Economics

The Economist magazine of 28 June included an article to mark the 75th anniversary since the launch of Formula One (F1) motor racing at the Silverstone circuit in 1950, and the consequent development of the F1 activity into a very substantial global business, which changed hands for US$8 billion in 2017.

Perhaps surprisingly, seven out of the ten racing car teams competing in F1 are based fully or partly in England, in an area within an hour’s drive of the Silverstone circuit in Northamptonshire, with one or two newcomers expected next year. The competing manufacturers are supported by more than 4,000 companies, from parts suppliers to PR firms, employing 50,000 people in all and generating revenues of £16 billion in 2023. Moreover, the Silverstone Technology Cluster, created in 2017, is a not-for-profit with 150 members that supports business to develop their capabilities. It is often lauded as an example of British industrial achievement and a driver of automotive innovation and technological development.

This highly successful industrial cluster well illustrates the concept of how agglomeration benefits can be gained from learning, sharing and matching. Firms acquire new knowledge by exchanging ideas and information, both formally and informally; they share inputs via common supply chains and infrastructure; and they benefit by matching jobs to workers from a deep pool of labour with relevant skills. Generally, it is supposed, agglomeration benefits drive urban development and population growth at higher densities, despite high land prices, rents, transport and other costs. To support this process, investment in urban and peri-urban transport is seen as helping generate agglomeration benefits.

In contrast, the FI cluster is quite spatially dispersed, and despite being dependent on established road links, there is no suggestion that transport improvements would be critical for further success. This prompts a question about the general relationship between the economic benefits arising from agglomeration and how these might justify transport investment in a modern economy with relatively mature transport systems.

We have had two centuries of investment to build our modern transport system since the opening of the first passenger railway in 1830. This has transformed how we live and work, and where industry and service businesses are located in relation to where the population resides. Over this period, industrial clusters have come and gone, such as textiles, ceramics and shipbuilding, a process that continues in a dynamic economy. It would thus be wise for our beliefs and expectations of what are casual relationships to be critically reviewed in the light of experience.

Another interesting, and now historic, cluster is ‘Fleet Street’, 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, as I discussed in my recent book (section 3.2), with benefits from shared facilities and staff, allowing news to travel faster and gossip to flourish. Those involved profited by being together, and the transport system was developed to bring them there and take them home, with personal contacts facilitated by short walking distances to the pubs and cafes in the immediate neighbourhood.

But there were offsetting disbenefits: newsprint in the form of huge rolls of paper had to be brought into central London, from where 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, by the latter part of the last century 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 disperse to scattered locations around London.

Nowadays, ‘Fleet Steet’ is a metaphor for the newspaper industry, no longer the actual location. And the print newspaper industry itself is a shadow of what it was, now eclipsed by the digital online information explosion. With hindsight, the agglomeration benefits and disbenefits were evidently more finely balanced than had been supposed, so that new technology could tilt the balance in favour of dispersion of the cluster.

A similar problem with union militancy in the auto plants of Detroit – of Ford, General Motors and Chrysler – facing competition from Japanese manufacturers, led to the dispersal of the industry cluster to other parts of the US where the United Auto Workers Union found it difficult to organise. The population of the Motor City fell from 1.8 million in 1950 to 0.6 million in 2020.

Another London cluster, this one of recent development, is the financial services concentration in and around Canary Wharf in Docklands. London was once the world’s largest port, but the traditional wharves and warehouses were made obsolete by the advent of containers carried in large ships that the existing docks could not accommodate, which went instead to berths downriver and to new coastal ports like Felixstowe.

A key initiative in redevelopment of the area was construction of the Docklands Light Railway (DLR), which connected the Docklands with the City, a relatively inexpensive development that relied on reusing disused railway infrastructure and derelict land for much of its length, employing smaller driverless rolling stock, compared with standard urban metros. The DLR showed how accessible was Canary Wharf – currently 10 minutes from Bank Station – and stimulated the development of a new financial quarter, both to complement and compete with the historic ‘square mile’ of the City of London. Growth of Canary Wharf was furthered by a succession of rail investments: the Jubilee Line Extension, the Overground, and most recently the Elizabeth Line that provides a direct link to Heathrow Airport.

The coronavirus pandemic generated an unanticipated stress test of the agglomeration benefits associated with the Canary Wharf cluster, as many employees were required to work from home, fully or partly. The development of fast broadband connectivity and software suitable for home working and remote meetings allowed dispersal of individuals from traditional workplaces, which employees liked more than their managers. The resulting tensions are still being played out, with a continued drift back to the offices, but resisted by those preferring to work from home.

After three decades, initial long leases at Canary Wharf are coming up to their expiry dates and the first cluster of buildings, conceived in the late 1980s and early 1990s, have reached an age when everything from windows to elevators and air conditioners will need expensive upgrades. Some large occupants have decided to move back to the City, while others are downsizing their space requirements. Property investors will have to commit huge sums to breathe fresh life into these buildings and revitalise the area, with little certainty that their plans will pay off. Shrinkage of this financial services cluster is not beyond the bounds of possibility, a consequence of the fine balance between pull and push factors, but allowing repurposing of existing buildings to respond to other commercial opportunities.

Residential developments in Docklands illustrate what would once have been unimaginable – our current affection for ‘waterfront living’ that has made homes alongside the river a highly desirable category of property – unthinkable to those forced to inhabit slums by the polluted Thames of the Victoria era.

Similar changes are evident elsewhere. New York City was also a historic major port for both cargo and passenger liners, which became obsolete like London. An elevated freight railway met the needs of the docks on the Hudson River, but lower Manhattan is well served by the subway system, so that the obsolete track could be converted to the High Line, an elevated linear park that has become a popular attraction offering exceptional views of the city and Hudson River, along with art installations, diverse plantings, and public programs.

Reutilisation of obsolete urban rail routes thus offers options for cities, whether to boost connectivity for traditional agglomeration benefits, or to improve the quality and attractiveness of the urban environment, with likely economic benefits for nearby retail businesses and the urban economy as a whole.

A broader approach to consideration of agglomeration benefits involves relating city size to productivity. Many economists argue that larger cities are more productive than smaller cities, and become ever more productive as they grow due to increased agglomeration benefits. However, Britain is exceptional. An OECD study published in 2020 concluded that the level of productivity in a group of 11 large UK second-tier cities (other than London) is low by national and international standards. Second-tier cities in most other large OECD countries have productivity levels that are as high as, or higher than, the national average. However, the gross value added (GVA) per worker in the UK cities was just 86% of the UK average in 2016 and the gap between these and second-tier cities in other OECD countries is even larger (ref 2).

Tom Forth, of Open Innovations (https://open-innovations.org/), has authored influential analysis of the relationship between GDP per capita and population size, of British and comparable non-capital European cities. He finds in general a positive relation between size and productivity. However, almost uniquely among large developed countries, this pattern does not hold in the UK. The UK’s large cities see no significant benefit to productivity from size, especially when London is excluded. The result is that our biggest non-capital cities, Manchester and Birmingham, are significantly less productive than almost all similar-sized cities in Europe, and less productive than much smaller cities such as Edinburgh, Oxford, and Bristol.

According to Tom Forth, one notable difference between the UK’s large cities and those in similar countries is how little public transport infrastructure there is in the UK cities. While France’s second, third and fourth cities have 8 off-street metro lines between them (four in Lyon, two each in Marseille and Lille) the UK’s equivalents have none. Manchester and Lyon have similar-sized tramway systems, with about 100 stations each, but Marseille (3 lines) and Lille (2 lines) have substantially more than Birmingham (1 line) and Leeds (0 lines). Greater reliance of UK cities on buses results in slower journeys, more variable journey times and poorer reliability. Forth argues that people generate the most agglomeration benefits for a city when they travel at peak times, to get to and from work, meetings, and social events, times when buses offer poorer service.

Analysing travel time by bus in Birmingham, Forth finds that 0.9m people could reliably get to the city centre in 30 minutes at peak time, compared to 1.3m off peak, and a simulated 1.7m by tram throughout the day. His hypothesis is that by relying on buses that get caught in congestion at peak times, Birmingham sacrifices significant effective size, and thus agglomeration benefits, to cities like Lyon, which rely on trams and metros. This difference is claimed to explain a significant proportion of the productivity gap between UK large cities and their European equivalents. It also can’t be good for the overall attractiveness of the city as a place to live.

The UK government recently announced investment of £15.6 billion in local transport outside London, largely metros, trams and similar modes. This is consistent with the suggestion that rail-based urban travel can increase productivity. However, as the Centre for Cities points out, British cities are much less dense than European competitors, reflecting our preference to live in houses with gardens rather than apartments – a factor not considered by Tom Forth. This means that fewer people live close to the city centre or near to good public transport connections, both factors that limit what can be achieved by investment in public transport. Increased densification of the existing built environment is difficult to achieve. 

Moreover, there is a question about the direction of causality. Could it be that European cities that are more prosperous, for whatever reasons, have more resources to invest in rail-based public transport, the aim being to improve the urban environment by reducing car use in the city centre, rather than to boost productivity?

Consider France, where over the past 35 years, a growing number of cities have developed modern light rail networks – 27 in all, with many of these being extended, while at least seven other municipalities are in the process of planning or acquiring new tram networks. Local authorities are able to fund their own tram and integrated transport systems through the ‘Versement Transport’, a levy on all local businesses that employ more than 11 people. As a legal obligation, the proceeds must be put towards improving the transport system. So the larger and more prosperous the city, the greater the revenue from the levy, which would be an incentive to invest in trams.

I recall a visit some years ago to a friend who lived near Bordeaux. One day we drove to the park-and-ride at the edge of the city and took the tram to the low-traffic centre, where we had a very pleasant day in what is a UNESCO world heritage site. There had been worries that the overhead wires would threaten its integrity, so trams in the city centre are powered by an innovative ground-level power supply system, with a central rail that is only live when the tram is directly over it. Bordeaux is an historic port city, a regional centre of the wine trade based on the many vineyards in its hinterland and an attraction for tourists. While the city is the home to many aerospace businesses, it is far from obvious that the tram system contributes to agglomeration benefits to industry, as opposed to the evident agreeable nature of the urban environment and boosting city centre retail and hospitality.

More generally, the features that make a city an attractive place to live, work, study and visit – a pleasant walkable central area with good leisure facilities, an accessible hinterland for those who wish to escape to a less stressful natural environment, a good ‘cultural offer’, and well curated heritage and public realm – are arguably as important as speedy journeys and traditional physical transport connectivity for those who determine business success and economic prosperity.

