Transport spending: Getting more from less Paul Godier Transport Planning Society 26 th January 2011

The challenge  Cut of about 20% by 2013/14 (Labour PBR)  Local authority spend too  Total saving needed ≈ £3½ billion p.a.  Balance of tax & spend?  The key goals of the economy & climate change remain

Expenditure savings 1 - efficiency  Some already built in to existing projections  Many examples of further scope:  Midlands Highways Alliance – joint procurement etc £11m pa  Shropshire CC – whole life road maintenance – save 24%  Norfolk CC – Integrated Transport Unit – save £0.6m pa  Network Rail – ORR require 21% pa saving by 2014  We suggest a realistic aim of 7½% cumulative - saving £1.3 billion p.a. by 2013/14

Expenditure savings 2 – bus subsidy  Key opportunity – restructure concessionary fares for the elderly  Package together with:  Faster smartcards & Incentive Per Passenger  Pre-loaded value  Multi-modal  Potential saving of £400m p.a.  Interim options – charge per card/flat fare

Expenditure savings 3 – and some high VFM addbacks  Road capacity investment to be reduced  Increased spend on high value areas:  Road safety  Smarter choices  Rail ‘ grand projets ’ – beware ‘crowding out’

Green taxes  Fuel duty +2p  Air passenger duty +25%  Simple lorry charging scheme  Could raise £1½ billion p.a. We are not arguing for hypothecation, but…

Decarbonisation  Looming fiscal hole – falls in VED & fuel duty yields  Loss estimated at £4 billion by 2020 & rising  More congestion as motoring gets cheaper  Step forward…road user charging  Also makes short term road spend unworthwhile  Can be phased  Once in, reduces case for public transport subsidy

Private sector  Community infrastructure levy  Business rate supplement  Workplace Parking Levy  Estimated £¼ billion p.a. from these sources  Opportunity for regulated utility model for national roads  Infrastructure Fund for pension investment may assist also

The scorecard £bn p.a. Efficiency1.3 Expenditure cuts (net)0.4 Taxes & charges1.5 Private finance.25 Total3.5 Approx. potential annual savings

In summary  It’s tough, but…  …there’s a menu of options that could:  Make a big contribution to short term fiscal need  Still deliver a great deal on the economy & climate change  Tax ‘bads’ not ‘goods’  Elicit private sector help  Fix the looming hole in fuel duty & VED  Full report at or Publications on CfIT sitewww.bit.ly/tsgmfl

What’s happened?  DfT resource DEL cut 21% over 4 years  Capital DEL only cut 11%  Burden on fares and Local Authority funding  Local Sustainable Transport Fund (30% less than Congestion TIF)  Tax Increment Financing