9 © Centre for Economics and Business Research 3.3. Revenue and economic effects The data3 shows that since the beginning of November 2021 until June 2022 – a period of eight months – an average of 1.9m journeys were made into the zone every month by vehicles not conforming to either Euro 6 diesel standards or Euro 4 petrol standards, resulting in £112.5m worth of revenue from those vehicles required to pay. By way of comparison between February and September 2021 prior to the ULEZ expansion, 329,527 journeys on average were made every month by non-compliant vehicles within the original central London boundaries, resulting in revenues of just under £19m. 3.4. Administration costs TfL have been less than transparent about the administration costs of ULEZ but various FoI requests have given some rough numbers. The expansion to the North and South Circular Roads under the existing scheme is estimated to have cost £115 million4. This probably combines some capital and running costs but is the only available number. 3.5. Direct economic effects on users Both private individuals and businesses have three choices in response to ULEZ. • They can pay the charge • They can change vehicle for a compliant vehicle Or • They can shift mode (rarely possible for businesses) or suppress the journey In evaluating the economic effects the ‘worst case’ for a private individual or a business is to pay the charge. For those who continue to use non compliant vehicles the cost to them is the charge. The negative impact for them can simply be calculated by adding up the charges they pay. For the other options the cost to the individual will vary from negligible to nearly the cost of the charge. For example, if a trip in a non compliant vehicle is of marginal value, the cost of suppressing it is negligible. But if its value is nearly the cost of the congestion charge, so too is the cost of suppressing it. Averaging over all those affected, the standard convention amongst economists is to assume that on average those taking these steps lose value of about a half of the charge5. We can use this to work out the impact on road users of the existing scheme. 3 https://media.rac.co.uk/pressreleases/expansion-of-londons-ulez-boosts-tfls-income-by-almost-ps100m-3212421 4 https://www.london.gov.uk/eir-ulez-operational-costs-feb2023#:~:text=Existing%20ULEZ%20costs%20and%20revenue,to%20make%20the%20scheme%20operational. 5 See the relevant Wikipedia article on this: https://en.wikipedia.org/wiki/Economic_surplus
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