Theory

While the examples cited above indicate the variety of ways in which agglomeration benefits might arise (and also lost as circumstances change), the treatment of these benefits in conventional transport investment appraisal is broad brush, based on econometric analysis and possibly outdated metrics.

In the context of DfT’s Transport Analysis Guidance (TAG), ‘wider impacts’ refers to the economic effects of transport investments that are not fully captured by traditional user benefits (mainly time savings). These wider impacts arise from market failures and imperfections, where the full social welfare impact of a transport scheme isn’t reflected in the transport market itself. Such imperfections can lead to changes in productivity, employment, and output in sectors beyond transport. One element of wider impacts reflects the way that productivity is affected by the density of economic activity, which is one of the reasons for the existence of cities and specialised clusters, such as financial hubs. The productivity impacts may occur within or across industries, termed localisation and urbanisation economies respectively, and are known as ‘agglomeration economies’, which are externalities and so are not reflected in transport markets.

Because there is no absolute measure of agglomeration, the academic literature relies on proxies, such as effective density or access to economic mass (ATEM). The DfT uses ATEM as the proxy, which seeks to measure the impact of changes in generalised travel costs and employment location on the strength of an agglomeration, reflecting both localisation and urbanisation effects.

The importance of ‘wider impacts’ was stressed by the seminal 1999 SACTRA report. This led the DfT to adopt a standardised national approach to estimating agglomeration impacts, applying a 10% uplift to business user benefits. However, a 2014 report by Venables, Laird and Overman, commissioned by the DfT, noted that because agglomeration effects cannot be observed directly, benefits have to be estimated indirectly by means of econometric analysis, an approach that lacks context specificity and risks significant errors, not being sufficiently attuned to the specific project that is being studied; more generally, because of the uncertainties, estimation of the scale of wider economic impacts is prone to optimism bias.

This critique appears to have prompted a major elaboration of the relevant guidance (TAG Unit A2-4 productivity impacts) published in May 2025 – a full quarter century since the SACTRA analysis, perhaps reflecting the difficulty of making progress. The 46 pages of guidance includes a requirement to estimate agglomeration benefits either (a) using evidence-based scenarios about how firms and households are likely to respond to the transport improvement or (b) using a land-use model to forecast how the transport scheme would impact firms and households – both challenging tasks prone to optimism bias, I judge.

The new TAG unit appears to have been informed by two recently published studies commissioned by DfT from authors at Imperial College and consultants Arup, but dated June 2024. The first is an account of the conceptual economic framework for treating economic density in transport appraisal, focusing on the modelling required to distinguish user benefits from the consequences of changes in agglomeration that result from transport investment. The economic model of TAG derives the welfare impacts of transport interventions as additive elements that are the outcomes of three partly or fully separated models: (1) a transport model measuring the direct user benefits (DUBs) and transport-related externalities of the intervention, (2) an agglomeration model quantifying the wider agglomeration benefits, and (3) a spatial model measuring other externalities related the relocation of firms and households. The Imperial/ARUP report is technically detailed and discussion is beyond the scope of this article, but the conclusion points to the difficulty of achieving a clean separation between the three elements to avoid double counting of benefits – not obviously attained in the new TAG unit.

One interesting finding of this conceptual paper is that agglomeration effects extend beyond productivity benefits to include amenity and consumption benefits experienced by consumers, higher density development and/or better transport offering more choices and varieties of destinations and services, which could also support the locational choices by the most innovative and creative businesses. This could provide an economic rationale for urban tram systems of the kind found in French cities.

A related paper from the Imperial/ARUP authors is a scoping study for a large-scale re-estimation of the agglomeration parameters applied in TAG, wherein agglomeration impacts for transport schemes are appraised within conventional cost-benefit analysis. Again, this is a thorough technical report, with many themes for further research, which suggest that the DfT would need to think carefully about whether the effort expended in such re-estimation of agglomeration parameters would be cost-effective in respect of improvements to investment appraisal, particularly given this conclusion of the scoping study:

‘The academic literature on transport appraisal has been relatively static in recent years. More significant developments have been made in the urban/spatial economics community, but most of their findings have not been translated into practice-ready solutions for appraisal; and in many cases this task does not seem trivial. Assimilation of this literature in appraisal cannot be part of the scope of a short-term re-estimation of TAG parameters, but it does provide considerable scope for more fundamental research. We recommend that the Department explore the means through which innovation in this heavily policy-relevant field of research can be supported and, if necessary, incentivised.’

The lack of progress in transport economics related to appraisal is a point well made – a matter of diminishing returns to effort and diminishing relevance to policy decisions. In my view, this reflects in part the difficulty of extending the original simplistic approach to cost-benefit analysis to coping with an increasing range of wider impacts beyond the customary benefits to transport users, a consequence of the extensive real-world outcomes of transport investment. The attempt to develop a standard approach to modelling these outcomes is not only inherently complex, as both the new TAG Unit and the scoping study show, but disregards entirely the varied nature of agglomeration clusters, as exemplified by the case studies discussed above.

Agglomeration benefits comprise one element of the outcomes sought from large transformational transport investments for which wider economic impacts are expected tbe greatest. A detailed analysis of 15 case studies of transport investments, seeking evidence of transformational change, concluded that it is rare to find transport investments which, in isolation, change or reverse underlying economic or transport trends, with few instances of benefits realisation strategies being systematically developed to ensure the benefits ultimately materialise, and transformation seemingly requiring private investment to be levered in, potentially at a level several times the level of the original public investment.

Generally, it may be concluded that transport investments considered in isolation cannot be counted on to lead to transformational change, whereas a co-ordinated effort by planners, developers and transport authorities has the potential to change land use on a sufficient scale to be transformational. The creation of New Towns in Britain after the Second World War is an example of transformational change, with Milton Keynes, the last of these, designed to accommodate traffic at a time when car ownership was growing. Another example, the redevelopment of London’s Docklands, depended, albeit in a less co-ordinated way, on a succession of rail schemes – the Docklands Light Railway, the Jubilee Line Extension, the Overground and the Elizabeth Line.  

More generally, the fundamental problem with conventional transport investment analysis is the supposition that the main benefit to users is the saving of travel time, time which could be used for more productive work or valued leisure. As I argued in Chapter 4 of my recent book, the evidence is that people take the benefits of faster travel largely as enhanced access to people and places, which provides better outcomes in terms of employment and retail opportunities, lifestyle experience, and available activities in which to engage.

For instance, suppose you live in a village poorly served, if at all, by public transport and you don’t have a car, so you are constrained to use the village shop for groceries and other items stocked. Suppose then you acquire a car. Initially you might continue to use the village shop, using the time saved by travelling by car for other purposes. But you soon realise that with a car, in the time available, you can access the supermarket at the nearby town for a greater variety of goods at likely lower prices. And similarly, when you come to change jobs or move house, the car offers a wider range of possibilities beyond the village, and so country roads fill with traffic. Road authorities may attempt to alleviate road traffic congestion, but the benefits experienced by road users are access benefits, not, beyond the short term, time saving.

Accordingly, to be consistent with observed behaviour, transport investment appraisal should value the projected increase in access, comparing the with- and without-investment cases. Increased access boosts observable land and property values, which can be a useful proxy for access gains.

A relevant example from London is the extension of the Northern Line underground rail route to a large brownfield site at Battersea at a cost of £1 billion, to which the developers contributed a quarter as cash, and additional taxes to be paid by businesses locating to the area allowed Transport for London to borrow the remainder (known as tax incremental financing). The investment decision followed an earlier standard economic appraisal of transport user benefits for a range of alternative property and transport investments, where the predominant benefits were assumed to be 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 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, exemplifying the scope for a transport authority working with a developer and the planners to take into account the value of real estate improvement. The agglomeration benefits arising from the enhanced connections were naturally included in the projected property value uplift, both productivity of commercial property and consumer attractions such as the shopping facilities in the renovated and repurposed Battersea Power Station.

Conclusions

Agglomeration benefits manifest themselves in a variety of circumstances, and the balance between pull and push factors can be quite fine, although not apparent in a cluster’s prime years when the positive externalities outweigh the negative. Adoption of new technologies, such as digital type setting or shipping containers, can then suddenly shift the balance.

Efforts to apply standard economic analysis involve a bolt-on to the underlying framework based on the mistaken assumption that time savings are the main benefit of transport investment. Moreover, conceptual consideration of economic analysis of agglomeration benefits shows this to be complex and far from ready for practical application.

In my view, the econometric approach, based on estimation of the notional ‘access to economic mass’, should be abandoned. Instead, there should be effort to test the use of uplift in property values as the observable proxy, working with developers whose practical knowledge and judgment of what appeals to and satisfies customer needs and desires   would be a more relevant input than the theories of the transport economists. The impact from planners would also be important, to ensure that developers’ aspirations are consistent with increasing the desirability of the particular place for all who live, work and visit there.

This blog post is the basis for an article in Local Transport Today of 4 September 2025.

Car useTransport

Excited reports of new applications of Artificial Intelligence (AI) regularly fill the media, yet its technical functionality and prospective impacts are difficult to comprehend. ‘Artificial Intelligence’ is perhaps rather a misnomer, in any case. ‘Machine Learning’ may be better description of its core capability – employing massive computer power, specialist chips and neural net algorithms to absorb, analyse and utilise huge amounts of data and identify meaning and relationships, so as to be able to answer rapidly any questions posed. The most common approach, pioneered by ChatGPT, scrapes vast amounts of written text from the internet to ‘train’ the algorithm, though ‘steal content’ might be a more appropriate label, some believe. 

Other approaches of particular interest included DeepMind’s Alphafold, which absorbs protein structure data, both amino acid sequences and three-dimensional structures determined by physical methods, so as to be able to predict 3-D structures as yet undetermined from known amino acid sequences – a huge achievement for which two Nobel Prizes were awarded. DeepMind has recently used historic weather patterns to match current weather conditions and generate forecasts much faster and more accurately than conventional methods that depend on computer modelling of the atmosphere.

For transport, a potentially major AI application would be commercially viable road vehicle automation through its ‘understanding’ of all possible types of in-motion situations and incidents, but here I am struck by the slow rate of progress compared with other digital implementations. Perhaps the problem is the magnitude and range of behavioural and environmental variant conditions that must be coped with, and the requirement to achieve publicly acceptable rates of error that lead to crashes. Perhaps a new breakthrough in the underlying technology is still needed – the British business Wayve is one to watch, applying AI to automated driving. Or possibly we need to be clearer in how we think about technological innovation and its comparison with equivalent human behaviour.

