The first UK scheme to tax parking spaces has received the government’s go-ahead and will be piloted in Nottingham.

The transport minister Sadiq Khan announced his support for the scheme, which will not start until April 2012, giving businesses time to adjust.

Under the scheme, called the Workplace Parking Levy (WPL), commuters could be charged £185 annually to leave cars at work, with the amount rising by 2014 to £350 per parking bay for companies with 11 or more spaces. It will be up to employers whether to pass the charge on to employees.

Although the aim of the scheme is to reduce congestion, it was immediately condemned by local business leaders as simply an effective way to boost council coffers. The Derbyshire and Nottinghamshire Chamber of Commerce has strongly opposed the scheme and warned that many businesses might choose to relocate rather than pay the charges.

John Dowson, the chamber’s head of policy and representation, said the scheme “is all about raising money and will do nothing to relieve congestion. It adds an unnecessary tax burden on businesses.” He complained that chamber officials have tried to discuss the scheme with government ministers with no success. 

The Conservatives oppose the tax. Shadow transport secretary Theresa Villiers said, “At a time when jobs are under huge pressure, it is wrong to hit enterprise in Nottingham with a workplace parking levy.”

It is feared by the British Chambers of Commerce that if the Department for Transport approves the scheme in Nottingham, other councils will follow suit and submit similar plans. Milton Keynes, Oxford and Cambridge have already shown interest.

Nottingham City Council could net £11.3 million a year through the charges, revenue which would be used to pay for the expansion of the Nottingham tram network.

If rolled out across the country, the WPL could cost companies as much as £3.4 billion a year.

The Department of Transport said it would be entirely up to councils to choose whether workplace charges are an appropriate way to fund improvements to local transport networks.

If parking spaces are to become heavily taxed, the option of buying seasonal parking passes from private parking firms becomes an ever more attractive one, with their implicit guarantee of a conveniently located and secure parking spot at a reasonable rate.

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