Written evidence from the Campaign for
Better Transport (TE 79)
Since 1973 the Campaign for Better Transport has
been helping to create transport policies and programmes that
give people better lives. Working nationally and locally, collectively
and as individuals, through high-level lobbying and strong public
campaigning, we make good transport ideas a reality and stop bad
ones from happening.
Have the UK's economic conditions materially changed
since the Eddington Transport Study and, if so, does this affect
the relationship between transport spending and uk economic growth?
The UK's economic conditions have changed dramatically
since the publication of the Eddington Transport Study. Faced
with a global recession and commensurate national economic decline,
the coalition Government has refocused the UK's priorities on
deficit reduction. At the same time our understanding of how transport
(and transport spending) engenders economic activity has changed,
particularly in relation to revenue expenditure.
In the Campaign for Better Transport's view, the
change in the economic situation makes Eddington's findings all
the more significant. For instance, his championing of smaller,
smarter interventions should be especially useful to local authorities
whose plans for a major scheme have not survived the comprehensive
spending review. Similarly, his recognition that congestion is
primarily an urban problem should be used to guide investment
away from rural bypasses and link roads and towards high-value
and sustainable urban transport packages.[64]
TRANSPORT ACTIVITY
HAS DECOUPLED
FROM ECONOMIC
GROWTH
It has become increasingly clear that transport is
no longer inexorably linked to economic activity. From 1997 onwards
the correlation between GDP and traffic levels has diminished
(see figure 1, below). By contrast during this period, growth
in the use of rail, after an initial decline, has consistently
run alongside or (more recently) ahead of GDP.
The reasons for this are unclear. One obvious cause
is the UK's transfer away from manufacturing and production towards
a knowledge-based economy. Other causes include land-use planning
policy, which has focused development away from out of town areas
and into town and city centres.
Figure 1
TRANSPORT AND ECONOMIC GROWTH INDEXED TO
1989[65]
Many UK cities, such as Nottingham and London, have
shown that economic growth can be achieved without a corresponding
increase in traffic. Despite this, Department for Transport forecasts
still assumes a linear relationship between economic and transport
activity and specifically a linear growth in road traffic and
car ownership to a "saturation level" akin to the highest
levels found in some US cities.
The assumptions underlying this forecasting, which
have remained unchanged for forty years, have a huge influence
on policy and economic analysis. Recent modelling of future levels
of car ownership in London forecast implausible increases of over
20% for central London boroughs, despite a long-term year-on-year
decline (see figure 2). Scenarios, ranges and sensitivity tests,
for example on future oil prices, should be incorporated into
the projects authorised by DfT, to ensure that spending is predicated
on robust, real-world situations, not wildly imaginative modelling.
Figure 2
FORECAST GROWTH IN CAR OWNERSHIP IN LONDON
2006-26[66]
More recently, some academics, such as Professor
Phil Goodwin, have suggested that we are approaching, or have
already reached, "peak car": the point at which car
ownership moves into permanent decline.[67]
This is different from a saturation point. Instead as the disbenefits
of car ownership (congestion, difficulty of parking, cost of ownership)
begin to outweigh the benefits, so car ownership and distance
travelled by car begins to decline.
Certainly there is convincing evidence that individual
travel has peaked. For instance, although our journeys are getting
longer (from 6.4 miles in 1997 to 7 miles in 2008) our individual
mileage peaked in 2005 and is now below 1997 levels. Similarly,
car use has been in steady, gradual decline, falling from 82%
to 79% of trips over the past decade, with per capita distance
travelled by car dropping from 5,705 to 5,468 miles per year.[68]
HIGHWAYS AGENCY
FORECASTING OF
ECONOMIC AND
TRAFFIC BENEFITS
IS GENERALLY
NOT ACCURATE
Since the Eddington Study, the Highways Agency has
published a number of "post opening project evaluation"
reports, which examine the correlation between forecast and outturn
impacts of specific road schemes, one and five years after they
opened. An Atkins meta-report summarised 28 reports, finding considerable
issues with the quality of forecasting, especially traffic levels
and economic benefits.[69]
In 60% of the examined bypasses, forecasters had
failed to predict traffic levels within a 15% margin of error.
35% showed differences of greater than 25%, and the majority had
actual traffic volumes above those predicted. Accident savings
for bypasses were around a third lower than predicted. Atkins
also found that time savings bore little relationship to the forecasts,
and the Highways Agency's forecasting of economic benefits was
"generally not accurate".