There is a fairly fundamental distinction in the approach to innovation in digital industries compared with transport technologies and other traditional industries. In digital industries, product lifecycles are short, which means that rates of innovation must be high, so that missing out on even one generation of improvement can be fatal, as Andrew McAfee, an astute academic commentator, has pointed out. Moreover, sustained exponential improvement means that sudden shifts in capability occur, such as computers getting small enough to fit into our pockets, or broadband getting fast enough to permit online meetings without specialised equipment.

All this means that competition between suppliers is intense because potential markets are so large, and since many of these markets are winner-takes-all (or nearly so), coming second is a not a viable strategy. At the same time, there is a rich open-source software movement from which all businesses can benefit. Venture capital is available for tech start ups that promise early returns. The general approach to innovation is to be agile, to aim for the rapid development of a ‘Minimum Viable Product’, the first functional version of a product, designed to be launched quickly and cheaply, to gather user feedback and support. 

In contrast, product lifecycles in traditional industries based on mechanical and electric power engineering, are much longer. The Boeing 747 jumbo jet aircraft, for instance, was manufactured between 1968 and 2023, a 55-year production run, and even now President Trump is acquiring a second-hand model. The life cycle of a car tends to be around 6-8 years between full model changes. Manufacturing techniques are substantially proprietary, with only limited knowledge transfer between businesses. Patient capital is needed but can be hard to find, given alternative uses.

Another distinction between digital and traditional innovations is the scope for cost reduction. Moore’s law reflects the observation that the number of transistors in an integrated circuit doubled about every two years or so, a compound growth rate of some 40%, with commensurate cost reduction. The cost reduction curve for mechanical engineering arises from increased experience of manufacture and refinement of design, which are not transformative of the business. 

Andrew McAfee argues that organisational structures are consequentially different:

Legacy organisationsDigital organisations
hierarchicalegalitarian
collegial, reliant on judgement and expertiseargumentative, reliant on evidence
process-focussed, based on planning and analysisoutcome-focused, based on iteration
myopicoutward-looking
scleroticinnovative
slowfast
brittleresilient

So there is a clash between both the approach to innovation and the organisational structure required for successful digital businesses, and that traditionally seen as appropriate for road vehicle manufacture.

But the operational environment for transport can certainly benefit from AI applications in stand-alone digital technologies such a digital navigation (AKA satnav in the road context), as offered by Google Maps, Waze, TomTom and others. These have penetrated the market quite fast, since the vehicle technology itself does not need to be changed. Similarly for offerings based on digital platforms, which make a market virtually rather than physically, exemplified by online retail pioneered by Amazon, a winner nearly taking all. Uber is an example of a commercially viable application of a digital platform in the transport sector that matches suppliers with customers, although it has only recently become profitable, after experiencing operating losses every year since its founding in 2009.

Yet putting digital and traditional mechanical/electrical engineering technologies together in a single product, the state-of-the-art modern car, has proved difficult, particularly for the legacy auto manufacturers, even at the present early stage of vehicle automation involving driver assistance and ‘infotainment’ – in-vehicle access to media and navigation, often via a personal smartphone. The transition to ‘driverless’ operations would be even more demanding since the solution suppliers are not in a position to fully control the operational environment on roads (adoption of automation in fixed track environments like rail is a much more persuasive concept).

A major complication for the auto industry is how, at the same time as pursuing automation, to accommodate the switch to electric propulsion, involving another new type of technology – battery chemistry – with many potentially conflicting requirements including energy storage, rate of power delivery, rate of charging, decline in performance over time, weight, safety and flammability. In the past, businesses with expertise in battery development and manufacture did not make vehicles, so they either partnered with auto businesses or sold their products into the market. For the vehicle manufacturers, the strategic decision had been whether to partner with a battery maker, who may or may not turn out to have a leading product, or to buy batteries as a commodity in the market, with the possibility of not having access to the best technology.

Battery development itself seems to fall somewhere between the digital and legacy models outlined above. As a field, electrochemistry is relative opaque, with apparently no theoretical framework that would delimit ultimate performance. The cost and speed of development has meant that action has shifted from academic labs, which generally publish their advances, to secretive industrial labs. The UK effort to promote academic research has taken the form of The Faraday Institution that has built a large, collaborative, multi-disciplinary research community, which, however, has as yet to deliver its full potential. 

The challenges faced by traditional car manufacturers generally are exemplified by the emergence of BYD (‘build your dreams’), now maker of the best-selling EVs in China. The business was founded as a battery manufacturer in 1995, buying a small car manufacturer in 2003 and subsequently building an EV product line based on in-house battery technology development, most recently including ultra-fast charging capable of adding up to 470 kilometres of range from a charging session lasting just five minutes. BYD has also announced advanced driver assistance capabilities at no additional charge (unlike Tesla, which makes a substantial charge for such capabilities). Warren Buffett, the legendary US investor, took a significant stake in BYD in 2008 when it was an obscure battery maker, an investment that reflected a prescient judgement and demonstrates the possibility of ‘picking winners’, even in this rapidly developing emergent market.

As well as addressing the strategic imperatives arising from vehicle electrification and automation, car manufacturers must now grapple with the uncertain global economy and in particular the impact of the Trump tariffs on market opportunities and supply chains that had been developed on the assumption of continued globalisation. Moreover, the Trump administration’s aversion to green technologies is a headwind to EV sales in the US.  The task of top management in this business environment is not enviable, and, indeed, the current turnover of CEOs is exceptional.

The incremental improvements that will emerge from strong competition will doubtless benefit consumers, but without being transformative of road travel. The historic transport technologies – railways, the bicycle, the internal combustion engine for a variety of road vehicles, the jet engine – each allowed a step change increase in speed of travel, which in turn permitted a corresponding step change in access to people and places, the true benefit of mobility. Vehicle electrification and automation do not allow a step change in either the speed of travel or in access, so the motivations for adoption are to improve the quality of the environment and of the journey – the latter a choice for consumers to make based on value for money.

A further issue that affects technological innovation is the wish to maximise safety and minimise risk to users and the public by means of regulation. For traditional transport technologies, regulation of vehicles, infrastructure and drivers is well established and improves incrementally. For digital technologies, particularly the application of AI, the speed of development and the commercial imperatives make regulation a contentious matter.  In Britain, we have comprehensive legislation in place to regulate automated vehicles (AVs), the Automated Vehicles Act 2024, based on thorough analysis by the Law Commission. This allocates responsibilities when a vehicle is functioning in self-driving mode, with regulations for implementation intended in 2026, as well as pilots of self-driving taxi- and bus-like services promised for next year.

While admirably clear and comprehensive in the style of traditional transport regulatory legislation, there must be a question as to whether this elaborate apparatus may deter deployment of AVs that exploit fast evolving digital technologies and algorithms, or propose creative novel operational environments. A contrasting approach is illustrated by a paper authored by researchers from Swiss Re, an insurer, and Waymo, Google’s AV business, which compared third party insurance claims, both property damage and bodily injury, for 25 million fully autonomous vehicles miles with a matched human driven mileage, finding a reduction of about 90% for the former. This impressive outcome suggests that standard insurance may be sufficient to ensure adequate safety of AVs, since any shortcomings in performance would result in higher insurance premia.

As noted above, digital navigation (AKA satnav) has quickly and extensively penetrated the road transport sector, the consequences of its benefits for users being available at low or no cost, no interaction with the vehicle’s core technologies, and an absence of regulation. The leading offerings predict journey times and provide traffic-aware route recommendations based on real-time road conditions, utilising data that includes live traffic flow information, incidents, and historical data to predict delays and suggest optimal routes. The providers, such as Google Maps, Waze and TomTom, are reticent about how they do this. So I asked Gemini, Google’s AI tool, how this was achieved, which provided a seemingly full explanation, summarised as follow:

“In summary, Google Maps predicts journey times by:

  • Measuring the distance between the start and end points.
  • Determining the fastest route using algorithms like Dijkstra’s or A*.
  • Applying speed limits for different road segments.
  • Overlaying real-time traffic data from various sources to understand current congestion.
  • Utilizing historical traffic patterns to predict future traffic.
  • Employing machine learning models to analyse and forecast traffic conditions.
  • Considering user-reported incidents and other relevant factors.

The combination of these data points and sophisticated algorithms allows Google Maps to provide highly accurate and dynamic journey time predictions that adapt to changing conditions. The accuracy can still be affected by unforeseen events or the availability of real-time data in certain areas.”

I wondered whether more might be learned from DeepSeek, the Chinese AI app that requires much less training effort and cost than its rivals, and offers as an option more insight into the ‘thought’ processes involved. Deepseek’s answer begins:

“Okay, so I need to figure out how Google Maps predicts journey times. Let me start by recalling what I know. I use Google Maps a lot, and it usually gives me an estimated time of arrival that’s pretty accurate. But how does it do that? I guess it’s not just using the current traffic, right? There must be more to it.

First, maybe they use the speed limits of the roads. Like, if a highway has a speed limit of 65 mph, they might calculate the time based on that. But that seems too simplistic because traffic varies. Sometimes you can go faster, sometimes slower. So maybe they also look at real-time traffic data. I remember that Google collects data from people’s phones using the Google Maps app. If lots of people are on a particular road and their phones are moving slowly, Google can tell there’s a traffic jam and adjust the estimated time accordingly. That makes sense…..”

Deepseek concludes:

“To sum up, Google Maps likely uses a combination of real-time traffic data from GPS signals, historical traffic patterns, road characteristics (speed limits, type of road), user-reported incidents, and possibly external factors like weather and events. Machine learning models process all this data to predict how long a journey will take, considering the best route based on current and predicted conditions.”

Regrettably, this discursive conversational ‘exposure’ of thought process adds almost nothing, although both Gemini and Deepseek mention the use of machine learning. What does not emerge is the nature of the core requirement for predicting optimal routes and journey times in different and dynamic circumstances, which must be a real-time model of the road network and the vehicles travelling thereon. This might be termed a ‘digital twin’, a concept of growing interest, although at present this is largely limited to machine and asset performance monitoring.

A Digital Roads of the Future project, based at Cambridge University, is exploring how digital twins, smart materials, data science and robotic monitoring can work together to deliver resilient roads that can measure and monitor their own performance over time, to make the highway system safer and greener. However, this does not extend to consideration of real-time traffic conditions and the responsive behaviour of traffic.

A recent report on the potential economic benefits of digital twins, commissioned by the Department for Transport, suggested a figure of £110 million (present value over a ten-year appraisal period) for network capacity management through reduced congestion under business-as-usual conditions. Yet the possible complementary contribution of existing digital navigation providers was not considered

It seems that the providers of digital navigation are well advanced in modelling road network performance through digital twin construction of some kind, and application of the relevant rapidly-gathered real time data. What I find remarkable is the disregard of these ‘commercial’ developments by the research community. I am aware of only four relevant papers in the research literature, three of which I authored. Two are case studies (this and this) of the impact of ‘smart motorway’ schemes that failed to deliver expected benefits.

The third, my summary paper, identifies three behavioural changes as a result of the wide use of digital navigation:

  • diversion of commuters and other local traffic to take advantage of faster travel made possible when the capacity of major roads is increased, thus pre-empting space intended for longer distance business users;
  • diversion of traffic from congested major routes to minor roads, previously used only by those with local knowledge;
  • the prediction of journey times under expected traffic conditions helpfully reduces uncertainty of time of arrival, which road users regard as the main detriment arising from road traffic congestion.

The fourth published paper is by authors from DeepMind, the London-based AI business, acquired by Google in 2014, who employed machine learning to improve the performance of Google Maps by comparing predicted journey times with outturn as observed at the end of a trip, and modifying the calibration of the model to bring these into line. This is a rare example of comparison of prediction with outturn for a transport model, with the aim of improving and better validating the model for future use.

This lack of consideration of the impacts of digital navigation applications in the peer-reviewed academic literature is remarkable, given the vast number of papers that model the expected impact of AVs (despite the present paucity of observation data) and the sizable number that discuss the impact of ride hailing (exemplified by Uber). It is equally surprising that road authorities disregard the impact that digital navigation is having on their networks, and the opportunities that likely exist for beneficial collaboration with the digital navigation providers. There is low-hanging fruit here, ripe for picking, unencumbered by regulatory barriers, new infrastructure requirements or significant public expenditure, given that the technology is already in place and in use by millions of road users. A potential boost to economic growth at low cost – what’s not to like?

One encouraging development is that consultancy SYSTRA is to use TomTom’s digital maps, location technology and traffic analytics to build transport models that replicate real-world traffic conditions, these to be used to perform analyses on the potential impacts of infrastructure investments, schemes and policies, and to support clients in evaluating outcomes. Orthodox transport modellers will surely need to consider whether their traditional approaches can compete with dynamic models like these, based on huge data inputs analysed by machine learning. If one element of the new digital technology era is a harbinger of significant change to current transport planning practice, this is surely it.

This blog post is the basis for an article in Local Transport Today of 17 July 2025.

EconomicsTransport

The outcome of the government’s current Spending Review is due to be announced on 11 June. It will set spending plans for a minimum of three years and will prioritise delivering the government’s missions. Departments will be expected to make better use of technology and seek to reform public services, to support delivery of the government’s plans for ‘a decade of national renewal’.

The intention is ambitious: ‘This will not be a business-as-usual Spending Review. The government has fundamentally reformed the process to make it zero-based, collaborative, and data-led, in order to ensure a laser-like focus on the biggest opportunities to rewire the state and deliver the Plan for Change.’

In support of this approach, the former National Infrastructure Commission has been transmuted into the National Infrastructure and Service Transformation Authority (NISTA), with a remit to support the implementation of a 10-year infrastructure strategy. NISTA is a joint unit of the Treasury and Cabinet Office whose aim is to unite long-term policy and strategy with best-practice project delivery, so as to transform the delivery of infrastructure, service transformation and other major projects, to ensure the government’s investments are driving growth and delivering the government’s missions. The newly announced CEO of NISTA is Becky Wood, a civil engineer by profession, whose experience includes a decade-long role at the Department for Transport (DfT), where she acted as senior responsible officer for major projects such as Crossrail, Thameslink and the Intercity Express Programme.

As well as these spending and organisational developments, a number of Departmental permanent secretaries are stepping down, including Dame Bernadette Kelly who has been at the helm of the DfT for the past eight years. There will be new leadership, but whether with transport experience remains to be seen.

So we could be about to see a substantial change in approach to transport investment, to reflect both the government’s enthusiasm for infrastructure investment to boost economic growth and for new approaches to achieving better outcomes, as well as to remedy the DfT’s past shortcomings in managing investment, which led to the truncation of HS2 and the abandonment of the Smart Motorway programme. On the other hand, transport investment is a tanker that is very slow to turn around, with many parties benefitting from present arrangements, so we might well end up with more of the same, with only cosmetic changes.

I want here to consider the DfT’s record in planning and managing road and rail investments, both competence and the benefits achieved, to assess whether the Department is likely to be fit to continue to manage very large investment programmes. As a former civil servant, I am aware of the difficulties in assigning responsibilities, given the central role of politicians with manifestos to be implemented, and also given unanticipated events, of which the covid pandemic is a good, albeit extreme example. Nevertheless, if decisions are to be ‘robust’ (a favourite appellation), a government department must be able to successfully navigate these swirling currents. Too long a list of crashes and wrecks must raise doubts about competence and general approach.

National Audit Office

The National Audit Office (NAO) provided an overview of the DfT for the new Parliament in November 2024, a good place to start. The NAO is the one body to offer a comprehensive and rigorous assessment of the performance of each government department, pulling no punches.

The NAO records that for 2023-24, overall net spend by the DfT was £44.3 billion, comprising:

  • the largest area of spend was on rail (£29.9 billion), most of which was on infrastructure management and enhancements delivered through Network Rail (£18.2 billion) and High Speed Two (HS2) (£8.5 billion). A further £2.6 billion was spent on subsidies and support for passenger train services. There were also book losses of £2.2 billion arising from the cancellation of Phase 2 of the HS2 programme and changes to how the redevelopment of Euston station would be delivered;
  • strategic road management and enhancements in England through National Highways (£7.1 billion);
  • funding to local authorities in England for their management of local transport (£6.1 billion), including road maintenance, bus subsidies and concessionary fares.

The NAO has assessed the nine principal risks faced by the DfT and its arm’s-length bodies. This is a formidable list, of which only a couple of items have decreased in severity in the past year. Particularly relevant to the investment programme are the Department’s inability to deliver its major projects to time or cost or deliver the expected benefits; inability to deliver sufficient carbon savings, inability to adequately maintain infrastructure, and to make adequate forecasts of future travel demand or changes in the transport system, thus resulting in ineffective decision making.

Noteworthy observations from the NAO overview include:

  • Although the DfT had identified key problems that needed to be addressed by Rail Reform, it had not been able to translate this into a programme it could implement. DfT had committed to a timetable that it had identified as high-risk, reflecting ministerial ambition, but without a clear plan for what it needed to implement.
  • Delays to projects on the strategic road network meant they would cost more and take

longer to deliver than planned. National Highways could have done more to plan for and manage the risks arising from the portfolio.

  • DfT does not have a good enough understanding of the condition of local roads and does not use the limited data it has to allocate its funding as effectively as possible.

The findings of earlier NAO reports are also relevant:

  • In 2019, the NAO concluded that the road tunnel proposed for the A303 near Stonehenge had a significantly lower benefit–cost ratio than is usual in road schemes; given experience of cost increases on projects of this kind, this ratio could move to an even lower or negative value. In the event, the new government cancelled the project in July 2024 due to cost concerns and a need to address public finances.
  • In 2022, the NAO reported that by 2025 National Highways will have completed less work on road enhancements comprising the RIS2 programme and at a higher cost than originally planned. National Highways and DfT could have done more to plan for and manage the potential risks to their portfolio of enhancement work.
  • In 2023, the NAO found that the rationale for East West Rail did not rest on the strength of the benefit–cost ratio for the project alone – which is poor – but on its wider strategic aim of overcoming constraints to economic growth in the Oxford–Cambridge region. Achieving the necessary value from the government’s investment in East West Rail will require stronger strategic alignment across government.

Office of Rail and Road

Another source of judgement of the performance of the DfT’s operational organisations is the Office of Rail and Road (ORR). In its most recent annual assessment, National Highways was found to be at risk of not being able to fully deliver the expected benefits of the RIS2 (2020-25) investment programme for road users and taxpayers, with four of its 12 key performance indicators below target or off track. There continue to be large variances between the company’s planned and actual renewals programme, without a clear explanation as to the cause. The consequence is that National Highways has needed to take account of a gap of £919 million between its Statement of Funds Available for the five years of RIS2, and the funding available within DfT business plans for Year 4 and Year 5. Moreover, the ORR found that National Highways was non-compliant with its licence in respect of the provision of data and information to allow the ORR to perform its statutory duties, to protect the interests of road users and ensure the efficient spend of public money.

Rail investment

Professor Steven Glaister, former Chair of the ORR, has recently discussed the prospects for the planned reform of the railways. He identified a crucial requirement: finding enough public money to meet everybody’s aspirations for a cheap, high-quality service. Yet he recognised that roads were providing for nine times the mechanised movement as rail, so that in the current financial climate it seems more likely that the level of financial support for rail will fall rather than be increased in the near future.

The DfT has recognised the problematic case for rail investment. In its 2021 Integrated Rail Plan for the North and the Midlands, it noted that rail schemes in the North are at increased risk of being considered poor value for money when applying conventional cost-benefit analysis, driven in part by smaller city populations, different travel patterns, as well as the general high cost of building rail infrastructure (p98).

In the same DfT document, it was also recognised that ‘Over the last 50 years the time people spend travelling has remained relatively constant, though distances travelled have increased . . .Overall, people have taken the benefits of better transport links as the ability to access a wider range of jobs, business and leisure opportunities, rather than to reduce total time spent travelling.” (p39).  It is, however, noteworthy that the DfT has not seen fit to revise its Transport Analysis Guidance, to reflect this recognition of the importance of access as the long run benefit of transport investment.  

In my recent book, Travel Behaviour Reconsidered in an Era of Decarbonisation, I endorse the DfT’s insight that enhanced access is the main benefit of transport investment, not travel time savings upon which almost all orthodox investment cost-benefit analysis is based. One crucial difference is that access benefits are subject to diminishing returns, which put a natural limit to transport investment, whereas time saving are subject to no such limit.

