12 Apr 2023
How is Action 7 tackling the climate crisis?
Parking levies limit congestion, cut emissions, and can raise millions of pounds to help fund high-quality public transport networks.
Nottingham’s workplace parking levy, introduced in October 2011, was the first of its kind in the western hemisphere. A trailblazing example, it is still the UK’s only workplace parking levy, despite a decade of successful operation and a highly replicable model. A workplace parking levy is a charge on employers who provide workplace parking spaces. This tackles congestion in two ways:
Incentivising employers to reduce their parking provision
Helping to fund major transport infrastructure.
In Nottingham, the charge only applies to employers who provide 11 or more parking spaces. Smaller employers are exempt, as are spaces for disabled people, NHS premises and emergency services. The current charge per parking space is £428 a year, payable by the employer. All revenue raised from Nottingham’s levy is ringfenced by law to be spent on improving local transport.
Nottingham has one of the UK’s strongest public transport systems. This is, in no small part, thanks to its workplace parking levy.
What impact has this had?
- By September 2021, a total of 7,840 tonnes of CO2 emissions had been saved since the levy’s introduction.
- The levy has contributed to a 33% fall in carbon emissions in Nottingham since 2005.
- 350 tonnes of CO2 saved by electrification of 15 buses, paid for by the levy.
Investment in public transport
- £83 million of revenue raised directly from levy.
- A further £600 million of spending on public transport infrastructure from outside sources. This £600 million has funded a major extension of Nottingham’s tram network, a £60 million renovation of its train station, the expansion of the city’s electric bus fleet, and £500,000 in grants to help employers make sustainable transport options available for employees.
- A 17.5 km tram extension part-funded by the levy carries 20 million passengers a year.
Less congestion and better air quality
- Reduced levels of nitrogen oxides and particulate matter emissions, leading to fewer cases of respiratory illness.
- 3 million private car miles eliminated because of public transport infrastructure improvements.
- Congestion growth cut by 47%.
- The levy enabled Nottingham to become the first local authority in the country to have its Air Quality Management Plan approved by the UK government without needing to create a charging clean air zone.
Business investment and local jobs
- Tram and train station redevelopments led to the employment of 1,200 people.
- Public transport infrastructure has encouraged businesses to relocate to Nottingham.
- A more equal city, with more opportunities for disabled people and residents without private vehicles.
- More physical activity due to new opportunities for active travel.
What made this work?
Public transport vision
Before the scheme began Nottingham already had high public transport usage, as well as strong tram and bus networks and cycling schemes. This was a product of the council’s passion for public transport.
From the council’s perspective, the levy was financially attractive. It would provide a guaranteed revenue stream at relatively low set-up costs and be quicker to set up and cheaper to run than alternative options (such as Clean Air Zones or a standard congestion charge).
Benefits for business
The council were successful in making the business case for the levy and proving that congestion was an economic threat. Before the levy, congestion was estimated to cost Nottingham £160 million a year, with most of this cost borne by business. Therefore, employers were set to directly benefit from the levy and even make savings. Furthermore, the WPL can be cost-neutral for employers, because they can choose to reclaim part or all of the cost from employees. 53% of liable parking spaces in Nottingham are paid for by the individual car user.
Stakeholder engagement and public consultation
Transparent channels of communication with stakeholders, particularly business, alongside informal and public consultation with members of the public.
The council decided to follow an ethos of compliance rather than enforcement. As much assistance as possible is given to employers, who are supported and guided, not punished or antagonised. This approach has achieved a 100% compliance rate to date amongst liable employees.
What resources were needed?
Nottingham was selected by central government to develop a workplace parking levy; it was therefore co-funded by Nottingham City Council and central government. Total set-up costs amounted to £1.8 million. However, any councils looking to replicate the scheme would enjoy markedly lower costs and risks, because Nottingham has already done the heavy lifting in devising a feasible model and is on hand to offer advice. The time needed would be reduced too – provided the political will and relevant resources were available, a new levy could be set up within two to four years, or a single electoral cycle.
As the levy is a licensing scheme, it requires no infrastructure investment. In Nottingham, employers manage their own accounts for paying the levy online, making administration even more low maintenance. Operational costs are £475,000 a year. Nottingham City Council has created their own consultancy service on workplace parking levies, headed by Jason Gooding and Nigel Hallam. Even so, the whole levy system is operated by a team of fewer than ten.
Things to look out for
There are few barriers to other councils adopting a WPL along the lines of the Nottingham model. Funding, of course, is always a concern for councils, but whilst they may not receive the same level of central government input as Nottingham did being the pioneer, other councils will benefit from lower overall costs.
Good communication about the benefits
A major hurdle faced in Nottingham was early predictions about business and investors being scared away by the levy. These fears have not transpired. Quite the opposite: business has flourished and the sophisticated public transport system has been a key attraction. Other councils have the advantage of Nottingham’s example to point to as evidence should similar doubts be encountered elsewhere.
A workplace parking levy will always be controversial. Councils need to be prepared to address this. It’s critical to have a highly effective communications campaign from the outset. In Nottingham, the communication strategy included mailouts to over 5,000 employers, workshops, and one-on-one meetings.
The benefits of the parking levy can feed positively into other public debates. When the Nottingham levy was launched, air pollution was not the hot topic it is now, nor had councils declared a climate emergency. The current profile of environmental issues makes today’s situation more favourable for councils considering a workplace parking levy – the public are more accepting of such measures than they were a decade ago.
The flexibility of a levy should help subdue controversy. Any given levy can be tailored to its specific context. The size of the charge, the geographical area covered, exemptions, discounts and support packages are all details that can be adjusted. This adaptability should counter-arguments about such levies being a tax on working people at a time when in-work poverty is a growing problem; if crafted carefully, there is no reason why working people should not benefit from such schemes.
The impact of coronavirus should not be taken lightly. Nottingham saw liable parking spaces fall by 50% in the first 2020 lockdown, though even during subsequent lockdowns the council still collected substantial levy revenue. If remote working becomes a permanent feature of life in the future, a financial remodel of the levy may be necessary. However, in 2021 the number of employees returning to office working is steadily increasing.
Importance of ring-fencing revenue
Another key lesson is that such levies are most effective when revenue is targeted. By making it a legal obligation to spend revenue only on public transport, Nottingham City Council has been able to maximise the impact of its initiative. Another lesson is the necessity of a thriving vision for public transport and the political fortitude needed to realise it.
If you're interested in setting up a WPL in your own city, please contact:
- Nigel Hallam [email protected].
- Or [email protected].
- Or by phone: 01158 765050.
For an academic evaluation of Nottingham’s Workplace levy, please see the University of Loughborough's research.
Learn more in this webinar Workplace Parking Levy Schemes: From Policy to Practice.
Many other councils have considered setting up their own WPL, but at the time of writing none have implemented one. Councils that have looked into a WPL or taken steps towards one include Hounslow, Leicester City, Oxford City, City of Edinburgh, Glasgow City, Cambridge City and Bristol City.
Friends of the Earth view
More councils – especially in urban areas – should consider introducing a parking levy to raise money for public transport improvements. Nottingham has shown how to convince businesses and deliver multiple benefits.
Other councils may wish to consider alternative ways to raise money such as Community Investment Bonds (Action 8 of the Climate Action Plan).
The government could help by giving local authorities more powers to raise funds locally such as a payroll levy which is common in France.
Friends of the Earth is showcasing specific examples of good practice in tackling climate change, but that doesn’t mean we endorse everything that council is doing.
This case study has been produced by Ashden and Friends of the Earth.