CLIMATE CHANGE
ACT AND
COMMITTEE ON
CLIMATE CHANGE
Since the Eddington Study was published, there has
been a greater awareness of the importance of reducing greenhouse
gas emissions and preventing climate change. Since 2006, despite
some press coverage, the evidence base for climate change and
global warming being real, serious, and caused by human activity
including vehicle emissions, has grown and solidified.
Figure 3
VEHICLE-KM TRAJECTORY FOR CARS[70]
In 2008, legally binding limits on CO2 emissions
were enshrined in the Climate Change Act. So far, Government action
has focused on promoting cleaner and lower emission vehicles,
but the Committee on Climate Change has also stressed the importance
of stabilising and reducing traffic and behaviour change measures
to achieve this (see figure 3). Ministers have accepted this,
and recently announced a new Local Sustainable Transport Fund
to support schemes which achieve this.
"SMARTER CHOICES"
PROGRAMMES CONTINUE
TO SHOW
EXCELLENT VALUE
FOR MONEY
Finally, evidence regarding the benefits of "smarter
choices" programmes has been further consolidated. The results
of the Sustainable Travel Demonstration Towns and the Cycling
Demonstration Towns have demonstrated sustained reductions in
car use following low-cost (primarily revenue) interventions.[71]
It is even clearer now than it was when the Eddington Study was
published that these interventions have real benefits, both for
the economy itself and for Government policy in the round.
THE CASE
FOR INFRASTRUCTURE
HAS BEEN
WEAKENED BY
A BETTER
UNDERSTANDING OF
THE EVIDENCE
BASE
Eddington suggested that the economic benefits of
major infrastructure investment were generally overstated in advanced
economies, because poor infrastructure was rarely a major obstacle
to business. Since his report was published, we have gained a
better understanding of the robustness of the evidence base for
major investment. As we have seen, many of the core assumptions
underpinning DfT forecasting and modelling are congenitally flawed.
The case for new infrastructure schemes, particularly major road
building, is considerably weaker than when the Eddington Study
was published, whereas the case for non-transport interventions
and resource spending has been strengthened. This should have
a major impact on future spending priorities.
What type of transport spending should be prioritised,
in the context of an overall spending reduction, in order best
to support regional and national economic growth?
The Comprehensive Spending Review should produce
a package of measures which support a sustainable economic recovery
in the short-term and which reduce the need for future capital
spending. Transport spending should fit with cross-Departmental
objectives. The major schemes pot should prioritise smaller schemes,
and we welcome the announcement of the Government's new Local
Sustainable Transport Fund.
FUND SCHEMES
WITH IMMEDIATE
BENEFITS, FIT
WITH GOVERNMENT
POLICIES AND
REDUCE FUTURE
SPENDING
The Government will want to prioritise schemes which
reduce the deficit and create the conditions for economic recovery.
It will therefore want to prioritise schemes with considerable
benefits within the first five years. There is little point in
allocating tens (or hundreds) of millions towards a scheme which
will spend several years going through the planning process, because
that money could be better spent on a project or package of measures
which is "shovel ready". Similarly, schemes whose benefits
are mostly felt towards the end of their 60 year evaluation period
(such as those whose economic benefits are mostly aggregated time
savings) should be rejected in favour of those with more immediate
benefits.
Recent work for the Public Transport Executive Group
has attempted to capture the economic benefits of investment in
public transport.[72]
This indicates that for every hundred direct jobs in rail, 140
indirect jobs are created. By contrast, one hundred direct jobs
in the motor industry generates just 48 indirect jobs.
Given the fragile state of the economy - and the
risk of a "double dip" recession - we must prioritise
measures which reduce future capital costs. It is clearly better
to spend money on maintenance now, if doing so avoids spending
larger amounts in a few years time. Failing to spend on highway
and rail maintenance now risks, to employ an over-used idiom,
spoiling the ship for a ha'pworth of tar.
This is also the case for schemes which reduce or
increase greenhouse gas emissions. As the Committee on Climate
Change has shown, and the Secretary of State accepted, we will
not be able to meet our CO2 targets by technology alone. However,
by investing in schemes which give alternatives to car use, and
thereby reduce emissions, we can make meeting the Climate Change
Act targets more achievable and therefore less costly in the medium-
to long-term. Conversely, prioritising schemes which increase
traffic and thereby emissions only increases the cost of meeting
these legally binding targets.
