GOING WEST – - London Chamber of Commerce and Industry

2. Views on the WEZValue for money?The Mayor claims that the Western Extension will raise extra money that can beinvested in public transport. Despite these claims, there is evidence to suggest thatthe extension is barely financially sustainable, let alone profitable. Concerns aboutthe financial viability of the congestion charge have also been raised by interviewees.Joseph Wan, group chief executive of Harvey Nichols, is ‘unsure whether there hasbeen total transparency to the public at large about operating costs compared to therevenue generated’.The installation of what Simon Burnett, proprietor of Pure Parking, called the ‘terriblyinefficient scheme’, will cost £118 million, yet it is forecast that it will generate only£25 to £40 million of additional operating profit a year. Consequently the WesternExtension is assumed to operate at a deficit until 2010. This has also beenrecognised by the Department of Transport (DfT) which rated the scheme as havinga ‘low’ or ‘poor’ overall benefit. 2 Kate Drafter, proprietor of Portobello Wholefoods,said; “public transport in London is badly served. I cannot see that the money madeby the congestion charge has been reinvested in public transport. As the system wasso expensive to set up in the first place the money has been used to cover thosecosts.” Other interviewees, like Anne Diego, store manager of Pepe Jeans, evensuggested that, ‘the level of service decreased after the introduction of thecongestion charge. The money raised is not reinvested in public transport’.Not only do high installation and administration costs undermine financial viability butadditional yield is diminished because a significantly higher number of motorists willbe entitled to the 90 per cent residents’ discount.The government is currently discussing the introduction of more flexible and costeffective road pricing schemes like the ‘tag and beacon’ system which would makethe congestion charge programme obsolete as soon as 2009. ‘Tag and beacon’technology functions through a vehicle tag responding to radio waves from roadsidebeacons. Early trials showed that this technology is 99.8 per cent accurate in taggingpassing vehicles compared with the 70 per cent accuracy rate from the currentcamera system. 3 The LCCI therefore believes that the very costly introduction of theWEZ is an unjustifiable, short term investment of public money.Heading in the wrong direction: Why the West?Our research has shown that businesses in the WEZ are concerned as to why awestward route was chosen for extension and are anxious about possible negativeimpact on their business as a result of the charge. Those legitimate concerns are ofgreat importance especially when considering that businesses are alreadyperforming with low levels of growth. The LCCI conducted research on howbusinesses in the WEZ rate the current performance of the London economy ascompared to how their own business is performing. The results show that on a scaleof 1 (very bad) to 10 (very good), respondents on average (mean) rated theirbusiness performance at only 5.7. The mean rate for the London economy wasranked slightly lower at 4.8. Considering the current low levels of consumer10