Economics

EconomicsTransportTravel

A surprising feature of the new Labour government is its enthusiasm for new airport capacity, notwithstanding its commitment to a pathway to net zero greenhouse gas emissions by 2050. The primacy of economic growth, so strongly espoused by the Prime Minister and his Chancellor, have been summoned to logically justify this approach – both as a practical measure, and a signal to prospective investors in the UK economy that ‘we are open for business’ – even despite the adverse climate change consequences. The economic case itself, however, is very questionable.

This initiative began with a speech on 29 January by Rachel Reeves, Chancellor of the Exchequer, in which she backed a third runway at London’s Heathrow Airport as part of the re-booted plan to get the UK’s sluggish economy growing. She also supported expansions at Luton and Gatwick airports, a stance formally endorsed by Heidi Alexander, Secretary of State for Transport,who appears to not have been the principal decision-maker in these matters.

The airport expansion plans for which ultimate ministerial consent are required are these:

  • Heathrow: the government has invited proposals for a third runway to be brought forward by the summer. The number of flights, presently capped at 480,000 a year, could increase to 720,000. Currently the airport serves more than 80 million travellers a year with its four passenger terminals and two runways, but eventually should be able to accommodate up to 140 million passengers a year, once the third runway is in operation.
  • Gatwick: the Secretary of State has issued a ‘minded to approve’ letter for the Northern Runway Development Consent Order (DCO), subject to the outcome of further consideration of operational controls on the scheme. This proposal involves repositioning an existing runway by 12 metres to allow dual runway operations. This runway is long enough for typical short-haul passenger jets and will increase the airport’s annual number of flights to 380,000 from the present 260,000, with passenger numbers going up from 45 million to 75 million a year.
  • Luton: the Secretary of State has granted a DCO that covers a new terminal (but no new runway), which could increase passenger capacity from 18 million to 32 million per year.
  • Stansted: the government has welcomed Stansted’s £1.1 billion investment to extend its terminal. It already has permission to grow to 43 million passengers a year, from the current 29 million.
  • London City: the government has approved plans to expand to 9 million passengers per year by 2031, from 6.5 million currently, but with no increase in the number of flights.

The Department for Transport plans to review the Airports National Policy Statement (the current version dates from 2018), including its compatibility with climate change obligations. Ensuring compatibility with climate change obligations will not be a trivial task, as is evident from the most recent report of the independent Climate Change Committee (CCC), proposing the Seventh Carbon Budget covering the five years 2038-2042.

Carbon Budgets

The UK’s Climate Change Act 2008 sets the framework for action to address climate change mitigation and adaptation. The Act requires the government to propose regular, legally binding milestones on the way to achieving Net Zero greenhouse gas emissions by 2050, known as carbon budgets. The CCC is required to advise the government on the level of these. Parliament must then agree each carbon budget for it to be set into law. To date the government has always followed CCC advice on the major decisions, including the level of the six legislated UK carbon budgets.

However, the government’s most recent Carbon Budget Delivery Plan, for the Sixth Budget, has been subject to successful legal challenge on the grounds that inadequate consideration had been given to the risks involved in delivery, assuming mistakenly that the policies would be delivered in full. The outcome is that the government has to lay before Parliament a fuller report dealing with the risks involved.

The CCC’s approach to carbon budgeting is to propose a ‘balanced pathway’, based on detailed expert analysis of options and extensive modelling. The treatment of aviation in the Seventh Carbon Budget has the following main features:

  • Aviation demand can only grow if aviation sector technology roll-out progresses and begins to abate and offset aviation emissions, with demand management playing an important role in the 2020s and 2030s while availability of Sustainable Aviation Fuel (SAF) and permanent engineered carbon removals are both still limited.
  • As a result, budgeted per-capita passenger-kilometres remain relatively flat between 2025 and the early 2030s. As SAF and engineered removals become more widely used from the mid-2030s, demand then grows from this point. This growth is conditional on these technologies developing as projected. Thus, compared to 2025 levels, aviation passenger demand is projected to increase by 2% by 2035 (to 319 million passengers), 10% by 2040 (to 345 million passenger), and 28% by 2050 (to 402 million passengers). 
  • Aviation will be the UK’s highest-emitting sector by the Seventh Carbon Budget period. The largest share of emissions reduction by this time comes from managing forecast aviation demand growth. This is followed by SAF uptake, efficiency improvements, and the roll-out of hybrid-electric aircraft and battery-electric aircraft.
  • The cost of decarbonising aviation and addressing non-CO2 contributions to climate change is expected to be reflected in the cost to fly. This will help manage growth in aviation demand in line with Net Zero.

It does not need detailed analysis to see that the government’s vision of substantial expansion of airport capacity is very much at odds with the CCC’s proposals for demand management to achieve climate change objectives. This discrepancy could be difficult to deal with in the government’s plan to achieve the Seventh Carbon Budget in a way that would be proof against legal challenge.

One key risk concerns the availability and cost of Sustainable Aviation Fuel, a topic on which both the Department for Transport (DfT) and the CCC have similar aspirations. SAF is produced from biological feedstocks, at present mainly used cooking oil and animal waste fat, and is sufficiently similar to standard jet fuel to be used in existing aircraft. Other biological sources are being explored. At present, costs of SAF are higher than for kerosene and supplies are limited.

To incentivise the development of SAF, the DfT is creating an SAF Mandate, which will set a legal obligation on fuel suppliers in the UK to supply an increasing proportion of SAF over time. In 2025, the obligation is set at 2% of the total fossil jet fuel supplied, and will increase annually to reach 10% in 2030 and 22% in 2040. In addition, the Department is currently consulting on how best to support the UK SAF industry by a ‘revenue certainty mechanism’ that will help producers get the investment they need to ramp up the production. The DfT’s position that this mechanism should be funded by industry, consistent with the polluter pays principle, and that the preferred approach is to introduce a levy on suppliers of jet fuel. The outcome of the consultation will be enacted in legislation.

The DfT’s aspiration for a 22% share of jet fuel derived from sustainable sources by 2040 falls short of what would be required for complete decarbonisation by 2050, and in any event must depend on whether SAF providers are able to locate biological sources of supply and reduce costs to allow this fuel to be commercially viable, mandate or no mandate. This is an important source of uncertainty which the government will need to address in formulating its Seventh Carbon Budget in a way that will be proof against legal challenge.

Demand management

The uncertainty as regards SAF supply prompts the need to consider demand management of air travel more seriously than the UK government has so far, to have any real prospect of aligning with the Climate Change targets. I set out the argument succinctly in a letter that was published in The Economist of 22 February:

‘It is understandable that Heathrow and other UK airports in private ownership would wish to increase passenger numbers, revenues and profits. But this is not in the national interest in an era of decarbonisation.

‘The crucial fact that most air travel is for leisure. Even at Heathrow, only around a quarter of passengers are travelling on business. There is therefore ample opportunity for business travel to increase, displacing leisure travellers to other London airports with spare capacity, and beyond.

‘This will happen through market forces since business travellers will pay a premium for the advantages of Heathrow. Eventually, all spare capacity at UK airports would be taken, and then the lowest value flights would be priced off, such as the weekend jaunts by stag and hen parties to convivial continental cities.’

To illustrate how market forces work, consider a trip to India. Suppose I am flying on business for a short stay, my organisation paying the cost. Living in London as I do, I would fly from Heathrow direct to the airport nearest my destination, where I would arrange to be collected by car. On the other hand, if I am going on a longer holiday trip, paying out of my own pocket to travel economy class, I would shop around for the lowest cost route. I would quite likely fly via one of the Middle East hubs, taking longer but costing less, with the possibility of arriving at an airport nearer my final destination. With Emirates, for instance, I might still depart from Heathrow, but also could leave from Gatwick or Stansted, as well as from Birmingham or even Manchester. I would expect the cost of these alternative options to reflect the lesser demand from business travellers using these airports.

If demand for air travel continued to grow, eventually spare capacity at UK airports other than Heathrow would be used up. Then market forces would result in increases in prices charged by airports (and increases in their profits), which would deter the marginal traveller, such as such as discretionary low-budget short-duration leisure tripsabroad, taking advantage of the present availability of low-cost flights outside the main season for tourist travel. Some increase in the cost of leisure air travel could be expected to increase the attractions of domestic destinations, probably with rather little loss of enjoyment and a greater benefit to the UK economy.

To put some numbers to the argument: survey data collected by the Civil Aviation Authority for 2023 shows that at the UK’s eight main airports, 57% of terminal passengers were UK residents on leisure trips, and 30% were overseas residents traveling for leisure purposes. Only 14% of journeys were for business purposes. Even at Heathrow, only 19% of passengers terminating at that airport were travelling on business.

In absolute terms, business travellers terminating at Heathrow totalled 14.9 million in 2023. This compares with 20.3 million in 2019 and 20.7 million in 2015. So there is no growth trend of business travellers at this hub airport. Indeed, there is indication of a substantial change of practice resulting from the coronavirus pandemic, where the combination of working from home, experience of remote business meetings, and environmental concerns, have greatly reduced the amount of business travel, particularly short trips to EU countries.

Economic case

The Chancellor, in her 29 January speech, asserted that third runway at Heathrow would unlock further growth, could create over 100,000 jobs, and, according to a recent study from Frontier Economics, could increase potential GDP by 0.43% by 2050. However, this study, commissioned by the owners of the airport, is based on a black box proprietary model of the whole economy, of the kind that gained little credence previously, including past analysis by the Airports Commission of the case for a third Heathrow runway.

The economic case for a third runway must be based on the need to accommodate growth of business travel, in order to increase opportunities for British companies in export markets, foster inward investment to the UK, facilitate the growth of London and the South East as a place for doing business, and promote London as a world city for finance, media, education, tech and other specialisms. But with the present lack of growth of business air travel and the headroom of capacity for any future growth by displacing leisure trips, the national interest in additional airport capacity is far from being established.

Hospitality, entertainment, high-end retail and other businesses benefiting from inbound tourism would doubtless welcome increased airport capacity. However, UK visitors going abroad spend more than twice as much as overseas visitors to the UK – £62290 million against £28358 million in 2019 (ONS data). So increasing airport capacity is very likely to drain spending from the UK economy, which could detract from economic growth.

