that, to the first approximation, every change to London’s transport policy that is now being rushed through was an explicit condition of this deal. Segregated cycle lanes, pavement extensions and road closures? All in there. So are the suspension of free travel for people under 18, or free peak-hours travel for those over 60. So are increases in the level of the congestion charge.

Many of these changes may be unpopular, but we now know they are not being embraced by London’s mayor entirely on their own merit: They’re being pushed by the Department of Transport as a condition of receiving the bailout. No wonder Khan was miffed that the latter hadn’t been published.

Jonn Elledge was founding editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.