Parking and pricing

Whilst AVs might hold the promise of a future with much reduced need for car parking, that future is not here yet. In the meantime, city centre car parking in our large conurbations is often insufficient to meet demand at peak times. Combined with the fact that such parking is largely controlled by underfunded local authorities, this creates upward pressure on pricing. A recent piece of research suggests that pricing of Council owned car parking has risen at a CAG of 4.4% over 5 years, significantly beating inflation. Meanwhile road related spending has fallen, indicating that LAs are using the additional receipts to cross-subsidise other shortfalls. Car park charging is a finely balanced debate. Retailers and many businesses would understandably prefer to see free car parking, and various studies have shown the positive effect that this has on city centre commerce. However, this is counterbalanced by a social objective to discourage car use in city centres (we see further debate this week on Sadiq Khan’s Ultra Low Emissions Zone for London) and the associated decrease in public revenues. As an economic principle, charging a market rate for any service encourages use by those that will derive the most utility from that activity and allocates resources efficiently. The challenge comes when there is a monopoly (in this case public sector) supplier, which has other drivers and motivations.