Given the unconvincing economic case and the conflict with policies to achieve Net Zero, why the enthusiasm amongst at least some government ministers for airport expansion? The explanation could reflect how desperate the Labour government is to boost economic growth, both to increase living standards and to raise tax revenues to fund increases in public expenditure, with a new requirement for higher defence spend. But the levers available to ministers are limited in scope and slow to act. So the positive stance toward increasing airport capacity serves to send a signal of intent, with no cost to the Treasury since airports are in the private sector.

Whether individual airport expansions go ahead will ultimately depend on commercial decisions by the owners, regardless of supportive government statements. The key question is whether the investment can be adequately remunerated by increased turnover in a market in which airports are in competition for airlines and their passengers. The business model takes account of landing and take-off fees charged to the airlines, and associated income from catering and retail concessions in the terminals, car parking and other trading in and around the airport. With one exception, airports can set their own charges for use. But charges at Heathrow are regulated by the Civil Aviation Authority on account of this airport’s dominant position. Currently charges are capped at about £25 per passenger, high by international standards.

The cost of a third runway at Heathrow was originally put at £14 billion in 2016, but this did not include the consequential adjustment and enhancement to surface transport,including putting a section of the M25 Motorway in tunnel. And for such a major construction project, there must be substantial risk that initial cost estimates are pitched too low, to get the proposal committed and underway, after which further cost are likely to be identified – as has been the HS2 experience. Accordingly, the owners will doubtless want reassurance that this expenditure can be recovered in higher passenger charges. But the airlines would be likely to oppose this since it would make their investment in Heathrow routes less competitive. BA would also oppose because expansion would be likely to lessen its dominance and pricing power at Heathrow. Under present arrangements, the CAA would need to adjudicate.

Also lying in wait on the critical path will be the updated Airports National Policy Statement, the government’s decision on implementing the Seventh Carbon Budget, and a planning inquiry into the detailed proposal for Heathrow expansion. For all the government’s talk about speeding up the planning process, with new legislation recently introduced to achieve this, the outcome of this particular scheme seems exceptionally uncertain.

From the point of view of both economic and climate policy, the case for a third runway at Heathrow looks highly unconvincing. And the commercial viability seems decidedly problematic. It is therefore good that some proper scrutiny is now going to be given by the House of Commons Environmental Audit Committee, which has launched a new inquiry to examine whether expansion of airport capacity can be achieved in line with climate and environment goals.

This blog post is the basis for an article in Local Transport Today, 1 May 2025.

Car useEconomicsTransportTravel

My new book, titled ‘Travel Behaviour Reconsidered in an Era of Decarbonisation’, brings together arguments and evidence that I have discussed briefly in my commentary columns in Local Transport Today and in previous books intended for non-specialists. This book, aimed mainly at professionals and academics, is fully detailed, evidenced and referenced, yet concise and (I hope) cogent, the core of which is a critique of orthodox transport economic analysis and modelling, plus proposals for fresh approaches. It is published by the UCL Press, part of my own institution, an academic open access publisher launched in 2015, that makes copies of its books free to download as PDFs and claims more than 10 million downloads so far. In this blog post I will outline the main themes of the book, as a trailer to encourage readers to access the full text.

I argue that the need to reconsider travel behaviour and its analysis is two-fold. First, decarbonising travel could be achieved both by new technology and by altering behaviour so that we make less use of the car. The question for consideration is whether such behaviour change is feasible in practice on a scale that would make a useful contribution.

Second, I argue that there is a need to reconsider the economic analysis of transport investment so that this reflects the observed travel behaviour of real people in the real world, as opposed to assumed behaviour of utility-maximisers functioning within constrained analytical frameworks, the orthodox practice.

Behaviour change

To set the scene, the first chapter of the book outlines the pattern of travel on Britain, largely based on findings of the National Travel Survey prior to the pandemic. (UK data is particularly extensive, but I refer to other countries where possible.) The main feature, of course, is the dominance of car travel, which brings with it a variety of problems familiar the LTT readers. Yet the attractions of the car tend to be underestimated by those who hope for a shift to public transport and active travel. The car provides convenient door to door travel over short to medium distances where road traffic congestion does not cause excessive delays and parking is available at both ends of the trip. These conditions may not be satisfied in city centres, where public transport can be provided most economically and where catchment areas, whether for schools or supermarkets, are tighter, making active travel more feasible. But beyond city centres – in the suburbs, towns and rural areas – alternative to the car are much less attractive and mode shift much more difficult to achieve.

Yet the car is not attractive just for its utility; there are also ‘feel good’ factors that prompt car ownership and car-dependent lifestyles. Witness that cars are parked for 95% of the time, a good economic argument for car sharing, but conversely an indication of the value placed on private ownership. Witness also the growth ownership of SUVs, not least in urban areas where there is little practical need for a large 4×4 in place of a traditional smaller hatchback. The motor manufacturers are naturally focused on satisfying such feelings; and governments are supportive of auto industries for reasons of industrial and employment policies.

In the third chapter of my new book, I outline the important consequences of the coronavirus pandemic, a ‘natural experiment’ that showed how digital access could substitute for physical access under ‘lockdown’. Yet once the restrictions were lifted, car use returned quickly to pre-pandemic levels, consistent with the attractions of the car for gaining physical access to people and places, activities and services.

Chapter 6 discusses the routes to transport decarbonisation. For surface transport, electric propulsion is by far the most important means, though the equivalent in aviation is much more difficult. Some analysts and policy makers argue for a substantial reduction in car use as well, for instance by 20% as soon as 2030. But because of the attractions of the car, and given the built environment we have inherited within which trip origins and destinations very largely arise, any such reduction reflects much wishful thinking. The best prospects are in city centres where rail in all its forms provides speedy and reliable travel compared with cars, buses and taxis on congested roads. But urban rail is costly and takes a long time to build. Cycling infrastructure is much cheaper and quicker to implement, but largely attracts people from public transport, not from their cars.

So the prospects seem quite limited for changing travel behaviour and reducing car use on a scale that would make a useful contribution to decarbonisation objectives. How did we get to this state?

Changing travel trends

The historic trends in travel behaviour, the successive changes that have occurred, and their implication for future demand, are at the heart of what the new book explores. The evidence presented in the second chapter suggests four eras of travel: first, early man came out of Africa to populate the habitable earth, walking for 3-4 hours a day, covering around 3000-4000 miles on average, hunting and gathering. Then, starting 12,000 years ago, settled farming communities came into being, when average daily travel time fell to about an hour a day, covering about 1000 miles a year at walking speed (horse drawn vehicles on poor roads were not much faster).

The third era began in 1830 with the opening of the first passenger railway, between Manchester and Liverpool, utilising the energy of coal to travel faster than walking pace. Oil in the twentieth century permitted mass mobility through the internal combustion engine employed for road vehicle propulsion, as well as air travel. And the modern bicycle harnessed human power for local trips at faster than walking pace. According to the National Travel Survey, the average distance travelled in Britain increased to reach about 7000 miles per person per year by surface modes by the end of the twentieth century, with average travel time invariant at an hour a day. But then growth ceased, in part the result of exhausting the scope for faster travel through refinement of established technologies. This was the beginning of the fourth era of travel, that driven by the need for decarbonisation.

Each of these past innovations in transport technology based on fossil fuel energy led to a step-change increase in the speed of travel, and in turn to increased distance traversed in the long-run invariant hour a day of daily travel. Hence the benefits of faster travel were taken in the form of greater access to people and places, employment, services and activities, to family and friends, with the enhanced opportunities and choices that improve our quality of life.

In contrast, the new transport technologies seem unlikely to result in increases in speed of travel or of access. Electric propulsion is important for decarbonisation but does not increase the speed of travel. Digital platforms, exemplified by the access readily provided to car travel by the likes of Uber, and digital navigation, known in the road context as satnav, improve the quality of the journey without increasing speed. And automated vehicles on roads shared with conventional vehicles seem unlikely to permit faster trips. So these, the main new technologies, will not increase access benefits to users of transport networks.

A second reason why the growth of average daily distance travelled ceased to increase at the turn of the century, is evidence that those with the availability of a car in the household or good public transport services have arguably adequate levels of access, choices and opportunities, such that there is no need to travel further. Hence demand can be said to be saturated, a general feature of mature markets, and with no reason why travel should be an exception. However, travel to permit access has two distinct characteristics. First, improved access to any given class of destination is subject to diminishing returns, a standard economic concept. And second, access increases with (up to) the square of the speed of travel, reflecting elementary geometry. The combination implies that per capita travel demand for the purposes of access may be expected to saturate, consistent with the findings of the National Travel Survey and other sources.

While per capita travel has ceased to grow, the UK population is increasing, which requires consideration of how this may propel travel demand growth. Much would depend on where the growing population would be housed: new homes on greenfield sites would increase car use, whereas accommodating population growth within existing urban areas would point towards improvement of public transport services to meet the associated transport needs. The scale and location of new homes is currently a major issue of national policy, yet to be settled.

So the fourth era of travel is characterised both by the lack of new technologies to travel faster, and by substantial travel demand saturation, both helpful to implement transport decarbonisation. Yet population growth accommodated on greenfield sites is unhelpful. Overall, the scope for a significant reduction in travel demand seems quite limited.

Appraisal and modelling reconsidered

The second core theme of my book – decision-making processes for transport investment – leads to a fairly detailed critique of conventional transport economic appraisal which is based on the supposition that the saving of travel time is the main benefit of investment in new capacity. My conclusion is that it has not been possible to achieve a self-consistent methodology in this territory even after some sixty years of effort. One consequence is a mismatch between the policy objectives of many high-profile investments and the conventional estimation of economic benefits, which is therefore suitably massaged to align with the policy.

At the same time, there has been growing general recognition that the main benefit of investment that allows faster travel is increased access. However, attributing monetary value to access has proved difficult conceptually, and has not been successfully developed into a methodology for practical application. Besides, as noted above, travel demand for the purposes of gaining access is subject to saturation, quite unlike demand based on the supposition of time saving, which means that the latter cannot be a proxy for the former.

Identifying the benefits of investment as enhanced access creates problems for transport modelling, another issue I explore in some depth in the new book. Transport models to justify major investments typically comprise two parts: a variable demand multimodal traffic model, the outputs of which are inputs to an economic model that allows estimation of monetary benefits, comparing the with- and without-investment cases, and hence yielding the benefit-cost ratio, important for the decision to invest. Yet benefit in the form of increased access cannot be accommodated by the economic model as it exists, on account of the assumption of transport economists that time savings are the main benefit. This therefore requires the traffic modellers to constrain model outputs to a counterfactual case in which travel time is saved, rather than used to travel further for greater access, disregarding the increased vehicle-mile-related externalities and land use change that arise in reality. So transport modelling as currently practiced does not provide a secure basis for the estimation of investment benefits, nor of carbon and other externalities.