There is a distinction to be made between, on the one hand, most areas of national infrastructure where a good case can be made for more investment – electricity supply and distribution, water and waste services, fast broadband, flood defences; and on the other hand, transport infrastructures – road, rail, airports – which are, arguably, substantially mature, with limited benefits from additional capacity on account of diminishing returns.

Transport decarbonisation

Decarbonisation is a policy central to the government’s agenda. Legally-binding carbon budgets are a key metric, used to measure progress to achieve Net Zero. The DfT’s Transport Decarbonisation Plan of 2021 set out estimations of the carbon savings planned to be achieved over the period 2020-2050, including 1-6 MtCO2e arising from increases in active travel, 21-22 MtCO2e from railway electrification, and 620-850 MtCO2e from zero emission cars and vans. What was not discussed were the increased carbon emissions from new transport infrastructure, both from increased volumes of oil-fuelled vehicles and from embedded carbon in materials such as concrete and steel. The disregard of these additional sources of carbon has been justified at the level of the individual road investment project as ‘de minimis’. Yet the aggregate of such projects forming a road investment programme must be substantial.

The latest National Networks National Policy Statement, issued at the tail end of the Conservative government, continued the project-level focus on carbon emissions, not precluding schemes with net increases, and not requiring assessment of emissions at programme level. There is a legal challenge underway which, if successful, could change the situation. But the concern is that the conflict between new road construction and climate policies is neither made transparent nor resolved. In the meantime, the DfT’s methodology for assessing project carbon emissions focuses on improving cost-effectiveness, for example by estimating the monetary value of wider social benefits per tonne of CO2e emitted. But this does not provide any constraint on investment in new road capacity to align with climate change objectives.

I have previously pointed out the conflict between the government’s support for additional airport capacity and its climate change objectives – another failure to reconcile policy ambitions.

Conclusions

The failures and inconsistencies of the DfT’s policies and practice for major infrastructure investment are numerous and noteworthy, raising a question of the Department’s fitness for purpose. As a point of comparison, we might consider Transport for London, generally considered a world-class regional transport authority, responsible inter alia for planning and execution of major projects.

Not everything has gone to plan for TfL, notably Crossrail for which had a cost overrun of £4 billion, and which opened three and a half years later than planned. This arose in part from the challenges of tunnelling under central London, enlarging existing stations to take double length trains on new platforms, and the need to operate rolling stock with different power and signalling systems for the underground and surface segments. Nevertheless, the scheme once opened has been admired for its design – it won the 2024 RIBA Stirling Prize, the prestigious annual award that recognises the UK’s best new architecture. And the Elizabeth Line, as it is now named, is very popular with users, increasing London’s rail capacity by about 10% and reducing journey times.

A contrasting success has been TfL’s creation of the Overground from a disparate collection of underused rail assets. As well, TfL has successfully modernised much of the Underground, and has introduced the central London congestion charge, the city-wide Ultra Low Emission Zone, a single ticketing system for all modes of public transport and the ‘touch in/touch out’ contactless payment system.

As a former London deputy mayor for transport, Heidi Alexander, the present Secretary of State, is well aware of TfL’s strengths and achievements, as is her rail minister, Lord Hendy, a former TfL Commissioner. It would probably be regarded as going too far to propose outsourcing the DfT’s infrastructure planning and execution responsibilities to TfL, putting transport professionals in charge, rather than generalist civil servants advised by blinkered economists. Nevertheless, further devolution of responsibility for London’s commuter rail lines to TfL would make good sense. And conceivably, NISTA could bring to bear a more effective approach to planning transport infrastructure improvements.

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 use

In a long-awaited step for North America, New York City (NYC) began operating a system of congestion charging on 5 January 2025. This applies to Manhattan south of 60th Street, an area of 8.7 square miles – very similar to London’s congestion charging zone. Drivers in passenger vehicles and motorcycles are charged the toll once per day upon entering the Congestion Relief Zone. Drivers in trucks or buses (other than commuter buses) are charged for every entry into the Zone. The daytime toll for passenger and small commercial vehicles is US$9, and up to $22 for trucks and buses. Taxis are charged $0.75per trip. Enforcement is by means of infra-red cameras reading licence plates, with penalties imposed by the Metropolitan Transportation Authority. The stated objectives are to reduce traffic and travel times, lead to safer streets and cleaner air, and raise revenue for improvements to the subway system.

Traffic data from the first week of operations of the NYC scheme showed a 7.5% reduction compared with the same period in the previous year, with reduction in journey times into the Zone of around 40%. Analysis by vehicle type indicates the main impact to be on private vehicles, reduced to 34% of traffic from 40% previously, while yellow taxis were up at 23%, compared to 16% before. However, detailed traffic monitoring shows that impacts vary considerably according to location.

Toll revenue is projected to be about UD$500m a year, although the funds available for investment would be less, after operating costs of around 25% of revenue are taken into account.

NYC has become the fourth major metropolis to adopt congestion charging, after London, Stockholm and Singapore. However, the future of congestion charging in NYC is in doubt since the Trump administration plans to reverse a federal approval granted last year, setting up a legal showdown over the tolling initiative.

I recently had a number of enquiries from US media about congestion charging in London, likely prompted by a 2018 published paper of mine comparing the three prior cities. These are the main points.

London

Congestion charging was implemented in a zone in Central London in February 2003. The initial charge of £5 per day was raised to £8 in 2005, to £10 in 2011, to £11.50 in 2014, and in 2020 to the current charge of £15 per day for driving a vehicle within the designated zone between 07.00 and 18.00, Monday to Friday, and 12.00 to 18.00 Saturday and Sunday. A range of discounts and exemptions are available for certain groups and in respect of certain vehicles, including exemptions for taxis, private hire vehicles and low carbon emission vehicles, and a 90 per cent discount for residents of the charging zone. The charging scheme is operated by Transport for London (TfL) the public body responsible for public transport and major roads. Six detailed annual reports were published up to 2008, after which reporting was included in TfL’s main annual report series ‘Travel in London’.

The final annual report directly focused on London’s congestion charging provides a perspective on five years’ experience of operations in the central zone. The initial introduction of charges in 2003 led to a reduction of car traffic entering and leaving the zone of 33 per cent almost overnight, following which entering/leaving traffic of all kinds has remained at broadly stable levels. For the totality of four-wheeled vehicles, including cars, vans, lorries, buses and taxis, the initial reduction was 18 per cent, followed by relative stability. The increase in the charge in 2005 had virtually no further impact on traffic levels, which suggests that those car users more sensitive to price had largely been deterred by the initial £5 charge, and that the remaining car users are less sensitive to additional charges. Such relative price inelasticity may be due to factors such as the congestion charge being a relatively smaller proportion of the overall running costs of more expensive cars, or to the charge being treated as a business expense.

TfL estimates congestion by reference to the ‘excess travel rate’ – minutes per kilometre (the inverse of speed), comparing travel rates in the early hours of the morning with those during charging hours. Immediately prior to the introduction of charging, the mean excess travel rate was 2.3 min/km. With charging in place there was an initial 30 per cent reduction to 1.6 min/km. However, this parameter steadily increased in subsequent years, returning to 2.3 min/km by 2007, despite the increase in charge in 2005.

So, although introduction of congestion charging led to a significant and sustained reduction in traffic entering the zone, the initial impact on congestion proved short-lived. TfL accepts that congestion within the zone has returned to its previous level, despite there continuing to be less traffic – indeed, traffic in central London has been on a downward trend (see Figure 26) since the introduction of congestion charging. Continued congestion is attributed to providing more road space for walking and cycling, and improvements to public transport, urban realm and road safety; other factors cited include reduction in effective capacity of the road network due to street works and major building works; and changed timings of traffic signals for reasons of traffic management and pedestrian safety.

London’s congestion charging scheme has been successful in many respects: implementation was the result of skilful political leadership; there is good public acceptability, with no pressure to withdraw or reduce the charge, although a Western extension to the charging zone, introduced by mayor Ken Livingstone was withdrawn by his successor, Boris Johnson, as a political decision. The technology, which uses number plate recognition cameras to enforce compliance, has proved reliable. Moreover, there is a useful net financial surplus to support public transport provision, worth £170m in 2023/04.

However, the main purpose of the London congestion charging zone was avowedly to reduce congestion and journey times, and in this respect it has not succeeded. What was observed was an immediate reduction in time delays after introduction of the charge, followed by a rebound over time to previous congestion levels. Analysis by tomtom, a provider of digital navigation services, found that London traffic was the slowest moving in Europe in 2024.

Stockholm

Congestion charges were introduced in Stockholm in 2006 as a seven‐month trial, followed by a referendum where a majority voted in favour of retaining the charges, which led to the permanent reintroduction of congestion charges in 2007. The charging system consists of a cordon around the inner city, with a time‐differentiated toll being charged in each direction – of 35 SEK (about £3) at peak times. Vehicles passing the control points are identified through automatic number plate recognition. Traffic across the cordon was reduced by around 20 per cent following introduction of the charge, a reduction that has remained stable over time.

Significant reductions in congestion were observed, comparing a period before introduction of the charge with the period immediately after, the magnitude depending on the class of road and the time of day and of year. However, there appear to have been no measurements of congestion beyond the short-term impact, so it is not possible to assess whether congestion reduction has been permanent, or whether temporary, as in London.

As for London, the Stockholm charging scheme reflects effective political leadership; the technology based on number plate recognition has worked well; and useful revenues have been generated. The successful employment of a trial period of operation provides a good example of how to gain public support for a controversial intervention. But the impact on traffic congestion in the medium term is unproven.

Singapore

Singapore introduced a congestion charge based on a paper licence in 1975, which was replaced in 1998 with Electronic Road Pricing (ERP), utilising a payment card inserted into an on-board unit that interacts with an exterior system of radio beacons mounted on gantries, payment being monitored by means of number-plate recognition cameras. The scheme covers a central restricted zone plus lower charges on four further zones. The aim is for vehicles to travel at a consistent speed in the restricted zone – between 20 and 30 km/h on urban roads and between 45 and 65 km/h on expressways. Accordingly, charges are assessed quarterly by measuring average speeds: if speeds fall below a threshold, charges are increased to reduce the volume of traffic, whereas if speeds are above the threshold, charges are reduced. Charges also vary by vehicle class, time of day and location. Traffic levels are quite sensitive to prices even though the charges are relatively low. Traffic volumes in the central business district were reduced by about 10–15 per cent following the introduction of ERP.

