1. 1 Motoring Towards 2050 Roads as Utilities? The need for institutional reform Stephen Glaister Imperial College London and Director RAC Foundation LSE, 19 January 2009

2. www.racfoundation.org2 The Utilities in Britain Telecommunications Gas Electricity Water Railways

3. www.racfoundation.org3 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

4. www.racfoundation.org4 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)

5. www.racfoundation.org5 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

6. 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

7. 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 (!)]

8. 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??

9. We do pay for our roads www.racfoundation.org9

10. 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)

11. www.racfoundation.org11 Relentless traffic growth (source: Road Statistics 2007, DfT)

12. www.racfoundation.org12 Why congestion has got worse

13. www.racfoundation.org13 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

14. www.racfoundation.org14 Government agrees! National Traffic Forecast (2008)

15. 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

16. www.racfoundation.org16 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

17. www.racfoundation.org17 RAC Foundation estimates 2005 – 2041 (fuel at £1.50/litre) AREA Car trips % growth 2005-2041 Vehicle Kilometres % growth in demand 2005-2041 GREAT BRITAIN2437 Scotland1123 North East1631 North West2034 Yorkshire & Humber2540 West Midlands2132 East Midlands2741 East2846 London3141 South East2539 South West2844 Wales1931

18. www.racfoundation.org18

19. www.racfoundation.org19 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

20. Road type www.racfoundation.org20 Road TypeConurbationsOther UrbanRural 1MotorwayN/AMotorway 2N/A Trunk Dual A 3N/A Principal Dual A 4Trunk A Trunk Single A 5Principal A Principal Single A 6B and C Rds B Rds 7Unclassified C & Unclassified

21. Urbanisation www.racfoundation.org21 Area typesDescriptionPopulation 1 2Inner 3Outer 4Inner Conurbation 5Outer Conurbation 6Urban Big> 250,000 7Urban Large>100,000 8Urban Medium> 25,000 9Urban Small> 10,000 10Rural

22. Regions www.racfoundation.org22 Northern Yorks and Humberside North East Eastern South Eastern West Midlands South Western East Midlands North Western Wales Scotland

23. Time of the week www.racfoundation.org23 PeriodDayTimePeriodDayTime 1Mon-Fri00:00 - 06:00 2Mon-Fri06:00 - 07:0012Saturday00:00 - 09:00 3Mon-Fri07:00 - 08:0013Saturday09:00 - 14:00 4Mon-Fri08:00 - 09:0014Saturday14:00 - 20:00 5Mon-Fri09:00 - 10:0015Saturday20:00 - 24:00 6Mon-Fri10:00 - 16:00 7Mon-Fri16:00 - 17:0016Sunday00:00 - 10:00 8Mon-Fri17:00 - 18:0017Sunday10:00 - 15:00 9Mon-Fri18:00 - 19:0018Sunday15:00 - 20:00 10Mon-Fri19:00 - 22:0019Sunday20:00 - 24:00 11Mon-Fri22:00 - 24:00

24. six journey purposes: HBWHome based work HBEBHome based Employers Busines HBEOHome based Essential Other HBDOHome based Discretionary Other ( NHBWEBNon Home based Work/Employers bus. NHBDONon Home based Discretionary Other LGVLight Goods Vehicles (less than 3.5 tonnes gross weight) RigidRigid Heavy Goods Vehicles ArticArticulated Heavy Goods Vehicles PSVPublic Service Vehicles (Buses/Coaches) Rail www.racfoundation.org24

25. g = p +  v (1/s) +  w w + t +... x i = x  i exp {  j ij (g j - g  j )} www.racfoundation.org25

26. www.racfoundation.org26

27. Time values scaled with regional incomes www.racfoundation.org27

28. www.racfoundation.org28 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

29. www.racfoundation.org29 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

30. www.racfoundation.org30 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

31. www.racfoundation.org31 Roads and Reality No extra capacit y +200 Lk m pa +400 Lk m pa +600 Lk m pa +800 Lkm pa No pricing Gross benefit to societyBase7.4812.7516.4219.55 Cost of additional capacityBase1.483.04.445.61 Average benefit:cost ratio of scenarioBase5.14.33.73.5 Marginal benefit:cost of additional capacity-5:13.5:12.6:12.7:1 Efficient pricing Gross benefit to society22.3328.2932.7236.1238.38 Cost of additional capacity01.483.04.445.61 Cost of charge collection4.5 Average benefit:cost ratio of scenario5.04.74.44.03.8 Marginal benefit:cost of additional capacity and collection 5.0:14.0:12.9:12.4:11.9:1 Costs and benefits - £bn p.a.

32. 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 www.racfoundation.org32

33. Carbon: Follow through principles of Stern and Eddington www.racfoundation.org33 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…

34. Congestion vs carbon www.racfoundation.org34 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

35. The objections: carbon www.racfoundation.org35 Effects on fuel consumption and carbon emissions

36. www.racfoundation.org36 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

37. www.racfoundation.org37 People and business becoming upset about variability Public attitude research Eddington, DfT research. Quality of service to the user

38. www.racfoundation.org38 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.

39. www.racfoundation.org39 T

40. www.racfoundation.org40 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

41. Conclusions GB is a rich nation … … unable to bring itself to spend the resources necessary for adequate transport infrastructure More infrastructure implies more spending!

42. 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

43. 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.

44. www.racfoundation.org44 PSA measure for one route

45. www.racfoundation.org45 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)