It can be hard to get reviews of new books of any kind, given the large number of books published and the limited number of journals etc that publish reviews. So I was pleased to see a generous notice of my recent book, Driving Change, in the Journal of Transport Geography: ‘a very readable, engaging and thorough investigation of the factors that have driven travel change in high-income countries so far, with the aim to determine what will drive change in the future.’

For the full review Driving Change J Trans Geog review

The Department for Transport’s (DfT) second Road Investment Strategy (RIS2) was published at the time of the recent Budget, committing to spend £27.4bn over the next five years on the strategic road network (SRN). The stated main priority is to maintain the existing roads. Only where existing roads are ‘simply not up to the job’ is the Government asking Highways England to develop wider, realigned or, in a few cases, wholly new roads to keep people and goods moving. Yet expenditure on maintenance is expected to be £12bn, whereas capital enhancements are worth £14bn.

Investment

Prioritising investment is based on the 2018 Road Traffic Forecasts, projecting growth on the SRN in the range of 29% to 59% by 2050. This suites the civil engineers of Highways England who see their main purpose as building roads. However, as I have argued previously, the DfT traffic forecasts are very problematic and have generally proved to overestimate outturn traffic levels. Moreover, as I noted in chapter 2 of my recent book, the rate of addition of lane-km to the SRN in recent years has been less than the rate of population growth, despite the high levels of spend.

It is therefore not surprising that average delays on the SRN have worsened during the RIS1 period, growing from 8.9 seconds per vehicle mile to 9.5 seconds per vehicle mile. The DfT’s ambition for performance at the end of RP2 is to be no worse than at the end of RP1. This is a very modest aspiration, and contrasts with the aim of the previous road investment strategy (RIS1) of a free-flow core network with mile a minute speeds increasingly typical.

The new ambition is consistent with the document’s recognition that it is ‘widely accepted that it is not possible to outbuild congestion across the whole of the road network’. Accordingly, investment is to be focused on congestion hotspots, so that average network performance will be at least as good in 2025 as it is in 2020. Yet, as I have pointed out, adding capacity induces more traffic, so tackling congestion hotspots has little impact beyond perhaps shifting congestion to another part of the network.

Optimisation

One odd feature of this and similar publications of Highways England, is the disregard of digital route guidance (Google Maps, Waze and others) that is in very wide use by drivers, because they find it of benefit in optimising routes under congested conditions and in estimating journey times. Roadside variable message signs are an outmoded technology, providing too little information, too late to be of much use.

There is picture of a route guidance app on page 38 of the RIS2 document, but no mention of its relevance. There is a statement that ‘During RP2 Highways England will work with Transport Focus [a consumer body] to investigate future opportunities to make more granular information about delay on the SRN publicly available. We anticipate that this might include reporting on a regional basis, journeys between conurbations, and maps showing delay across the network on a link-by-link basis.’ Highways England seems totally out of touch with the real world.

Non-investments

The RIS2 mentions the outcome of a number of earlier ‘strategic studies’ that now seem unlikely to lead to much. For the M60 Manchester NW Quadrant, it is concluded that the transformational options identified by the study would have significant adverse impacts on local people and communities, and overall would not provide value for money. The proposed Trans-Pennine Tunnel, improving the route between Manchester and Sheffield, seems unlikely to proceed. The Oxford to Cambridge Expressway project has been paused to look at other options.

In contrast, the A303 Stonehenge Tunnel is to go ahead. Yet the National Audit Office found that transport and economic benefits accounted for only 27% of total benefits; the value of cultural heritage, based on a survey asking people what they would be willing to pay to remove the road altogether, was put by the DfT at 73%, and yet this yielded a benefit-cost ratio of only 1.15 , which in the event is likely to be worse because cost overruns. The NAO noted that the DfT has no plan for the corridor as a whole, and that all the other projects on the route offered poor value for money.

This critique of the A303 route can be generalised to the RIS2 as a whole. Although it is entitled a ‘strategy’, in reality it is a construction programme that is deficient in both economic justification overall and indication of spatial impact of economic benefits. What benefits might we expect, and where? We are not provided with more than vague aspirations.

