Government plans to permit local councils to levy a charge for workplace parking would be very damaging to business, says Ruth Lea, Head of the Policy Unit at the Institute of Directors (IoD).

In a letter to all the members of the House of Commons Standing Committee currently considering the Transport Bill, the IoD points out: "The imposition of what could amount to a very expensive total charge in some locations; including London, could seriously damage business profitability and competitiveness."

While supporting the Government's plan for a competitive economy the IoD fears that the parking proposals will actually work against this. The Commons Committee is due to debate the issue of a workplace-parking levy and has been considering road user charging.

A survey of IoD members in 1998, when many of the ideas in the Transport Bill were first set out, showed that over 80% (of over 2000 respondents) were opposed to having a workplace parking levy imposed. Even for larger businesses, one effect of the levy would be higher costs to customers. Many firms would need to pass on some or all of the cost to their employees. The workplace parking proposals could be particularly damaging for small and medium sized enterprises.

The IoD's letter also states that: "At present there is a lack of realistic alternatives to car use in very many locations such as rural areas and many urban fringes. We are very concerned indeed that such proposals would lead to even greater problems than they are intended to solve, by way of costs to business and loss of morale of employees where organisations had to pass on extra charges."

Traffic congestion is very damaging for many businesses and the IoD has given cautious support for suitably administered schemes to tackle this, provided they were cost-neutral to business.

Anna Lagerkvist