E AST OF E NGLAND T RAVEL P LAN N ETWORK 3 rd NOVEMBER 2009

1. EASTOFENGLANDTRAVELPLANNETWORK3rd NOVEMBER 2009

2. East of England Travel Plan NetworkTax and Travel Plans Stephen Potter Professor of Transport Strategy s.potter@open.ac.uk

3. Tax and Commuting • Generally, except for parking, employer supportto staff for commuting is treated as taxable ‘income in kind’ • BUT: for non-employees (e.g. students, customers or visitors) Travel Plan benefits are not taxable • However many Travel Plan measures are now exempt from Income Tax and National Insurance Contributions (NICs)

4. NBTN Advisory Note • NBTN Travel Plan Advisory Note No 1 Tax and Travel Plan Measures is at: http://www.nbtn.org.uk/downloads/NBTN_ADVISORY_NOTE_1.pdf • Broadly, the travel plan measures exempt from tax and NICs are:

5. General Support and Public Transport • Interest-free loans to buy season tickets, a bicycle or anything legal - up to £5,000 in any tax year • Negotiated discounts • Employer-provided works buses with 9+ seats used for commuting • Employer-subsidies to public bus services - when there is a contract with the operator (this can include discounted or free fares for staff • But other ways to subsidise bus tickets are still taxable • There are no tax concessions for fare subsidies to train, tram or Tube fares - or bus fares where they is no contract with the operator

6. Bicycle and Carshare • The provision of Bicycles and Bicycle Safety Equipment (e.g. helmets and lights) has been exempt from tax since 1999. • The provision of cyclists breakfasts exempt from 2002 • In practice they never were taxed (being ‘insubstantial’), but this makes the situation clear • Bicycle maintenance, rescue services etc. ARE liable for tax (despite being part of the new DfT Cycle to Work Guarantee!!) • Alternative backup ‘get-you-home’ transport for car sharers is tax-exempt (up to 60 trips a year) • Payments to give up car parking rights (‘Cashout’) ARE taxable

7. Salary Sacrifice • Anything subject to a tax concession can be delivered through a Salary Sacrifice scheme • This allows the employee to ‘pay’ for the benefit through a reduction in salary • In effect the price they pay is free of tax and NICs • Frequently used for Bicycles and now increasingly so for bus passes

8. Business Travel • Business travel has always been tax-exempt unless limits are passed (e.g. the maximum ‘mileage rate’ for using cars • Some recent measures favour a ‘greening’ of business travel: • 20p a mile cycle mileage rate • 5p a mile car passenger rate • But not many businesses provide passenger rates or even cycle rates

9. Employer Taxation • NICs exemptions provide a small employers benefit • Generally, NICs reduction should cover admin costs of Salary Sacrifice arrangement • Otherwise only normal tax system rules apply (but worth checking as this can cut the cost of Travel Plans). • E.g. Relief for capital expenditure as ‘machinery and plant’ (e.g. bicycles, buses, computer equipment) • The lack of employer tax incentives is a serious weakness

10. Changing Tax Landscape • Further travel plan tax measures may emerge • But probably of more importance is that wider tax changes will increase the business case for travel planning • Workplace Parking Levy is an obvious example, but pressures are building up for a ‘greening’ of the whole tax system • Much could emerge as a result of the Copenhagen Climate Change Conference • The recent Green Fiscal Commission Report scoped out a possible green tax shift. (See http://www.greenfiscalcommission.org.uk/index.php/site/about/final_report/

11. EEDA and NBTN The Nottingham Workplace Parking Levy Professor Stephen Ison Transport Studies Group Department of Civil and Building Engineering Loughborough University 3rd November 2009 Matthew Frost and Stephen Ison 13th Jaanuary 2009

12. Introduction • Only one city in the UK has proposed a Workplace Parking Levy • Constrain congestion and provide funding to improve public transport • Improved bus provision and extension of City’s light rail network Structure: • Background to the concept of the WPL • Experiences in Nottingham of taking forward a WPL scheme • Consultation process • The scheme • Conclusions Matthew Frost and Stephen Ison 13th Jaanuary 2009

13. Background • UK Government’s White Paper 1998 placed renewed emphasis on road user charging and workplace parking charges • Seen as key ingredients in a package of measures designed to tackle traffic problems • Local authorities were given power in the Transport Bill 2000 • Transport Innovation Fund – Government funding based on some form of innovative component • Charges can be seen as working directly on the demand side • Local authorities are now able to apply for powers to levy a mandatory charge on workplace parking across all or part of their area Matthew Frost and Stephen Ison 13th Jaanuary 2009