 

 

 

 

 

 

 

 

 

The Court of Appeal has upheld a challenge to the decision to proceed with a third runway at Heathrow airport on the grounds that the Government’s Airports National Policy Statement (ANPS), which endorsed the runway, was unlawful in failing to take into account the Government’s commitment to the provisions of the Paris Agreement on climate change.

The Government takes the view that Heathrow expansion is a private sector project and so will not appeal against the judgement, leaving open the possibility of later amending the ANPS. This doubtless suites the Prime Minister, who represents a West London constituency under the flightpath and who had earlier been a vocal critic of the airport’s expansion. Abandoning the third runway would also add to the Government’s credibility when hosting the COP26 climate change conference in Glasgow later this year. Meanwhile, the owners of the airport must decide whether an appeal to the Supreme Court would be worthwhile.

The case for increasing the capacity of Heathrow, the UK’s main hub airport, has been based on the needs of business: more direct connections for exporters, facilitating inward investment to the British economy, and boosting London as a world city for doing business. There is no convincing argument for expanding tourism, inbound or outbound, given the need to reduce carbon emissions from aviation.

What is generally overlooked is that most air travel is for leisure purposes. Even at Heathrow, only 25% of passengers are on business trips. So there is ample room for business travel to grow if the demand emerges. Leisure travellers would be displaced to other airports with spare capacity, Stansted and Luton near London, and regional airports beyond. This would happen under the influence of market forces since most business travellers would be willing to pay a premium for the advantages of Heathrow.

Suppose I need to travel to India, to Bangalore for instance. If I’m on a short business trip paid for by my organisation, I’ll fly direct from Heathrow. But if I’m going on holiday, paying out of my own pocket, I’ll shop around for a low-cost flight, expecting to fly with one of the Middle East-based airlines, changing flights at an intermediate hub such as Dubai. I might leave from Heathrow or from Gatwick, Stansted or a regional airport, depending on price and convenience. If demand for business travel to Bangalore grows, leisure travellers who might have flow direct will be have viable alternatives.

Ultimately, growth of demand for air travel will be constrained either by airport capacity or by the need to limit carbon emissions to comply with the Government’s legally binding target of net zero emissions by 2050. One way or another, the cost of air travel is likely to rise, reducing growth in demand.

Hubbub, a UK environmental NGO, has released a report on flying by people in the 20-45 age group, based on a survey sample of two thousand. It found that no less than half the flights by men aged 20-45 in 2019 were for stag parties and a third of flights by women were for hen dos. Hubbub is concerned about the carbon emissions from these flights and the options for reduction by selecting a UK destination. For example, swapping Barcelona for Brighton is the equivalent of going vegan for 2.5 months.

The high proportion of flying for partying is surprising, and reflects the availability of low-cost flights outside the main season for tourist travel. Some increase in the cost of leisure air travel would increase the attractions of domestic destinations, without rather little loss of enjoyment, I anticipate.

Although the private sector operator of Heathrow has a natural commercial interest in expanding its capacity, not all the airport’s users agree. Willie Walsh, chief executive of British Airways’ parent company, has been critical on account of the likely need to cover the cost of construction through higher landing charges. A capacity constraint would allow BA as the dominant airline to raise prices over time, but would also allow the Government to claw back some of the increased profits through a rise in Air Passenger Duty.

In short, we can manage without a new runway at Heathrow. The market will allocate airport capacity to the highest value users, and the UK’s chances of meeting its carbon reduction target will be improved.

 

 

 

 

 

 

The environmental charity Hubbub has released a report on flying by people in the 20-45 age group, based on a survey sample of 2000. It finds that half the flights by men aged 20-45 in 2019 were for stag parties and a third of flights by women were for hen parties. Hubbub is concerned about the carbon emissions from these flights and the options for reduction by selecting a UK destination. For example, swapping Barcelona for Brighton is the equivalent of going vegan for 2.5 months.

An implication of this high proportion of optional leisure flights is to weaken the case for additional runway capacity to accommodate the forecast growth of demand for air travel, in particular the third runway planned at Heathrow. In the absence of increased capacity, growing demand would lead to higher prices in the market for air travel, which would tilt the balance towards UK destinations for leisure trips, to the benefit of the economy of seaside towns and other hospitable destinations. Most air travel is for leisure purposes. There is plenty of airport capacity for business travellers who are willing to pay a premium to command priority over those on leisure trips.

