ITC rethinks how we spend money on transport

Rethinking how we spend money on Transport

The Occasion

Willy Rickett CB, former Director General of Strategy at the Department for Transport, chaired a panel comprising Professor Stephen Glaister CBE, Director of the RAC Foundation, Professor Andrew McNaughton, Chief Engineer of High Speed 2, and Elizabeth Gilliard of London Underground, who addressed a select audience comprising leading representatives from the fields of industry, urban design, academia and transport consultancy.

Summary

How would you best spend £50bn on improving Britain’s transport infrastructure? Prompted by the likely bill for High Speed 2, this was the question addressed by key opinion makers at the Independent Transport Commission’s summer Discussion Evening on Thursday 17th June 2010. The evening included representatives from more than 25 leading organisations.

Unsurprisingly, discussion was shaped by the present adverse funding climate and the sharp cuts promised in government spending. With these constraints in mind, consensus emerged that the key problem to address was not so much where spending should be directed, as how best to decide where priorities should lie. If Transport is to remain a high priority for government spending it will need to emphasise the benefits that better connectivity brings to quality of life.

Spending on Transport infrastructure – key issues raised by the speakers:

We must take into account significant population growth. In spite of ONS forecasts that the UK population will increase to 70 million by 2030, the resulting pressure on our transport system has barely begun to be addressed. There is no reason to expect that these people will do other than make 1,000 trips a year, most of them by car, as we do now.

In the absence of better alternatives, the Eddington Transport Study provides a framework for determining transport spending. While there are flaws in the report (such as the treatment of carbon emissions), there is no time to invent new appraisal methods before the forthcoming spending reviews. It will be important, however, to appraise each proposed scheme on its own merits, rather than simply focusing on its cost. As one speaker suggested, ‘in a land of the blind the one-eyed man is king, and our one-eyed man is Eddington’.

We will need to rethink the timetable for reducing CO2 emissions. The present timetable for reducing emissions is very tight. Reduced infrastructure spending as a result of budget cuts will result in more congestion and therefore higher emissions.

Local Transport initiatives often produce high rewards for low levels of capital spending. Low-cost initiatives can bring broad benefits: greening schemes, for example, have helped to reduce traffic speeds and improve local living standards. Furthermore, failure to spend on local infrastructure, such as lower classification roads, results in multiplied costs at a later stage due to deterioration.

Infrastructure spending will need to work within existing transport corridors. Existing urban constraints will have to be accepted: it is not feasible to drive new routes through built-up areas. We should carefully consider which modes of transport are best for each corridor, and determine how best to use new technologies. The Canadians, for example, have beneficially applied Automated Transport Systems in a number of their urban corridors.

We should pay more attention to improving infrastructure for moving freight. The sustainability of our freight systems has been ignored, in spite of their importance both for carbon reduction targets and regional economic growth. We should consider the creation of a freight spine down the length of the UK, electrification of freight vehicles, and the benefits of a second transport link with the European mainland.

Economic growth will depend on better policies for Inter-Urban transport in Britain. We urgently need to reduce the peripherality of British cities outside London, and address the way in which poor connectivity stymies local economic growth. Solutions could involve High Speed Rail links or rapid transit connecting the North-Midlands megalopolis of Manchester, Leeds and Birmingham.

Discussion Outcomes

The Transport sector must think of fresh means of raising revenue in order to increase spending. Participants noted that it was unacceptable for Highways to run such large deficits, especially as the road network was a potentially highly profitable public asset. It was acknowledged that rail and bus services were fundamentally less profitable, and would continue to require some public backing. Private Finance Initiatives were suggested as an opportunity to be embraced, based on the success of previous schemes in cities such as Portsmouth.

Some attendees urged the merits of road user charging, with charges varying by time and place depending on congestion. This would help reduce congestion and the need for new capacity, could potentially raise revenue and would allow the privatisation of the road network so that it was no longer subject to public spending constraints. Lorry road user charging offered one potential route to a national scheme. The establishment of a national pricing regulator, similar to those created for the utilities, would avoid the sort of pricing inefficiencies that had characterised local schemes such as the M6 toll road. Local politicians, other than in London, were unlikely to take the lead. Other speakers felt that similar results might be achieved with less ambitious plans, such as by raising fuel duty or giving motorists much better real-time information on road congestion.

The need for a National Spatial Plan would help us move beyond the current infrastructure mindset. This would enable large infrastructure visions, such as the plan to connect the North-Midlands megalopolis, to take shape. Larger infrastructure projects, some attendees noted, often generated fresh ideas and visions, as had been the case with High Speed 1. A National Plan would enable better planning to deal with projected population change, rather than leaving local authorities to deal desperately with ad hoc and unplanned population increases. A number of attendees criticised poor decision making in the local government arena, where elected representatives often lacked expertise; shifting council elections to a 5 year basis (rather than yearly in 5ths) should reduce the effect of ‘special pleading’.

We need to redefine capacity. It was suggested that we rethink where unused capacity exists on our networks in order to alter passenger behaviour. In this respect it was important to improve information systems that could identify capacity issues. Smaller projects were also important in influencing behavioural change, and a better understanding of such effects would be important for local government spending.

The fact that the transport world speaks with several voices is a drawback. The presence of many mode-specific lobby groups created a climate where spending priorities were determined by inter-modal competition. A single transport body to make the case for transport spending as a whole would greatly improve the chances of implementing major initiatives, such as national road pricing, and better develop integrated transport planning.

There is value in focusing on local transport projects with wider economic and social benefits. The panel observed that we must understand each scheme’s returns when selecting priorities. Some attendees expressed surprise that there was limited cheerleading for High Speed 2 as an immediate priority.

A number of attendees raised the point that the key issue at stake was how to hold and direct policy for the Transport sector. How do we decide the most important projects for spending? Attendees did not have universal confidence in the present route, focusing on benefit-cost ratios, but a number acknowledged that it would take time to invent new methods to make decisions. It was noted that current transport benefit-cost ratios were lower than those identified in other government departments, which could leave the transport budget open to further cuts. However, there were many beneficial factors that were not quantified in the calculation of transport rations, some of which are included in calculations made by other departments. We need to give greater consideration to a process whereby benefit-cost ratios are measured fairly.