14. Background • Licence fee • Owners or occupiers of premises applying to traffic authority for a licence • Revenue stream is derived from the workplace parking charge per vehicle multiplied by this maximum number • Workplace – predominantly working environment • Provides incentive for occupiers of a property to reduce the total number of parking spaces, restricting the maximum number of vehicles for which a licence is sought Matthew Frost and Stephen Ison 13th Jaanuary 2009

15. Workplace Parking Levy • In 2000 the City started to consider the options for a charging scheme • The City set the following objectives for a scheme: • Reduce traffic levels by fiscal restraint to car travel and encourage public transport use • Generate funds to provide better alternatives to the car Matthew Frost and Stephen Ison 13th Jaanuary 2009

16. The Nottingham Tram • Opened in 2004 carries approx 11m passengers per year • 4km on street (Wilkinson street to Station Street) • 10 km off street (Wilkinson street to Hucknall) Matthew Frost and Stephen Ison 13th Jaanuary 2009

17. Matthew Frost and Stephen Ison 13th Jaanuary 2009

18. Matthew Frost and Stephen Ison 13th Jaanuary 2009

19. Policy Options • As proposals developed time constraints influenced the scheme decision making process • Main driver for WPL option seems to have been need for a quick implementation enabling generation of an income stream Matthew Frost and Stephen Ison 13th Jaanuary 2009

20. Consultation Phase • Public consultation on the scheme took place in Summer 2007 • The proposals were extensively advertised in the local media and via a dedicated website • Approximately 2500 responses were received • Following the initial consultation key themes and topics were identified such as the cost to businesses and the equity of the scheme. • The consultation also revealed that public transport was in need of improvement Matthew Frost and Stephen Ison 13th Jaanuary 2009

21. Comparison of WPL and RUC for Nottingham Matthew Frost and Stephen Ison 13th Jaanuary 2009

22. Public Examination • Public examination of the proposals was made by the City Council so as to allow business and residents a further chance to air their views • Issues of concern from the Examination included: • Equity of the Charge • Scheme and pricing • Presentational issues • Traffic issues and displacement • Business impact • Economic impact Matthew Frost and Stephen Ison 13th Jaanuary 2009

23. Issues of Concern Equity of the Charge • WPL was perceived as a very blunt instrument • Its principal drawback is that it would not distinguish between those who travel in congested periods on congested roads, and those who do not • It does not distinguish between those who have practicable public transport alternatives and those who do not • In addition it could take more of the disposable income of those on low incomes than of those on high incomes Matthew Frost and Stephen Ison 13th Jaanuary 2009

24. Issues of Concern Scheme and Pricing • A sophisticated RUC scheme, allowing drivers to be charged only when traveling in congested conditions, would be, and would be perceived as, a fairer means of tackling congestion • RUC could be considered more subtle than the WPL if it charged only for the journeys made on congested lengths of road, which should be possible with modern technology • The fact that it would be less cost-efficient than the proposed WPL did not appear to be an insurmountable barrier to its adoption, as it would be self-financing Matthew Frost and Stephen Ison 13th Jaanuary 2009

25. Issues of Concern Presentation Issues • Presenting the proposals has posed a significant challenge for the Council. They have chosen not to present the proposed WPL as simply a deterrent measure for those drivers with free workplace parking, but as part of a general package of public transport improvements • Clearly those paying the levy would wish to see some obvious benefit to themselves, as well as to the rest of the public Traffic Issues and Displacement • The WPL scheme has the potential to deliver public transport benefits to Nottingham through expenditure on transport projects. It would probably however have a very small direct effect upon the growth in traffic congestion alone • In the immediate aftermath of charging being passed on by an employer, there might be a displacement of parking onto nearby streets Matthew Frost and Stephen Ison 13th Jaanuary 2009

26. Issues of Concern Business Impact • Employers could choose to move to new locations outside the City • The greatest risk is the sense of alienation and hostility which might be engendered Economic Impact • Until other local authorities, particularly those in neighbouring areas, decided to introduce their own WPL or RUC schemes, Nottingham could be a disadvantage • It might be sufficient to tip the balance in persuading them to move to a site inside or outside the City Matthew Frost and Stephen Ison 13th Jaanuary 2009

27. The Scheme • The proposal is for the levy to be city wide within the City council boundary • All liable employers (i.e. those with more that 10 spaces) will have to obtain a licence • Customer/Visitor spaces and fleet vehicle spaces will receive a 100% discount • Spaces at essential services such as hospitals will receive a 100% discount • Disabled parking spaces will receive a 100% discount Matthew Frost and Stephen Ison 13th Jaanuary 2009