The Prime Minister has announced the Government’s decision to go ahead with High Speed 2 (HS2), the new rail route from London to the cities of the Midlands and the North, despite the dramatic escalation in construction costs, from £37.5bn in 2011, to £50bn in 2013, to £65bn in 2015, to excess of £100m in 2019 and probably in eventual outturn.

The value for money (VfM) of the investment has been computed according to the Department for Transport’s (DfT) standard approach to appraisal of proposed investments. This compares benefits with costs according to long-established principles of cost-benefit analysis as applied to public sector investments. The main benefit to users of a faster rail route is assumed to be journey time savings, which are supposed to allow us more productive work or enjoyable leisure. To these time savings are added lesser contributions from improved reliability and reduced overcrowding, as well as some wider economic impacts such as productivity gains and environmental impacts.

It was noteworthy that the initial increases in the cost of HS2 did not change the supposed economic benefit, as measured by the benefit-to-cost ration (BCR), which held steady at close to 2.0, or £2 of benefit for every £1 of cost. Substantial additional benefits were recognised by the promoters, even though nothing fundamental had changed in the business case. However, the independent review by Douglas Oakervee, commissioned by the Government and just published, puts the BCR at 1.1 to 1.5, reflecting the increase in costs. The National Audit Office’s recent report on HS2 estimated a BCR of 1.4.

The DfT is yet to issue a revised Business Case for HS2 that takes account of the latest plans and possible cost savings. When it does, I expect to see the usual tweaking and massaging of assumptions about an uncertain future state of the world that can be defended as a legitimate exercise of professional judgement by transport economists who wish to please their clients, in this case Ministers who have decided to press ahead. The objective will be to achieve a BCR of 2, which is the threshold for the DfT’s High Value for Money (VFM) category.

Apart from such malleability in analysis, there are two big problems with the standard approach to the economic appraisal of proposed transport investments. First, the time saving benefits arise from trips between cities and say nothing about economic development within cities. The strategic case for HS2 is to boost the economies of the cities of the Midlands and the North by improving their connectivity to London and the South East. But the impact on cities, as seen in the form of property development and increased real estate values from productivity enhancement and employment creation, does not enter into the cost-benefit calculus, which is silent on the geographical distribution of benefits. The Oakervee review concluded that the economic case does not currently fully align with the strategic case because economic rebalancing, one of the primary drivers in the strategic case for HS2, is not currently reflected in the economic case.

The second problem is that average travel time, as measured in the National Travel Survey, has hardly changed over the past 45 years, despite many £billions of public investments in the transport system justified by the value of journey time savings. What actually happens is that investments that result in increased speed of travel allows us to travel further, to gain access to more distant destinations, opportunities and choices, which are the real benefits experienced by users, not the hypothetical time savings assumed by the economists. Such transport investments lead to changes in land use as people and businesses take advantage of the improved access to land and property capable of better use.

The standard approach to economic appraisal of transport investments is quite narrowly focused and disregards the value implied by changed land use and the geographical distribution of economic activity. The DfT has not required or supported modelling of the land use impacts of transport investment, which has contributed to the failure to value the real benefits of HS2. These might turn out to be quite substantial if the linked cities can take advantage of the modern high-speed connection to London to boost their economies by local investment in property development near to new stations and in urban rail to enlarge the benefits to surrounding districts.

The purpose of HS2, as with any new railway, is to move more people through space, so spatial impacts are what are of interest. The focus of the transport economics profession on time savings has been quite misconceived.

This blog was also published in Transport Times on 13 February 2020

 

 

 

The Office of Rail and Road (ORR) is responsible for overseeing the performance of Highways England (HE), a publicly owned company responsible for England’s strategic road network. ORR is consulting on how it should perform its role. I have responded as below:

HE is responsible for a substantial programme of investment in new and improved road infrastructure, each element of which is supported by cost-benefit analysis consistent with the Department for Transport’s Transport Analysis Guidance. The main economic benefit is assumed to be the value of the time saved as a result of investments which increase capacity and are intended to reduce road traffic congestion.

