Transport and the economy
Memorandum from Stephen Plowden
Summary
Not all economic activities and growth are desirable. There is an urgent need to reduce unemployment and to redress the balance of the economy between economic sectors and geographical regions. However, this must be done in a way which gives pride of pace to reducing transport’s contribution to climate change and also helps to reduce the social injustices inherent in present transport arrangements.
It is very important to enforce speed limits properly; the best way is by fitting vehicles with variable speed limiters. New vehicles should be manufactured with these limiters, and a mass programme of retrofitting existing vehicle should be undertaken. This programme, which would be partly funded by the state, should be used to reduce unemployment.
Minimising the need to travel is an important way of reducing all the costs and nuisances of transport. Recent technical advances make it possible for many commuting and business journeys to be replaced by telecommunications. The government should ensure that all regions are well served by broadband and should also be prepared to help provide businesses or individual people with the necessary equipment.
To keep journeys short, and to ensure that when longer journeys are necessary they can be made by public transport, the facilities required for everyday living should be provided in every neighbourhood, and those too large or specialised for that to be possible should be located near public transport stops. These aims can be achieved by locating governmental facilities appropriately, by planning permission for private developments, and by using money from transport budgets to promote a suitable configuration of facilities. For example, facilities which are too small to be commercially viable, but are justified in terms of social cost-benefit, should be subsidised by money which would otherwise be spent on transport. .
Inadequate user rules mean that the existing roads are not being used to the best effect. The principal reforms required in towns are lower and better enforced speed limits, more reallocation of space away from cars to pedestrians, cyclists, buses and sometimes also goods vehicles, controls over non-residential off-street parking places. Lower, better enforced speed limits are needed on roads outside towns. A simple nationwide system of road pricing for lorries should be introduced, and there may be a case for road pricing for cars on motorways and selected A roads.
A modest programme of investment will be required to implement these management measures, which should sometimes be accompanied by relatively minor investment in new infrastructure. But until the reforms have been implemented and their effects observed, no case can be made for any general increase in road capacity. The national road programme should be scrapped.
These reforms to the user rules for roads would allow large cuts to be made to the huge and regressive subsidy now given to rail. It is probable that a substantial programme of individually relatively small railway improvements can be justified, but neither Crossrail nor HS2 can be. They both work against the restructuring of the economy that the government rightly seeks, and their huge costs, and, especially for HS2, environmental damage, are unacceptable.
The needs
1.
I
t is clear from the
Transport Committee’s
call for evidence
that
that
both
the Secretary of State for Transport
and the Committee itself
attach very great importance to
encourag
ing
economic growth. Since the size of a country’
s economy is
measured by
GDP, it is
presumably
an increase in
Britain
’s
GDP that the Secretary of State
and the Committee
want to see.
But
GDP
is not a
measure
of
prosperity or welfare. It is
only a (somewhat deficient) measure of economic activity
, which can and often does include activities which are environmentally or socially undesirable. If the aim
is
to make
Britain
a better place to live in, both for its present inhabitants and for posterity, it is therefore very important to
discriminate between economic activities and to
select
quite carefully
the ones
to
be encouraged.
2.
In the present
economic
circumstances
the focus should be o
n reducing
the unemployment resulting
both
from the
recession
and from the severe and rapid cuts which, whether wisely or not, are being made to reduce the deficit.
T
here is also a
need to rebalance the economy,
both
in terms of economic sectors and
of
geogra
p
hical regions,
both
in order t
o reduce the risk of another financial crisis and
also
for wider social reasons. (It is to the new government’s credit that
it has
recognised this need, although unfortunately, as discussed
in paragraphs
20
to 22
below,
its
two most important propos
als fo
r
investment in transport work against it.)
W
e should also seek to minimise expenditure on transport in order to limit the
need for
damag
ing cuts
in other
sector
s.
3.
These current
concerns must be addressed in
way
s
which take account of
climate change, which is the
greatest challenge of our
times, and which
also
reduce the
heavy
social and environmental costs of transport and the injustices inherent in our
prese
nt
transport arrangements.
The injustice in road transport is that poor
er
people who have benefited least from the growth in car ownership and use, which has been the dominant trend of the last sixty years
,
have also suffered most from
its adverse consequences. The mobility of people without cars has been markedly reduced by
the decline in local bus services
, the worsening of conditions for
walking and cycling
, and the trend for facilities of every kind to become larger in size but fewer in number and therefore harder to access
except by car.
A
t the same time
, poorer people, whether car owners or not,
are disproportionately exposed to the danger, noise, air pollution and visual intrusion which the huge increase in motor traffic has brought about.
