Charging into the unknown

Firms are left guessing about the impact of the charges

By Brian Wheeler BBC News Online business reporter

No one really knows what impact Ken Livingstone's congestion charge will have on London's business community.

The figure of £2bn is sometimes quoted as the annual cost of transport hold-ups in the capital.

These things can only operate with consent - after a certain point, if the consent is not there the system can not operate

Piers Merchant, London chamber of commerce

Transport for London (TfL), which will administer the charge, and the Mayor's office prefer a more modest "£2m to £6m" a day.

But businesses that have to make deliveries in central London claim they will be out of pocket to the tune of £100m a year when charging comes in on 17 February.

While many shops on the edge of the charging zone say they will be driven out of business altogether.

In truth, the cost of congestion - and the impact a levy on road use in central London will have on it - remains an unknown quantity.

And for many businesses, that is a worrying prospect.

'Tax on profits'

TfL has said it wants to see traffic in the charging zone reduced by 10 to 15%.

Does Livingstone understand business?

The knock-on effect in terms of reduced journey times and greater predictability for business people trying to make it to meetings across town is obvious, it argues.

But it has shied away from putting a figure on how much companies are likely to save.

"We would rather leave that to the imagination," a spokesman told BBC News Online.

Many smaller companies see the charge as a straightforward tax on their profits.

The road haulage lobby succeeded in securing a reduction from £15 a day to £5.

No improvement

But Geoff Dossetter, of the Freight Transport Association, says a great deal of anger remains.

Road space is a scarce commodity and this is a realistic way to rationalise it

CBI

"It is another stealth tax on business.

"And it is not going to alter delivery strategies one jot.

"Every available economy of consolidating loads, out-of-hours deliveries and other efficiency measures have long since been deployed.

"So the arrival of the scheme is unlikely to stop the wheels of a single goods vehicle turning," said Mr Dossetter.

Early start

Helen Evans, information officer for Covent Garden market authority, said traders felt Mayor Livingstone has ridden roughshod over their concerns.

"Catering is an industry that has very tight margins and these costs are going to have to be passed on," she said.

The market lies just outside the charging zone, in Vauxhall, but many of its workers will have to pass through it on their way home from work.

It may also mean an even earlier start for traders, as customers try to beat the charge's 7am start time.

Non-payment

The London Chamber of Commerce believes the charge must be given a chance to succeed.

Vehicles entering the zone will be charged

But its spokesman, former Conservative MP Piers Merchant, said he would not rule out a campaign of non-payment, if the scheme fails to deliver on its promise to unclog the capital's roads.

"These things can only operate with consent.

"After a certain point, if the consent is not there the system can not operate.

"I think the Poll Tax proved that," Mr Merchant said.

Tempers flaring

He added: "If we reached the conclusion that congestion charging was completely non-viable, that it was a complete mistake, we would be very vigorous in campaigning for it to be abolished.

"And we would do what was necessary to achieve that.

"We are a membership organisation and we would be guided by our members.

"But if it really isn't working, one can imagine there could be a situation where tempers are running fairly high."

The Chamber is monitoring traffic flow in central London and carrying out a series of case studies, to find out the impact of the charge on its members.

Transport for London will publish its own assessment of congestion charging after six months, with the first full annual analysis to follow in Spring 2004.

'Blatant profiteering'

But Nick Winch, London policy officer for the Federation of Small Businesses, believes traffic congestion - or the lack of it - is not the issue.

"Livingstone has failed to recognise the difference between essential and non-essential traffic.

"In many companies, the cost of the charge will be unrecoverable.

"We are also seeing price inflation. Wholesalers are going to add a 2.5% charge on to their invoices," he told BBC News Online.

He accused some suppliers of "blatant profiteering" by using the charge as an excuse to ramp up prices.

Business backing

Big business has been more supportive of the charge, recognising traffic congestion as a major disincentive to inward investment.

Richard Dodd, of bosses group the CBI, said: "Road space is a scarce commodity and this is a realistic way to rationalise it.

"Feedback from our London members is that they will support it, so long as it produces the intended result."

But even the most ardent supporters of the charge admit it is a huge gamble.

Attractive option

Business organisation, London First, argues London needs an independent revenue stream to fund improvements to public transport, free from Treasury interference.

And congestion charging has consistently been singled out as the most attractive option by businesses.

But London First's transport chief, Julia Lalla-Maharajh, said she thought Mayor Livingstone was underplaying the importance of the extra cash it will generate for public transport.

The £130m frequently quoted by Mr Livingstone does not include penalty payments. With that, she argues, it will be more like £200m.

Mrs Lalla-Maharajh was also "annoyed" at the way TfL was planning to spend its windfall, with £36m apparently earmarked for "road safety".

Congestion charging was a "very brave" move, she argued, but the critics would be ready to pounce "within six months" if it does not deliver.