Motoring Towards 2050

1

Motoring Towards 2050

Roads as Utilities?

The need for institutional reformStephen Glaister

Imperial College London and Director RAC Foundation

LSE, 19 January 2009

www.racfoundation.org 2

The Utilities in Britain

Telecommunications

Gas

Electricity

Water

Railways


1947 – 1979 Nationalised Industries

Common features:

Strong public interest considerations

Natural monopolies (networks)

Owned and controlled by the State

Claimed to be inefficient and poor quality of service


Conservatives under Mrs. Thatcher

Desire to

encourage forces of competition

economic efficiency (labour costs)

meet consumer needs

reduce size of the State

Later…

promote private shareholding

raise cash for the Treasury (reduce taxation)


Competition in a natural monopoly??

1. Separate the distribution network from supply of service

2. Sell network to private shareholders

for-profit monoploy, subject to regulation

3. Promote competition for supply over the network by private enterprises

4. INDEPENDENT, public interest regulation

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,

fund capacity investment

Consumer protection: eg Quality of Service is published and debated

Direct connection between value to consumer and investment in capacity

For roads we have little of this:

Individual cannot hold provider to account

For Rail there is now a coherent strategy

High Level Output Specification (HLOS)

Statement of Funds Available (SoFA)

Independent Regulator to adjudicate that it all adds up

[High speed rail proposals will have to be shown to be good value for money, genuinely good environmentally affordable by the taxpayer (!)]

There is no HLOS or SoFA for roads!

The Government’s rail strategy has

Defined level of capacity increase

(much of it local commuting and in London area)

A definition of who will pay

a balance between passengers and national taxpayer

What would HLOS and SoFA look like for roads?

Why don’t we have them??

We do pay for our roads


0

5

10

15

20

25

30

35

1975 1981 - 82 1986 - 87 1996 - 97 2006 - 07

£ b

illio

n

GB Roads: taxes (ex VAT) and government spending (2006 prices)

Fuel duty

Other taxes

Local roads National roads

Road users do pay charges!

Road tax is a substantial charge for use of system

What are the principles?

to raise general Exchequer revenues?

to incentivise efficient use of the system

including carbon & environmental concerns?

to fund investment in capacity?

Little info on what you get for your money (Q of S)


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


Why congestion has got worse

0

200

400

600

800

1000

1200

85 87 89 91 93 95 97 99 01 03 05

Nu

mb

er

Year

English Trunk Road Construction 1985/6 - 2006/7

Route Kms Lane Kms


Growing demand for roads

Between 2005 and 2041: Population will grow by at least 11% Most growth in the E, S and London Incomes will double Number of cars will increase by 44% Road traffic demand up by 43%

DfT forecast 29% by 2025


Government agrees!National Traffic Forecast (2008)

Will current proposals deal with the roads problem?

Hard shoulder running

Better roads management

Travel Demand Management

Local road pricing schemes

…. etc.. I doubt if they will


The problem for the fututre

Population growth 2001-21

and 2021-41

-10% or less

-5% to -10%

-1% to -5%

+1% - -1%

1% t 5%

5% - 10%

10% or more


RAC Foundation estimates 2005 – 2041 (fuel at £1.50/litre)

AREA

Car trips% growth 2005-2041

Vehicle Kilometres% growth in demand

2005-2041

GREAT BRITAIN 24 37

Scotland 11 23

North East 16 31

North West 20 34

Yorkshire & Humber 25 40

West Midlands 21 32

East Midlands 27 41

East 28 46

London 31 41

South East 25 39

South West 28 44

Wales 19 31


Speed change (%) 2010-41Speed change (%) 2010-41 Traffic change (%) 2010-41Traffic change (%) 2010-41


Model: Sources

DfT FORGE 2010

Tempro

Generally, official DfT parameter values

Elasticities from our previous research

Model structure from previous work for Independent Transport Commission

Road type


Road Type Conurbations Other Urban Rural

1 Motorway N/A Motorway

2 N/A N/A Trunk Dual A

3 N/A N/A Principal Dual A

4 Trunk A Trunk A Trunk Single A

5 Principal A Principal A Principal Single A

6 B and C Rds B and C Rds B Rds

7 Unclassified Unclassified C & Unclassified

Urbanisation


Area types Description Population12 Inner 3 Outer 4 Inner Conurbation5 Outer Conurbation6 Urban Big > 250,0007 Urban Large >100,0008 Urban Medium > 25,0009 Urban Small > 10,00010 Rural

Regions


Northern

Yorks and Humberside

North East

Eastern

South Eastern

West Midlands

South Western

East Midlands

North Western

Wales

Scotland

Time of the week


Period Day Time Period Day Time

1 Mon-Fri 00:00 - 06:00

2 Mon-Fri 06:00 - 07:00 12 Saturday 00:00 - 09:00

3 Mon-Fri 07:00 - 08:00 13 Saturday 09:00 - 14:00

4 Mon-Fri 08:00 - 09:00 14 Saturday 14:00 - 20:00

5 Mon-Fri 09:00 - 10:00 15 Saturday 20:00 - 24:00

6 Mon-Fri 10:00 - 16:00

7 Mon-Fri 16:00 - 17:00 16 Sunday 00:00 - 10:00

8 Mon-Fri 17:00 - 18:00 17 Sunday 10:00 - 15:00

9 Mon-Fri 18:00 - 19:00 18 Sunday 15:00 - 20:00

10 Mon-Fri 19:00 - 22:00 19 Sunday 20:00 - 24:00

11 Mon-Fri 22:00 - 24:00

six journey purposes:HBW Home based work

HBEB Home based Employers Busines

HBEO Home based Essential Other

HBDO Home based Discretionary Other (

NHBWEB Non Home based Work/Employers bus.

