1 London and national transport policy in a low carbon, lean public expenditure future Stephen Glaister Director RAC Foundation London School of Economics 1 st February 2010

There is a lot going on!

12 October 2009 The Prime Minister: “sell off the assets” – inc. Dartford bridge Mayor of London “Draft Transport Strategy” London Population up 1.3 million by 2031 London road charging? Committee on Climate Change “First Report” Decarbonisation of transport National road charging?

21 October 2009 ONS: UK population of 61.4 million rise to 71.6 million by 2033

31 December 2009 Delivery of High Speed 2 Report to Secretary of State for Transport Apparent all-party support for “a network of new high speed railways”

Winter Flooding Frost damage to already poorly maintained roads Cost of putting infrastructure into good condition?

January 2010 Tory policies on rail (Less than 10% of passenger and freight market: heavily loss-making.) Reduce fares implies more capacity? Reduce crowding Increase competitive pressure on Network Rail Reduce competitive pressure on train operators Invest heavily in High Speed Rail network Teresa Villiers, 12 January

January 2010 Tory policies on road (More than 90% of passenger and freight market: Profit-making) Road congestion and unreliability a recognised as a problem… Improve road works, traffic lights More localised decision-making Lorry road user-charging (No general road user-charging) Make Highways Agency more efficient New road projects only “where … consistent with a responsible approach to the public finances”. Teresa Villiers, 22 January.

After General Election Government expenditure cuts Transport NOT “protected”

2009 Budget Report

A need for a strategy that is: Long term: road and rail Makes roads safer Deals with carbon Affordable – how do we pay for it?

London is the focus of the strategic road network and the most congested area Source: Eddington Review

Most rail travel is centred on London Source: Eddington Review

Transport policy in London tends to concentrate on radial corridors Source: Mayor’s Draft Transport Strategy, 2009

But a great deal of the movement is within London and by car! Source: Mayor’s Draft Transport Strategy, 2009

In Greater London 60 per cent of all personal mechanised trips are by private car; 22 percent are by bus or taxi and 3 percent by cycle so = 83 percent are by road. Only the 17 percent are by rail. Travel in London Report No 1, TfL, 2009, Table 3.1.

Mechanised trips entirely within Outer London 76 percent are by car 18 percent by bus and 2 percent by rail.

Growth will put extra demands on road network Source: Mayor’s Draft Transport Strategy, 2009

Mayor’s draft Transport Strategy, 12 October 2009 What is the strategy for London Roads?

Funding and priorities? The Draft MTS lacks any clear indication of priorities. 35 policies and 129 proposals Which are the most important? Funding will be insufficient where will it be focussed?

National Policy Long Term Strategy: road and rail

All parties are claiming the economy will recover Implies return to growing demand for road and rail We are already short of capacity on both!

Relentless road traffic growth (source: Road Statistics 2007, DfT)

Why congestion has got worse in the past

27 Congestion will get worse! Between 2005 and 2041: (RAC Foundation estimates) Population will grow Most growth in the E, S and London Incomes will double Road traffic demand up over 40% Rail planning is assuming that rail growth will continue at recent rate

National Traffic Forecast (DfT, 2008)

Plans to 2015 January 2009 Hard shoulder running alternative to motorway widening, 520 additional lane miles to the national strategic road network, of which 340 lane miles through hard shoulder running. £6bn announced in July 2008 Not much new capacity for local roads

Investment good value for money? Source: Eddington (Dodgson, RAC Foundation, 2009)

Appraisal methods subject to revision …but economic returns look very good for the right road or rail schemes (Eddington)

Public transport cannot help much Public transport improvements may be good policy BUT They cannot make much impact on road congestion or carbon emissions at a cost that is feasible Rail and local bus each have 6% of passenger market

The alternatives Let congestion continue to grow Build & widen roads without reforming pricing Reform pricing and heavily restrain demand To reform pricing to improve efficiency AND additional capacity to preserve mobility

Make roads safer

Jo Hill Small expenditures on improving roads have very high returns ! Source: Road Safety Foundation, 2009

Source: Mitchell, RAC Foundation, March 2010

Deal with carbon

Committee on Climate Change, First Report, 12 October 2009

Committee on Climate Change, First Report, 12 October 2009

Carbon: Follow through principles of Stern and Eddington Decide what the price of carbon should be Ensure everybody pays it Do road and rail appraisals properly and use them!