Fresh approaches

Pulling all these threads together, the final chapter of my book suggests some fresh approaches to travel analysis and transport policy, to respond to the methodological shortcomings of conventional appraisal and modelling that I identify, and to the need to make progress towards the Net Zero objective. I suggest a presumption that Britain has a mature transport system comprising the road and rail networks, consistent with travel demand saturation as discussed above. This is already the case for urban roads, where, in the last century, investment in increased capacity in the form of both new (often elevated) highways and enlarged carriageway for vehicles took place in response to growing car ownership; whereas more recently the trend has been to recover such capacity for active travel and prioritised bus routes. Demand for vehicle travel on urban roads must now be managed within constrained capacity.

There is a good argument for treating the interurban road network as mature, so not aiming to invest to increase capacity generally, hitherto justified by notional travel time savings. There may be benefits from particular investments associated with land use change; for instance, were a third runway at Heathrow airport to be built, investment in surface transport infrastructure would be needed to cope with increased passenger numbers, the resource implications of which should form part of the cost of the project as a whole.

More generally, location-specific road investment to make land accessible for development could be justified where the decision to develop is made jointly by planners, developers and transport authorities and where the developer contributes to the cost of the infrastructure. The case would be based more on commercial considerations than on orthodox welfare economics, although carbon emissions and other externalities should be taken into account.

Cessation of investment in a national road construction programme would be a big shift of policy politically, although this is what the Welsh government decided two years ago. But there is still widespread support for road investment among most politicians, national and local, the latter because the funds provided by central government are seen as ‘free money’. It is widely supposed that increasing road capacity reduces congestion, improves connectivity and boosts economic growth, although the basis for this supposition is tenuous. And of course, the construction industry and the consultancies that benefit from the funds that flow are also supportive. Nevertheless, there is a strong case for a switch in effort from costly investment in new civil engineering structures to making best use of the physical infrastructure we have. Economic analysis and modelling would then focus on the efficient management and use of the network, closely linked to the operational analysis of the road network in real time, a topic that has been neglected hitherto. To do this we now have the opportunity to take advantage of digital technologies that are already in wide use and are both scalable and relatively low cost.

Transport economic analysis has focussed on individual projects. In contrast, it has always been difficult to articulate an economically persuasive strategic case for a programme of transport investment. Regarding the transport system as substantially mature changes the main challenge from justifying a collection of investment projects to reconciling transport operations with the Net Zero objective.

The key elements of a strategy, whether of a particular sector or of transport provision as a whole, are:

  • the switch to zero-emission vehicles for surface transport;
  • employment of digital technologies to optimise network operations;
  • and financial support for public transport.

Alongside these, any investment in new capacity should now be specifically justified case by case to support economic development, such decisions being taken jointly with planners and developers, and schemes funded in part by the developers, as beneficiaries.

Active travel is not included in my key elements of strategy, although it is a good thing in many respects, including health and environmental benefits – I myself am a cyclist. But I see limited scope for getting people out of cars onto bikes. Copenhagen is a city famous for cycling, but car mode share is only slightly less than in London, while public transport is half that in London. So you can get people off buses onto bikes, but harder to get them out of cars, even in a small, flat city with excellent cycling infrastructure and a strong cycling culture.

One reason is that in Britain 80% of carbon emissions from car journeys arise from trip of more than 5 miles, and 95% from trips of more than 2 miles, so only limited opportunity to get switch to cycling and walking respectively. I don’t therefore see promotion of active travel as a central
element of a national transport strategy, although in cities with crowded public transport it may have more attractions, as in London, albeit with some loss of farebox revenue.

POSTSCRIPT

The new government’s policies: do they meet the need?

The manuscript of my book was completed before the General Election, which has led to a new focus on the basis of transport decision-making and the sources and allocation of funding. The new Labour Chancellor Rachel Reeves soon cancelled the proposed Arundel Bypass on the A27 and the tunnel adjacent to Stonehenge on the A303, as well as some minor rail schemes, laying the blame at the budget deficit.

Louise Haigh, the new Transport Secretary, has meanwhile been required to undertake a review of £800m of unfunded commitments in her department and a basis of prioritisation of projects, suggesting shortcomings in its system of controls. A new Office of Value for Money is to be established to identify areas where the government can reduce or stop such problems or improve the value of spending.

The government also intends to establish a National Infrastructure and Service Transformation Authority (NISTA), comprising the National Infrastructure Commission and the Infrastructure and Projects Authority, to drive more effective delivery of infrastructure across the country and support a 10-year infrastructure strategy. A seasoned transport and railway professional, Lord Hendy, has been given the rail policy brief, and a junior minister at the Department for Transport, Lilian Greenwood, the title ‘Minister for the Future of Roads’. All this suggests that there may be changes from past policies in the offing, in a direction that could be consistent with the arguments I have been making.

Such new approaches inevitably raise questions about the competence of the Department for Transport that cannot just be attributed to misjudgements by past Conservative ministers. A point of comparison is Transport for London, which is generally agreed to be a world leading planner and provider of regional public transport and major roads. TfL has a good vision of how London’s transport system needs to develop, aiming to implement the Mayor’s Transport Strategy and consistent with his responsibilities for housing, the environment and for London’s economy. This vision involves major investments in rail, low-cost investments in active travel, plus operational improvements across the board. Such a vision requires validation of individual investments – the ‘vision and validate’ approach.

But here it is important to recognise that decision makers do not simply bring an open mind to consider a portfolio of potential investments from which they might choose. Generally, those in charge – senior and experienced people – will have a pretty good idea of what investments they would like to make, and can justify. They seek validation from analysts – modellers, planners, economists, engineers. Validation includes securing good value for money and complying with all legal requirements. It is thus not often that major misjudgements occur in the choice of projects pursued. The popularity of the new Elizabeth Line, formerly known as Crossrail, is a good example of what has been achieved, despite overruns of construction time and budget. Other successful projects have been the introduction of the Congestion Charge and the upgrade of erstwhile ‘Cinderella’ rail lines into the London Overground.

In contrast to TfL, the Department for Transport has had neither a vision nor a strategy, nor has been a ‘driving force’ in the proposal/selection and delivery of the potential ‘best’ schemes, or the promulgation of effective ‘system management’ concepts. What it has had are problems with the major sectoral ‘wish list’ expenditure programmes for road and rail, the economic benefits of which it has found difficult to convincingly justify, both at programme level and for individual projects, but creating huge pre-emptive budget requirements. It has overseen serious cost overruns on HS2, had many setbacks and criticisms in the courts in the face of litigation by those objecting to road schemes. And it has struggled to reconcile the impacts of a large road investment programme with the Net Zero climate change objective, having its overall decarbonisation plans for transport twice rejected in the courts.

My book discusses many of the proposed investments supported by the Department as case studies in the application of a defective appraisal methodology, including the virtually impossible to justify Stonehenge A303 tunnel, questionable smart motorway schemes (a programme cancelled by the previous government as the result of public anxieties about safety, but falling well short of expectations economically), HS2 (now truncated), and the extended saga of a third runway at Heathrow. In some cases, the analysis was forced to comply with a prior policy decision, in others key strategic economic benefits were poorly treated or disregarded.

There is now surely a good case for an independent review of transport investment appraisal and modelling to identify a fit for purpose methodology for an era in which the high-level strategic priority is decarbonisation. I hope my book might provide useful evidence and argument were such a review to take place.

My new book is available at https://uclpress.co.uk/book/travel-behaviour-reconsidered-in-an-era-of-decarbonisation/ free to download as a PDF.

This blog post was the basis of an article in Local Transport Today of 5 September 2024.

Car useEconomicsTravel

Professor Glenn Lyons has been developing the concept of Triple Access Planning over the past decade and has now published, with 17 co-authors, a 130-page Handbook setting out the approach in some detail. The essential idea is that nowadays we seek access to other people and places by three means: spatial proximity, physical mobility and digital connectivity, each employed to different degrees to meet our needs. Accordingly, if transport planners consider only the transport system, they are ‘dangerously blinkered’ and invite uncertainty into decision making by ignoring the other two systems, it is contended.

The focus on access (or accessibility) as the real objective, rather than movement, is very welcome as an approach to planning. Access is what we seek – to people and places, activities, services and employment, friends and family, for the opportunities and choice that improve the quality of our lives. Over the past two centuries, physical access using mechanised transport systems based on fossil fuel energy arrived with the Industrial Revolution and was rapidly developed, indeed was economically and socially transformational – though not without damage. Next came telecommunication, latterly offering apparently limitless digital connectivity, again having a revolutionary impact. Meanwhile changes in how land is used and the locations of activities relative to one another has reshaped the world out of all recognition.

There can be little dispute that the ‘three option’ thinking is very useful in putting transport provision itself in its proper place. Yet the Triple Access Planning approach, as set out in the new Handbook, has its limitations.

Triple Access Planning is stated to be a way of thinking that marks a change for transport planning from the ‘predict and provide’ paradigm to ‘decide and provide’. This is a fashionable shift of perspective, described as a ‘vision-led’ philosophy, for which there are good arguments in respect of addressing emergent issues such as sustainability. Yet the question avoided is whose vision, and who decides? The answer presumably is that of planners, and of the politicians they serve, both national and local, but who must nevertheless take account of the views of those whose taxes pay their salaries and who elect them into office. The democratic process often impedes the deployment of measures that planners would see as beneficial to the community, but which many members of the public may see as detrimental to their personal well-being, particularly if less car use is proposed. For instance, the Handbook cites as sound thinking the Scottish Government’s Climate Change Plan of 2020 that made a commitment to a 20% reduction in car kilometres travelled by 2030 compared to pre-pandemic levels –  an example of decide and provide, but one for which measures to implement such a substantial change have not been articulated. Generally, the Triple Access approach seems designed for planners and has comparatively little to say about the practicalities of gaining general public support for its proposals.

A second, and more substantial limitation of Triple Access Planning is the lack of economic content. Resources are always constrained, so that planners and politicians have to be concerned with the relative cost-effectiveness of different approaches to meeting access needs and their wider consequences.

