Friday, 27 June 2008

Subsidies for car owners?

Bristol City Council are proposing to formalise the system of subsidising car ownership by providing valuable on-street parking spaces at nominal cost. The proposals are presented as Residents' Parking Schemes (RPS), whereby on-street parking in the inner city would be regulated with the particular aim of eliminating commuter parking and providing resources to better manage residents' parking.

In comparison with the status quo, an anarchic free-for-all, the proposals appear to be a step forward. Illegal and obstructive parking should be controlled by wardens funded by the scheme and finding a parking place should become much easier during the day when much of the commuter parking should disappear (or shift to areas without RPS). But as Steve L flagged up elsewhere, the easier availability of parking for residents may encourage more use of cars since using one's car currently results in losing one's parking place and sometimes a long search for another one.

The fundamental effect of the proposals is to make car ownership and use a more attractive option for many. An on-street parking place must be worth in the order of £1,000 per year (around £4 per working day, compared to up to £15 per day with NCP), perhaps far more in those areas closest to the central CPZ (pay and display) area. Yet the Council are only proposing to charge £40 p.a. for the first car parking permit and £80 p.a. for the second. Even a third car permit will only cost £500, still far below a market rate in many areas.

In effect the Council are heavily subsidising car ownership. Households with two cars will benefit the most but the losers will be car free households, who will in effect be funding the subsidy by paying higher taxes than they would if parking was paid for at market rates. In Bristol as a whole 25% of households have 2 or more cars while 29% are car free, but in the inner city areas affected by the RPS proposals only about a fifth of households have 2 or more cars (and less than 1 in 20 with a third car) whereas about a third are car free. That's a third of households, often the poorest, who will be heavily penalised for daring to choose to be car free.

It's worth considering how this impacts on the relative wealth of households in the inner city areas affected. For simplicity let's say that the subsidy is worth £1,000 each for the first two cars and £500 for a third. There are around 1,500 households with 3 or more cars in the proposed RPS area and they will each receive the full subsidy worth £2,500 per year. There are around 6,000 households with 2 cars who will receive a subsidy worth £2,000 per year and around 18,000 households with one car who will receive a subsidy worth £1,000 per year. Then there are around 13,000 households with no car who will receive no subsidy whatever.

The total value of the subsidy to car owners in the RPS area could be over £30 million per year. That dwarfs current expenditure on alternatives to the car within the same area. It also represents a substantial transfer of wealth from the poorest households to the wealthiest. The value of the subsidy also dwarfs the value of all motoring taxes (VED, fuel duty, etc) paid by motorists so even deducting those taxes from the subsidy leaves a massive net benefit to motorists.

One has to ask how this sits with the Council's aspiration to be green, not mention its aspiration to help disadvantaged sections of the community. Perhaps going for market rates simply isn't a realistic political option, but why don't they at least acknowledge that what they are doing is subsidising car owning households at the expense of car free households. The public (and it seems the Council) need to understand that nothing is really free and that market values must at least be recognised as a reference point.


SteveL said...

I'm not sure how you estimate subsidy cost. And its not a subsidy so much as "what is the market value for being able to park near your house during the week"? For a lot of people, the number is 0; they don't care. At the same time, if you look at the cost it takes to turn a garden into a driveway -and the increase in the value of the house- you can assess how much people are already prepared to gain all-day parking for one or more cars.

SteveL said...

one more thing; a CPZ will reduce the benefits of having a driveway as you wont be able to park in front of it, not with yellow lines enforced by the council. Though by saving 80+ pounds a year, there are still advantages.

Chris Hutt said...

Parking places clearly have a market value, although until we allow the market to operate and stop distorting it with subsidies we cannot know what it is. Therefore my figure of £1,000 is just an indication of the likely order. It might be £500 or £2,000, but probably somewhere in between.

Once one accepts that the market value is of that order, if the Council then choose to sell those places for as little as £40 per year then it follows that they are massively subsidising car owners.

As for driveways, they are also preempting the availability of a parking space so the owners should have to pay the market price for that space in the same way as if they parked in it. Not to charge for driveways is yet another subsidy which will result in a proliferation of paving over front gardens.

Anonymous said...

Hi Chris,

Great Blog - and too true...

Making and maintaining the road that car park on costs money. There are where cars are parked could be converted into a wildlife, seating or play area... that allows natural drainage.

I wonder what the cost is for pumping and treating the water that runs-off the hard road surface of a parking space.

If the market rate for a parking space in say Clifton or Redland is 0, why not ban parking all together! No demand=zero value and people can walk where they please...

Access to and from driveways also has a cost.

How many people with driveways park across it, rather than on their driveway? And are these people who Stevel claims do not want road parking... really valuing that road space at 0? I think not?

Is Stevel really Boris Johnson?