The Manchester Congestion Charge

The proposed investment of £2.8bn in Manchester, includes a conjestion charge. This has the dual purposes of.

 

1)                Providing a “stick” incentive of getting people to use public transport instead of cars.

2)                Raising sufficient revenue to pay off £1.2bn of loans.

 

The projected costs are £318m capital investment, with expected annual revenues of £174m and operating costs of £31m

 

 

I have attempted to put this into a calculation.

Other snippets of data are

1. “Fewer than 20% of Greater Manchester’s weekday peak-time drivers would pay a charge. The average daily charge is estimated to be less than £3 (at 2007 prices).

2. The average cost in 2013 would be £3.60 (£3 at 2006 prices)

 

From this I have put together the following estimate.

Manchester Congestion Charge
Manic Beancounter’s Estimate based on £174m revenue
        Data Basis Comment on Calculation
             
    Revenue From Tolls        
           
C1   Average Charge per day   £3.60   This is £3 per day at 2006 prices
           
C2   Average per annum per person   £680.40    
    Based on No of days Commuting   189   Allows for 15 days sick or on business elsewhere, and 20% “foul weather” drivers using car 50% of the time
           
C3   Number of commuting drivers   810,000   (equivalent to 54.5% of Gtr Manchester’s Working Age population)
           
C4   Drivers paying charge   153,900 19.00% % of total commuting drivers paying Toll
           
C5   Annual Toll Revenue in £m   £104.7    
             
             
    Revenue From fines        
           
C6   Non-payers per day   6926 4.50% Equivalent % of total paying drivers (based on London)
           
C7   Annual Fine Revenue    £69.3 £40 Average fine (compared to £80 in London)
           
           
C8   Total Revenue (Tolls & Fines)   £174.0       C5 + C7
           
C9   Operating Costs   -£31.0    
C11   Capital Costs   -£37.9   Repayment of borrowings of £318m out of £1200m
           
C10   Annual Surplus   £105.1 887 Equivalent amount of borrowings in £m
             

 

Further assumptions made are

 

C2. I have looked at the average driver, to allow for actual days travelled. That is some taking bank holidays and 25 days leave. With 260 weekdays in the year, that leaves around 225 working days. Then some people mix between commuting by car and other means (public transport, car share, cycle, walking). I have ignored the other road users for this calculation. Therefore 189 days at £3.60 give £680.40 average charge per annum

C3. The number of weekday peak-time drivers per day I calculate to be 810,000, or 54.5% or the working age population. The working age population I assume to be 60% of the population of Greater Manchester of 2,480,000. It is a rough and ready calculation, but

C4. As less than 20% will pay the charge, I take 19%, or 153,900

C5. The total revenue is 153,900 x £680.40 = £104.7m

C6. There will be some non-payers. I assume that the percentage will be the same as in London, that is equivalent to 4.5% of the payers. That is 6926 per day.

C7. The average fine, I estimate to be £40, compared with £80 in London. This seems a bit steep at 27 times the average charge, compared with 10 times in London. If it was actually that level, I am sure the non-payers would be less. However, if I don’t set it at this level, I will not get back to the £174m total revenue.

C11. The capital cost is a charge that I have included. It is interesting to note that the term of the loan is 10 to 12 years. I am sure that the life expectancy of the system will be only five to seven years. Therefore the capital cost should be around £70m. This would only leave the surplus to pay for other borrowings at £300m over 5 years, and not £887m over 10 to 12 years.

C12. We thus have an annual surplus of £105.1m, sufficient to pay off £887m of borrowings.

 

Issues.

 

1.The estimates made here are speculative. Although the proposals will be based on better data, I believe that the figures should be independently reviewed. There is a considerable risk that the revenues are over-estimated, and the operating costs under-estimated.

2. The life expectancy of the system should be stated. If electronic tagging of cars is to be introduced before 10 years of operation are complete, then the quantity of other investment will reduce dramtically. The general taxpayer will end up paying.

3. The numbers are after 15% to 20% reduction in drivers switch to public transport. That means the estimates project around one million weekday drivers when the charge is implemented. Is this based on a considerable growth from present day levels.

3. Finally, I would like to see the study that claims “JUST ten per cent of weekday motorists would pay a Greater Manchester congestion charge”, as reported in the Evening News on 11th August. I have had to stretch things a bit to get 19%.

Leave a comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: