The long-threatened workplace parking tax has finally become reality today. Nottingham City Council is the first in the country to apply powers created many years ago. It has forced all workplaces with parking spaces to register them on a database, with over 45,000 already accounted for.
Companies with more than 10 spaces will now be taxed £288 for each one, a substantial sum that will rise to £334 next year, £364 in 2014 and £381 in 2015.
Councillor Jane Urquhart calls this tax the ‘Workplace Parking Levy’ and says it provides a ‘vital funding stream’ which is supposedly underpinning ‘two more tram lines’ and a ‘redevelopment of a railway station’.
The plans to tax parking spaces dates right back to 1998, when the then New Labour government proposed giving the powers to local councils to help raise money for public transport. Powers to introduce road tolls - ‘the congestion charge’ - were also introduced at the same time and proved more tempting to local authorities.
Both Edinburgh and Greater Manchester proposed ambitious charging schemes and both were massively rejected in local referenda. No surprise, then, that the local councils have gone back to the rather easier method of taxing parking spaces. Bristol, Portsmouth and Southampton are also said to be close to pushing the button.
The philosophy of trying to get motorists to cough up to directly part-subsidise public transport has been around for over a decade. The London congestion charge was meant to rake in huge amounts, which would be used to help subsidise the bus network. Trouble is, providing public transport - with half reasonable fares - is incredibly expensive.
The huge expansion of the bus fleet in London took the subsidy from near zero at the end of the 1990s to over £650m today. The congestion charge never raised much above £120m, showing the huge gap that will never be breached. Indeed, in 2006 I took great pleasure at getting a letter published in the Financial Times, showing that, for every £5 fee paid by drivers, £4.75 was absorbed by administration costs.
And spare a thought for Edinburgh’s tax payers. After a congestion charging scheme was thrown out by voters, the council decided to press on with an ambitious scheme to build a series of tram lines. It has been a financial catastrophe. In 2003, the three-line project was expected to cost £375m. The latest estimate - for a much truncated network - is expected to be £1bn, which includes £228m in interest on the extra money borrowed.
It’s hard to imagine how congestion charging revenues could have even begun to cover the cost of the tram’s construction. Of course, further subsidies will be needed to operate it.
I’m not sure how far £8m per year - eventually £14m per year, the council calculates - will go towards Nottingham’s public transport ambitions. But it just proves the win-win situation of car ownership. Drivers can go where and when they want, making accessing jobs much easier. The government rakes in a ton of cash from fuel duty, road tax and VAT on sales and servicing.
But the cost of providing major league bus networks or new trams is now so huge, that trying to further scalp the over-burdened motorist can only ever be a drop in the funding ocean. Still, as Ken Livingstone said when Mayor of London: ‘only rich people have cars’.