No parking sign

The dangers of workplace parking levies

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I don’t know about Robin Hood, but the spirit of the Sheriff of Nottingham certainly lives on in that historic city. Nottingham’s council was, in 2012, the first in Britain to impose a new tax on local businesses. That tax is the Workplace Parking Levy. It dictates that workplaces with over ten parking spaces for their employees have to pay £375 for each space. Every year.

It’s easy to understand why Nottingham City Council is keen on the levy. It’s quite a money-spinner. If a workplace has 20 parking spaces, that’s 20 x £375 = £7,500 of tax revenue a year. Multiply that by the hundreds of businesses in the city, and some pretty large numbers emerge. Indeed, the council is raising enough to help improve the local tram system, railway station and bus network. This levy has legs.

And it’s not just Nottingham City Council who like the idea. It suits our government in Westminster, as it demonstrates that councils can still get stuff done despite having their central funding cut by 40 per cent over the past five years – so long as they raise the money themselves. It thrills environmentalists, who regard this as a congestion charge that will cut the number of cars in city centres. And it interests other councils, looking for a way to extend their finances. Cambridge is just one of those thinking about introducing their own levy.

These are all noble motivations. Who doesn’t want our cities to be cleaner, less congested and better equipped? But it’s still worth questioning whether the Workplace Parking Levy is the best – or even a good – way to achieve these things.

There are reasons to think not.

The first of these reasons is the unfairness written into the levy’s design. Even putting aside the controversial matter of whether employers should be charged for their own private carparks, there’s the terrible divide between those who have ten parking spaces and those who have eleven. The former pay nothing to Nottingham City Council. The latter have to stump up £4,125 and rising. It’s a particularly unforgiving sort of threshold.

Worse still are the Workplace Parking Levy’s unintended consequences. As with any tax on business, there’s the question of who pays it. Is it, as intended, the employer who owns the parking spaces? Or is the employees who use them? A survey conducted six months after the introduction of the levy found that 30 per cent of businesses split the cost with their staff. A further 11 per cent made their staff pay in full.

Or is it, in fact, the people of Nottingham who might otherwise have been employed by those businesses? At a time when margins are still tight for businesses both big and small, the imposition of another tax might be enough to prevent them from hiring another worker – or even to force them away from the area altogether. That same survey found that 12 per cent of businesses were considering moving out of Nottingham. Others have probably decided not to move in.

And that’s before we consider the residential streets flooded with cars that were formerly parked in workplace car parks. For this is how it has ever been: good intentions don’t always produce good results. The Sheriff of Nottingham probably thought he was doing the right thing too.

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