The idea of a congestion charge is a good one. London, however, is struggling with the implementation. Apparently, while the number of cars in the congestion zone has gone down, the rush hour congestion has gone up. Why? Because the congestion charge does not change by time of day, it is more than high enough to drive out off-hour users, but is not high enough to change the behavior of rush hour drivers. Basically, they have made the center of London quieter at night.
This is actually not surprising. Economic theory would say that the
demand for travel at rush hour is more inelastic (i.e., less
susceptible to fees) than travel at other times of the day. (If it were
not inelastic, people would be willing to drive in such congestion.) If
fees don't change during the course of the day, they will have the
greatest effect during the hours that are more elastic. A properly
designed fee should temper peak-period demand; a fixed fee instead
tempers off-peak demand.
And, as I can attest from my last visit to London, where I was actually dumb enough to drive a car into town, the way they have implemented the system is not very amenable to time of day pricing.