There is quite a lot that can be said about cost-effectiveness of measures to enhance the three components of Triple Access Planning. Spatial proximity is very largely determined by the built environment we have inherited, whether the low densities of sprawling US cities such as Los Angeles, or the high densities of admired inner areas of European cities like Paris or Barcelona. Generally, UK cities are relatively low density, reflecting a preference for single family homes with gardens. While there is scope for what is called ‘gentle densification’ of existing communities, we could not afford, nor would we wish, to attempt large scale redevelopment of suburbs to higher density. The historic development of British cities therefore limits the opportunity to enhance spatial proximity.

On the other hand, enhanced spatial proximity is an option for some types of new build, for instance based on high rise apartments on urban brownfield sites. However, for new greenfield housing at low density, built to sell by developers, lack of spatial proximity seems not to be seen by purchasers as a disadvantage, although campaigners remonstrate at the lack of alternatives to the car. Occasionally, wholly new settlements might be created, as exemplified by Britain’s Post-War New Towns, the last of which, Milton Keynes, was designed to accommodate the growing car ownership of that era. Subsequently, Poundbury, an urban extension on the western outskirts of Dorchester masterminded by the Duchy of Cornwall (led by the then Prince of Wales), was designed as a walkable community, giving priority to people rather than to cars. Nevertheless, because Poundbury is small – 5,000 homes are planned – the mismatch between homes and jobs means that residents are likely to travel further afield for work, such that car ownership is higher than in Dorchester and the surrounding region, with 55% of residents using a car or van to get to work.

New built homes increase the national housing stock by only about one per cent a year, so it is the existing built environment, homes and facilities, within which almost all trip origins and destinations occur, that places a limit on improving spatial proximity, with little scope for cost-effective change.

Physical mobility meanwhile depends on the historic transport infrastructure already in place that accommodates all trips. There is much debate about adding capacity to the road and rail networks, and considerable public resources have been allocated for this purpose by successive governments. Yet adding capacity is costly, whether shifting earth, pouring concrete and rolling tarmac for new roads, or constructing track, tunnels, power supplies and signalling for new rail routes, so that the net addition to capacity is quite small. For the strategic road network, annual additional lane-miles barely keeps up with population growth. And for rail, the prospect of escalating construction costs may lead to truncation of plans, as with HS2, or to an unwillingness of decision makers to commit public money in the first place.

So the possibilities for cost-effectively increasing the physical capacity of transport infrastructure to enhance mobility are quite constrained. However, there is scope for making better use of existing networks by means of digital technologies, thereby increasing access, particularly on the railways where modern signalling and control technologies allow higher train frequencies to be achieved while maintaining safety standards. Digital technologies to increase effective road capacity are more difficult to implement, given the diversity of traffic, but warrant more attention than they are receiving, particularly to exploit the very general use by drivers of digital navigation, known as satnav in the road context. But in any event, higher speeds of travel are unlikely to be achievable by digital or other new mobility technologies, which limits increased access by physical mobility, given the constraints on the time available for travel within the 24-hour day.

Enhancing access by improved digital connectivity seems a more promising approach, given the scalability of the relevant rapidly advancing technologies and the resulting cost reduction, hence the ubiquity of digital connectivity, driven by Wi-Fi and Broadband that have facilitated a variety of telecom innovations and apps for online interaction, such as Zoom or Teams, and services such as Skype and FaceTime, as well as social media sharing and conversational networks, all at an affordable cost.

So enhanced access through the new digital technologies is a persuasive approach in theory, but what about the practice?

There has been a long-running but inconclusive debate about whether digital communications technologies can and will actually substitute for physical mobility, or instead mainly complement it, for instance by allowing people to cultivate wider social and business networks, with whom face to face contact from time to time would be important to sustain relationships, and the parallel desire to undertake ‘experiential’ activity through leisure travel. The forced cessation of travel during the coronavirus pandemic showed that we could make much more use of digital communications than we had previously. Although travel behaviour has not yet returned to pre-pandemic levels for all modes, it has come fairly close, and indeed sometimes exceeding prior levels, particularly car use and air travel. In respect of the journey to work, the tensions between desires of employees to work from home for part of the week, and the wish of their managers to have them in the workplace, seem not to have yet fully played out. But in any event, it would be hard to conclude that the desire for face-to-face access has changed substantially, let alone being in decline, despite the availability of cost-effective digital technologies that make remote personal interactions possible.

The pandemic also led to a boost to online retail, but subsequently growth returned to the prior trend. Much shopping is a social and hands-on activity, so a new balance will emerge between the physical and the virtual – perhaps in the quite near future. Yet public policy is focused on sustaining the vibrancy of town centres, not promoting digital connectivity as an alternative to bricks-and-mortar retail. More generally, digital technologies may be comparatively low cost compared to physical structures, yet cost-effectiveness requires the utility of digital technologies for access purposes to be assessed in comparison with physical mobility – with the outcome still to be determined. The comparative carbon footprint of electricity-driven digital activity compared with physical mobility, and its own shift to electric power, is similarly far from yet clear.

The Triple Access concept is welcome in that it encourages wide ranging thinking about the possibilities for meeting people’s needs for access. Yet when an assessment of the cost-effectiveness of measures that might be adopted is superimposed, the scope for implementing innovative measures becomes quite constrained.

A third limitation of the Triple Access approach is the lack of consideration of the basic characteristic of access, which is that it is subject to diminishing returns – the more access you have to any kind of service, the less the value of a further increment. The Competition Commission, as it then was, some years ago investigated competition between the main supermarket brands. This involved relating where people lived from census data to where the large supermarkets with car parking were located, finding that 80% of the urban population had three or more supermarkets within 15 minutes’ drive, and 60% had four or more – arguably offering good levels of choice. You could ask yourself whether you would need to drive further to have more choice in the weekly shop – if not, your demand for travel to supermarkets would be said to have ‘saturated’. This has come about over the years through growing household car ownership and investment by the supermarket chains in more large stores, both trends now largely played out.

For those who don’t run a car and rely on local food stores, similar developments have been widely seen, with the main chains opening small local branches and many thriving independent minimarkets staying open for conveniently long hours. In my own neighbourhood, for instance, in an inner London borough, there are branches of two chains and some four independents, all within ten minutes’ walk. However, there remain ‘food deserts’ in areas of low income where choice of outlets is limited.

How much shopping choice we need depends on the nature of the goods or services we seek. For standard products at fixed price, such as newspapers, the nearest shop suffices. For fashion goods, a trip to the city centre may be justified, plus a search of online outlets. Many services are routinely purchased online, insurance in all its forms, for instance, and much travel booking.

A second characteristic of access is that it increases, approximately, with the square of the speed of travel: what is accessible is proportional to the area of a circle whose radius is proportional to the speed of travel (recalling elementary geometry). A constraint is the density of the road network, highest in urban areas, lower in rural. But in any event, access increased markedly as car use replaced slower modes. It is the combination of access increasing with up to the square of the speed of travel while being subject to diminishing returns implies an expectation of the saturation of travel demand to achieve access to frequently used activities.

In practice, those who have available use of a car and/or good public transport provision, plus fast broadband, arguably have sufficient access to sources of most goods and services to meet their needs, implying that their demand for access has saturated. Demand saturation is a phenomenon that arises generally once uptake of some new innovation is widespread, washing machines for instance where the market now depends on replacement of worn-out models plus population growth. There is no reason to suppose that demand saturation would not apply to travel, although it is a topic neglected by investigators and theorists.

In conclusion, while Triple Access Planning encourages fresh thinking, the constraints on practical measures, and the circumstances in which these might be applied, seem thus far to have been underestimated. Limiting factors are insufficient consideration of public aversion to change, the cost-effectiveness of measures that might be adopted, and the fundamental characteristics of access benefits. Nevertheless, the aim of meeting the human need for access by means other than investment in transport infrastructure is a welcome extension to conventional transport planning and analysis that deserves further development.

This blog post is the basis for an article published in Local Transport Today 2 July 2024.

Car useEconomics

The recent publication of the Full Business Case (FBC) for the A428 Black Cat to Caxton Gibbet Improvements Scheme highlights the policy inconsistencies and misleading supporting analysis that typify road investments. We have the Introduction by the Roads Minister explaining that A428 has long been seen an important section of the strategic road network that required upgrade due to its problems of congestion, poor journey time reliability and resilience, and how accordingly the Scheme will enhance journey times, support local and regional economic growth, create jobs, and improve employment and the environment.

To justify these high level objectives, the 270 page FBC grinds through all possible aspects of the case for constructing ten miles of dual carriageway. This is impressive in its way, but is the effort ‘proportionate’, to use a favourite DfT term, I wonder? Perhaps the intent is to ensure the proposal is crash-proof in the event of any further legal challenge; or perhaps to deter potential challengers from initiating such challenge. Then again, the economics of the investment look pretty marginal, based on opaque reported analysis, so perhaps extensive quantity is seen as a counterbalance to thin quality in making the case for the Scheme.

Journey time savings for all classes of vehicles, of £633m, are claimed as the main benefit, as is usual (although in 2010 prices discounted to 2010, implying some antiquity to the modelling). But this is not split between business users (cars and road freight) and non-business (commuters and others), as must have been modelled, since each class has a different value of time. In other cases I have examined, the split between business and non-business has been shown, with time savings to non-business users almost entirely offset by increased vehicle operating costs, the result of local users diverting to take advantage of faster travel provided by the improved route. The economic case for a scheme depends on the scale of such diversion, since local users pre-empt capacity intended for longer distance business users. This failure to split the journey time savings looks like intentional obfuscation.

The time saving benefits are in any case offset by quite substantial carbon disbenefits worth -£182m. My impression is these are much more than in previous road schemes, reflecting updated carbon values promulgated by the former Department of Business, Energy and Industrial Strategy. So no longer are increased carbon emissions dismissed as de minimis, at least in economic terms. Nevertheless, if, as I expect, the long run benefits of the scheme mainly take the form of enhanced access, rather than time savings, the increased vehicle-miles-travelled (known as ‘induced traffic’), would increase externalities. So carbon disbenefits are likely to have been underestimated.

Whatever the magnitude, new road capacity must generate more carbon emissions. What needs to be spelled out is the total increase in carbon from the whole road investment programme, to see to what extent this impedes delivery of transport’s contribution to Net Zero. Regrettably, the new 114 page National Networks National Policy Statement, recently published, fails to prescribe programme level estimation of carbon emissions. If neither at programme level nor at scheme level, where is this significant and unwanted damaging impact to lie?