FOCUS ON
MAINTAINING EXISTING
NETWORK, HELPING
PEOPLE GET
TO WORK
AND CUTTING
URBAN CONGESTION
The Government's current appraisal system, the New
Approach to Transport Appraisal, has been roundly criticised for
placing too much emphasis on small time savings at the expense
of more material economic benefits. For example, the overwhelming
majority of the economic benefits of the proposed Hastings to
Bexhill Link Road are time savings averaging 15 seconds per user.
Whilst such schemes appear to enjoy relatively high benefit-cost
ratios, this does not translate into significant real-world benefits.
In any case, time savings are only a proxy for economic
benefits. KPMG, in recent work for Network Rail, has identified
ways of prioritising schemes according to their impact on the
real economy.[73]
Their report proposed reducing the reliance on Welfare economics
- user benefits monetised according to the willingness to pay
principle - and instead focusing on economic outcomes, such as
economic and labour market activity, land use, development activity
and environment and sustainability.
As the Secretary of State has suggested, Government
spending should prioritise schemes which make best use of the
existing transport network, cut congestion and improve access
to employment, education and training. As Eddington notes, 89%
of congestion is in urban areas, where solutions should centre
on providing alternatives to car use, not additional road building.[74]
Such schemes would be of particular assistance to those on limited
incomes, who are disproportionately less-likely to drive and thus
find it harder to get to work or education unless there is affordable,
accessible public transport.
We believe that maintenance should be a major priority
for the coalition Government. Maintenance work could also coincide
with programmes to make best use of existing infrastructure, including
plans for active traffic management for Highways Agency roads,
and bus lanes, public realm improvements and cycle infrastructure
for those managed by local authorities.
REJECT LEGACY
ROAD SCHEMES
BUT SUPPORT
LOW-COST
ALTERNATIVES
The previous Government's spending plans were dominated
by legacy road schemes with little national benefit and detrimental
environmental and social impacts. These schemes ill accord with
Government policy and have never been subject to a proper assessment
of options in line with current WebTAG guidance. Others are designed
to enable unpopular housing developments necessitated by now-abandoned
central Government housing targets.
There are two sensible courses of action. Firstly,
the coalition should introduce a "transport test" to
ascertain the impact of decisions taken by other departments.
This would demonstrate the benefits of encouraging new developments
in sensible locations, such as around existing railway stations
or on urban brownfield land (from which people could walk or cycle).
It would also highlight the impact that some measures, such as
closing rural post offices or relocating hospitals, would have,
both on individual travel patterns and expenditure, but also on
air quality, traffic and greenhouse gas emissions.
Secondly, the coalition should cancel the majority
of legacy road schemes and require a reassessment and re-examination
of all lower-cost and alternative options. These should focus
on a package of measures rather than on road building alone. The
new Local Sustainable Transport Fund should help provide funding
for the packages which arise out of this process.
How should the balance between revenue and capital
expenditure be altered?
The Eddington Study highlighted the vital role played
by low-cost interventions in tackling transport problems. Many
of these "smarter choices" programmes require revenue
funding, in that they often involve a mix of information provision,
travel marketing, cycle training and support for transport operators
and local businesses. The Treasury has proposed substantial cuts
to resource spending as part of the comprehensive spending review.
This would be an entirely retrograde step.
REFORM CAPITAL-REVENUE
SPLIT TO
GIVE LOCAL
AUTHORITIES FLEXIBILITY
For transport, increased revenue funding serves a
number of useful ends. Revenue spending ensures better efficiency
of existing services and networks, whether through marketing public
transport services and thus making them more economical, supporting
businesses in developing travel plans and thus reducing congestion,
or extending the hours a bus service runs so that more people
are able to rely on it.
Secondly, revenue services offer lower-cost solutions
to transport problems. It is generally cheaper to reduce demand
than to attempt to provide additional capacity. The Department
for Transport calculated that spending on the Sustainable Travel
Demonstration Towns had a benefit-cost ratio of 4.5 for congestion
benefits alone.[75]
More recent academic research has substantiated and elaborated
on these findings, particularly on cross-departmental benefits,
such as health.