Importantly, Singapore is a city-state without a rural hinterland. Accordingly, private car ownership has long been limited through a licence bidding system aimed at restraining growth of the car stock to match planned increase in available road space. Vehicles are consequently expensive to acquire: a Certificate of Entitlement to own a car for 10 years may cost around S$100,000 (about £60,000), and car ownership is only about 100 cars per 1000 population, compared for instance to 450 cars per 1000 for the UK population. Revenues from licences are far greater than from congestion charges, so the latter are no of policy concern.

In effect, road user charging in Singapore comprises two elements: a high fixed charge for access to the network; and a low variable charge reflecting the use made as a function of congestion. The revenues from licence auctions help fund a comprehensive public transport system.

The current Singapore ERP system is reaching the end of its operational life. The transport authority plans to replace it with the new ERP 2.0 system based on Global Navigation Satellite Systems (GNSS) technology. This system is more responsive to managing road traffic conditions, offering the option of charging by distance travelled. It should be less costly to build and maintain, and better able to collect aggregated traffic data, to improve traffic management and transport planning.

Learning lessons

Now let’s look at what’s been learnt in this small corner of transport policy – and any clear deductions can be made about the outcomes, and their wider implications for charging and managing traffic.

In the case of London congestion charging, reductions in road capacity have been invoked to explain the failure to reduce congestion beyond the short run, as noted above. However, I suggest there is a more general explanation. Congestion arises in densely populated urban areas with high levels of car ownership, particularly at times of maximum demand when people travel to and from work. There are therefore many more trips by car that could be made but are not (suppressed trips) – due to anticipated time delays arising from congestion and individuals’ assessment of the relative performance of alternatives: public transport, cycling or walking, or choosing a different time or destination, or not making the trip at all. An important determinant of such choices is the time available to the individual for travel, which, for settled human populations, is found to be about an hour a day on average. This reflects a balance between the many activities that have to be fitted into the 24-hour day, and the need to venture beyond the home to engage with people and places important for economic wellbeing and quality of life.

The prospect of experiencing congestion delays exceeding the individual’s travel time availability is a deterrent to car use. Accordingly, congestion is generally self-limiting – as traffic increases, delays increase, and the incentive to make other choices increases for those who are flexible. Gridlock is generally avoided, aided by urban traffic management systems that micro-manage traffic flows.

For the same reason, road traffic congestion is difficult to mitigate, as road users anticipate expected traffic conditions. The introduction of congestion charging in London and Stockholm reduced traffic as those road users who were cost-sensitive vacated the charging zone. However, the resulting reduction in congestion lead, as might be expected, to a rebound, as those who were more time-sensitive but less cost-sensitive would make more and/or longer trips, until congestion reverted to its previous level. I anticipate that a similar rebound will be seen in NYC over time (if the scheme is not withdrawn). So, the effect of congestion charging at the charge levels that apply in these three cities is to redistribute road space from the those less able or willing to pay to those more willing or able to do so, rather than to reduce congestion.

Transport is generally a relatively equitable domain, compared with other areas of life. Paying more to travel by rail or air generally achieves more comfort but not higher speeds. On roads subject to traffic congestion and legal speed limits, a driver of a top of the range car has limited advantage in journey times compared with a one at the wheel of a basic family hatchback (the main exception being in countries where an interurban toll road offers an alternative to an historic toll-free route). So, the introduction of urban congestion charging could be seen as retrograde as regards equity. On the other hand, if the net revenues from the charging scheme are devoted to improving the public transport system, particularly rail-based in all its forms, those drivers priced off the road network may have an attractive alternative, and existing public transport- dependent travellers get a better system.

The case of Singapore, in contrast, illustrates the possibility that sufficiently high charges for car ownership could substantially reduce traffic and permit the resulting congestion to be effectively mitigated with modest charges to reduce delays to acceptable levels. But such an approach seems politically unachievable in high-income economies with typical levels of car ownership.

Future of road user charging

London congestion charging has been in place for more that twenty years. Arguably, as in Singapore, it is time to refresh the technology, given the general pace of digital advance. At the same time, the deployment of electric vehicles (EVs) is leading to a decline in proceeds from road fuel duty, which currently raises about £25 billion a year in the UK, a significant source of government revenue. For the time being, the lower running costs of EVs helps offset the higher capital costs to car owners, compared with internal combustion engine vehicles. But over time the purchase costs of EVs are expected to reduce, reflecting advances in battery technology and competition between manufacturers. So the question will soon need to be asked about users of EVs contributing adequately to the costs of the road network, and more generally to help fund other demands on public expenditure.

One approach would be to build on the success of London congestion charging by creating a new payment mechanism via a smartphone app. A smartphone knows where it located, in time and space, so knows whether it is a charging zone at a time when charges are levied. A smartphone also has built in a payment mechanism. What would need to be added is a link to the vehicle, since it is this that is subject to the charge, not the phone, but this is feasible. Payment via a smartphone would allow new options for charging, including duration and location in the zone, and level of congestion. Capping the total daily charge via the app at the standard charge for payment of the daily fixed charge online should make the smartphone option acceptable, even attractive, to users.

A congestion charging mechanism of this kind could be extended to use by other cities wishing to manage traffic and raise funds to improve public transport. It could also be the basis for a national charging scheme for EVs, and possibly for all vehicles, at the right time.

In summary, congestion charges at the levels likely to be publicly acceptable are useful for raising revenue to improve the transport system and for wider public purposes, but cannot be relied on to achieve a useful reduction in road traffic congestion.

The long-standing belief of transport economists that road user charging is both a logical and desirable means to manage demand for road capacity has proved to be ineffectual in practical application, at least thus far, with Singapore as a single exception. In part this may be because cordon pricing unrelated to the level of congestion is a blunt tool, and not what the economic theory requires; and also because the charges levied are too low to have useful impact on congestion.  

Moreover, economists generally focus on gains in efficiency and neglect losses of equity, though it is the latter, seen as reduction of ‘fairness’, that can motivate opposition to any new charging scheme. Yet, as we have seen in London, Stockholm and Singapore, and now New York City, firm political leadership is able to implement congestion charging, in the expectation that public acquiescence will follow, particularly if improvements to public transport are an evident benefit.

This blog post is the basis of an article in Local Transport Today of 5 March 2025.

Car useTravel

The new Labour government includes a junior minister in the Department for Transport with responsibility for roads, but with the unusual title of ‘Minister for the Future of Roads’, perhaps implying that the future will not be business as usual –  likely to be the case, in my view. Consistent with this, the Department has established a panel of external experts to provide advice on strategic considerations for its capital investment portfolio. The government is also establishing a new body, the National Infrastructure and Service Transformation Authority (NISTA), combining the functions of the National Infrastructure Commission and the Infrastructure and Project Authority. NISTA will be located in the Treasury and is intended to bring oversight of strategy and delivery under one roof, supporting the development and implementation of a ten-year infrastructure strategy.

Several sets of eyes are therefore going to be looking hard at where investment is genuinely needed to support the Government’s key missions, a dominant one of which is delivering economic growth.

There is a general belief, voiced by the Prime Minister, other politicians and many industrialists, that we need to invest more in infrastructure to facilitate economic growth, decarbonisation and other policy objectives. To be sure, the case is persuasive for investment in new electricity sources of supply and transmission, in the water industry to clean up effluents and build new reservoirs, in fast broadband, in flood defences and in solid waste disposal. But transport is different, and the perceived links between infrastructure provision and economic development not as hard-wired as has previously been thought, as I argue in my new book, Travel Behaviour Reconsidered in an Era of Decarbonisation.

Personal travel in Britain, on a per capita basis, has not increased over the past 25 years. According to the National Travel Survey, on average we are on the move for about an hour a day, making about a thousand journeys a year, covering some 6500 miles by all travel modes (except international travel by air, a different story). This is unlikely to increase in the future. We have reached the limits to the speed of travel with existing technologies, and new technologies, such as electric vehicles or automated vehicles, whatever the other benefits, will not allow us to travel significantly faster.

Besides, there is evidence that most of us have enough travel to meet our needs for access to people and places, employment, services and activities, family and friends, with an ensuing good range of opportunities and choices. For instance, a study by the former Competition Commission found that 80% of people living in urban areas had a choice of three or more large supermarkets within 15 minutes’ drive, and 60% had a choice of four or more. If a choice of three or four supermarkets is sufficient to meet your needs, your demand for travel to this class of destination is said to be ‘saturated’, a standard concept in business economics. This has come about through both the growth of car ownership providing access, and the supermarket chains taking advantage of road construction that made land accessible for new large stores both in and on the edge of urban areas, both trends now largely played out. Moreover, with the growth of local ‘convenience’ food stores in recent years, both branches of major chains and independents, a similar situation commonly applies in urban areas for those who shop locally.

Beyond food stores, DfT Journey Time Statistics for access to key services indicates high proportions of potential users having access to key services within reasonable travel times. For example, for access to GPs, 71% of users are within 15 minutes travel time by public transport/walking and 96% within 30 minutes, while 87% are within 15 minutes by bicycle and 98% by car. Similarly, high levels of access are found for other services, including employment opportunities, schools, food stores and town centres. Journey time statistics can also be used to infer levels of choice of such services. For instance, the populations of a majority of English localities have access on average to five or more GPs within a 30-minute journey by public transport/walking, and almost all localities have such choice within 15 minutes by car. Moreover, new methods for connectivity analyses are allowing even better understanding of these relationships between transport services and the facilities and services people need to reach (see for example https://www.podaris.com/ ).

More generally, the available evidence indicates that those with a car in the household, or who have the use of decent public transport services, as a result have good levels of access and choice of regularly used types of destination. There are, though, places where choice is limited, particularly in rural areas, which is where the car is particularly advantageous.

However, the population is growing, the consequence of net immigration. The impact on travel demand will depend on how this growth is accommodated: to the extent that new housing is developed on greenfield sites, car use will be important, leading to more traffic, and prompting further road investment; but to the extent that new homes are developed in existing urban areas, investment in public transport would be more relevant. This balance would be influenced by how demand for accommodation is influenced by the travel preferences of young adults. Yet the current bottom-up piecemeal approach to planning for new homes by each local authority, does not address the overall likely impact on the transport system.