While the cost data in the FBC are redacted, presumably to protect National Highways position in other road scheme projects out to tender, the initial benefit-cost ratio (BCR) is estimated as 0.92. To make the investment at all viable, ‘wider impacts’ of £282m have been adduced to yield an adjusted BCR of 1.63. This scale of wider impacts seems very high for a non-urban scheme, based as it is on an elaborate, yet in reality, not much more than a back-of-the-envelope calculation. It may be that it is this tenuous boost to benefits, to put the Scheme in the DfT’s medium VfM category, that has necessitated the supporting assessment and sign off by the two accounting officers, the DfT permanent secretary and National Highway’s chief executive.

For my part, I suspect that optimism bias is at work to generate even an initial BCR of 0.92, requiring yet more optimism to get to 1.63. So I would not regard the figures in the FBC as robust, even though the analysis is presented as exceptionally extensive. Yet I have some sympathy for the highways engineers at National Highways, who see this scheme as necessary to create continuous dual carriageway between the M1 at Milton Keynes and the M11 at Cambridge, with onward travel to the ports of Felixstowe and Harwich. A stretch of single carriageway in what is otherwise a dual carriageway route is, to them, offensive. Naturally they seek to add capacity to reduce congestion and achieve a free-flowing network. This approach would also seem logical and persuasive to most local politicians and business leaders not versed in the principles of transport planning and the observed road user responses to additional capacity provision, let alone the minutiae of scheme appraisal and Benefit Cost Ratio calculation.

However, congestion on roads in well-populated parts of the country typically displays morning and evening peaks, indicating use by commuters, who have choices of route. Travel patterns are not fixed and are certainly influenced by network changes. So new free-flowing routes tend to attract additional traffic, whether by diversion in the short run to achieve the saving of journey time, or in the longer run through permitting longer trips within the travel time available. Both of these are beneficial but are not the benefits conventionally modelled, nor are they allocated to the categories of traffic that underpin the original justification for the scheme. Generally, where commuters and longer distance business users share road space, free flow is difficult to achieve, particularly at peak hours.

There is a gulf between the simplistic but erroneous headline justification for this and similar road investments, and the complex, opaque and misleading quantified supporting analysis. It would be good to find a common language to bridge this gap, based on a behaviourally realistic account of what is going on, what options there are to improve matters, and what is most likely to happen in practice if changes are made. Applying the concept of Heuristics is one possible solution.

Heuristics are simple rules – rules-of-thumb – for making decisions, coming to judgement, solving problems or shaping intuitions, that work well enough in most circumstances. I want to suggest that transport planners and practitioners would benefit from relatively simple heuristics in offering advice to decision makers about addressing perceived issues of system inadequacy and the justification for providing additional capacity in a range of circumstances.

This would mean distilling the evidence from research by academics and others to yield rules-of-thumb that are intuitively credible to both practitioners and decision-makers. One problem is that research findings are often based on case studies, specific to place and time, and are path-dependent, so generalisation may be difficult. Besides, the research literature in the area of transport studies has burgeoned in recent years, not necessarily to overall professional benefit, in part the consequence of the proliferation of open access journals that charge researchers for the cost of publication, rather than rely on library subscriptions; this creates an incentive for the journal to downplay rigorous peer review and editorial oversight in the interest of increasing income, and the consequence is a proliferation of case studies that may gain academic credit but are of limited general applicability.

Moreover, the research literature may overlook the authoritative information available in official publications, including statistical series, as well as in the unofficial ‘grey literature’ publications from think-tanks and others. Hence formal reviews of the ‘research literature’ may therefore be both unwieldy and incomplete, making it hard to see the wood for the trees and so difficult to draw useful conclusions. Government departments accordingly now seem often to commission ‘rapid evidence reviews’, which give consideration to a manageable number of selected papers to save time and effort, but selection may be biased, consciously or otherwise, to support the expectations of the commissioning department, and the most important recently revealed insight and understanding may not yet be included.

In these circumstances, I believe helpful Heuristics would need to be based on a deep and wide knowledge of both publications, practice and observed data, to establish a cogent and concise framework for analysis and decisions, in accessible language, not set in stone but subject to review in the light of new evidence and experience.

One area where rules-of-thumb may be particularly useful for transport planners and decision makers is in the tackling of road traffic congestion, central to the contemporary travel experience and to transport investment, such as the A428 Scheme, but for which repeated interventions have demonstrated little impact in practice. To the extent that relief may be achieved, this is more short term than long term. Yet huge amounts of public expenditure are justified by the objective of relieving congestion and boosting connectivity, with little evidence of success at outturn.

So, let me suggest some rules-of-thumb for thinking about road traffic congestion. I will not cite chapter and verse of the evidence in support, for which see my recent book.

  • Congestion arises in or near areas of high population density where car ownership is also high. More car trips might seek to be made at times of peak demand than the road network can accommodate. Delays ensue, which motivate some road users to make other choices, including adopting alternative routes or times of departures, alternative modes of travel where available, different destinations where there are choices (such as for shopping trips), or not to travel at all (such as ordering good online). Congestion therefore is generally self-regulating in that if demand increases, delays increase and more potential trips are suppressed. Daily gridlock or long tailbacks are uncommon and arise where there are unanticipated obstructions to movement.
  • Increasing road capacity has the effect reducing delays in the short term, but thereafter attracting previously diverted and suppressed trips, as well as permitting new and longer trips, consistent with the maxim that we can’t build our way out of congestion, known from experience to be generally true. The result is additional traffic, known as ‘induced traffic’, which in the short term is the consequences of diversion of commuters and other local users on to the new capacity to save time; and, in the longer term, of road users taking advantage of faster travel to make longer trips to increase access to desired destinations, as well as changing trip origins by moving homes.
  • Interventions that reduce vehicle use initially reduce delays, but this attracts back onto the network previously suppressed trips, thus restoring congestion to what it had been. Interventions conceived as intended to reduce vehicle road use include the promotion of active travel and public transport, congestion charging and road pricing, and consolidation of freight deliveries into fewer goods vehicles.
  • Reduction in urban carriageway available to general traffic can make more space available for bus lanes, cyclists and pedestrians. This initially can increase congestion delays, which leads to drivers making alternative choices. In the longer term the intensity of congestion is difficult to reduce, but the absolute amount of congested traffic would be lessened and could be better managed to benefit the whole population.
  • Induced traffic results in more vehicle operating costs and in additional externalities, including carbon and air pollutant emissions, which public policy is seeking to reduce.
  • The orthodox economic case for road investment relies mainly on the saving of travel time. Yet the evidence is that average travel time is a long term invariant, implying that people take the benefit of faster travel in the form of improved access – to people, places, employment, services and activities, with ensuing enhanced opportunities and choices.
  • Transport models that project travel times savings, comparing the with- and without investment cases, do not reflect the reality that improved access is actually the main beneficial outcome. Access is subject to diminishing returns, implying declining returns to road investment as the road network matures.
  • The car is very popular for its utility in door-to-door travel over short to medium distances, as well as over longer distances when alternatives are less attractive, provided  congestion delays are acceptable and parking is available at both ends of the journey. These conditions may not apply in city centres, where public transport, particularly rail-based in all its forms, provides a speedy and reliable alternative to cars and buses on congested roads. But beyond city centres, in suburbs, towns and rural areas, the popularity of the car as a mode of travel against available alternatives is difficult to challenge.
  • Promotion of active travel has limited impact on car use. The evidence is that improved cycling facilities mainly attracts people from buses, which reduces farebox income and leads to reduced service levels or a requirement for more subsidy. It is difficult to be pro-active to successfully increase walking, which is the slowest mode of travel, permitting the least access to desired destinations for most people.
  • The built environment, within which are located nearly all the homes, facilities and services that are trip origins and destinations, is largely a given, with limited opportunity to increase density through brownfield or infill development. Creation of new communities on greenfield sites with choice of travel modes has proved difficult. Accordingly, there is limited scope for the creation ’15-minute cities’, an aspiration of many urban planners, aimed at reducing car use, congestion, pollution and carbon emissions.
  • As well as being popular for getting from A to B, for many people ownership of a car is attractive for a variety of lifestyle reasons. The fact that cars are generally parked for 95% of the time is a seemingly persuasive economic argument for car sharing in its various forms. But conversely, the desire to own a resource that is so little used is an indication of the value attached to ownership and convenience. This is in part why it proves difficult to shift car owners to other modes. Cars parked at the kerbside reduce carriageway available for vehicles on the move, contributing to congestion delays and deterring some road users.
  • The wide use of digital navigation (known in the roads context as satnav) has the effect of redistributing traffic. Commuters and other local users divert from existing routes to new capacity on major roads, to save time, pre-empting capacity intended for longer distance business users, including freight, so detracting from the projected economic benefits of the new capacity. In addition, traffic diverts from congested major roads to minor roads that offer a less congested alternative route, such minor roads previously used only by those with local knowledge, making them ‘rat runs’ less suited for active travel and detracting from quiet residential environments.
  • The most advanced forms of digital navigation predict journey times, so reducing uncertainty about time of arrival, which is what bothers road users most about the impact of congestion. Digital navigation is thus arguably the best means available for mitigating the perceived impact of road traffic congestion, as well as being vastly cheaper than providing new road capacity.

These rules-of-thumb about observed realities are proposed as ‘good enough’ ways of recognising and addressing the problem of congestion that we face on road networks and identifying effect means of mitigation. I suggest three questions to structure shared thinking about this and the other problems we face, amongst transport planners, politicians, other decision makes and influencers:

Q1 What’s going on here?

Q2 What options do we have to do better, that are both cost-effective and affordable?

Q3 What choices to make?

Responding to the first two questions is the task of analysts, including transport planners, economists and policy advisers, approaching problems with an open mind. Responding to the third question, with the benefits of the answers to the first two, is the task of decision makers in the public and private sectors, as well as advocates of all kinds. Better decisions would be made if those involved are clear about their roles, tasks and expectations. Heuristics, of the kind outlined above, could help them acquire good intuitions of the cost-effective options available, and give others greater insight into the basis on which decisions are made.