Finally, resource spending can be used to reduce
future capital expenditure. Small-scale, targeted spending on
travel planning, car sharing and other demand management options
by the Highways Agency for businesses located at the Cambridge
Science Park, for instance, lead to sizeable cuts in congestion
on an otherwise gridlocked junction, avoiding the need for additional
road space. Research conducted by Steer Davis Gleave into alternatives
to the Wing Bypass suggests that the cost of a revenue intervention
to reduce the need for capital investment could be less than the
interest repayments on borrowing the capital costs.
It is therefore important that there is greater flexibility
in revenue-capital allocations, so that the right decisions can
be made according to local needs. One option would be to enable
revenue spending which could be demonstrated to reduce capital
expenditure to be classed as capital spending. Another approach
would be to give scheme promoters greater flexibility by not distinguishing
between packages of capital and revenue spending.
Are the current methods for assessing proposed
transport schemes satisfactory?
The flaws in the Government's New Approach to Transport
Appraisal (NATA) are widely acknowledged. Appraisal reform was
a cornerstone of the Coalition Agreement, and all three parties
included some form of reform in their manifestos. Campaign for
Better Transport set out the case for NATA reform in a recent
letter to the Secretary of State for Transport, Philip Hammond,
which accompanies this submission.
TIME SAVINGS
DO NOT
REFLECT REAL-WORLD
ECONOMIC BENEFITS
Time savings dominate benefit-cost ratios: 85% of
the benefits of the Bexhill-Hastings Link Road come from time
savings averaging just 15 seconds. However, research by the Department
for Transport and elsewhere has questioned whether drivers even
notice such minor time savings, let alone use them to generate
additional economic activity. Very minor time savings are especially
vulnerable to slight changes in traffic levels; even minor congestion
would wipe out savings of less than a minute. The focus on time
savings also leads to regional disparity, because it leads to
a presumption in favour of road building in the south east to
the detriment of other parts of the country.
One suggestion, which we endorse as an interim measure,
would be to disaggregate time savings, showing how many are less
than a set time period (say, one and a half minutes) and how many
are greater. However, in the long-term we believe that time savings
of less than one or two minutes should be disregarded, focusing
instead on schemes which generate considerable and lasting time
benefits.
WITHOUT REFORM,
NATA WILL CONTINUE
TO REWARD
SCHEMES WITH
POOR POLICY
FIT
The Department for Transport undervalues greenhouse
gas emissions, counting changes against an unrealistic baseline
scenario which assumes emissions increase, despite legally binding
commitments to cut carbon dioxide emissions. We propose that emissions
should be considered against a decline of 80% by 2050, in accordance
with the Climate Change Act.
Secondly, the cost of a tonne of CO2 is too low,
especially when considered against the value of time and indirect
tax revenues. The cost of the carbon dioxide emitted by burning
a litre of petrol is considerably outweighed by the benefit to
Government from the associated fuel duty. This could be remedied
by changing the treatment of fuel duty (see below) and by implementing
the draft version of WebTAG dealing with the cost of carbon (3.5.3d),
as proposed during the 2009 NATA refresh.
Benefit-cost ratios are over-reliant on fuel duty
revenue. Schemes which increase fuel duty are permitted to discount
capital costs against future revenue; those which decrease revenue,
by providing lower-carbon alternatives, must include the reduction
as a cost. In some cases, indirect fuel duty revenue outweighs
the cost of construction, leading to ludicrous BCRs.
The A14 Ellington to Fen Ditton, estimated to cost
up to £1.3 billion, has a benefit-cost ratio of -3.1; although
the scheme would cost £765 million (in 2002 prices), it would
raise £1,068 million in fuel duty, and is therefore assumed
to cost approximately -£300 million. The Highways Agency
reformulated this by moving the fuel duty from the costs to the
benefits column, resulting in a BKR of 2.6. Removing fuel duty
entirely would produce a BCR of 1.2, well below the threshold
for central Government funding.
Fuel duty may be a benefit to the Government, but
it is a major cost to transport users. It's inclusion in transport
appraisal expressly encourages unsustainable schemes and presents
a barrier to schemes which provide alternatives to private car
use. We do not believe there to be a case for including fuel duty
revenues in transport appraisal and propose that it be removed
from benefit-cost ratios altogether.
There also issues about the treatment of light rail
schemes. Whilst the minimum local authority contribution towards
scheme funding is normally 10% of capital costs, tram scheme promoters
must contribute a minimum of 25%; utility discounts for diversions
required by tram schemes are just 7.5%, compared with 18% for
highways schemes. This discourages local authorities from submitting
light rail schemes, despite their attractiveness to users and
potential to provide reliable, high-quality alternatives for urban
transport.
