My colleagues at the UCL Transport Institute recently organised a conference on the theme of ‘Radical Transport’. The outline of my presentation is below.
Plans were developed in London in the 1960s for an inner motorway ‘box’ (ie a rectangular orbital road within the North and South Circular Roads). Westway, an elevated arterial road, was built westwards from central London to the planned ‘box’ at White City. A similar northwards route, widening the A1, was started, with a six-lane duel-carriageway constructed up to the edge of Highgate Village. There followed four public inquiries into plans to continue the widening, which were strongly opposed by local people, led, amongst others, by a Haringey councillor, the young Jeremy Corbyn. The upshot was the decision to abandon plans for the motorway box, although the sections in east London, north and south of the Blackwall tunnel, were constructed.
London avoided building obtrusive elevated motor roads in the inner city, essentially retaining the historic street pattern from the age of horse-drawn vehicles. This has limited the growth of car traffic, which indeed has fallen somewhat over the past twenty years, despite rapid growth of population and incomes. The consequence has been a steadily declining share of journeys by car, from 50% of all trips in 1993 to 36% currently, with public transport use growing to compensate.
London has thrived economically, culturally and socially, despite (and because of) not building the motorway box to accommodate growing demand for car travel. Had the standard approach to economic appraisal of proposed transport investments been in use at the time, the economic case for construction (the ‘Do-something’ case, as the economists designate) would have been based on the time savings to car users, compared with the supposed traffic-congested ‘Do-minimum’ case. In fact, the Do-minimum case was adopted, which turned out to be the better policy.
I have written previously about the possibility of not building another runway at Heathrow, an issue with which the Government is still struggling following the recommendation of the Airports Commission in their final report of July 2015. The Commission’s economic case estimated benefits of a third runway at Heathrow (the Do-something case) as £69bn NPV gross, and £12bn net, after subtracting construction costs and disbenefits. What is not clear from the published information is the nature of the Do-minimum case, against which these benefits are estimated. It seems likely that a static pattern of air travel has been assumed to hold in future at Heathrow. What appears to have been disregarded is the dynamic response of a very competitive aviation industry to a capacity constraint.
Three-quarters of passenger passing through UK airports are on leisure trips. Even at Heathrow, only 30% of passengers are on work trips. Yet all the arguments for airport expansion are about increasing business travel – more destinations for British exporters, more inward investment, London as a world city for doing business. There is little reason to expand leisure travel: the UK has a negative balance of trade in tourism, which could worsen; and London, a working city, is getting very crowded with visitors.
With no new runway at Heathrow, business travellers would claim priority for existing capacity because they would be wiling to pay premium process for use of the hub airport. This would displace leisure travellers elsewhere, for instance to take advantage of unused capacity at Stansted. An important innovation in air travel in recent years has been the rapid growth of Middle East airlines based at hubs in the Gulf, well suited for serving long-haul destination to the east and south. At present, the three Middle East airlines between them fly daily from six UK airports apart from Heathrow, not yet including Stansted, which seems a natural alternative if Heathrow accommodates more business travellers.
If it were easy to decide where to build another runway in southeast England, if it were easy to mitigate the environmental consequences, and if it were easy to finance construction from private sector resources, then it would be sensible to go ahead. But since none of these are easy, we could live with a runway capacity constraint, and London would continue to thrive on the Do-minimum case.
East London River Crossings
Another situation where Do-minimum may be the best policy is the case of the proposed two new river crossings in East London, costing £1bn each. As I have argued previously, the scale of congestion from induced traffic has been underestimated, and the impact on development probably overstated. Better use of the money is available – the ‘opportunity cost’ – by strengthening radial rail links to employment opportunities in central London, which will allow developers to building housing on land made more accessible.
We tend to neglect consideration of the Do-minimum case in transport investment appraisal for a number of reasons:
- There is a ‘bias to action’ that motivates contractors and consultants to favour construction, since that is how they earn revenues. Likewise, many politicians favour investment that gains them credit. The bias to action is compounded by the well-known phenomenon of ‘optimism bias’, which involves underestimating construction costs and overestimating usage.
- Spending other people’s money allows these biases to flourish. Spending your own, or your shareholders’, enforces a more rigorous analysis. A mistaken investment in the private sector can be damaging to the business and to the reputations of those responsible, but in the public sector, the ship of state sails onwards, with blame for disappointing investments being diffuse.
- We neglect the ‘opportunity costs’ of investments: the benefits forgone from better use of the resources.
- There are of course uncertainties associated with the Do-minimum case, but these are not different in kind or scale with those associated with the Do-something case. It may take more imagination to consider how users of transport systems – individuals and businesses – respond to capacity constraints.
The comparison between Do-something and Do-minimum nowadays increasingly boils down to a question of investment in civil/mechanical engineering versus digital technologies. Most transport investment involves costly and impacting civil engineering – shifting earth, pouring concrete, rolling tarmac – or in expensive kit: trains and planes. In contract, digital technologies can be far more cost-effective, and are out of sight and mind. The Do-minimum option for London’s proposed motorway box has turned out to involve an effective urban traffic management system that proved its worth coping with the big shift of flows during the 2012 Olympics, and improved signalling on the Underground that permits 36 trains per hour, increasing capacity by up to 30% – an example of the ‘digital railway’.