28. The Scheme • The scheme should start in 2012 with a phased implementation charge of £253/space/year. • This discount is to provide an incremental implementation, this will rise over the first five years by inflation plus a mark up • Phased cost introduction will allow the planned public transport improvements to come on stream prior to the main part of the charge • The 100% charging discount for 10 or less liable parking spaces means that over 3,000 small employers will not pay any charge. • Around 500 larger employers will be liable • Enforcement of the scheme will be undertaken by current on-street parking officers who will have extended powers to enter premises Matthew Frost and Stephen Ison 13th Jaanuary 2009

29. The Scheme • It is expected that vehicles will be required to display a WPL permit where their parking requires the space in which they are parked to be licenced • It is estimated that the income from the Levy will be £91.7m over a 20 year life of the scheme • The implementation costs are approximately £1.9m • The annual operating costs, met by the revenue generated, will be in the region of £0.6m Matthew Frost and Stephen Ison 13th Jaanuary 2009

30. Conclusions • WPL is perceived as a crude tool, that does not necessarily target the key congestors • To develop a WPL support needs to be provided to help employers develop workplace travel plans in conjunction with the levy • Complementary measures need to be planned and costed into the scheme at an early stage • WPL is a relatively quick system to implement, manage and operate • As RUC technology improves and becomes cheaper a move to such a scheme could be more equitable, thus WPL could act as a short-term stop gap whilst RUC technology is refined further • As with RUC they can be unpopular, with business presenting a powerful lobby against such schemes Matthew Frost and Stephen Ison 13th Jaanuary 2009

31. Conclusions • A parking levy may not deliver a reduction in traffic alone. It is the improvements that are funded by a levy that aid in reducing or constraining traffic growth • Obtaining stakeholder support and acceptance presents a significance challenge for a communication strategy. This could include a clear statement of the public transport improvements to be funded and explanation of the benefits to the payers themselves of reduced traffic • There needs to be a recognition that improved transport provision can not take place without the implementation of the levy Matthew Frost and Stephen Ison 13th Jaanuary 2009

32. "Climate change is the greatest challenge facing mankind today and we only have a very small window of opportunity to act“ HRH The Prince of Wales

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34. Adding Value

35. Inspire Engage Support Challenge

36. Best Practice

37. Best Practice

38. Inspire Engage Support Challenge

39. Business Case

40. ...because you can’t afford not to

41. Cost Savings • The Carbon Trust predicts that taking action on climate change could save UK businesses up to £1m a day collectively. • Energy and transport – a “win-win” situation. • Insulating buildings, heating timers and coordinating deliveries so less travel is required

42. New business • Businesses can pass on cost savings to customers, so helping to retain existing, and win new business. • They can also win new business by helping customers to reduce their own carbon emissions and costs.

43. Reputation and Trust • A 2008 survey found that consumers ranked ‘responsibility to the • environment’ in the top 5 most important criteria in their trust of brands. • Businesses that take action on climate change and communicate it to their customers will be better placed to retain their loyalty and win new customers. • Two thirds of consumerssay it is important to buy from environmentally • responsible companies.

45. Increased Morale • Increased morale with businesses downsizing and employee redundancy increasing, climate change activities can help to increase staff morale. • Recent research has shown that 70% of employees want to cut their carbon emissions, and would like more guidance and empowerment from their employers.

46. Shareholder Return FTSE companies actively managing and measuring CR issues outperformed the FTSE 350on total shareholder return by between 3.3% and 7.7% (2002-2007).

47. New Markets • Markets for low carbon products and services are likely to exceed $500bn per year by 2050. • UK spending on ‘green’ and ‘ethical’ products reached £35.5bn in 2007, up 15 per cent from £31bn in the previous 12 months • 62% of consumers said environmental concerns influence their purchasing decisions, ‘the same as a year ago’, and just over a quarter said they influence them ‘even more’ than in 2008. • Those businesses that provide low-cost, low-carbon goods and services will be best positioned to capitalise on these markets now and after the recession.

48. Recruitment & Retention Recent research has shown that nearly half of all staff would like to work for organisations with strong environment policies. Taking action on climate change and communicating it to potential and current employees could prove to be that vital factor in attracting the best talent.

49. Skills Investment • Science, Technology, English and Maths (STEM) skills will be vital skills for a low carbon economy. It is predicted that by 2014, the demand for science, engineering and technology related jobs will rise by 2.4 million. • At present, 59% of employers are having difficulty recruiting enough STEM-skilled individuals to meet their needs

50. The Climate Change Act The Carbon Reduction Commitment (CRC)