In addition
,
the huge subsidies to rail (amounting to £5.2 b
illio
n last year according to the
Economist
of 18
th
August) mostly benefit better off people and people in
London
and the south-east, the richest part
of the country
. Many poorer people rarely if ever take a train.
Short-term job creation
4.
The most important of measures
,
discussed very
briefly
below, to manage transport better concern speed. The speed limits on most roads
are too high
, but whether the
y
are reduced or not the same problem of how best to enforce them arises. The
best method is through
variable
speed limiters on the vehicle
.
(It is now compulsory for lorries and coaches to be fitted with top-speed limiters. Although
top-speed limiters
have proved very valuable
,
they do not enforce compliance with speed limits on roads of all c
lasses as
variable speed limiters would
do.)
Variable s
peed limiters are of two kinds: driver-
operated or externally activated.
There is still work to be done in the development and testing of externally activated limiters, whereas the
technology of driver-operated limiter
s, which is virtually identical to that of cruise control
,
is fully established. We know that
driver-operated speed limiters would
work and what the extra cost of fitting them to new cars in the process of mass production would be
,
and we have a reasonable idea of what the cost of retrofitting cars already on the road would be.
5.
All cars should be fitted with
variable
speed limiters. When externally activated limiters have been developed and approved, drivers who preferred them would be allowed to have them, but in the meantime cars should be fitted with driver-operated speed limiters
. The responsibility of knowing what the speed limit on each road is would remain with the driver (subject, as at present, to the limits being properly signed)
, although
drivers who wanted the additional aid of GPS systems and computerized maps (when they become available) showing what the speed limits are on each section of road could of course buy and use them.
The cost of fitting new
vehicles
with speed limiters would be borne by the
manufacturer and passed on to the driver, just as hap
pens w
ith other ma
n
datory fe
atures,
such as exhausts and seat belts
,
at present.
But the cost of retrofit is
much
higher and it would not be very fair to make owners pay the full cost of improving a
vehicle
which complied with all the regulations in force when it was bought, especially when most of the benefits of the improvement would accrue to
other members of
society rather than to the individual owner. There is therefore a good case for the state to contribute
to the cost of retrofit.
6.
The programme of retrofit would take several years
, which is a good thing as high unemployment
is
also likely to be with us for years
. The employment would be spread over all regions, and although some training would be required, the work should be suitable for most of the people who are now unemployed but seeking work. In our study
Speed Control and Transport Policy
, published by PSI in1996, Mayer Hillman and I showed that retrofitting the 23 million cars then on the road would pay
very
handsomely
just
in terms of crash and casualty reduction, without regard to the other important benefits
that
compliance with speed limits
would bring.
This finding
must be even more
true now. Our
calculation
assumed full employment, whereas a programme of retrofit
sh
ould be used to employ people who would otherwise be unemployed.
In addition, the reduction of the official discount rate from 8% in 1996 to 3.5% today increase
s
the benefit/cost ratio.
Action in transport compared with action in other sectors
7.
Conventional methods of regional planning, such as inducements to invest in those industries and regions most in need of it, and the
location
of the government’s own
offices and
of universities, research cent
res
, cultural facilities
and so on
,
are like to
be more important than transport policies in bring
ing
about the required rebalancing of the economy. Howev
e
r
, transport measures could help to improve local commuting, especially for people without cars, who are most in need of help. The quality of the local environment can be an influential factor in deciding where businesses locate
. T
traffic is one of the biggest threats to that, so measures of traffic restraint could be important in that respect as well a
s in others. There is also a gr
e
a
t deal that can be do
ne to reduce carbon emissions f
r
o
m transport.
Reducing the need to travel
8
. The
best way to reduce all the costs of transport
, resource costs as well as
environmental and social costs, is to
find ways of satisfying the same journey
purposes
as at present while travelling less.
The
ideal would be to get rid of the need to travel altogether. Recent advances in telecommunications make this a real possibility for many commuting and business journeys.
Personal computers and email have made it possible for many office workers to work at home one or more days a week. There seems to be a trend
in this direction already
(
I think there are some statistics on this but I have not had time to research
it
).
The trend
is likely to grow spontaneously
and it could also be encouraged by policy, including the reforms to the other modes discussed below. Both road and rail congestion could be substantially reduced in this way.
Business travel could be reduced by t
eleconferencing
, which has now reached such a high stan
dard that it as if the participants were in the same room. Business journeys
account for 19% of long-distance car journeys in
Britain
, 22% of long-distance rail journeys and
58% of domestic air journeys, so teleconferencing could
help significantly to reduce travel by all modes.
