Parking Space Levy / Workplace Parking Levy

Parking Space Levy (PSL) – a charge to car users who occupy parking spaces within an area liable to a levy.

Workplace Parking Levy (WPL) – a charge to employers who provide parking spaces to staff and/or visitors.

Parking Space Levies are implemented to discourage car use in targeted business centres by imposing a levy on parking spaces (including parking spaces in parking stations). These levies influence travel behaviour, cut carbon emissions and raise revenue. On the other hand, working parking levies  charge employers who provide workplace parking and provide an incentive to manage employee travel behaviour and reduce workplace parking. For example, a WPL was introduced in Nottingham through the Transport Act 2000. The costs of WPLs are usually absorbed by the employer, unlike with PSLs where the individual car owner generally pays the price.

The use of market-based instruments to orientate mobility choices towards more sustainable options may be combined with the earmarking of corresponding revenues to support the delivery of those sustainable options, such as public transport, walking and cycling. This approach entails a vision and decision-making at the level of the urban mobility system, in order to set out clear objectives for each mode and for the urban mobility system as a whole, taking into account the need to share physical and financial resources. Applications of the ‘polluter-pays’ principle include urban tolls and congestion and/or pollution charging, parking charges and workplace parking levies. The latter is the only option that incentivises employers to cut parking supply to employees, and makes the terms of providing it less attractive. Free or cheap parking is a major influence on the decision to drive to work, so charging for it will help reduce this incentive, whether the charge falls on the employer, or is passed on to the individual employees. Its impact will be reduced or lost altogether if the cost of the levy is passed on to the firm’s customers (although the adverse effect on the business’s competitiveness may cause them to be cautious about adopting this strategy).

Parking at workplaces is a major influence of peak-hour traffic. In the UK, Private Non-Residential parking typically accounts for some 40-60% of UK town centre spaces. In 1996 there were 3 million spaces at UK commercial premises. A study in Bristol in 1997 calculated that cutting the number of spaces by 12% would bring about a 7-12% reduction in a.m. peak congestion. In Nottingham, where the tax has been implemented, beneficiaries included the Station Hub project which entailed redevelopment of Nottingham Railway Station, completed in 2014. The total cost of this project, which transformed the station into a 21st Century transport hub, was £67 million.

In order to make this measure effective, it should be combined with a number of Support Measures for Business, meaning employers and employees, to help them take advantage of measures enabled by WPL funding. This can include:

  • Travel planning and smarter choices • Public transport and personal journey planning support • Parking management and parking management support grants • Traffic management • Cycle infrastructure support grants

Decision-making factors Is there need for Workplace Parking Levies in other cities? To answer this question, it is necessary to examine the circumstances of the city in question, to address the following issues: 1. Is there serious congestion? 2. If so, where? In which parts of the city? On certain corridors only? Radial and/or orbital routes? 3. What measures have been taken to alleviate congestion? 4. To what extent have they worked? 5. Is any further action needed? 6. If so, what other possible solutions have been considered? 7. Is there political will to do anything else?

There are various approaches to consider as alternatives to or in conjunction with Workplace Parking Levies, including: Ø Public transport priorities such as bus lanes, bus gates, traffic signal activation, bus only roads Ø Increased and improved bus services: higher frequencies, longer service operating hours, new routes, higher-quality vehicles and information, lower fares. In the UK such improvements often take place under Quality Partnership schemes: collaborative partnerships between local authorities and bus operators Ø Park & Ride Ø Parking restrictions: quantity, price, location Ø Congestion charging

Boundaries The choice of where to fix the boundary and the determination of the area to tax are key influences on the success of a Workplace Parking Levy scheme. Key criteria are that the boundary must relate to city planning or transport system objectives or outcomes, consider potential of taxable parking to “relocate” outside of taxed area, and be based on practical considerations as to how much taxable parking is needed to make the system viable – i.e. it must not cost too much to administer, relative to the amount it generates in income.

The Nottingham scheme, which covers the whole of the city administrative area, goes some way to meeting these criteria, but there are built up areas contiguous with the city that are sited in neighbouring jurisdictions. The site occupied by Boots, a major Nottingham employer, straddles the boundary between the City of Nottingham and Broxtowe District. Initially the company considered relocating some parking from inside to outside the city boundary, but this proposal was not put into effect. Overall, licence renewals for 2013-14 show the scheme to have gone well, with 100% of large employers, 99.7% of medium and 99% of small employers having renewed.

The size of the area to cover will influence the scale of the scheme and what it can achieve. Current UK and Australian examples range from the complete city of Nottingham, through to Sydney’s Central Business District, plus regional nodes to the Central Business District -only schemes of Melbourne and Perth. When WPL was at the discussion stage, civil servants doubted the need for a scheme to cover a complete administrative area, as subsequently adopted in Nottingham.