Market maturity

The pattern of uptake of a new consumer item or service over time generally plots out as a S-shaped curve: slow growth initially driven by innovators who prize novelty or cutting-edge technology, followed by the early adopters, then the middle majority and subsequently by the laggards, in the well-known technology adoption life cycle. The eventual outcome is high levels of ownership and use, for instance over 85% of household ownership for many types of ‘white goods’, such as washing machines and refrigerators, and similarly for well established ‘brown goods’ such as televisions. When such high levels are achieved, demand is effectively saturated, with further sales dependent on technological advances where that is possible, prompting replacement, on obsolesce or excessive costs of repair, or on growth of households. Markets are then said to be mature.

Oddly, demand saturation and market maturity are concepts rarely considered in travel analysis. Although I published a paper in a peer-reviewed journal in 2010 titled ‘Saturation of Demand for Daily Travel’, few other investigators have pursued this theme. The general assumption is that travel demand will continue to grow as incomes grow, such that econometric analysis involves unquestioning extrapolation of historic data and relationships into the future, as the basis for forecasting of travel demand and appraisal of proposed transport investments

The evidence for substantial travel demand saturation is fits well with the familiar concept of sustainable travel, and prompts my proposal that transport networks are best regarded as mature, with only marginal benefits to be gained from costly investment in additional capacity. This is already how we see urban roads, where, in the last century, efforts were initially made in the 1950s 60s and 70s, to increase capacity to meet growing car use, for instance by constructing urban motor roads (often elevated), by creating one-way systems (known as ‘gyratories’), and segregating traffic from pedestrians. But within a couple of decades this was seen to damage the urban environment and subsequently there has been a reversal of priorities, making more road space available for bus and cycle lanes and for pedestrians.

So we now effectively treat urban road networks as mature, the aim then being to manage demand for vehicle travel, whether directly as through London’s congestion charge or Nottingham’s workplace parking levy, or indirectly by investing in alternative travel modes, particularly rail-based mass transit technologies that are faster and more reliable than cars, buses or taxis on congested roads, such as Manchester’s light rail system.

I suggest that there is now a good case for regarding the interurban road network as substantially mature, with little to be gained in general from constructing additional capacity. A very common situation is a major road in or near populated areas, with morning and evening peak congested flows. To the highways engineer, this is a prompt or opportunity to invest in additional capacity, whether by adding carriageway to the congested road or constructing a separate ‘relief road’, in order to alleviate congestion and hopefully to improve connectivity between cities, so boosting economic growth – motivations which politicians are generally pleased to endorse as delivering ‘solutions’.

However, the morning and evening peak flows indicate that the road is being used by commuters, who have alternative routes available. So, if the capacity of one route is increased and delays thereby reduced, commuter traffic will divert to that route, a process now facilitated by the wide use of digital navigation devices (commonly known as satnav) that indicate journey times by alternative routes. Increased commuter diversion pre-empts additional capacity intended for longer distance business users, including freight, on which the economic case for the investment largely depends. This is the basis for the maxim that ‘we cannot build our way out of congestion’, which we know from experience to be generally true.

There will be cases where road investment may be justified, for instance to make land accessible for new development, whether commercial or housing. But the decision needs to be made jointly by the planning authority, the developers and the road authority, with the developers contributing to the cost of the road infrastructure from which they benefit, rather than claiming that the new capacity is a benefit to the whole community. Moreover, all instances of investment to increase road capacity result in increased carbon emissions, both from road users and from the embedded carbon in materials, notably cement and steel – a further reason to regard the road network as mature and its expansion as problematic.

Road freight

My argument so far has concerned personal travel, including travel by car on business and for commuting, both purposes recognised by the National Travel Survey. Yet cars share the roads with freight vehicles, so we need to consider how the latter impact on the demand for road capacity.

For aviation, though there are dedicated freight services, passengers in the cabin and high value freight in the hold are complementary sources of revenues for the airlines. On the railways, passenger and freight trains are distinct, but must be managed on busy intercity routes to optimise overall performance. But on the roads, such management is not attempted – it is effectively a ‘free for all’ as to who gets to use the available capacity.

The Department for Transport has collected survey data on road freight carried by a stratified sample of heavy goods vehicles (HGVs), including tonnes lifted, tonne-kilometres moved and kilometres travelled; domestically, these were 3-5% lower in 2023 than 2022. UK-registered HGVs operating internationally lifted 12% less tonnes in 2023 than in 2022, and 30% less than the 2015-2019 average, reflecting a long-term decline over the past twenty years, in part a consequence of the 2008 recession and Brexit. The number of licenced HGVs in England has changed little over the past twenty years. So, we have seen no overall growth of HGV traffic in recent years, and have little expectation of future change.

In contrast, the number of vans (i.e. light goods vehicles, LGVs) increased by 70% over the past two decades (DfT data set VEH 0101). A pre-Covid-19 survey published by the DfT in 2021 found that total van mileage and van stock have increased in parallel in recent years, with little change in average mileage, although mileage varied with the type of use: in 2019-20, 54% of the van population carried equipment, tools or materials and was responsible for some 60% of total van mileage; 16% delivered or collected goods, responsible for about 25% of mileage; while almost 30% were used for private non-business use or for providing transport to others, responsible for 15% of mileage. Use of vans for private non-business use would be captured by the National Travel Survey.

On a typical day, half of all vans stayed local, within 15 miles of their base, just over one third travelled regionally, and 15% travelled nationally or internationally. Vans travelling locally had the lowest average annual mileage overall, at 7,600, while vans that travelled nationally had the highest average mileage at 26,300. Over two-thirds of vans travelled on local or rural roads regularly, with other main or ‘A’ roads also used regularly by 60% of vans. Fewer vans use dual carriageways and motorways regularly, with only 39% and 21% of vehicles using these roads 4 or more days per week, respectively

It may be supposed that factors contributing to the growth of van use include the increasing popularity of online shopping, and perhaps the shift in the structure of the economy from manufacturing to service provision. Also, there may be lifestyle changes amongst some previous car owners that prompt a switch to vans. Changes of this kind tend to have natural limits, although it is difficult to predict these in advance. Internet sales as a proportion of total retail sales increased steadily from 3% in 2006 to 22% in late 2019, then peaked at 38% during the coronavirus pandemic, reverting to around 26% post-pandemic, possibly now a stable level. More generally, increased distances travelled by vans bring the businesses that use them into increased competition with similar businesses based elsewhere, implying diminishing returns and hence limits to distances travelled.

So to summarise, we have broadly steady HGV numbers and use, contrasted with rapidly rising numbers of vans, roughly two-thirds the usage of which is for business purposes and one third used for private trips that would be captured by the National Travel Survey. What does this imply for the argument that we should regard the interurban road network as mature?

To put the growth of vans in perspective, in 2023 cars account for 76% of all motor vehicle traffic, while vans have become more important over the last decades, now accounting for 17% of all motor vehicle traffic. However, vans are used predominantly on local roads, where generally there is little possibility or intention to increase capacity. The lack of growth of HGV numbers and use does not support any general investment in interurban road capacity. And the small proportion of vans using interurban roads, as well as the uncertain prospects for growth, likewise do not make a compelling case for further such investment. Accordingly, treating the interurban road network as mature seems a sensible approach.

Against this background, a major issue for both the DfT and the new NISTA must be the successor, if any, to the costly second Road Investment Strategy programme (originally announced at £27 billion for 2020-25), particularly at a time of severe pressure on public finances. Besides, any increase in road capacity negates the requirement to decarbonise the transport system, both on account of increased traffic and hence vehicle carbon emissions, and the embedded carbon in cement, steel and other construction materials, and in equipment and vehicles.

The interurban road network needs to be well maintained and used efficiently. The wide employment of digital navigation serves to enhance efficient use by offering optimal routing that takes account of traffic conditions and other impediments to movement. It is to be expected that the generality of vans used for business purposes would employ this technology, which is free to access via a smart phone.

I would argue that what is now needed is for road authorities to concentrate on keeping the system in good order, well managed operationally, and recognise and take advantage of the impact digital navigation is having on driver behaviour on their networks.

What we do not need is a further major programme of investment to increase the capacity of motorways and major roads, with the futile aim of building our way out of congestion. The Department for Transport is currently reviewing its Appraisal and Modelling Strategy, which creates an opportunity to rethink its published Transport Analysis Guidance, to develop its application to the management of existing capacity, rather than to produce demand projections that underpin a predisposition to invest in new capacity, supported by unevidenced claims that this will magically unlock economic growth.

This blog post is the basis for an article that appeared in Local Transport Today of 22 January 2025.

Car use

The internal combustion engine, utilising oil-derived fuels, invented in the late nineteenth century, was the basis for the mass motorisation of society, which was a dominant feature of the twentieth century, and for the way most of us now live and inter-connect. Within less than a hundred years this originally complicated and unstable piece of kit was developed to high standard of performance and reliability – a considerable achievement by the world’s auto manufacturers and fuel suppliers. But now, what was thought to be an enduring technology, is in flux, with uncertain outcomes for both manufacturers and users of road vehicles. Major decisions are having to be made about a switch to electric propulsion and the automation of vehicle controls, with global industrial, societal and environmental consequences; and business (and public policy) disrupting penalties for those making the wrong choices.

In this blog I look at the implications of this critical time of change for both the propulsion and control systems underlying our deeply entrenched relationship with motor vehicles – and what the governmental role should be. 

Vehicle electrification

The switch of road vehicle propulsion from internal combustion to electric power is being driven by the need to decarbonise road transport, substantially and quickly cutting its contribution to climate change. In pursuit of this goal the UK’s  Zero Emission Vehicle Mandate, put in place by the previous government, requires 22% of new cars sold this year to be zero emission, rising each year to reach 100% in 2035. Under international agreements begun with the Paris COP accord on Nationally Determined Carbon contributions in 2015, similar requirements are in place for most developed economies, although the mechanisms vary. The car manufacturers are responding by developing new models, although UK firms are finding it hard to meet the current government-mandated requirement in terms of annual electric vehicle (EV) sales. Even though approaching year-end, 22% of new car sales are battery EVs, nevertheless the industry has pressed for a relaxation in the year-by-year targets. In response to this plea, the government recently said it intends to launch a consultation on the scope for flexibility, while remaining committed to phasing out sales of new petrol and diesel cars by 2030. 