Nevertheless, some may argue that such heuristics serve to over-simplify what is bound to be a complex analysis of what’s going on. Albert Einstein said: ‘Make things as simple as possible, but no simpler’. Are these heuristics for understanding and reacting to congestion good enough or are they too simple? Do we still need the full panoply of the Department for Transport’s Transport Analysis Guidance to present to a small coterie of people a theoretical analysis based on problematic behavioural assumptions as to what should be done? Or, as some may believe, to justify, through virtually impossible to decipher analytical complexity (as represented by the likes of A428 business case), someone’s original hunch, then bought into tenaciously by the scheme’s promoting bodies. My own view is that narrative and dialogue based on heuristics would offer an alternative approach, well worth trying, to answer the three questions above in a generally understandable way.

This blog was the basis of an article in Local Transport Today of 21 March 2024.

Economics

The Prime Minister’s recent announcement that the HS2 rail line will not now continue from Birmingham to Manchester and beyond raises issues both immediate and long term. Immediately, there is the question of how that money saved is to be reallocated. In the longer term, the question is whether we have an analytical framework that is both sufficiently complete and robust to be relevant to major projects whose gestation and implementation may span decades.

The Prime Minister’s principal stated reasons for scraping the lines beyond Birmingham were cost escalation, delays to construction, and the impact of Covid on travel behaviour. The money saved would be devoted to improved transport schemes outside London, mainly in the Midlands and the North of England, he argued. He also pointed to the huge chunk of the national transport investment budget taken up by HS2, for which Rishi Sunak implied was a relatively narrow user base and geography.

Certainly, the cost estimates of HS2 have grown substantially since the scheme was first announced in 2010. The initial cost of the full Y network, comprising both the first section to Birmingham and legs to Manchester and to Leeds, was put at £37 billion (2009 prices), but by the time of publication of the Full Business Case in 2020, this had risen to £109 billion (2015 prices), with further cost escalation in prospect due to inflation and real cost increases as earlier optimism bias is exposed.

The economic benefits projected in the Full Business Case were largely to rail users, predominantly £39 billion (present value, 2015 prices) as a result of reduction of train journey times. There were also significant benefits from reduction in crowding on the conventional network, as well as reduction in waiting and greater reliability as the network was enlarged by adding the new line, which, together with some smaller benefits, yielded net transport user benefits of £74 billion. To this was added benefits from agglomeration and other wider impacts to reach £94 billion net benefits. Taking into account revenues from fares resulted in a benefit-cost ratio (BCR) declared in 2020 to be 1.5, categorised as low-to-medium value for money.

Clearly, any further cost escalation since 2020 was potentially likely to tip the BCR into low value territory, a most unwelcome position for the largest single UK transport infrastructure project ever. But do the estimates of benefits reflect the reality? We need to go back to the core proposition, endorsed by the main political parties.

The stated intention of HS2 was to reshape the national economy by joining up the North, Midlands and London, effectively halving the journey times between the centres of the UK’s largest cities. This, it was contended, would allow businesses to invest beyond London whilst still retaining ready access to it. It was argued that the scheme would contribute towards sustainable growth in towns, cities and regions across the country, spreading prosperity and opportunity more evenly, acting as a catalyst for job creation, the development of new homes and ultimately, the regeneration of major cities and towns along the route.

This thinking was more heroic than business-like. The assumption of conventional economic investment appraisal is that the transport user benefits provide a good estimate of the ultimate benefits that arise as perfect markets redistribute benefits amongst the various beneficiaries, including land and property owners who gain from the improved access, the businesses that occupy the new premises, and people who occupy new homes. This itself is an unrealistic assumption in general. Moreover, in the case of HS2, for which the distribution of benefits between London and the cities of the Midlands and the North is crucial, estimation of spatial distribution was not attempted in the economic appraisal of the investment – and indeed is a difficult matter to predict.

Consider, for instance, a business with headquarters in London and a branch office in Birmingham. It might take advantage of the faster rail connection offered by HS2 to close the branch office, serving clients in Birmingham from London; or it might expand the Birmingham branch where office rents and housing costs are lower, on the basis that staff could get up to the head office speedily as necessary; or arrangements may be left unchanged, staff benefiting from the faster business travel spending more time in the office; and, of course, the increase in working from home as a result of the pandemic must influence all the possible business decisions. What might emerge could be an instance of what is known as the Two-way Road Effect, whereby improved accessibility between two regions may benefit prosperous areas rather than the poor areas targeted by the scheme, sucking activity away rather than bringing it in.

Given that the intention of HS2 has been to boost the economies of cities and region to the north of London, uncertainty about distribution of economic benefits means that the value of the investment was always hard to judge. Much would depend on the ability of the connected cities to take advantage of the new rail route to put in place city-centre development around new stations plus local transport infrastructure to speed travellers to and from their final destinations beyond the rail terminal. These longer origin to destination considerations can change to value of the high speed rail journey itself. The HS2 Full Business Case included an annex outlining hoped for developments around the new Curzon Street station in Birmingham, which illustrated the economic possibilities. But these did not constitute part of the economic case for the investment, to avoid double counting travel time benefits. This illustrates how notional time savings are tenaciously preferred to estimates of real-world benefits when applying the orthodox methodology to the appraisal of transport investments.

The inadequacy of the economic analysis, likely involving underestimation of the benefits from development, may well have contributed to the truncation of the HS2 project, given the latest BCR estimate of 0.8-1.2 quoted by the DfT.

A comparison with Crossrail

Another major rail investment that ran over time and budget was London’s Crossrail, renamed the Elizabeth Line on opening. Fortunately, those responsible kept their nerve. The project was not skimped or cancelled and has proved to be a great success, an example of a modern metro whose performance and popularity has surpassed expectations. The case for investment was based on the value of travel time savings to users (business, commuting and leisure) plus a number of wider economic impacts (mainly agglomeration benefits). The value of time saving benefits was put at some £12 billion, while the wider impacts provided an additional £7 billion in 2005. Subsequently, further analysis in 2018 increased the wider benefits to £10-£15 billion.

As with HS2, there was no explicit reference in the appraisal to the impact of the new rail route on real estate values or on the economic value of the businesses to be accommodated in new developments along the route. The assumption was that the boost to development and employment was accounted for by the value of travel time savings plus the wider impacts, an assumption that is implausible to non-economists. The economic analysis of the investment case failed to consider the spatial distribution of benefits, although by the very nature of the project, these would be largely within London. Nevertheless, the benefits to businesses were recognised by a funding agreement between the Mayor/TfL and the Government, which identified contributions of £300m from ‘developer contributions’ and a further £300m from a ‘London Planning Charge’ (subsequently to become the Mayor’s Community Infrastructure Levy or MCIL), a useful but not decisive contribution.

Transport for London has developed a framework to evaluate the benefits of the Crossrail investment. It is envisaged that a study to be published two years after opening will address the transport effects of the new railway, including: mode shift from cars to public transport, relief of congestion on public transport and roads, and the implications for air pollution and carbon emissions. A subsequent study is planned to consider the broader social and economic effects, including the effect of improved connectivity on new homes and jobs, changing patterns of employment and land use, and residential and commercial property prices. A report has already been published on the pre-opening impacts of Crossrail on property prices, arising from the announcement of the project; this found fairly small positive increases to both house prices and office rents.

TfL’s approach to evaluation is admirably ambitious, yet there is obvious inconsistency with the original investment case based on the value of estimated travel time savings and of wider impacts inferred from econometric analysis. It seems unlikely that it will possible to compare forecast and outturn by deducing time savings and agglomeration benefits from the evaluation findings. This prompts the question of whether, with hindsight, the investment appraisal could have been based on projections of the actual benefits that are expected to be achieved. Certainly, inconsistency of economic analysis as between appraisal and evaluation does not make much sense, not least because ex ante travel time savings and wider impacts are, by their nature, notional not observable.

A comparison with the Northern Line Extension

The possibility of forecasting the actual expected benefits of investment is illustrated by another London rail investment, the Northern Line Extension to a large brownfield site comprising the derelict Battersea Power Station and adjacent erstwhile low value commercial buildings and opportunity sites. The developers took the view that the optimal commercial gain would result from access to new properties on the site by means of an extension to the Underground, rather than by enhanced surface modes. The Battersea developers were therefore willing to contribute a quarter of the construction cost in cash. The Treasury agreed that additional taxes paid by businesses locating to the area would contribute the remainder of the financing of the rail link. On that basis, TfL could agree to proceed with construction, a rare instance of the capture of increased land value arising from new transport infrastructure to finance that infrastructure. Views may differ about the quality and coherence of the subsequent development, yet a significant area of central London has been transformed from low value to high value property, including a new building for the US Embassy.

It is relevant that there had earlier been a standard economic appraisal of transport user benefits for a range of alternative property and transport investments on this site, where the predominant benefits were travel time savings. It was found that extension of the Underground would have a less favourable benefit-cost ratio than other transport alternatives on account of the higher capital cost. Nevertheless, the decision was made to extend the Tube, the increase in real estate value being the deciding factor. Thus, much as with earlier development of the Underground, for instance the pre-war extension of the Metropolitan line, the decision was taken essentially on a commercial basis, with the estimated increase in real estate value forming an integral element of the investment decision. This exemplifies the scope for a transport authority working with a developer to take into account the value of real estate improvement for mutual benefit to take into account the increase in real estate values. In this case, of an underground electric railway, detrimental externalities were not important beyond the construction phase.

Conclusions

The main message from these reflections is that there are fundamental shortcomings to orthodox transport investment appraisal, as set down in the Department for Transport’s Transport Analysis Guidance (TAG). These arise principally from a requirement to requirement to estimate economic benefits based predominantly on time savings and other user benefits that are notional, not real and observable; the disregard of changes in land use and value that results from the improved access made possible by transport investment; and the lack of any mechanism to recognise the spatial and demographic distribution of benefits, a crucial concern in the context of regional disparities and avowed intentions to level up society. As exemplified by the cases discussed above, the orthodox approach is not fit for purpose and is becoming irrelevant for decisions making. This leaves political and commercial actors to call the shots.

These shortcomings are all the worse, given that there has been emphasis in the last two years, both in the Treasury’s Green Book and in TAG, on articulating the strategic case for a transport investment. The requirement is to set out a robust case for change that demonstrates how a proposal has a strong strategic fit to the organisation’s priorities and government ambitions. There were successive attempts to do this for HS2, clearly none wholly convincing, leaving observers with a feeling that the goal posts were being continuously moved. And now, consequent to cancellation, there is little sense of any strategic thinking, informed by cogent economic analysis, in the mishmash of investments and interventions announced by the Prime Minister, seemingly to avoid being accused of truncating HS2 merely to save money, and perhaps to find a more politically acceptable set of beneficiaries in the short term.

