Road pricing-key challenges

17 August 2007

Peter Elliott, Barry Jennings

In the UK there has been extensive, high profile debate about road pricing schemes and considerable controversy and vocal opposition centring in particular on allegations that it represents a stealth tax, and raises privacy issues and security concerns. In spite of this, the majority of reports looking at ways to tackle congestion suggest that road pricing is inevitable and that the only questions to be answered are how the system will work (localised schemes or a national system; government project or a concession/licence model), and when it will be introduced. However, the prospect of road pricing actually presents a host of legal and commercial issues that show the initial public debate as only the first of a host of hurdles to the successful implementation of road pricing schemes which combat congestion effectively.

Mechanisms for Road Pricing

What often gets lost in the noise of the debate is that there are a variety of options, of varying sophistication, for charging for road use and they each raise difficult questions. These include:

  • Toll – although this requires vehicles to stop and could increase traffic congestion (this is currently being used on the M6, although most people tend not to use the toll part and prefer to queue on the old road);

  • Self-declaration – similar to the London Congestion Charge although can be an inconvenience if the system is used regularly;

  • Dedicated Short Range Communication (DSRC) – a mature RFID tagging technology used across Europe for localised schemes (e.g. Dartford tunnel for goods vehicles) but only economically viable for measuring traffic passing particular single points;

  • Automated Number Plate Recognition (ANPR) – although this would be low cost to set-up as the plates and cameras already exist it would be more open to abuse (through faked or stolen plates) and has problems with accuracy; and,

  • Global Navigation Satellite System (GNSS) - Satellite monitoring of a vehicle as it moves about allowing sophisticated charging models and value added services (e.g. satellite navigation) but expensive to set up on a regional basis and suffers a public perception problem (Big Brother).

If it implements a road pricing scheme, the government seems likely to implement a system which will formulate the charge based not only on distance travelled, but also on the time the road is used, and the consequences of using that road at that time of day. GNSS has certain advantages over the other methods in terms of achieving this in that it allows national monitoring of real-time vehicle use.

Legislation

The Transport Act 2000 provides the legal framework for local authorities to introduce local road pricing schemes and provides the Secretary of State for Transport (or the National Assembly in Wales) with certain regulatory powers. However, the draft Local Transport Bill (presented in May 2007) proposes curtailing the requirement to consult the Secretary of State for charging schemes proposed in England and abolishing the power of the Secretary of State to require consultation on a charging scheme proposed in England.

The Road Tolling (Interoperability of Electronic Road User Charging and Road Tolling Systems) Regulations 2007 begin to pave the way for electronic road user charging schemes by establishing rules to help ensure interoperability with other schemes both in the UK and abroad. These regulations prescribe the technical requirements for any new electronic toll system, such that an electronic toll system must use one or more of the following technologies in its communication interface:

  • Satellite positioning

  • Mobile communications using the GSM-GPRS standard (reference GSM TS 03.60/23.060)

  • 5.8 gigahertz microwave technology

The regulations do not rule out traditional tolling or the use of ANPR technology as they provide an exemption where the system does not require an electronic device on-board the motor vehicle.

Interoperability

The Government is waiting to see how local pilots of road pricing schemes develop before making a decision on whether or not to proceed with a national road pricing scheme. For local schemes to be a success they will need to demonstrate interoperability with other pilot schemes as people travel between pilot areas. Members of the public will not want to have to use different on-board devices in different cities and they will not want to face a multitude of billing arrangements. They will also want disputes readily resolved by their local operator even if the disputed charge relates to travel in a different region. Whilst regulations and standards can go some way to achieving this, robust contractual arrangements (a) between public bodies and their road pricing system suppliers, and (b) public bodies have with each other will be essential. There needs to be clear delineation of responsibilities and skilled contract management to avoid the potential for significant disputes going forward.

Interoperability is at least as significant an issue in relation to road pricing systems operated overseas. For a general road user charging scheme, UK residents travelling abroad will not want to be forced to acquire different equipment to drive abroad. While this would be an irritant for members of the public and potentially more costly, it could have a severe impact on haulage businesses seeking to trade across Europe and compete with overseas hauliers operating in the UK but being licensed abroad.

“Mobile Model”

Much of the dialogue amongst the suppliers of road pricing technology has been around the potential for following a “mobile telephone” or “utility” model for road pricing (i.e. a number of operators are ‘licensed’ to sell road pricing devices to members of the public to put in their cars and these devices work to record road use). The operators can then use these on-board devices as a platform for provision of a variety of value added services (satellite navigation, traffic information, local services information, pay-as-you-go insurance). This approach certainly has attractions – for the suppliers it avoids a lengthy procurement process that they may not win and provides a channel to consumers to generate more revenue through these value added services; for public bodies the provision of value added services could help convince members of the public to accept road pricing and the revenue from value added services would help to fund the operating costs of the road pricing scheme (and help convince suppliers to accept more risk on the upfront development costs and on-going operating costs so the public sector gets a better deal).

