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Transport Innovation Fund

3.32 pm

The Secretary of State for Transport (Mr. Alistair Darling): With permission, Mr Speaker, I would like to make a statement on the transport innovation fund, as well as setting out how we are taking forward the development of a national road pricing scheme.

We said in our manifesto that we would examine the potential for moving away from the current system of motoring taxation towards a national system of road pricing, which, with a range of other measures, would tackle congestion in the long term. Congestion on the roads is a complex problem, which will need a range of measures to tackle it successfully. They include investment in public transport, as well as measures to get more out of the network, for example, through better traffic management and car pool lanes.

Our strong economy, demography and the fact that we live on a crowded island mean that we need to plan ahead now for the pressures that we will face in the next 20 to 30 years. Road pricing is about making journey times by car more reliable for motorists and getting more out of the road network. Today I want to set out what the Government are proposing for developing the concept of road pricing further, the role of the transport innovation fund and further work that needs to be done.

My Department is also publishing its two new congestion targets today. They focus on improving the reliability of journey times on the strategic network and the movement of people on urban roads. The Government set out their intention to establish the transport innovation fund in the White Paper, "The Future of Transport", which we published last July. We pointed out that, without radical measures, including more effective demand management, road congestion would get worse. That is why we need to consider whether road pricing would allow us to get more out of the network, especially at peak times.

If we were to implement a national road pricing scheme, we would not do it all in one go. That would not be possible. A road pricing feasibility study that was published in parallel with the White Paper last year recommended that it would be far better for local or regional schemes to be piloted to test approaches as road pricing was further developed. The transport innovation fund is part of that. Indeed, the fund is central to the approach that I set out in the White Paper. It offers substantial long-term investment and will support smarter, better management of the capacity that we have. It will also ensure that we can plan ahead to prepare for the long-term challenges that we face.

The transport innovation fund will be used to support the delivery of infrastructure schemes that will promote our national productivity. Transport that is well planned and sensitive to our environmental and social objectives is fundamental to our sustained prosperity, through road improvement as well as rail and light rail schemes, for example. The fund will also be used to support local plans that will help to tackle congestion. We are looking for proposals that combine some form of demand management, such as road pricing, with better public transport. These pilot schemes will contribute to our work on national road pricing.

Today, I am publishing further information on how we expect to deploy the transport innovation fund, which will come on stream from 2008–09 and is set to
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increase over time, reaching some £2.5 billion by 2014–15. We are also today asking local authorities to bid for development funding, which will be made available over the next three years to support planning for local demand management schemes in which pricing is a major element. We have set aside £18 million between 2005–06 and 2007–08 to support preliminary scheme development by local transport authorities. These schemes could ultimately be funded from the transport innovation fund. Within the fund, therefore, we are prepared to ensure that up to £200 million a year is ultimately available to support such local pilots. If more good schemes emerge, more can be made available.

The guidelines for bidding for this pump-priming development work are today being placed in the Library, published on the Department for Transport website and sent to all local highway authorities in England. If a local authority or group of local authorities in Scotland or Wales wish to introduce road pricing pilot projects, they could do so in conjunction with the Scottish Executive or the Welsh Assembly Government. The Department will be happy to work with the devolved Administrations on such schemes, given their national implications.

Ahead of any future national scheme, parts of the country already experiencing congestion may wish to develop road pricing schemes to improve travel within their area. If road pricing is to be developed, we need to pilot a scheme covering one or more local authority areas or, for example, a passenger transport executive, in which congestion is already a problem and the local authorities want to do something about it. We want to work with local authorities to develop and implement a pilot scheme for road pricing. No decisions have been taken on where such a pilot might take place, but we hope to identify partner authorities willing to work up pilot proposals within the next year. We hope that they will then start work on the ground with support from the transport innovation fund when it comes on stream.

As well as making available the money through the transport innovation fund, we are taking forward a programme of work that would enable us to take decisions on road pricing in the future, and which covers three key areas. The first relates to the shape of a national scheme. National road pricing could take different forms, and we are looking at the options and the scale of benefits that each would bring. We are also looking at how best to address the environmental issues, particularly the problem of vehicle emissions and climate change. We clearly need to encourage the development and use of cleaner vehicles. However, we also need to avoid designing a scheme that is too complex or costly to run.

The second element of our work relates to technological capability. We need technology and systems that can be provided at an affordable price and to a satisfactory level of reliability. We need to engage with the industry to discuss the technologies that exist today and those that might be developed in the future. Much of the technology already in use for commercial purposes might be suitable, and might come with the benefit of working in practice. For instance, one UK insurance company is already piloting a new system of pay-as-you-drive insurance, which uses a satellite box fitted in the car to calculate the cost of the insurance
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premium on a monthly basis, and sends to car users as an itemised bill that looks almost exactly like a mobile phone bill.

Many cars are already fitted with technology that    combines satellite positioning with mobile communications to provide facilities such as useful information on road conditions, and in 10 to 15 years, such technology will be commonplace. But we need to establish what technological options there are for putting together distance, place and time of travel. We are looking at what is working now, and how we could approach pricing in a way that allowed us the scope to benefit from future technological development. While cross-party support to examine the benefits that road pricing might bring is important, the lesson of recent times is that we need a consensus not just among politicians but among the public. We are considering how to provide the safeguards that would need to be built into the system: for example, to respect individuals' privacy and to ensure that the right price is put on the right journey in a way that motorists can see and understand.

A great deal of work has already been done on some of those issues in the development of the lorry road user charging scheme. That has confirmed that a distance-based charge has the potential to be a workable and practical way forward. But our thinking on national road pricing has developed further. We are now taking forward work on a national system of road pricing, so it is right for us to take forward the plans for distance-based lorry charging as part of the wider work on    national road pricing—to develop a single, comprehensive, cost-effective system.

Although, therefore, the current procurement for lorry road user charging will not continue, we will continue to work with the industry and to ensure that we carry the full experience gained from the project into the wider work to develop a national road pricing system for cars and lorries. We will also continue to work with the haulage industry to ensure that its needs are represented as we develop a national road pricing system.

For the sake of completeness, and with your permission, Mr. Speaker, I ought to draw the House's attention to a written statement made by the Treasury today. In the Budget, the Chancellor of the Exchequer announced that, owing to the sustained volatility in the oil market, the annual inflation-only increase in the main fuel duties would be deferred until 1 September. The Financial Secretary has today announced that the Government will not go ahead with the planned inflation increase on 1 September, including for rebated oils, biofuels and road fuel gases. The position will be reviewed again at the time of the pre-Budget report.

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