However, there are questions about the estimation of prospective travel time savings derived from the standard models used for traffic forecasts. For example, monitoring of the outcome of widening of the M25 between junctions 23 and 27 concluded that ‘increases in capacity have been achieved, moving more goods, people and services, while maintaining journey times at pre-scheme levels and slightly improving reliability.’[1] No travel time savings were observed beyond the first year after opening, in part at least due to increased traffic, notably an increase of 23% at weekends. These outturns were inconsistent with the forecasts of traffic volumes that were significantly less than observed, and with speeds that were projected to be higher with the road widening than without.[2] The higher speeds were the basis for estimates of travel time savings, leading to the DfT’s estimate of the Benefit-to-Cost ratio of 2.3, which justified the investment.

This example shows that there may be a substantial discrepancy between forecast and outturn traffic flows and speeds. That this is a general problem is indicated by the observed invariance of average travel time over the past 45 years, as found in the National Travel Survey.[3] This implies that the benefits of road investment have been taken, not as time savings, but as increased access to desired destinations, which results in more traffic. This additional traffic is known as ‘induced traffic’, the consequence of increasing capacity, which results in increased externalities related to vehicle-miles travelled, including congestion, carbon emissions, air pollutants, and death and injuries. While HE routinely monitors outcomes of schemes 5 years after opening, this may not be sufficiently long to observe the full extent of induced traffic.[4]

There is therefore reason to suppose that in general the outcome of road investment as experienced by users does not correspond to the rationale for the investment, which is principally to increase welfare and economic growth by reducing congestion and improving connectivity. This discrepancy should be of concern to the ORR.

[1] Smart Motorway All Lane Running M25 J23-27 Monitoring Third Year Report. Highways England. 2108.

[2] https://www.gov.uk/government/publications/vdm-used-to-estimate-traffic-volumes-and-travel-time-saved

[3] Table nts-0101-2018

[4] Sloman L, Hopkinson L and Taylor I (2017) The Impact of Road Projects in England, Report for Campaign to Protect Rural England

 

 

Transport for London has recently published its latest report on Travel in London. At 279 pages, this latest in an annual series is almost certainly the most detailed account of travel behaviour in any city in the world. All credit to TfL.

Table 2.3 shows trip-based mode share. Private transport (very largely car) was responsible for 48% of trips in 2000, declining to 37% in 2015, but thereafter stabilising. Public transport has been stable at 35-36% of trips since 2012, and walking at 24-25% since 2000. Cycling grew from 1.2% in 2000 to reach 2.5% 2018. So the declining trend of car use has ceased in recent years, but it may resume as new rail capacity is opened, particularly Crossrail (the Elizabeth Line). Nevertheless, the target reduction of private transport to 20% by 2041, a feature of the Mayor’s Transport Strategy, looks difficult to achieve.

Section 9.7 discusses the role of licenced taxis and private hire vehicles (PHVs), a topic of much current interest. Taxis (black cabs) have been in slight decline while PHVs have grown substantially in recent years, largely reflecting the entry of Uber into the market. A survey of PHV users in London found that the two main trip purposes were for a night out and to/from airports, but only 28% of PHV trips were for both outward and return legs. App-based PHV users were attracted by specific features: estimate of fare, time for driver to arrive, knowing details of car booked, and estimate of journey time. 30% of PHV users said they had not needed to buy, replace or own a car, which facilitates a shift from individual car ownership.

Assessment

While a long-term target for reduction in car use has merit in that it shapes shorter term decisions, no Mayor is likely to hold office for anything like the time to reach the 2041 target date. A shorter-term target would allow performance to be held to account. And while the recent experience of London is that a steady reduction in the share of trips by car is compatible with the economic, cultural and social success of the city, sustaining this in the longer term would depend on substantial investment in the rail system that provides a fast and reliable alternative to buses, cars and taxis on congested roads. The biggest challenge for TfL and the Mayor is to find means of financing this investment.