We propose that NATA be modified so that all schemes
are considered equally.
How will schemes be planned in the absence of
regional bodies and following the revocation and abolition of
regional spatial strategies?
It is entirely unclear how schemes will be planned
following the demise of the regional decision making bodies. There
is clearly a need for some form of sub-national decision making
process, if only to mediate between DfT and individual scheme
promoters.
In principle, Campaign for Better Transport supports
initiatives which encourage local authorities to work together,
such as through Integrated Transport Authorities. However, as
the recent Regional Funding Allocation demonstrated, regional
decision making is just as likely to result in counter-productive
horse-trading as in strategic packages of interventions. We would
prefer to see strategic thinking along the lines of the Regional
DaSTS studies recently begun by DfT, which generally achieved
the challenging outcome of balancing central Government objectives
with local and sub-national aspirations.
There are serious concerns about Local Enterprise
Partnerships. Local people need to be included in the decision
making process but this is not the case in several local coalitions
between councils and business. The Greater Norwich Development
Partnership, for instance, claims to be exempt from Freedom of
Information Act requests and does not allow the public to attend
its meetings, despite being a publicly funded body. Whatever sub-national
decision making bodies emerge over the coming years must be bound
by the Freedom of Information Act and should be accountable to
local people.
There is a wealth of experience across voluntary
organisations involved in environmental and transport issues of
involvement in regional decision making. It would be a real pity
if that experience were lost or excluded from future strategic
decision making bodies.
We have argued above that future spending should
prioritise smaller schemes and rely more on resource spending
and non-transport interventions. Ideally, what limited money remains
in the capital budget should be allocated to schemes which accord
well with central Government priorities, with the remaining money
made available for demand management programmes and smaller interventions
to make best use of existing capital assets.
September 2010
64 The Eddington Transport Study, page 79. Eddington
notes that 90% of non-urban traffic travels in "relatively
uncongested conditions" and that 89% of time lost on the
roads is in urban areas. Back
65
Transport Statistics Great Britain 2009, http://www.dft.gov.uk/pgr/statistics/datatablespublications/tsgb/2009edition/.
Back
66
Delivering a Sustainable Transport databook, Annex 9, http://webarchive.nationalarchives.gov.uk/+/http://www.dft.gov.uk/pgr/regional/strategy/dasts/databook/annex9.pdf
Back
67
"What about 'peak car' - heresy or revelation?", Local
Transport Today, 25 June 2010. http://www.transportxtra.com/magazines/local_transport_today/opinion/?id=23221
Back
68
Transport Statistic Great Britain 2009. http://www.dft.gov.uk/pgr/statistics/datatablespublications/tsgb/2009edition/sectiononemodalcomparisons.pdf
Back
69
Highways Agency Post Opening Project Evaluation, meta-analysis
report, Atkins, March 2009. http://www.bettertransport.org.uk/system/files/HA-POPE-summary.pdf
Back
70
First Progress Report, Committee on Climate Change,
http://downloads.theccc.org.uk/21667%20CCC%20Report%20AW%20WEB.pdf
Back
71
See, for instance, letter from Gillian Merron, then-Transport
Minister, to local authority Chief Executives,
http://webarchive.nationalarchives.gov.uk/+/http://www.dft.gov.uk/pgr/sustainable/demonstrationtowns/lettersustainabletraveltowns.pdf,
or The effects of smarter choices in the Sustainable Travel
Demonstration Towns,
http://www.dft.gov.uk/pgr/sustainable/smarterchoices/smarterchoiceprogrammes/.
Back
72
Employment in sustainable transport, http://www.pteg.net/NR/rdonlyres/D09F59E8-72C6-438C-8964-60A1993A8F48/0/EmploymentintheSustainableTransportSectorpdf.pdf.
Back
73
Prioritising investment to support our economy, KPMG, http://www.networkrailmediacentre.co.uk/Press-Releases/INVESTING-TO-BUILD-BRITAIN-S-ECONOMY-1561.aspx.
Back
74
The Eddington Transport Study, page 79. Back
75
Department for Transport, The Effects of Smarter Choice Programmes
in the Sustainable Travel Towns, chapter 21.
http://www.dft.gov.uk/pgr/sustainable/smarterchoices/programmes/
Back
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