Care, Not Car Parks

Labour's promise of free parking at hospitals has been criticised as a waste of resources—resources that should be going to care. But we don't have to choose between the two.

During the 2017 election campaign, a strange man called Richard Angell tweeted, repeatedly, that Labour’s policy of promising free parking at hospitals should not be introduced. Angell claimed that implementing such a policy would mean less money was available for healthcare – and suggested that “If new people is available [sic] it should first be spent on CARE not CAR PARKS”. Arguments of this nature – for whatever reason, in various degrees of good and bad faith – have resurfaced time and time again since then.

Why should hospital car parking be free? Let’s first allow the assumptions that governments are revenue constrained (they aren’t) and that governments themselves run and receive revenue from hospital car parks (they often don’t).

In very boring, very mainstream economics, a condition for efficiency is that price should be set equal to marginal cost. Setting price above this represents market failure and, generally speaking, signals monopoly power. This is broadly the case: hospital car parks are frequently the only available car parks in the vicinity of a hospital. What about the marginal cost of an extra car in a car park? This is, as near as damn it, zero, until that hospital car park becomes full, or near full (on which more later).

More than this, monopoly power is not merely a property of physical geography but of the context that defines a hospital: the hospital car park operator has monopoly power because, very often, people who go to hospitals want to be able to park as close as possible to that hospital. While microeconomists may point out that alternatives further away are always available, they are unlikely to be viable. The reasons for this are probably self-evident to anyone who knows what a hospital is, but to name two: visitors want to maximise the amount of time spent with a relative or friend during visiting hours, and people who are taking patients to (or collecting patients from) hospital want to park up as close as possible. Again, it should go without saying but: the conditions under which for which people visit hospitals are generally characterised by distress, sadness, and a particular type of time poverty.

Are there arguments in favour of charging for hospital car parking? Those that are are frequently raised are: 1) the loss of revenue to the NHS, 2) distributional issues, 3) the desirability of removing cars from the roads, 4) that hospital car parks often reach capacity, and 5) the suggestion that non-hospital visitors will use hospital car parks if they are free. I will deal with these in turn.

The loss of revenue to the NHS – again, ignoring that car parks are frequently operated by private providers whose revenue exceeds their payment to the NHS for their contract – is a strange point to raise. This ultimately amounts to an objection that setting price equal to zero would represent a loss of revenue on that grounds that more can be charged: that the hospital sector is failing to exploit its monopoly power, something which would be seen as undesirable economically and ethically repulsive if actually done. Further, why stop there? If non-healthcare aspects of hospitals are fair game for price gouging, why not price gouge in hospital canteens? Why not charge distressed bedside visitors, say, £10 for a cup of tea? Even aside from this (and with the caveat regarding revenue constraints of governments), it is hard to take in good faith the idea that this amounts to an important and irreplaceable portion of government revenue.

Distributional issues represent, in my view, the only reasonable point against not charging for car parks. For instance, the poorest poor do not drive, but must rely on public transport. But here we run into further problems. If we want to ensure distributional equity, we already know how to do this: general taxation. In any case, public transport itself represents another good with similar characteristics to car parks – until a bus or a train is near-full, the marginal cost of an additional passenger is again almost literally zero. We already offer free bus travel to those aged over 60: it is not hard to imagine that this can be extended. Until such time, hospital visitors and patients should be more broadly remunerated for their costs incurred in so doing.

A third objection is that that it is desirable to remove cars from the roads. To make a full disclosure: I do not drive and I would be delighted if cars were almost-entirely banned from substantial proportions of urban areas as soon as possible. But this seems to confuse the specific and the general. Hospital visits represent one of the few cases in which driving would seem uncontroversially more reasonable: people who visit hospitals on average have greater accessibility needs, for instance. Should we make efforts to remove cars from the roads? Yes. Is it possible to imagine a better world where cars are removed from the roads, with few important implications for hospital parking? Yes. Would making driving-to-and-parking-at-hospitals specifically more expensive be reasonable? Probably not.

Two related, final objections are that non-hospital visitors will take advantage of free parking, and that capacity constraints are reached in practice anyway. Like much of this, it is hard to imagine that the former is an objection raised in good faith. Validated parking schemes are not difficult to notice, never mind difficult to conceive of. At least one Dutch hospital caps patient charges at a still-high €25 per week; again, it is not hard to imagine that this could be extended. The latter argument at least engages with the basic economics of the situation, but takes for granted that price is a valid mechanism by which to ration access to the NHS, or to visit unwell relatives. Again, that capacity constraints may be hit already points not to a need to charge more for hospital parking, but to fix the atrocious state of our public transport.

A call to set hospital car parking charges equal to their marginal cost should not be seen as revolutionary, but as cashing some very basic cheques written by the authors of microeconomics textbooks. Hospital car parking is not in all cases preying on the vulnerable, or the poor, but it is in some – and that would seem to be justification enough. It is unnecessary, economically inefficient and in many cases actively predatory. Set price equal to marginal cost. Care and car parks: make hospital car parking free now.


Dan Howdon (@danielhowdon)

Dan Howdon is a Senior Research Fellow in Health Economics at the University of Leeds.