Parking Revenue In the Pandemic – And Why Dynamic Pricing is Needed

The impact of the pandemic on parking revenue 

With far fewer journeys taken since the first lockdown began in the spring, many car parks and off-street parking spaces have been left empty. So it won’t come as a surprise to anyone working in the parking sector that the pandemic has had a significant impact on parking revenues as a result.

In fact, revenue from parking fines has been almost wiped out in some local authorities

If a councillor were to tell you how much income their local authority had lost from parking during the pandemic, you’d probably be forgiven for not showing that much sympathy.

Parking penalties may seem unjust and excessive (and in some cases they can be), but when someone refuses to pay for a fare – or breaks the law in some other way – most of us would agree that there should be a penalty – unless there were significant adverse circumstances. For example, if a parking machine is broken and the driver has no opportunity to pay, it would seem fair to challenge any parking notice that they might subsequently receive.

The truth, whether we like it or not, is that local authorities are reliant on parking revenue to help them provide essential services for their communities – from funding schools to delivering vital infrastructure projects and repairs.

But parking revenue is just one piece of a complicated jigsaw puzzle that councils are finding increasingly difficult to fill. Overall spending in English councils fell by over 20% between 2009-2010 and 2017-2018  – driven by government-led austerity policies intended to reduce the UK’s budget deficit following the late 2000’s recession.

As a result, local authorities face even greater pressure to identify new revenue streams, expand on existing revenue sources, or make cuts to services that may already be underfunded. Despite this, it is important to stress that many councils have paused parking enforcement procedures since the pandemic took hold.

So how much has revenue from parking fines gone down?

Between April and June this year, councils collected £16.8 million in parking fines – compared to £58.1 million in the same period in 2019 – a loss of £41.3 million.

The data – from LeaseFetcher – found that Leicester suffered the biggest loss of all councils surveyed. The PCN income there down an astonishing 99.2 percent compared with last year. London boroughs lost out on £31.8 million, with total PCN income 68.2 percent lower than last year. 

How much has parking revenue been hit overall?

According to the Ministry of Housing Communities and Local Government, councils were expected to earn in excess of £885 million from parking in 2020-2021. Current data indicate they suffered a £200 million shortfall in the first four months of the pandemic – from the point at which the lockdown restrictions began. By next year, official government data will show just how much revenue has been lost in total.

But even if you just consider that £200 million shortfall, that’s enough money to cover:

As you can see, this kind of shortfall has big implications for society.

So how have local authorities tried to minimise this damage?

Since the pandemic took hold in March, local authorities have had to balance the need to preserve revenue while factoring in the fall in household incomes and the effect this has on both the demand for and affordability of parking.

Many have temporarily reduced – or in some cases abandoned – parking charges in an effort to fill up parking spaces and help support high street businesses and other retailers. 

However, such gestures – while undoubtedly popular with motorists – can make it very difficult for councils to balance their books in the long term.

Sometimes, difficult decisions have to be made

Already, many local authorities are having to make unpopular decisions – either by reintroducing charges or increasing them. For example: 

  • Dorset Council has doubled its parking charges in parts of the coastal towns of Lyme Regis and West Bay from £2 to £4.
  • Newport Council recently defended its decision to retain parking charges – saying it would incur a ‘big loss of revenue’ otherwise
  • Local authorities in Bradford, Walsall and North Tees plan to reintroduce hospital parking charges.

So how can a dynamic pricing strategy help?

Dynamic pricing – which involves raising or reducing prices based on factors such as occupancy levels and vehicle types – can be a viable alternative to the blanket approach of reintroducing standardised fees or raising them altogether.

This pricing strategy is already prevalent in businesses like hotels and airlines. For example, many hotels charge higher rates at weekends compared to weekdays – and hotels in popular seaside resorts like Brighton and Bournemouth may charge a premium during the school summer holidays – when demand for rooms is particularly high. Conversely, airlines will usually offer heavily discounted fares during off-peak periods like November and January, to fill up seats.

More local authorities want this kind of flexibility

Research by cashless parking provider RingGo has found that over 40% of councils surveyed wanted to provide dynamic pricing based on availability, and half wanted to use this strategy based on vehicle type as well. In fact, the data revealed that the vast majority (78%) of councils were already implementing emissions-based parking strategies to try and reduce congestion, minimise pollution and improve air quality in their communities.

But won’t this mean motorists will have to pay more as a result?

Not necessarily. While it might seem like motorists could get caught out by more expensive fares when demand is high, case studies have shown that a dynamic pricing strategy can actually reduce the cost for the motorist overall – while cutting congestion and improving the availability of parking simultaneously.

Is there any good evidence that dynamic pricing has worked for parking?

Yes: here are three case studies where dynamic pricing has been successfully implemented in the parking sector. This information is from a study entitled ‘Is Parking in Europe Ready for Dynamic Pricing? A Reality Check for the Private Sector’, which was published in March 2020.

1 – European airports

Some large European airports now use pre-booking systems for airport parking – enabling private sector operators to offer different prices based on the occupancy level of the car parks, the length of stay, time of day, and so on. The move to dynamic pricing has been driven by strong demand for pre-booked parking spaces and competition from providers offering off-airport parking.

2 – Madrid

In 2014, Madrid launched a dynamic pricing system in which the fee was adapted to the demand for parking and the vehicle type. Drivers pay 10% of 20% less than the standard fee when occupancy rates are lower than 30 percent. When demand is high (occupancy between 65% and 95%, the driver pays 10% or 20% more. This dynamic pricing policy is based on environmental and mobility goals that are set by the council.

3 – San Francisco

In 2011, San Francisco adopted a demand-responsive parking pricing pilot study known as SFpark, which aimed to keep 15% of parking spaces available at any one time. The data showed that average parking rates fell by 1%, parking availability improved, the amount of time taken to search for a space fell, and emissions in the area also fell.

Dynamic pricing regulates demand with real-time data

The demand for parking spaces fluctuates constantly – and this is where dynamic pricing can be particularly advantageous for local authorities

It’s obvious that the demand for parking spaces near high streets will normally be much higher during prime shopping hours (i.e. Saturday afternoons) – and the same goes for parking spaces near schools during the school run. That’s why many local authorities charge more-expensive fares when demand is likely to be high – and lower fares when it’s likely to be much quieter.

However, dynamic pricing goes much further than that:  it empowers local authorities to adjust their pricing based on what’s happening right now at a specific location, rather than just using historic data that might apply to a wider area. When a car park or a street is almost full, fares can be increased to deter people from driving. In theory, this might encourage them to use alternative modes of transport (ie. walking, cycling, public transport).

To summarise:

Here are some examples of how dynamic pricing can benefit the customer

  • Increasing parking fares when demand is high may encourage more people to walk (where possible) and help them meet their daily exercise requirements.
  • When demand goes down, prices may be considerably lower than they would have been in a static pricing system. This may benefit people on low incomes who are not inconvenienced by travelling during times when demand is lower.

And how dynamic pricing can benefit the local authority:

  • Councils would have more power to regulate traffic flow to keep congestion and pollution to a minimum.
  • Councils would also be better equipped to reward low-emission vehicles with reduced fares and help speed up the transition from fossil-fuel-powered vehicles to EV.
  • Councils can increase their revenue by charging higher fares for the most polluting vehicles .

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