(
1
)
Government has a role to ensure that all regions, but especially those with
the most
severe problems of unemployment
,
are
provid
ed with broadband (this may be happening already)
.
In addition
,
there may be scope for helping businesses
,
and/or individuals who want to work from home
,
to obtain
the necessary
equipment.
9
. Land-use planning can be used to ensure that the facilities required for everyday living are located in each neighbourhood, thus allowing
daily needs to be satisfied by short journeys. The shorter the journey, the
more likely it is
to
be made by
foot or by cycle
. If a short journey is made by car, it still
cause
s
less danger, pollution and other nuisance than
a
longer one. Facilities too large or specialised to be provided in each neighbourhood should be located close to public transport stops. Not only would this help
travellers
without cars, it
also
makes it more like
ly
that people who do have
the option of
a car
will use public transport instead,
so reducing
all the
costs and nuisances of car travel.
10
.
Public organisations
,
such as the NHS, government departments and local authorities
,
should follow these principles in deciding the number, size and location of their own facilities.
The same principles should guide p
lanning authorities
in deciding
development applications made by
private firms or
people
.
L
ocal authorities
should
also
be given powers
to subsidise facilities which are too small to be commercially self-supporting but which can be justified by a cost-benefit analysis taking account of environme
ntal and social considerations. In effect, local authorities’ transport budgets should become accessibility budgets,
allow
ing
money to be diverted from transport to land use where that would produce a better
outcome.
Management before investment
11. At any time, but especially at times of financial stringency such as the present, it makes sense to ensure that the best use is being made of existing infrastructure before
thinking of adding to it. That would be true of any economic sector, but especially of transport, where
small schemes, such as bus priority measures, road safety schemes, cycle tracks, commonly show much higher benefit/cost ratios than major ones.
Moreover, i
f management measures do not work as expected, they can be altered, whereas new infrastructure is inflexible. This cons
ide
r
ation is of especial importance at this time when there are major doubts about
whether
travel and traffic would grow even under
a
business-as-usual
scenario
with no attempt at restraint
. The calculation of the benefits from major schemes usually relies heavily on the assumption of continuing growth.
12. In urban areas, the most important management measures
, supplement
ing
policies
to reduce the need to travel whic
h we
re discussed above
,
are lower and better enforced speed limits, the reallocation of road space away from cars in favor of pedestrians, cyclists and buses (and also, in certain circumstances, good vehicles)
,
and parking controls.
Most urban car journeys, except perhaps some
longer ones in
London
and other conurbations, are too short for increases in
travel time resulting from lower speeds
to
deter much car travel.
But
,
in addition to other environmental and safety gains,
they would make cycling much safer. Danger is the most important reason why p
eople who would like to cycle
do not
cycle now.
The experience of towns,
especially on the Continent, which have
created safe and agreeable
conditions for cycling
s
hows that the suppressed deman
d is huge
.
Parking controls are potentially a very powerful and discriminating means of control which
are now underused.
In particular, there is a need to take control of private non-residential spaces, especially in central areas. The need is not so much to charge for these spaces as to reduce their number, which will require new legislation.
13. Eff
ective
measures of traffic restraint in towns would have some feedback effect on traffic levels on roads outside towns. The most important reform needed on these roads themselves
is to reduce and enforce speed limits. In contrast to the situation in towns, this would have a profound effect on reducing car mileage, both by encouraging a shift to other modes and, which is probably more important, by checking and reversing the tendency for car journeys to become longer.
14.
Many economists would put road pricing top of their
list of manage
m
ent
measures
,
but lower speeds are more important.
If traffic volumes were reduced by pricing, speeds would go up
. Higher speeds would lead to higher
crash and casualty rates
per vehicle mile
,
and
also to higher
rates of fuel consumption, CO2 emissions and noise. Lower speeds would
have a similar effect
as pricing
on reducing vehicle
mileage,
but they would
reduce
crash and other rates
very significantly
as well
.
15.
It
is possible
, however,
that when everything else had been done
to
reduce car mileage
,
there would still be an undue degree of congestion on some
motorways and major A roads. If so, road pricing for cars could be considered on these roads. Because the network is limited, with few and clearly defined access points,
implementation would
be very easy
.
A
drawback, however, is that
the charges could encourage
drivers to divert to other
less suitable roads with higher crash rates
.
That should not happen to any
significant
degree if
properly enforced speed
lim
its
, lower than the limits on
motorways and dual carriageways, were in place on the alternative routes.
16
.
