Role of Hypothecation in Financing Transit: Lessons from the United Kingdom

Abstract

Two hypothecated charges to fund local public transport have recently passed onto the statute books in the United Kingdom. The first is road user charging, with London and Durham the first to be implemented, and the second is a workplace parking levy. The use of such local hypothecated (or "earmarked") mechanisms is not new. A variety of such charges, local taxes, and levies have been in use for decades to fund public transport and (less frequently) as a tool for transport demand management in the United States, Germany, Austria, Portugal, Scandinavia, India, and Singapore. In the general debate about the two new hypothecated charges in the United Kingdom, this international experience has been largely neglected. The aim is to detail a related and equally neglected area, namely, the local hypothecation of charges to fund public transport improvements in Britain. Under existing legislation it has been possible for some local authorities to dedicate revenue streams from sources such as parking charges and planning gain to develop and improve public transport services. There is also significant experience of dedicated revenue streams in the private sector, for example, at airports. Examples of the British experience of hypothecation are detailed, and their lessons for the new and more radical measures that are now being considered are examined.