Briefing Note (BN11)

The distributional effects of the proposed London congestion charging scheme

Date: 02 October 2000
DOI: 10.1920/bn.ifs.2000.0011
This note uses the 1991 London Area Transport Study to estimate the distribution of charging liabilities amongst households living within the M25 arising from theproposed London congestion charging scheme.

Different households will have differing liabilities to the charging scheme accordingto the many and varied factors that together determine their travel patterns where they live, where they work, where their children go to school, whether they have a car or van, the number of members in the household and so on. And one thing that can be guessed about the final effects of the scheme on households is that these effects willbe extremely heterogeneous. Many households will be, on the face of it, unaffected by the charge. Many others, if their present travel patterns persist, may be faced withvery large bills.

The aim in this study is to analyse the potential progressivity or regressivity of the scheme in other words, to look at the link between the level of charges thathouseholds are likely to face and their ability to pay those charges.

The plan of the note is as follows: it first discusses the way in which the distributionaleffects of a tax or charge can be measured; it then describes the data used to make thiscalculation; finally it presents the results with a discussion.