BMW and Daimler recently announced that they were withdrawing their joint car-sharing service from the North America and the UK, although it will continue in some European cities. This business, known as ShareNow, which was the successor to BMW’s DriveNow and Daimler’s Car2Go brands, offered app-based short term car rentals, with pick-up and return anywhere withing large urban areas. The reasons given for withdrawal were rising costs and insufficient customer interest. The rationale for entering this shared use market was in case this were to develop into a significant alternative to the private ownership and fleet markets.

The implication of the BMW/Daimler decisions is that shared use seems less promising than many had supposed, not least CoMoUK, the association for the promotion of shared vehicle use in Britain. They see car sharing as a way of providing socially inclusive, low emission mobility which helps break dependency on private car ownership. Pay-as-you-go cars offer affordable, occasional access to cars to benefit individuals. At the same time, they help policy makers meet targets for emissions reduction, improvements to air quality and encouraging use of sustainable modes. However, CoMoUK’s concept of car sharing does not extend to the chauffeur-driven version, Uber and similar, the existence of which is likely to be a reason for the lack of commercial success of ShareNow.

Many observers believe that shared vehicle use is the solution to traffic congestion: if  occupancy could be increased, fewer vehicles would be needed. However, in urban areas there is substantial suppressed demand for car travel, the consequence of the deterrent effect of prospective delays due to congestion. Measures to reduce congestion initially reduce delays, which make car trips more attractive to those previously deterred, generating more traffic. So the limited levels of vehicle sharing that seem likely are probably not going to make much difference to road traffic congestion.

On 25 November, Transport for London (TfL) announced that it would not grant Uber a new private hire operator’s licence on account of a number of failures, including a change to Uber’s systems that allowed unauthorised drivers to upload their photos to other Uber driver accounts. This allowed them to pick up passengers as though they were the booked driver, which occurred in at least 14,000 trips – putting passenger safety and security at risk.

TfL commissioned an independent assessment of Uber’s ability to prevent incidents of this nature happening again, which led TfL to conclude that it currently does not have confidence that Uber has a robust system for protecting passenger safety, while managing changes to its app.

Uber is appealing to the Court against TfL’s decision, during which time is continues to operate. In effect, the Magistrate will adjudicate.

While the shortcomings of Uber’s system need to be rectified, what is unclear is the magnitude of the detriment to users and how this compares with other taxi businesses. Uber claims that more than 3.5m Londoners regularly use its service, so the proportion of trips with unauthorised drivers may be very small, raising a question as to whether TfL’s refusal of a licence to operate is a proportionate response. Arguably, this is an example of the ‘nanny state’ attempting to protect users from a low probability risk – the alternative being to publicise the infringement and allow users to make up their own minds about the acceptability of the risk that may arise. It would be interesting to know whether use of Uber dipped following the announcement of the driver identity failures.

A recent research study of Uber in London interviewed a range of people involved in ‘ridesourcing’ (i.e. prearranged and on-demand transportation services for compensation in which drivers and passengers connect via digital applications, also known as ‘ridehailing’). Stakeholders generally were unsure about how to deal with ridesourcing services and had no immediate plans for managing such services. There have been no new regulations or guidelines developed for ridesourcing in London, and these services currently operate under the private hire vehicle licensing system which was developed in the 1990s. These regulations are deemed generally to be outdated for ridesourcing, because the way services such as Uber operate is technically not a typical black taxi service – which can be hailed or stopped on the street without prior booking – or a traditional minicab, which requires a pre-booking.

The study quotes ‘a key policymaker in London’: “There are no regulatory changes planned, at the moment…….There comes a time where there is a whole proliferation of services which are completely unmanaged, unregulated, we then have to start thinking what powers we need to actually deal with this. You got to have some control. They are carrying passengers, offering transport for hire, people are paying fares, so it (kind of) fits into that whole public transport network and we really need to have management of that”.

Another London policymaker is quoted: “this is covered within the mayor’s draft transport strategy; however, it doesn’t sort of set clear plan for that specific element. Generally, shared occupancy is a good thing, albeit, it’s still by road transport, and the main thrust of the mayor’s transport strategy is to achieve that 80% sustainable mode share target, which is enormously demanding so everything has to be seen in that context”.

