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Jun 25, 2023

Rise of the parking app makes the rich richer as motorists struggle

Digital parking has spread rapidly across Britain, but campaigners say it is

Digital parking has spread rapidly across Britain, but campaigners say it is stressful or inaccessible for many

All summer, exasperated motorists have been jabbing at their phones, trying to download and install yet another parking app. Then follows the interminable chore of entering card details and number plate, which may ultimately be derailed by poor phone signal or a glitchy app.

Anti-ageism campaigners say navigating the process can be overwhelming for some older people who, in the words of the veteran consumer champion Dame Esther Rantzen, risk being "imprisoned at home".

Those who loathe this seemingly unavoidable aspect of the modern world will take little or no comfort from knowing that the rise of digital parking is making some rich people even richer.

Ten members of Germany's sprawling Porsche automotive dynasty, which controls Volkswagen, were named in accounts lodged at Companies House this month as "persons of significant control" behind PayByPhone, one of the UK's most successful parking apps. It paid dividends worth £13.6m in the year to the end of December 2020, the documents show.

Accounts for the latest year show a return to profit after the impact of the pandemic, with earnings of £172,000 on the back of a 24% increase in revenues to £4.2m.

Local government disclosures show the company has spread across Britain, winning contracts with councils including North West Leicestershire, Luton, North East Lincolnshire and Sheffield, to name a few.

Its website lists more than 120 areas where it collects cash from drivers, encompassing hundreds of local authority sites, as well as private businesses and the National Trust.

But PayByPhone is only one player in a burgeoning market that include Saba, Just Park and the UK market leader RingGo, which has contracts with the City of London, North Devon, Leeds and Nottingham, and boasts thousands of locations on its website.

RingGo is part of the Park Now Group, which was owned by another German auto giant – BMW-Daimler – until it was sold in 2021. The buyer, EasyPark Group, is in turn owned by Vitruvian Partners, a pan-European private equity powerhouse with around £8bn of assets.

Vitruvian's 12 members – the senior employees entitled to a share in its profits – have pocketed payouts worth more than £100m over the past two years alone, thanks to shrewd investments such as EasyPark.

Accounts for Park Now's Dutch parent company, a subsidiary of EasyPark, show that it is doing something common to tech businesses with an eye on dominating their sector, such as Uber and Tesla: growing very fast while incurring heavy losses.

Turnover in 2017 was €46m (£39m) – including the US and Europe – but had doubled to €92m by 2019, the last reporting period before the pandemic hit sales. Over the same period, a €1.1m pre-tax profit turned into annual losses of more than €30m, largely due to a tripling in staff costs as the company annexes ever more car park real estate.

The accounts also reveal exactly where Park Now makes the bulk of its revenue. In 2019, €7m came directly from the councils that pay for its services but the vast majority, a further €79m, came directly from app users. EasyPark declined to comment.

Councils that use such services deny they are forfeiting valuable revenues that could be spent on public services. A spokesperson for Leeds city council said it did not have the capacity to operate its own app-based parking service.

The local authority benefits, it says, because it gets the parking fee, with RingGo picking up a 15p transaction fee. Customers who pay cash will not pay this fee.

In Nottingham, a council spokesperson said using PayByPhone saved the authority money, reduced incidents of vandalism and theft at pay machines and meant there was no need to have vehicles on the road collecting cash from them.

There may, however, be another benefit to councils from a system that some find harder to use. Data obtained under freedom of information legislation earlier this year showed councils collected £158m of parking fines in areas that offered a cash option. In those that did not, the figure ballooned to £257m.

What may be lucrative or pragmatic for councils can be stressful for drivers, particularly in the growing number of areas where cashless payment is the only option.

Earlier this year, the music writer Pete Paphides was inundated with stories of bad experiences with digital parking, after tweeting about how his 84-year-old father had struggled to use an app when trying to arrive on time for a friend's memorial service in Birmingham.

"It was him and a load of other Cypriot old-timers, all phoning their kids because there was nowhere else to park and they thought maybe they could get in touch with the company and explain," said Paphides. "But of course you can't get through to a human being."

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Paphides’ father died before he could pay the resulting fine, forcing the writer into a lengthy and unwelcome dispute with a debt recovery firm, requiring him to provide a death certificate.

Asked what options there were to help older people at cashless locations, Nottingham city council said it – like other local authorities – had set up pay points at local shops, where drivers could hand over notes or coins.

However, this option has the potential to be confusing, time-consuming and requires extra physical exertion for elderly or disabled people.

Caroline Abrahams, the charity director at Age UK, said the charity had found many older people don not have a smartphone or a credit card, meaning car parks that don't take cash are no use to them.

"If they have mobility issues as well then it can be even worse, even completely preventing people from leaving their house," she said. "We are still light years away from a world where digital tech can help everyone, and public bodies and businesses running car parks should recognise this.

"Operators may save some money by not processing cash, but it's the digitally excluded in their communities, many of them older people, who are left paying the price."

There is another way that councils could go, one in evidence on the harbour arm of the Kent seaside town of Folkestone. The land is owned not by the council but by a private company, the Folkestone Harbour & Seafront Development Company, whose website proudly states: "Our parking site does not use RingGo payment."

Instead, the firm – owned by Sir Roger De Haan of the dynasty behind the over-50s brand Saga – hired a small company to provide an automatic number plate recognition system, which it plugs into its own payment website.

Although internet use is still the chief point of contact, no app download is required and the site is much more intuitive than an app, more akin to making a purchase from an online retailer.

Machines that accept cash are also on hand, as is a duty officer who can help out when things go wrong.

Luke Bain, a director of the Folkestone Harbour & Seafront Development Company, said the business was not only making money from its system, but visitors were finding it easier.

"We didn't want people associating our car park with penalty notices and getting fined," he said. "I expect councils just can't be bothered to do anything different from the norm because they have limited resources."