It is time for the DfT economists to desist from engaging in the incremental development of their thousand pages of TAG. Rather, they need to stand back and ask what purpose is being served by this, when decision makers evidently have quite unrelated preoccupations. The necessary shift in mindset is to recognise that the role of transport investment in generating economically transformational change depends on interlinked decisions by local political leaders, planners, developers and transport authorities, as illustrated by the Northern Line Extension. Appraisal needs to take a holistic view of economic benefits, including from development. The current methodological practice of focusing on transport user benefits in the absence of such linked decision-making means that the uncertainties about ultimate economic benefits are either too great to allow funds to be committed in the first place, or risk having the plug pulled after construction has started if costs increase, as illustrated by HS2.

The above blog was the basis for an article in Local Transport Today of 17 October 2023.

EconomicsTransport

The Prime Minister, in his speech to the Conservative Party Conference on 4 October, announced the truncation of the iconic HS2 rail route, originally promoted as a means of levelling up the regions beyond London by halving journey time between city centres. The intention is now for high speed trains to run only between Euston and Birmingham, reverting to lower speeds on existing track to further destinations.

The economic case for HS2 was always problematic. It got worse as costs rose. The initial cost of the full Y network, comprising both the legs to Manchester and to Leeds, was put at £37 billion (2009 prices), but by the time of publication of the Full Business Case in 2020, this had risen to £109 billion (2015 prices), with further cost escalation in prospect due to inflation and real cost increases as earlier optimism bias became exposed. In July 2023 the Infrastructure and Projects Authority gave the project a red rating, meaning that successful delivery appears to be unachievable without rescoping.

So, it is not wholly surprising that Rishi Sunak pulled the plug. Yet London’s Crossrail scheme, renamed the Elizabeth Line on opening, also overran substantially both time and budget. But once opened, the design has been widely admired and performance has surpassed expectations. So, did the Prime Minister lack the courage to adhere to the strapline on his lectern when making his announcement: ‘Long term decisions for a brighter future’?

To avoid the charge of chopping HS2 to save money, the PM announced a whole raft of alternative transport projects, ranging from a metro for Leeds to more funds to fill potholes, most of which were already planned. However, a major rail investment has been replaced in part by a miscellany of road schemes, unhelpful for achieving Net Zero but consistent with the Government’s recent downplaying of urgency of this objective. And if the expenditure profile of the aggregate of these alternatives matches that of the abandoned section of HS2, then it would be many years before their benefits are realised.

The Government established the National Infrastructure Commission in 2015 to advise it on the UK’s main infrastructure needs. The Commission is shortly to publish its second National Infrastructure Assessment outlining a strategic vision over the next thirty years. The Commission has been unsighted by the HS2 announcement, which its Chair stated to be ‘deeply disappointing’.

The truncation of the largest single transport investment, planned over many years, will not reflect favourably on the UK’s ability to execute large infrastructure schemes on which a dynamic economy depends. Nor will an announcement at a party conference of a huge switch of resources from a major strategic investment to a diversity of lesser schemes seemingly designed to spread benefits thinly where these may have greatest political advantage.

There has long been an argument that better regional rail links for cities in the Midlands and the North would be offer greater economic benefits that North-South links. But any major shift of resources deserves more extensive consideration by those affected than has occurred in the present case, where the Prime Minister has wanted to make a break with his Conservative predecessors who had endorsed HS2.

Economics

The economic benefits of agglomeration – learning, sharing and matching – have long been recognised as driving the growth of cities. In conventional transport economic analysis such benefits comprise the main part of the ‘wider impacts’, over and above transport user benefits. This process of concentration of economic activity in city centres has been in part a consequence of the shift of economic activity from manufacturing to business services, and has taken place despite the development of information and telecommunication technologies in recent decades that has allowed remote working. The inference has been that the positive benefits of agglomeration have outweighed the negative aspects such as higher rents and commuting costs.

The coronavirus put this inference to the test. Many employees who did not need to deal with clients face to face successfully worked from home and have proved reluctant to return full time to the workplace, not least because the successful development of broadband and Zoom, Teams etc for remote meetings. This is leading to changes in the demand for city centre office space, for instance at Canary Wharf in London’s Docklands.

We have seen a previous technological development that shifted the balance between the centripetal and centrifugal forces underlying observed agglomeration clusters. Fleet Street was once the physical location of the national newspapers in central London, with printing presses in the basements, print workers on floors above and editorial staff on the upper floors. This was a classic cluster, with benefits from shared facilities and staff, allowing news to travel faster and gossip to flourish. But there were offsetting disbenefits: newsprint had to be brought into central London, from which newspapers were distributed across the country overnight, and there were restrictive labour practices reflecting trade union power when the product had to be made anew each day. However, the advent of digital typesetting allowed newspapers to be printed at remote printworks with better access to transport networks, so that the editorial offices could be disbursed to scattered locations around London. Nowadays, ‘Fleet Steet’ is a metaphor for the newspaper industry, no longer to the actual location. With hindsight, the agglomeration benefits and disbenefits were more finely balanced than had been supposed, so that new technology could tilt the balance in favour of dispersion of the cluster.

A question is whether advances in technology and the experience of the pandemic have led to a tipping point in what had seemed to be a continuing process of city centre concentration, so that a more dispersed pattern of economic activity will develop. It will take time to see what use is made of the space freed up by major businesses leaving Canary Wharf and downsizing office accommodation. Possibly lower rents may attract other businesses that previously could not afford central locations. Repurposing is also possible to create residential accommodation, hotels, laboratory space and the like. The implications for travel demand and supply take time to become clear. It is paradoxical that firms are leaving Canary Wharf just when the opening of the Elizabeth Line has improved its connectivity to central London and to Heathrow.

Car useEconomics

I previously mentioned my analysis of the widening of the M1 motorway between junctions 10 and 13. My paper has now been published in a peer-reviewed journal: Transportation Research Part A, 174, 103749. The abstract is below. Access to the article may be available free of charge for a limited period here

Abstract

Cost-benefit analysis of road investments involves models that generate travel time savings as the main economic benefit. Evaluation five years after opening of a scheme to widen a section of England’s M1 motorway between junctions 10 and 13 found that the traffic moved more slowly than before the scheme opened. Comparison was made with forecast flows generated by SATURN variable demand modelling and an associated economic model. Substantial net benefits to business users were forecast, whereas for non-business users time saving benefits were more than offset by increased vehicle operation costs, consistent with diversion of local trips to take advantage of the increase in capacity. There is reason to suppose that such diversion is facilitated by the wide adoption of Digital Navigation (known generally as satnav), which makes evident the fastest route choices, even at the expense of increased fuel costs. Diversion of local trips to utilise new strategic road capacity seems likely to be a general phenomenon, which detracts from the economic case for road investment. There is therefore a good case to treat the strategic road network as mature, focussing on improving operational efficiency and exploiting vehicle-to-infrastructure connectivity in the form of Digital Navigation.

EconomicsTransport

The Department for Transport has issued a draft National Networks National Policy Statement (NNNPS) for consultation . It covers major investments on the road and rail networks in England. The draft is intended to replace the version issued in 2015, before the government’s commitment to Net Zero and publication of the Transport Decarbonisation Plan. The House of Commons Transport Committee has announced an inquiry into this draft.

The DfT states that the 2015 NNNPS shall apply to projects already selected for public examination, so the new NNNPS will apply only to applications accepted after it is implemented, following the consultation. It therefore looks as though the Lower Thames Crossing tunnel, which has been accepted by the Planning Inspectorate for consideration, will be subject to the old guidance, despite construction being deferred by two years as announced in the recent Budget, which seems odd.

The purpose of such National Policy Statements is to provide guidance for decision-makers on the application of government policy when determining development consent for major infrastructure. The intention is to remove the need for consideration of fundamental national policy questions at planning inquiries. Those subject to this guidance are the scheme promoters (National Highways for most road proposals), planning inspectors, and the Secretary of State when granting Development Consent Orders.

The important question is how investment in new road capacity could be reconciled with the government’s legal commitments to achieve Net Zero greenhouse gas emissions by 2050, meeting the requirements of both the Climate Change Committee’s Sixth Carbon Budget that has been agreed by the government and the intentions of the DfT’s Transport Decarbonisation Plan. (Rail, already substantially electrified, is less of a problem.)

The draft opens by rolling the pitch, stating that the government sees a compelling need for the development of national networks (para 3.22), such that there is a presumption in favour of granting Development Consent Orders (para 4.2), while at the same time recognising the need to move away from ‘predict and provide’ (para 3.44). This is very different from the new approach of the Welsh government, which does not see a compelling need to develop its national road network.

Scheme proposals are to be supported by assessments of whole life carbon emissions, to ensure minimisation as far as possible (para 5.29). The draft states that, in reaching a decision, the ‘Secretary of State should be content that the applicant has taken all reasonable steps to reduce the total greenhouse gas emissions from a whole life carbon perspective. However, given the important role national network infrastructure plays in supporting the process of economy wide decarbonisation, the Secretary of State accepts that there are likely to be some residual emissions from construction of national network infrastructure’ (para 5.36). Moreover, a net increase in operational greenhouse gas emissions [from more traffic] is not, of itself, reason to prohibit the consenting of national network projects or to impose more restrictions on them in the planning policy framework (para 5.37). So in policy terms, additional road capacity is more important than decarbonisation.

Importantly, the application for development consent orders applies to individual schemes. There appears to be no requirement to estimate the impact on carbon emissions from an investment programme, such as the planned five-year Road Investment Strategy 3 (RIS3) due to start in 2026. Accountability scheme by scheme is not so very different from the present practice whereby National Highways argues that each individual scheme makes only a de minimus contribution to national carbon emissions, which can therefore be disregarded.

The DfT’s Transport Decarbonisation Plan made broad-brush estimates of carbon reduction from policies and programmes, for instance 1-6 MtCO2e from increased active travel over the period 2020 to 2050, and 620-850 MtCO2e for electrification of cars and vans over the same period. It is inconsistent not to recognise offsetting carbon increases from investment in new road capacity, likely to fall somewhere between the above ranges, and certainly not de minimis for the programme as a whole.