The researchers’ conclusion was that there are no mechanisms currently in place to monitor or assess the impacts of ridesourcing services in London, which results in a genuine lack of knowledge among policymakers and transport authorities on how they approach these services, in terms of regulations, operational guidelines, integration with other modes and future transport systems.

A House of Commons briefing paper published in November 2018 (CBP 2005) summarised the position as regards taxi and private hire vehicle licencing in England. Licencing of London’s black cabs is based on a Statutory Instrument enacted in 1934, and involves TfL setting fares, which may ensure income for taxi drivers, albeit limiting competitiveness with other providers. The government has considered aspects of taxi regulation but does not intend to bring forward substantive proposals for reform.

Assessment

The current regime for taxi regulation was devised before the advent of app-based services and is therefore no longer fit for purpose. It may inhibit some kinds of innovation, for instance fare flexibility for black cabs to better match supply with demand, while other innovations are not adequately catered for, as seen in the all-or-nothing refusal of Uber’s operating licence for what are arguably small and remediable infringements of a very popular service. Not only is the regulatory regime inadequate; there appears to be a lack of policy thinking in London that would inform regulatory practice.

A review of the regulation of taxi services in the light of current and expected technological innovations would be timely. Aspects that would need to be addressed include the possibility of control of numbers of cabs (not at present the case in London), whether regulation should cover terms of employment of drivers, the relationship to other modes of travel, competition for kerb space for loading and unloading, and the potential conflict of interest for TfL in its roles as both taxi regulator and public transport provider.

 

 

The National Infrastructure Commission has published an interesting discussion paper on capturing the value of urban transport investments. The starting point is the recognition that average travel time changes little, which means that travel time savings do not provide a reliable basis for valuing new investment. The Commission proposes an approach that focuses on valuing agglomeration benefits plus consumer benefits as these increase with increasing population density. Agglomeration benefits have for some time been recognised as appropriate for inclusion in cost-benefit analysis, but a direct estimation of density-dependent consumer benefits is novel.

The NIC paper is welcome fresh thinking, although not without raising issues for consideration. A supporting study commissioned from consultants SDG estimates that the utilisation of available theoretical transport capacity to access city centres ranges from 20% (small cities) to approaching 70% in the 0800-0900 peak hour. There is therefore considerable capacity underutilisation in all cities studied. However, London was not considered. It is possible that capacity utilisation in London is substantially higher, reflecting the pressures of population and economic growth. If so, this would suggest that adding to transport capacity in other cities would not be crucial to stimulate economic growth in the near term. It may not be valid to assume that enough latent demand exists that any additional capacity added will be used.

More generally, while transport capacity can act as a constraint on economic growth, justifying investment in expanding cities, other kinds of investment may be more cost-effective in stimulating lagging cities. This might be investment in broadband, for instance, or in improvements other than infrastructure that falls within the NIC’s remit.

The SDG approach focuses on capacity to access city centres and disregards the potential of faster and reliable travel, as offered by light rail or BRT, that would increase the size of travel to work areas. A study of travel in Birmingham, which has only a single light rail line, prompts the hypothesis that by relying on buses that get caught in congestion at peak times for public transport, Birmingham sacrifices significant size and thus agglomeration benefits, compared with cities of a similar size in France which rely on trams and metros.

Nature of benefits

Estimations of agglomeration and amenity/consumer benefits are based on elasticities derived from econometric studies of correlations between inputs and outputs, controlling for confounding variables. Such benefits are not observed directly and this respect they resemble travel time savings, which are based on the output of models, but not observed in practice. Moreover, the confounding variables are not insignificant, given the typical scatter of data points in plots to quantify agglomeration effects, which suggests that there may be many other possible interventions that might be made, other than those focused on travel.

What is observed as the result of transport investment are changes in land use and market value, the subject of a study for the NIC by the Institute for Fiscal Studies. Increases in real estate values reflect increases in agglomeration and amenity. Arguably, such increases in value would be the basis for a more grounded approach to appraising urban transport investment, more aligned to real world investment decisions.

Although the NIC discussion paper is concerned with urban investments, the approach is applicable to transport investments generally.