Transport and the economy

Memorandum from the Automobile Association (AA)

THE VIEWS OF THE AA

1. Introduction and summary

1.1 Throughout its 105 year history the AA has been looking after the interests of drivers. It has sought to improve the condition of the roads they drive on, looked after their safety and campaigned to ensure they are treated fairly. The AA is the UK’s largest motoring organisation. The AA engages with its members through numerous communication channels, ranging from the internet, a mailed magazine, direct contact by letter, telephone and through polling. A recent significant innovation has been the creation of a ‘members’ panel’ which comprises of 150,000 people who agree take to part in monthly AA/Populus panel surveys on a range of motoring issues. The panel is the largest dedicated motoring opinion panel in Europe. The AA has also developed a website based motorist discussion ‘zone’.

1.2 AA members have differing views on many key motoring issues. Most say that roads are in a fairly poor state and have not kept pace with traffic growth. A majority of AA/Populus panel members support the construction of new and improved roads. Congestion and unreliable journeys are a significant concern for motorists and business. Motorists accept they must pay for their motoring but resent being seen as a ‘problem’ and oppose escalating costs such as fuel, road tax, parking charges and potential congestion charges. Private motoring is an essential part of 21st century life and is something people continue to aspire to and even enjoy. Motoring is the main form of transport for 86% of passenger journeys. Many people are dependent on the car and the mobility of the car benefits society in many ways.

1.3 The UK’s road system is critical to the national economy and at local level to daily household life and business vitality. Most trips, even ones by rail, involve a road element and the majority are completed entirely by use of roads.

2. Responses to questions

2.1 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 state of the UK economy has changed significantly since the Eddington study with recession damaging both household, business and national finances. AA/Populus research carried out in March 2010* shows that 40% of AA members were slightly or more optimistic about the UK economy than they were over the previous year. However, just over a third (34%) felt more or much more pessimistic and 24% felt no different about the economy.

Over the last 30 months the AA has also been tracking the impact of fuel prices on AA members and this has revealed that when prices are high, as in the peaks of July 2008 and May 2010, drivers cut back even more on driving and also cut back on other spending to compensate.

In the March 2010 survey* 29% had cut back on driving due to the price of fuel, 19% of respondents had cut back on other areas of spending, and 19% had done both. In terms of what spending cut backs had been made to compensate for the high cost of fuel 28% had cut back on eating out, 24% had cut back on theatre/cinema and entertainment and 16% had cut back on weekly shopping.

In a separate question about the ‘current economic climate’ (March 2010) 56% said this would make them less likely to buy a new car, 20% said they were less likely to get their main car serviced and 47% said they were less likely to holiday abroad. AA/Populus panel members’ top motoring concern is the cost of motoring.

The AA polling shows the impact the economic downturn is having on ordinary drivers and how, despite the fact many need to use their cars, they are cutting back on driving and other spending which ultimately harms the economy.

Clearly as the UK seeks to reduce budget deficits there will be pressure on Departmental budgets. The comprehensive spending review will undoubtedly have a major impact on Transport. However, the AA believes that a mature economy like that of the UK should not sacrifice its transport system to fulfil economic policy. The UK will need a well maintained, efficient, uncongested and safe transport system if it is to come out of recession and compete in Europe and with the rest of the world.

It would be an economic disaster to downgrade Britain’s transport assets through under investing in maintenance and improvement.

2.2 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 AA believes it is crucial to protect, preserve and not least improve the UK’s motorway and trunk road network and investment should be geared towards relieving congestion, improving safety and ensuring the fabric of these roads is maintained. The AA believes that there is merit in pursuing road construction schemes such as by passes. These tend to produce phenomenal economic rates of return on investment. The high economic value in terms of benefits v cost is largely because many help unblock economic stagnation and also produce high value in reducing death and injury. The Eddington study found that a 5% reduction in business travel time on the roads would generate £2.5bn benefit. The study also found that road schemes produced rates of return at a ratio of about 10:1 and the number of road schemes with high levels of return far outweighed major public transport schemes such as heavy and light rail.

Current mechanisms do not provide nearly enough funding to advance badly needed schemes. Local authority ‘A’ roads improvements have also already suffered from lack of investment. Urban and suburban traffic congestion is rife, for example at any time during the morning peak 15% of urban drivers in Birmingham, Glasgow, Sheffield Leeds and Manchester are stuck in queues.

The AA believes that at a time of recession the UK should embark on a major programme of road ‘renewal’ to create jobs and ensure the future predicted congestion on UK roads in the future does not harm the UK’s economic restoration.

2.3 How should the balance between revenue and capital expenditure be altered?

The division between revenue and capital spend particularly as regards roads has often appeared more sleight of hand than based on pragmatic administrative and financial prudency. Our observations are that at local authority level there is always insufficient funding (in both accounts) to fulfil highway needs and shifting emphasis from capital to revenue or vice-versa often has little bearing on the outcome in terms of clearing repair backlogs or developing schemes. The value for money and benefits of both capital and revenue spend can often be equally as valuable whether it is preserving asset in terms of maintenance or creating new infrastructure or refurbishing existing assets like street lighting. In times of financial hardship the public sector needs to get better value for money , so tough negotiation and re-negotiation are required on every transport procurement contract.

2.4 Are the current methods for assessing proposed transport schemes satisfactory?

The AA believes that in a time of financial prudency more weight must be given to the greatest number of people which will benefit from investment in a particular transport scheme (by mode) so that the greatest benefit to society can be achieved. This may mean more resources going into road rather than rail as only 3% of total trips are made by rail compared to 63% by car or van as driver or passenger, a further 7% of travel is by national or local bus, again using roads. In terms of overage distance travelled rail accounts for 8% bus 5% and car or van driver or passenger 78%**. Of course due consideration must also be given to citizens as well as transport users and also the other impacts of transport schemes.

In terms of the UK’s transport needs priority must be given to schemes which help renewal of the economy. This will mean ensuring congestion is reduced, safety and capacity is improved and the environment is protected through for example schemes that take road traffic away from communities.

2.5 How will schemes be planned in the absence of regional bodies and following the revocation and abolition of regional spatial strategies?

Local authorities and local economic partnerships are probably fully able to develop schemes within perhaps joint frameworks established with neighbouring authorities and of course in accord with national planning. Many transport schemes at regional or local level have probably already been on the drawing board for a considerable time and may have also been proposed within other studies like multi modal or local transport plans. It appears to the AA that the UK does have a wealth of transport schemes it dreams to have but which can take decades or longer to deliver due to political or fiscal prudency. We believe we already know what the UK’s transport needs are at national and local level and that there may already be developed schemes that simply need delivering.

* AA / Populus panel survey responded to by 17,480 AA members carried out 15-22 March 2010

** DfT National Travel Survey 2009

September 2010