Effects on fuel consumption and carbon emissions

On current values Congestion is a bigger problem than carbon Carbon in transport will be reduced by Implementation of better technology Decarbonising surface transport (see Committee on Climate Change) More sensible pricing

Picture is of more traffic Stable transport carbon emissions Achieved by improved vehicle technology etc. Implication: we will need more road capacity!

Affordable: how do we pay for it?

Increase fuel duty or VED??

Roads taxation is controversial!

National Road Charging NOT essential, but it helps! A means to manage demand more efficient use of existing network A way of generating more funds in order to enhance the network safety, management, physical capacity A way of dealing with carbon

Reform of road investment and charging The primary problem: Lack of public understanding Even if understood, lack of public trust Nobody promotes interests of road users

With or without national road charging … … change will require change in the institutions Institutions and governance matter!

CC in London has succeeded: why? Leadership A properly researched proposition A clear “deal” for the electorate Political accountability Fiscal accountability and transparency

The UK regulated utility Telecoms, Gas, Electricity, Water, Rail Consumer pays a fee for use Fee determined by independent regulator publicly declared principles: economy, efficiency, fair return on capital, capacity investment funded Consumer protection: eg Quality of Service is published and debated Direct connection between value to consumer and investment in capacity

For Rail there is a coherent strategy High Level Output Specification (HLOS) Statement of Funds Available (SoFA) Network Rail to promote railways Independent Regulator to adjudicate that it all adds up High Speed Rail proposals should fit within this framework

Water industry has many lessons? Massive investment funded by charges to users Improvement in water quality Gradual acceptance of domestic metering Benchmarking an important driver of efficiency Statutory users’ representation Industry has a duty to supply

Strategic Roads like other regulated utilities? Road infrastructure provider With an income stream Held accountable by independent regulation A duty to meet the needs of users Ensure that it is able to finance its functions Monitor its performance in relation to stewardship and service delivery; and

Defective roads governance Byzantine confusion about who is accountable for what The absence of a customer billing relationship between the service provider and the road user No independently reported measure of quality of service No independent consumer protection No long term charging or investment strategy

Governance reform Some lessons taken from the other public utilities ? New and independent authorities could be a useful part of future reform. We need better measures of quality of service This would facilitate the necessary rebuilding of trust between accountable bodies and users. But it must be national

To progress, a scheme … … must offer a clear “deal” Understandable (keep it simple) Broadly “fair” (spell out winners and losers) Credible (the arithmetic stacks up) Technologically robust Worthy of trust (can check if it’s delivered) New charging scheme has to be national (deal on existing road taxes)? except London, (Cambridge)….?

Corporate governance options for roads Reform of national and local government?? More independence for HA? Public Benefit Corporation or public trust? Regulated private provider?

Geographical scope? National? Regional? Route-based?

How does London fit with a national reform?

Conclusions Do nothing?? Highways Agency given [what?] corporate status An independent regulator for roads and road safety? Government HLOS and SoFA for roads? Informed by input from road users, local authorities and regional bodies?

We need a long term strategy for railways and especially roads! Safer Deals with carbon Affordable – how it is paid for?

Roads and Reality (RAC Foundation) GB strategic roads Costs and benefits (£bn p.a. in 2041) No extra capacity +200 Lkm pa No pricing Gross benefit to societyBase Cost of additional capacityBase Average benefit:cost ratio of scenarioBase Marginal benefit:cost of additional capacity -5:13.5:12.6:1 Efficient pricing Gross benefit to society Cost of additional capacity Cost of charge collection4.5 Average benefit:cost ratio of scenario Marginal benefit:cost of additional capacity and collection 5.0:14.0:12.9:12.4:1

The car used by rich and poor Lowest 2 nd 3 rd 4 th Highest