NODES strategic objectiveContribution
Enhance accessibility and integration ++
Enhance intermodality ++
Enhance liveability ++
Increase safety and security conditions ++
Increase economic viability and costs efficiency ++
Stimulate local economy ++
Increase environmental efficiency ++
Increase energy efficiency ++

Good practice

Nottingham City Council Workplace Parking Levies

The City of Nottingham has a long history of strong transport policies and high-quality, municipal and privately-owned local public transport. In the early 21st century, it needed central government finance to implement its preferred schemes, notably the extension of the tram network. The government required the city to contribute to the scheme cost as a condition of making its own financial contribution. Workplace Parking Levies were chosen because they satisfied the policy aims of improving public transport and reducing traffic and unlocked government funding, enabling schemes to go ahead.

Nottingham WPL Features

  1. Scheme introduced in 2011 2. Charge per space 2012: £288 3. Charge rises with inflation: estimated to reach £381 by 2015 4. Paid by employers within city boundary with 11 or more workplace parking spaces 5. Expected to raise £14m a year over 23 years 6. All income to be invested in public transport improvements

Nottingham WPL Outcomes

A charge is levied on employers with 11 or more employee car parking spaces in City Council area. 3,500 employers hold WPL licences, covering 45,000 parking spaces licensed at 3,000 premises. 500 employers pay a WPL charge. Employers decide whether to recoup the charge from their staff. 38% of licensed workplace parking places are covered by a car park management scheme, under which the employers are recovering all or part of the cost of the levy from their employees or other users of their car park. There are exemptions for disabled people, customers, company fleets, un/loading, emergency services and NHS front-line staff.

Nottingham traffic growth almost halved from 15% to 8% and the forecast is for there to be 2.5 million fewer car journeys by 2015. By 2015, public transport journeys will rise by 20% and Park & Ride demand by 45%. The length of the tram network will also have more than doubled, from 15 to 32 km. The City will have a redeveloped rail station and improved city link bus services.

In 1998, the government policy White Paper Breaking the Logjam recommended Workplace Parking Levies. The proposal passed into legislation in the Transport Act 2000, which permits both Congestion Charging and Workplace Parking Levies. Employers were allowed to decide whether or not to pass charges on to their staff. Workplace Parking Levies and Congestion Charging were seen as alternatives: § London, under the Greater London Act 1999, chose Congestion Charging § In Edinburgh, a referendum rejected Congestion Charging, 2005 § Bristol City Council rejected Workplace Parking Levies, 2008 § Nottingham City Council Workplace Parking Levies Order, 2009, with aim to offer realistic alternatives to the use of private cars by delivering high-quality sustainable public transport The original policy document and legislation were brought in by a Labour government. The Conservatives are thought to be less enthusiastic about the concept, but the legislation has been retained by the Conservative-Liberal Democrat coalition, during whose term of office the Nottingham scheme was introduced. It was suggested by Andrew Whybrow that the Labour government’s Ten Year Plan for Transport in 2000 killed the interest of many local authorities by offering them an alternative source of public funding for investment.

Businesses and the motoring lobby generally opposed the WPL concept, citing extra costs, bureaucracy, suggesting the policy will not work, will strangle the local economy, hurt the poor, and that firms will relocate to avoid schemes. While charging for a previously ‘free’ service is always unpopular, there is no body of evidence that the rhetoric has been followed by mass action. The cost of relocation would almost certainly far outweigh that of paying the levy.


Australian Workplace Parking Levy Schemes

Workplace Parking Levies originated in Australia with the Sydney scheme in 1992, with further schemes implemented in Perth in 1999 and Melbourne, 2006. In each case, the schemes were set up to raise money for public transport. There are detailed differences between the three Australian schemes. Sydney is the only city to have adopted Workplace Parking Levies in localities beyond the Central Business District. In Sydney, New South Wales, the parking space levy collected more than $97.3 million over a period of 3 years and the revenues were used for public transport funding. Over the three-year period ending 30 June 2011, the revenue generated was the primary source of funds to deliver the Commuter Car Park and Interchange Programme. 27 new commuter car parking facilities are now complete and open, encouraging commuters to use public transport.

In Sydney and Melbourne, income is dedicated to paying for public transport improvements, whereas in Perth it is used to provide free public transport in the CBD. In Perth a free WPL licence is available for providers with up to 5 spaces: this has led to a 10% reduction in the supply of spaces. 10% of available licences have not been taken up: Perth city centre has some 7-9,000 unused/unlicensed spaces. The charge per space in Perth has risen from $70 to $600 over 10 years.


Dr Martin Higginson: Case Study on Workplace Parking Levy (working document). 2014

Dr Martin Higginson: Workplace Parking Levies as an Instrument of Transport Policy. 2013

Jason Gooding, ‘The Nottingham Workplace Parking Levy’, The Transport Economist, Vol.37, No.3, Spring 2011

TheBigWheel Nottingham

Todd Litman, Parking Taxes: Evaluating Options and Impacts, Victoria Transport Policy Institute, Victoria BC, Canada, 2011