NHBDO Non Home based Discretionary Other

LGV Light Goods Vehicles (less than 3.5 tonnes gross weight)

Rigid Rigid Heavy Goods Vehicles

Artic Articulated Heavy Goods Vehicles

PSV Public Service Vehicles (Buses/Coaches)

Rail


g = p + v (1/s) + ww + t + ...

xi = xi exp { j ij (gj - gj)}



Time values scaled with regional incomes



Roads and Reality

Strategic Road Network: Trunk roads in Britain + some rural principal roads Targeted Prog. of Improvements up to 2015/16

included Additional capacity 2010 to 2041 considered

200 Lane Km pa increments up to 800 LKm pa

With and without ‘Efficient’ Road Pricing Pattern of improvements similar to Eddington


The alternatives

Let congestion continue to grow unchecked

Build & widen roads without reforming pricing

Reform pricing and heavily restrain demand

To reform pricing to improve efficiency

AND additional capacity to preserve mobility


Roads and Reality

Efficient Road Pricing:Replaces existing motoring taxes with A carbon tax on fuel (14p litre) A distance based charge reflecting

congestion harmful emissions road track costs accidents


Roads and Reality

No extracapacit

y

+200Lkm

pa

+400Lkm

pa

+600Lkm

pa

+800Lkmpa

No pricing

Gross benefit to society Base 7.48 12.75 16.42 19.55

Cost of additional capacity Base 1.48 3.0 4.44 5.61

Average benefit:cost ratio of scenario Base 5.1 4.3 3.7 3.5

Marginal benefit:cost of additional capacity - 5:1 3.5:1 2.6:1 2.7:1

Efficient pricing

Gross benefit to society 22.33 28.29 32.72 36.12 38.38

Cost of additional capacity 0 1.48 3.0 4.44 5.61

Cost of charge collection 4.5 4.5 4.5 4.5 4.5

Average benefit:cost ratio of scenario 5.0 4.7 4.4 4.0 3.8

Marginal benefit:cost of additional capacity and collection

5.0:1 4.0:1 2.9:1 2.4:1 1.9:1

Costs and benefits - £bn p.a.

Road pricing deals with congestion

Extra capacity restores mobility

Both are needed to do the job – a policy package

600 Lane Km pa justified with OR without pricing

This is not excessive by historical standards


Carbon: Follow through principles of

Stern and Eddington


Decide what the price of carbon should be

Ensure everybody pays it

Secure Transport’s correct position in carbon reduction hierarchy

Do road and rail appraisals properly and use them…

Congestion vs carbon


On current values

Congestion is a bigger problem than carbon

Carbon will be reduced by Implementation of better technology More sensible pricing

Fuel duty already over-prices carbon?

carbon = 14p/litre duty = 60p/litre

The objections: carbon

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

0 200 400 600 800

Annua l la ne inc re ments, stra te g ic roa ds

% c

hang

e in

GB

fuel

con

sum

ption

No pric ing With pric ing


Effects on fuel consumption and carbon emissions


Predictability of journey times

As the network gets closer to capacity

Average journey times increase (classic congestion)

Variability of journey times increase.

Conventional appraisal has only considered the average


People and business becoming upset about variability

Public attitude research

Eddington, DfT research.

Quality of service to the user


PSA Journey reliability target

An attempt to represent variability by

Journey time on the slowest 10% of journeys on a sample of about 90 routes.

Target was to improve this by the end of the three years ending March 2008.


T


Problems

The measure is difficult to understand and almost impossible to explain to the public

It is highly aggregated by: Time of day Road type Location 12 month moving average

There are technical failings

An important research area

Conclusions

GB is a rich nation …

… unable to bring itself to spend the resources necessary

for adequate transport infrastructure

More infrastructure implies more spending!

Roads: the only public utility to be provided by a purely administrative process with little regard for value to users

Pricing, taxation and investment to be moved away from

the Treasury’s economic and political priorities

and towards

transparent transport policy-related considerations

Reconsideration of the principles behind road taxation

must be a part of this

? Time and distance-based pricing as part of a tax reform and investment package?

A realistic, long term national roads 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.


PSA measure for one route


T

The underlying data

Section-by-section measurement

gives more useful data?

(scales have been adjusted to indicate contribution of each link’s contribution to PSA1)

Documents

Motoring Towards 2050