However, this licensing approach has a number of difficulties:

  1. Unlike the voluntary purchase of a mobile phone, road pricing will be a mandatory scheme for tax collection. Adding bells and whistles will not change the minds of the more vehement opponents – particularly as many of the mooted value added services are available commercially already or soon will be – and there is an argument that this would effectively be a privatisation of part of tax collection.

  2. The government would be creating a commercial channel on the back of a mandatory (and monopoly) service. If, by way of example, members of the public can access discounted satellite navigation via their mandatory road pricing device, current satellite navigation suppliers are likely to object strongly (unless they are part of a licensed consortium) and this could raise competition law and state aid issues depending on the commercial arrangements.

  3. Also unlike mobile phone licences, the suppliers of road pricing systems cannot be left largely to their own devices (subject to regulatory control) upon payment of a one-off or annual fee. There will be an on-going public sector service that the responsible public bodies will need to manage. This means that local authorities might consider themselves better-served by competitively procuring one road pricing partner under a service agreement and keeping the service as straight-forward as possible – this certainly helps to mitigate service management, interoperability and dispute resolution risks. If road pricing is nationalised, the Department for Transport (if it decided to centralise control) could take a similar view and have no more than a few regional service providers.

  4. There is no public imperative to create competition in the supply of road pricing on-board devices. An open market would suit the supply industry as it allows more of them to get a slice of the pie but the government could take the view that, particularly with a topic as sensitive as road pricing, the public interest is better served through tight control of monopoly operators and price-setting by the public sector.

This all goes to illustrate the inevitable divergence in objectives between the public and private sectors. This is by no means an impossible divide to bridge but requires an open dialogue between the government and industry and careful consideration of the principle objectives of road pricing.

Data & Privacy

When 1.8 million people signed the petition against road pricing on the Downing Street website earlier this year, it was clear that, along with the concern over increased driving costs, the issue concerning most people was the prospect of a massive surveillance system tracking citizens across the country’s road networks. The use of data by the public sector is always a sensitive topic in the UK but it is becoming increasingly high profile.

Ensuring compliance with the Data Protection Act – in terms of both use of personal data and ensuring security and accuracy of data held – will be at the fore-front of operators’ minds, particularly as data storage and handling is likely to be outsourced to the private sector. In addition, if a road pricing scheme was interpreted as providing a public communications network (and road pricing schemes based on the use of telematics could well be), the Data Retention Directive 2006 would also apply and the data retention regulations to be implemented in the UK would require certain data to be retained for at least 12 months.

Traffic trend data could be of significant commercial value to third parties. If a public authority seeks to licence this data to third parties (potentially recouping some of the operating costs of the road pricing scheme) then it will need to ensure (a) it has the authority to use the data in this way, (b) it complies with the licensing rules under the Re-Use of Public Sector Information Regulations 2005, and (c) it deals with location data in compliance with explicit provisions – particularly regarding consent - contained within the Privacy & Electronic Communications Directive 2002 (brought into English law by the Privacy and Electronic Communications (EC Directive) Regulations 2003).

Enforcement/Evidential Issues

One question that will need to be answered by any operator of an electronic tolling system is how do you enforce the scheme? Furthermore, who is liable for the charge – the owner of the vehicle or the driver? Presuming it is the owner (the speed camera example demonstrates how difficult it can be to identify who was driving a vehicle at any point in time, although improvements in technology mean that a scheme including cameras could largely override this problem), this will require links to the DVLA database of vehicle owners when seeking to enforce the scheme and this will need to be done in accordance with data protection legislation. What happens if the database is incorrect? How would you deal with rental or foreign vehicles? What, ultimately, will be the sanctions if someone refuses to comply?

Any electronic tolling system will not only need to link up with the electronic devices on-board vehicles passing through the charging zone but it will also need to link in with a CCTV or speed camera system to identify those vehicles that pass through the charging zone without the requisite electronic device on-board. High enforcement costs would undermine the benefits of a scheme and, therefore, it is crucial to devise road pricing schemes that are simple to enforce and difficult to avoid and to identify at the outset who will be responsible for enforcing the scheme.

Conclusion

The implementation of road pricing schemes is probably inevitable given the rapid increase in congestion in the UK. This will undoubtedly prove controversial but even if the public debate can be won (or avoided) there are still a number of issues to resolve in order to introduce successful schemes (locally or nationally). This article has focused on those questions that are specific to the road pricing question debate – and there are answers to all of these - but local authorities, public bodies and suppliers should not forget the dangers inherent in all major public sector projects with procurement, project delivery and contract management. Ultimately, the success of road pricing schemes will depend upon a combination of sensible strategy, informed decision making and good management.

For further information please contact peter.elliott@twobirds.com or barry.jennings@twobirds.com by email or on 020 7415 6000.

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