There is also a problem of modelling future carbon emissions arising from road investment. Transport models are complex and opaque, with many parameters, the value of which requires expert judgement. In consequence, the are two types of protagonist: experts who have a good working understanding of transport models because they earn their living from building and running such models; and non-experts, who are interested in the output of models but are not able to understand the assumptions, simplifications and judgements that the experts must make. Non-experts include decision makers in national and local government who have prior expectations of the economic value of particular road schemes, and whose test of a good model is that it delivers outputs, comparing with- and without-investment cases, consistent with these expectations. Other non-experts are those opposing road schemes at public inquiries, who are faced with modelled outputs as part of the promoter’s proposal that are not open to detailed scrutiny. Inspectors at planning inquiries are also non-expert in this sense.

The NNNPS requires projects to be supported by a local transport model, but planning inspectors and the Secretary of State do not need to be concerned with the national methodology and national assumptions around the key drivers of transport demand (para 4.7). In practice, most schemes on the Strategic Road Network employ local versions of a set generic traffic and economic models, typically SATURN for network traffic modelling, the outputs of which are inputs to the TUBA economic model. So, as it appears, consideration of the predictive validity of these models for projecting carbon emissions need not be considered either at a public inquiry or by the Secretary of State. One can understand why a planning inspector should not be burdened with a task for which they are not professionally trained. Nevertheless, the question is where in the decision-making process the validity of the supporting modelling might be assessed.

The need to assess the predictive validity of transport models is pointed up by the failure of standard models to project fairly short-run traffic flows in two cases of motorway widening, on the M25 and the M1, as I have recorded previously. This does not increase confidence in the ability of such models to project economic benefits and carbon emissions out to sixty years.

One particular problem of transport models is that they are largely used to justify new investment, in which context the saving of travel time is supposed to be the main economic benefit. Yet average travel time, as estimated by the National Travel Survey, has changed very little over fifty years, excepting the period of the coronavirus pandemic. The implication is that people take the benefit of faster travel as enhanced access to desired destinations, people, places, activities and services, for the opportunities and choices on offer. Travelling further, rather than using travel time savings for more productive work or agreeable leisure, means more externalities related to vehicle-miles travelled, carbon emissions in particular.

Modellers who aimed to model such access benefits, and the resulting changes in land use and value, would not be appreciated by the economists who are wedded to travel time saving as the main economic benefit of investment, nor by decision-makers who are well used to conventional economic investment appraisal. So modellers must fix their assumptions, simplifications and parameters to get outcomes that satisfy a ‘realism test’ of prior expectations, subject to conformity with unspecified standards of professional respectability.

The upshot is that the modelling of the impact of new road investments will systematically underestimate carbon emissions from the additional (induced) traffic. This makes it easier to appear to comply with the pathway to Net Zero, but means that the outcome is likely to fall short of that pathway.

Some further light is shed on this matter by the cost-benefit analysis the DfT has published in support of options to implement the Zero Emissions Vehicle Mandate, the legislative framework to fulfil the government’s objective to phase out the sale of internal combustion engine cars and vans by 2030. The need for this cost-benefit analysis is not stated, since the timing of the phase out is largely for negotiation between the government and the motor manufacturers. Perhaps the Treasury wish to be assured that this route to decarbonisation represents good value compared with other possible decarbonisation measures. Or perhaps the DfT economists wish to parade their competences after cost-benefit analysis failed to be supportive of a number of major rail and road investments.

The modelling assumes that that the switch to ZEVs could result in increased mileage per ZEV driver because electricity as fuel is cheaper than petrol or diesel (which begs the question of whether some new charge for EVs might be introduced, as I have suggested). This extra driving, a ‘rebound effect’, is supposed to lead to more congestion delays, with a very substantial cost impact: for a central sensitivity case of the preferred policy option, the abatement cost of the ZEV Mandate for cars and vans estimated as £12/tCO2e excluding the rebound effect, and £100/tCO2e including it (Tables 61 and 62).

So, the DfT thinks it would be much more costly to reduce CO2 emissions by means of the Mandate if the lower operating cost of EVs led to greater distances travelled. However, in my view, rebound of the magnitude modelled is unlikely, quite apart from the possibility of a road user charge for EVs. The per capita distance travelled by car depends on three main factors: speed of travel, time available for travel, and household car ownership. None of these are affected by the switch to electric propulsion. Vehicle operating costs have a second order impact at best, witness the growth of SUV ownership despite higher fuel use.

Paradoxically, the DfT modellers postulate additional traffic from reduced vehicle operating costs arising from electrification (mistakenly, in my view), while being in denial about the additional traffic arising from road users taking the benefit of investment in increased capacity as enhanced access involving more travel (again mistakenly).

The ZEV Mandate cost-benefit analysis states that the preferred policy option is expected to achieve emission savings of 415 MtCO2e in the period 2020-2050 (Table 29). This is substantially less than the savings from switch to electric propulsion of car and vans of 620-850 MtCO2e projected in the Transport Decarbonisation Plan, mentioned above. No clear explanation for this discrepancy is given; it may be because the present Mandate is for the period to 2030, with a further Mandate promised for 2031-35; or it may reflect the sensitivity of model outputs to input assumptions.

More generally, modelling for the ZEV Mandate exemplifies how modelling outputs can be very sensitive to input assumptions that are made in the absence of firm evidence of future travel behaviour. This is a caution that applies to most transport modelling, not least to the projections of transport sector carbon emissions to support decisions necessary to achieve reductions required by the legislative framework to achieve Net Zero.

We have been before in a situation in which there have been doubts about approaches to transport economic analysis endorsed by the DfT. Good work was done by SACTRA – the Standing Advisory Committee on Trunk Road Assessment – an independent body created by the DfT, that issued two influential reports in the 1990s. One confirmed the importance of induced traffic arising from new road construction, a view that had been resisted by the DfT since such traffic added to congested and reduced travel time savings. The other report recognised the wider economic impacts of investment, beyond the conventional time saving, vehicles operating costs and those externalities to which monetary values could be attached; estimation of such wider impacts, such as agglomeration effects, now forms part of the standard approach to investment appraisal.

Although SACTRA, by its very name, was intended to remain in existence, at least until formally stood down, it seems to have fallen into that state by not receiving new commissions. There is a need, in my view, to reconstitute it, or some similar body of independent experts, to look at the suitability of the current body of official guidance on transport economic analysis and modelling in an era when decarbonisation is a national policy priority. As it is, however, the people in DfT and their consultants, who naturally wish to please their clients, are talking to each other in an echo chamber, from which interested outsiders are excluded.

Other departments do better. The Treasury’s model of the UK economy has long been available to independent forecasters. The Energy Department collaborates with academic energy modellers and makes available the online Mackay Carbon Calculator that allows users to explore the options for reducing carbon emissions. Modelling of the coronavirus pandemic was largely carried out collaboratively by academic groups whose models and outputs were public for all to debate. And the modelling of climate change is carried out openly, collaboratively and internationally as input to the reports of the Intergovernmental Panel on Climate Change.

Th DfT instigated a move to update the National Transport Model to generate a new version, NTMV5, intended to be open to other users, but this seems not to have worked out in that the National Road Traffic Projections 2022 employed the previous version (as I have noted). The DfT should explain what went wrong, and should engage openly with those beyond the Department and its immediate advisers on how best to model the decarbonisation of the transport sector.

This blog post is the basis for an article in Local Transport Today 23 May 2023.

My written evidence to the House of Commons Transport Committee inquiry into the National Networks National Policy Statement is based on this blog.

Car useEconomics

The National Infrastructure Commission has published an Advice Note, directed to the government, on roads policy, to help inform plans for the Third Road Investment Strategy (a five year investment programme for strategic interurban roads). I found this rather disappointing in its analysis of the problem.

The need to decarbonise road transport is obligatory, yet investment in new road capacity is counterproductive, whatever is achievable through the switch to electric propulsion. The Department for Transport’s draft National Networks National Policy Statement, recently issued, persists in addressing carbon emissions at scheme level, where they can continue to be treated as de minimis. There should be a requirement to estimate carbon emissions for the whole future programme (RIS3), when announced.

Given the conflict between road building and achieving decarbonisation, a critical look is needed at the econometric analysis of the relationship between interurban road investment and GDP growth, which is less than convincing. Likewise, scepticism is justified as regards projections of the growth of future traffic growth based on demographic and economic factors; per capita car use did not increase for twenty years prior to the pandemic. The main factors determining car use per capita are speed of travel, time available for travel and household car ownership, none of which seem likely to increase in the future.

The benefits of road construction are subject to diminishing returns. Arguably, the UK has a largely mature road network. For instance, cities such as Stoke-on-Trent and Wakefield, which would see themselves as lagging economically, are well located in relation to the Strategic Road Network. For devolved regional governments able to decide priorities for infrastructure investment, new road capacity may not be high, except where it is required to permit major site-specific development.

The Advice Note argues that effective prioritisation of road projects requires a focus on the links that will be most significant for trade between major regional cities. However, interurban roads are used by commuters travelling into cities. It is a common situation for traffic on interurban routes in or near populated areas to show pronounced morning and evening peaks, the consequence of commuting. If capacity is increased to alleviate congestion at these times, this will attract commuters from local roads on account of the faster travel made possible – one type of induced traffic, and one reason why we cannot build our way out of congestion. This diversion of commuters on to new major road capacity is facilitated by the wide use of Digital Navigation (generally known as satnav), which makes fastest options clear. The increased local commuting pre-empts the additional capacity intended for longer distance business users.

The proposal for a systematic analysis of the road network to see which routes are slow or unreliable is reminiscent of the approach of US highway engineers to categorising levels of service as the basis for proposals to increase capacity, thus justifying multilane freeways that attract more traffic. Yet there is a conflict between accepting the need for further road construction and demand management measures to reduce carbon emissions from the sector.

We no longer add to urban road capacity to accommodate growth of demand for road traffic; indeed, the trend is to subtract carriageway available for general traffic in favour of more space for buses, cyclists and pedestrians, plus investment in urban rail, traffic management and demand management measures. Yet the focus of interurban roads policy continues to be on investment in new capacity (although the Welsh Government has taken a different view). Given the demands of decarbonisation, a reconsideration of this traditional focus is desirable.

The prospects for autonomous vehicles as a source of economic benefit are unclear. Yet Digital Navigation is widely use and is changing travel behaviour. Road freight operators take advantage of similar digital technologies to manage their fleets effectively. There are opportunities to exploit digital technologies to improve the operational efficiency of the mature road network, which would be far more cost effective than civil engineering technologies employed to increase capacity.