T
he case for road pricing for lorries is mu
ch stronger. The
system should be kept very simple, with the
charge
per mile
depend
ing
only on the physical characteristics of the vehicle
,
without regard to type of road, congestion or any other consideration.
Because of its simplicity this system would
be extremely easy to administer –
Sweden
used to have such arrangements but was forced to give them up when
on
join
ing
the EU. A mileage-related charge
would act as a constant incentive to shippers and operators to consider such questions as:
could I find a nearer suppl
ier;
c
ould I send my goods by rail
; could I delay a shipment in order to achieve a higher load factor?
I
t would
also
encourage the development of urban systems of goods distribution organised on a town or area basis
, and using vehicles specially designed or selected for the task,
rather than by firms or products as at present. Th
at
could have important consequenc
es for personal travel as well. The presence of unsuitable
lor
r
ies
is a major danger and deterrent to cyclists.
Investment
Supplementing management measure
s
17
. Despite what the slogan "management before investment" may suggest, implementing the kind of management measures referred to above does of course require some investment
.
It costs something
to put in a bus lane or to pedestrianise a shopping centre. There is also likely to be a need for some new infrastructure to supplement measures
to make better use of the existing roads
. Bus
priority schemes
may not always be enough; new busways may be required as well.
A
lthough
cycling policy should concentrate
on making
it safer and more agreeable to cycle on ex
isti
n
g road
s
,
there
is also likely to be a need
to construct separate cycle paths or to provide bridges for
bicycles
over main roads, railways or canals.
Restricting car parking in town centres
may
sometimes
make sense only if park-and-ride car parks are built elsewhere.
Investment in roads
18
. The road programme has traditionally
been inspired
by the
supposed
need to cater for growing demand.
This is no longer a sensible aim, even if perhaps it once was.
No schemes designed to bring about a general increases in capacity should be considered until the
required
reforms to the regulatory and fiscal framework have been implemented and their effects observed.
S
ome local road building to serve new developments will be required and it is probably that some bypasses can also be justified.
Investment in rail
19
.
Lower speeds and the other reforms to the rules for the use of the roads will give rise to some extra demand for rail travel. On the other hand
,
these reforms w
ill
also
al
low the huge sub
s
idies to rail to be reduced (though
,
to be fair to the people who have come to rely on them,
th
ey could be phased out only
gradually
)
,
which would dampen demand.
The number of rail journeys which could be replaced by telecommunications may be quite high, and there may also be considerable scope for substituting
coach travel
for rail.
20
.
I would guess that the net effect of all these developments would be to reduce rather than increase the demand rail travel
. E
ven so, there could well be a case for all
sorts of local
rail investments, which cumulatively might come to quite a substantial programme.
But no case can be made for the two major schemes which dominate rail investment at the moment, Crossrail and HS2.
21
.
I have alrea
dy submitted a memo about Crossrail
to the
Committee
,
and I hope
the reason why there
has been no response
is only that because of the
summer recess
members have not yet had a c
hance to
read it.
To summarise drastically: a scheme which is designed to
increase employment in the financial centres of central London obviously has no place in a strategy to reba
la
nce the economy both in
terms of economic sectors and of geographical regions; even if spending £16 billion on rail investment in London could be justified, there are better ways of spending it.
22
. A high-speed rail network emanating from
London
would reinforce the unhealthy predominance of
London
and the south-east vis-à-vis other regions.
Experience shows that improving communications between an economically strong region and a weaker one is at least as likely to suck activity out of the weaker one as to
help it.
To the extent that transport investment may have a part to play in redressing the
UK
’s regional imbalance, it should take the form of improvements within each of the weaker regions, or possibly strengthening the connections between them, leaving out
London
. None of the other arguments for HS2, or for any other high-speed rail network
Britain
, stand up.
In particular, high-speed rail will not reduce but increase carbon emissions from transport. It is a disquieting reflection on the way that policy is formed in
Britain
that these plans ever reached their current advanced stage of development.
Should the balance between revenue and capital expenditure be altered?
23. The balance should indeed be altered in favour of revenue expenditure, but as far as transport is concerned it would be better to abolish this distinction altogether. It may be necessary to have separate budgets for national transport expenditure and for each major local authority, but there should be no ring fencing or further divisions within these budgets. They should be allocated between projects, whether large or small, regardless of mode, according to their benefit-cost ratios, modified or reinforced as necessary by environmental and social factors not included in the cost-benefit calculations.
References
1. These statistics, which relate to the five-year period 2002 to 2006, are derived from Figures 2 and 4 of Long Distance Travel in Britain published by the Independent Transport Commission in March 2010. The ultimate source is the National Travel Survey.
September 2010
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