Consulting » Congestion charging – Proceed with caution

From the outset, London’s Mayor, Ken Livingstone, took care to try to get fleet operators on side with the London congestion charging scheme.

There are two fleet schemes – one for cars and one for vans. Both involve a registration process, where fleet operators must register a minimum of 25 vehicles in either or both schemes. The biggest benefit to registering is that fleet operators can then avoid incurring a series of penalty charges, currently £80 or £40 if paid within 14 days, which they would otherwise have to pay if fleet drivers fail to pay the congestion charge when driving into the zone.

The cost of registering with one of these schemes is relatively inexpensive – £10 per vehicle, per year. That may not sound like much but it’s a nice additional revenue earner for Transport for London (TfL), especially with 1,000-vehicle fleets and above, where it simply becomes an additional cost of doing business in London to be added to the £5 x ‘n’ number of journeys that operators will also have to bear.

Under the notification scheme, which is primarily aimed at company car operators, fleet operators voluntarily submit a list at the end of each monthly accounting period of those registered vehicles that were driven into the zone on each day of that month. This clearly will require a substantial administrative effort from fleet operators, many of whom will, at present, not be logging every journey of every fleet driver. Operators now need to ensure that if a driver heads into London, that information is captured for their records.

The registration plates of all vehicles entering the zone are captured on camera and automatically dumped on to a massive, searchable database.

The operator’s list is automatically checked against this database of registrations. Any omissions from the list are then added to the operator’s fleet account with TfL, the body that is operating the scheme.

There is, apparently, no penalty to fleets for omitting vehicles from the list. TfL appears to have complete confidence in the probability of its system correctly identifying any omissions, and correcting the list and the subsequent billing automatically. The main concern for fleet operators will be ensuring they have sufficiently accurate systems in place to audit the TfL monthly charge – to ensure their drivers did, in fact, enter the zone on the days in question.

The system operates a prepayment scheme, with funds drawn from the operator’s account by direct debit, in favour of TfL. Again, this scheme looks slick enough on paper and – apart from the possibility of false identifications and incorrect charging – one might expect it to become simply another element of fleet management.

Business reaction to congestion charging has largely been positive, although many have adopted a wait-and-see attitude. As CBI London director Mary Rance made clear in her statement on the new charge, a gridlocked, congested London is anti-business anyway.

There is fairly uniform acceptance that something must be done. “It is in no one’s interest for congestion charging to fail. The principle is right. Road space is a limited resource and this is a realistic way of rationing it. Clogged roads are a huge drain on business and we cannot do nothing,” said Rance.

The proof of the scheme will be that it actually succeeds in driving a sufficient number of vehicles off the road, thus bringing about reduced congestion in real terms. TfL has set a target of 10% to 15% less traffic, on average, on the roads at peak times. The first week of the scheme, however, delivered closer to 25% less congestion, but about 10% of that was thought to be a result of the school holidays, thus fewer parents making the school run.

Rance says that her members are looking to TfL to use the scheme as a catalyst for wider measures to create more workable rules for delivery and service vehicles travelling into London. “Daytime parking restrictions and the night-time lorry ban make it very difficult to carry out these crucial activities,” she claims.

Rance points out that alternatives to the congestion charging scheme are seriously flawed. “For example, workplace parking charges (an idea floated in the government’s Transport White Paper) would add to business costs while having little effect on traffic levels,” she notes.

Paul Bellamy, general services manager at courier company DHL, says that early feedback from the company’s drivers suggests traffic volumes are down and that it is now marginally easier to make deliveries. However, he had some gripes with the administration of the fleet systems. Under the scheme, alternative fuel vehicles only pay a one-off registration charge and are exempt from the daily charge. Bellamy complains that the process for registering liquefied petroleum gas-fuelled (LPG) vehicles is long winded. But despite this, he was pleased that DHL’s foresight in moving to “greener” vehicles has been recognised and rewarded by the TfL scheme.

DHL, in common with many companies, has taken the view that those sales people who drive into the zone will have to pay the charge out of their pockets and claim it back as an expense. If they forget, and are fined as a result, the company will not reimburse them. “We wrote a policy for this, which all our car drivers saw. They are well aware of their responsibilities. I had thought that self service of the kind envisaged by the charging scheme would be a problem with the executive ranks, but it has worked very smoothly,” comments Bellamy.

Terrance Bonner, finance director at City & Suburban Haulage, reckons it is still too early to tell how well the scheme is working. “The roads are always (less congested) when the schools are on holiday. It may be that instead of launching a congestion charging scheme, TfL should have addressed the problem of parents and school children in cars,” he says.

For Bonner the biggest concern is that the company’s drivers will drive into the zone on business and forget to pay the fine. “If someone strays into the zone without telling you and does not take care of the charge, the fine will arrive in the post and that will be a real irritant,” he says.

According to Norman Green, Oracle UK vice president of finance, Oracle is in favour of the charge. “Less traffic on the roads means our consultants can make appointments in better time.”

As with DHL, Oracle is treating individual charge payments by its drivers as an expense item, with the driver having to field any fines that he or she might incur. However, Green points out that while Oracle aspires to be an ethical company with a green tinge to it, it is already aware of a dilemma caused by the fact that many of its employees with company cars have taken to using public transport to get to client sites in the zone.

That is all well and good, Green says, but it leaves Oracle having to pick up the tab for providing a company car in the first place and for the new increase in expenditure on public transport.

“On the plus side, there is less wear and tear on the car, which enhances its residual value. On the down side, we are now paying for both public transport and a car. This is something we are looking to address through new policies,” he comments.

LeasePlan UK managing director Kevin McNally points out that a survey of LeasePlan customers just prior to the introduction of the charge found that 86% of businesses had decided to continue driving into London as usual, despite the charge. “You would not find a single business, including our own, that would be happy with a gridlocked London, but companies are uncertain right now of the scale of the administrative burden the scheme is likely to impose.

“There is simply no system in most companies for capturing in some centralised, available way where company car drivers are headed when they get into their cars. We can help our fleet operator customers deal with these challenges, but they will need to be met,” says McNally.

One of the more innovative elements of the TfL scheme is an option that allows drivers to use their mobile phones to pay their congestion charge.

Mark Fitzgerald, business development director at WAPmx, whose SMS Gateway product is at the heart of the TfL SMS (text messaging) option, explains that drivers can initially phone or go online to the TfL call centre to give their personal, car registration and credit card details. Thereafter, every time they want to pay the congestion charge, all they do is key a special number, 81099, into their mobile phone, then give the last four digits of their credit card.

The system holds the driver’s details, so the mobile phone number, which is automatically captured by the SMS system together with the last four digits of their credit card, is sufficient to identify them accurately.

The system then debits their credit card for the day’s congestion charge.

Thanks to the flexibility of SMS, the scheme allows a driver to pay for someone else’s congestion charge as well by texting in 0024 followed by a space, followed by the additional car registration number. As Fitzgerald explains that a user might share a trip in to London with a friend and agree to pay the congestion charge in return for a lift in.

Once there is some uniformity among the networks, it would be possible for TfL to identify a driver’s vehicle from the cameras, recognise that they are a member of the SMS scheme, and text them to say they have been billed £5.

Fitzgerald hopes that the striking efficiency of this approach will prompt UK corporates to think more creatively about how SMS can be applied to their business processes. “We hope to see (more) business interest in the potential of SMS, thanks to the high profile it will get from the TfL scheme,” he says.