The change to electric propulsion is causing a major shake-up to the global auto industry. Modern EV development emerged at the end of the 20th century in response to oil market crises and growing climate concerns. Starting with the Toyota Prius in 1997, the 2000s marked the development of hybrid vehicles (with batteries working alongside the internal combustion engine), the popularity of which has persisted to mitigate concerns about the driving range achievable with pure battery EVs. Tesla pioneered the development of commercially attractive battery EVs, starting with the Roadster sports car in 2008 (when Elon Musk became CEO), followed by successive models, designated X, Y and 3, achieving record sales such that the company became the world’s most valuable car company.

Tesla brought fresh thinking to bear on vehicle design, with a view to making best use of the limited driving range available from current batteries between recharging. The traditional car sales dealer network was cut out, as was conventional advertising and marketing, Musk relying instead on acquiring a large personal following of early adopters though social media and live presentations. This approach has proved very successful so far, but Chinese and Korean EV manufacturers are a growing challenge, while China has become by far the largest market for EV sales, where battery EVs currently comprise 29% of new car sales and plug-in hybrids a further 17%; corresponding figures for the UK are 22% and 40% respectively.

For legacy car manufacturers, design and manufacture of internal combustion engines has been a core competence, developed and executed in-house, with much else brought in from specialist equipment suppliers. Batteries are the most expensive component of an EV, whose performance is most crucial to the acceptability of the vehicle to purchasers. So the question for car manufacturers is whether to develop and make these in-house, or to partner with a specialised battery supplier, or to buy in batteries as a commodity, choosing the best available on the market. This strategic question is perhaps the most difficult, since the wrong decisions may have a major impact on sales. Another strategic question is whether to develop electric motors in-house, as does Tesla, or whether to buy in from specialist manufacturers.

One consideration is the desirability of locating battery production near to vehicle manufacture, given the weight batteries and the cost of moving them. Another is the possibility of advances in battery chemistry that offer better performance and/or lower cost. For instance, batteries based on lithium-iron-phosphate chemistry are lower cost but heavier than the hitherto standard lithium-nickel-manganese-cobalt formulation, whilst offering more limited range – less of a disadvantage in China where distances travelled are shorter than elsewhere. There is much effort underway to develop better batteries, yet only limited electrochemical theory to indicate likely directions for success, although much renown and commercial returns are to be gained if success is achieved. Also important is dependence on sourcing of key minerals, such as those mentioned above, although demand brings forth new supply, as ever.

Accordingly, difficult judgements are required as to where to locate battery development and manufacture in relation to car manufacture. Ten years ago, Tesla entered into a partnership with Japan’s Panasonic, a battery specialist, to build the first ‘gigafactory’ in Nevada, USA. In contrast, BYD, short for ‘Build Your Dreams’, founded in 1995 in China as a battery innovator, subsequently very successfully adding car and bus manufacture, has an integrated supply chain staring with lithium mining, and has now overtaken Tesla in global sales of EVs, focussing on lower price sub-premium markets – initially at least. There are a considerable number of Chinese start-ups that have entered a very competitive EV market, with downward pressure on prices – good for purchasers but challenging for the legacy manufactures such as VW that had been successful with petrol and diesel vehicles in the large Chinese market. Chinese manufacturers are now entering overseas markets, posing a threat to the European manufacturers, who have not developed integrated supply chains.

In response, as a trade protection measure, the EU recently imposed further tariffs of up to 45% on EVs imported from China, on top of existing 10% tariffs. This has been justified as a countermeasure against what the EU perceives as unfair competition, prompted by concerns that Chinese EV manufacturers have for years received substantial state subsidies, allowing them to produce vehicles at something like a 30-40% cost advantage as compared with European automakers. Chinese industrial policy support has enabled Chinese firms to build experience, reduce costs, scale up and push ahead on battery innovation. The EU tariffs are controversial since they may not be sufficient to exclude the lower cost Chinese vehicles from European markets, while possible retaliation may be counterproductive, particularly for European luxury car manufacturers selling profitably in China. There may also be increased likelihood that Chinese manufacturers would set up plants within EU countries to avoid the tariff. Indeed, BYD is already building a car plant in Hungary. For now, the UK has opted to stick to the existing 10% tariff, benefitting purchasers but possibly problematic for future trade negotiations with the EU.

The availability of low cost EVs from Chinese manufacturers puts pressure on competitors to extend their offering to include lower cost models. Tesla has just four cars in its model line-up, but none at low-cost entry level, which Elon Musk has justified by the expectation that it ‘is blindingly obvious at this point that [autonomy] is the future’, and announcing a two-seater autonomous Cybercab without steering wheel or pedals (pictured above), to be on sale before 2027. But this may be hoping for progress with vehicle automation that may not be fulfilled (see below), as well as a presumption that drivers would be prepared to forgo the satisfactions associated with personal car ownership.

Another possible role for governments is to support the construction of battery gigafactories, without which vehicle manufacturing may decline. The Biden administration has devoted substantial resources to boost US-based EV production. But the forthcoming Trump administration may cut such support, relying on tariffs to protect US manufacturers. The previous UK government published a battery strategy in November 2023, aiming (as usual) for Britain to be a ‘world leader’ and a ‘science superpower’. Two UK gigafactories have been announced so far, with government financial support, but a critical House of Commons committee report concluded that announced plans would satisfy little over half the capacity the nation needs by 2030. The failure of the Swedish Northvolt, Europe’s one-time battery champion, and before that of Britishvolt that planned to make batteries for EVs in Blyth, Northumberland, points up the risks involved in a major shift of technology.

The benefits of the switch to electric propulsion are environmental. The mobility to which we have become habituated in the built environment designed around it, that we have inherited, and which is very slow to change, means that the heavy lifting to decarbonise the transport system must depend on the expeditious switch of those vehicles deployed on it to electric propulsion. Incentives to achieve this can be contentious, however. A valuable recent report from the Resolution Foundation addresses equity aspects, arguing that, paradoxically, it has been justified for tax incentives to purchase EVs to target the richest fifth of households that are responsible for the majority of spending on new cars, who drive more, and whose new cars in due course feed the used car market for other buyers. But these incentives can be wound down now that capital costs are falling and the ZEV Mandate is in place to require manufacturers to ramp up EV sales.

However, a remaining impediment to EV purchase is that the cost of using a publicly-provided kerbside charger remains much higher than charging at home from the domestic electricity supply, an option not available to some 35% of British households. The public cost has increased by half since January 2023 despite wholesale electricity prices falling considerably, according to the Resolution Foundation, which estimates that the cost of driving an EV that is refuelled away from home is now double that of one charged at home (11.5 pence per mile compared with 5 pence per mile), amounting to a £425 difference each year based on average mileage. Regulation might now be needed to put a ceiling on the charges made by providers, analogous to the price cap imposed on domestic energy charges.

Vehicle automation 

There has been much enthusiasm in recent years – at least in technological, and some investment and governmental circles – to develop self-driving vehicles, also known as autonomous vehicles (AVs). The impetus has come largely from technology entrepreneurs who see the possibilities to earn large returns. Some politicians perceive AVs as powering industrial and economic growth. Traditional manufacturers are trying to keep up, to avoid loss of markets should the technology gain wide acceptance. However, the technical task has proved more challenging than anticipated, and thus slower to realise than predicted, and the prospects for widespread deployment of self-driving vehicles are far from clear, as indicated in a recent review. A variety of technological advances in combination may allow the human driver ultimately to be dispensed with, at least under specified conditions. The human is replaced by a robot driver – a robotic replacement for the control, navigation and safety functions exercised by an experienced and safe human driver.

There are a number of technological components that typically go to make the robot driver. The robot must sense its surroundings using video cameras, usually plus radar and often plus lidar, which uses the reflection of laser light to detect objects. It must know where it is located in relation to the features of the road network, requiring satnav location and high-definition three-dimensional digital maps, which need frequent updating. Fast software programming is required to fuse all collected images, using inexpensive hardware with minimum power requirements. But unlike a factory robot performing-well specified tasks in a well-defined space, the robot driver cannot be pre-programmed to deal with all situations that might arise, so the robot must learn on the job by utilising artificial intelligence to learn to cope with a wide range of circumstances.

While such a multicomponent approach to autonomous vehicle control is most generally employed, Tesla is restricting itself to cameras, to replicate the information available to a human driver. This reduces costs and avoids the need for digital maps, which eases wide deployment, although it is yet to be seen whether acceptable safety can be demonstrated – a general problem for all technological approaches.

There is extensive and ongoing development of automated technology both by new entrants to the road vehicle sector and by established manufacturers. There are broadly two approaches. An evolutionary approach adds individual features to progressively reduce the driving task, such as cruise control, lane keeping, lane changing and valet parking. These can be seen as further advances in the sequence of developments that have delivered established technologies such as automatic gearchange and automatic emergency braking. The potential problem is that as the tasks required of the driver are reduced, yet some remain (such as emergency intervention) and the driver’s attention may wander or may become occupied by unrelated tasks, with the risk that the human may not be able to respond sufficiently quickly to take control in circumstances where the robot cannot cope – such as sudden reduced visibility or a difficult-to-identify obstruction.

This problem of achieving a safe handover to the human driver when required has prompted an alternative approach – a step-change to automation in which the vehicle is designed not to need a human driver at all. If purpose-built, it may omit the steering wheel and other controls; where a conventional vehicle is adapted, conventional controls are normally redundant. Waymo, a subsidiary of the parent company of Google, has been the most advanced in developing vehicle automation, operating a driverless taxi service – a ‘robotaxi’ – initially in Phoenix (Arizona), subsequently in San Francisco, with Los Angeles and Austin (Texas) planned, all places where the weather is generally fine and the roads straight and wide. Yet there are reports of rapid progress by Chinese manufacturers in developing AVs for deployment in congested city centres. On the other hand, General Motors has just pulled out of the development of the Cruise self-driving taxi, attributing this to ‘the considerable time and resources that would be needed to scale the business.’ And earlier, Ford and VW had shut down a joint self-driving car venture.

More generally, the vision is that of equipping and permitting an autonomous vehicle to function without a driver within a defined geographical area where highway and traffic conditions are suitable. It would be more demanding to go beyond that to replace the human driver under all conditions, although this is the ultimate objective of the proponents of the technology.

However, the practical benefits of vehicle automation remain unclear. Proponents argue for safety benefits, especially in the United States where 41,000 people were killed in motor vehicle crashes in 2023. Given that human error and risky behaviour are responsible for 90% or more of fatalities, it would seem a reasonable expectation that robots could do better than fallible drivers. On the other hand, robots suffer from their own shortcomings, tending to be less effective at perceptions involving high variability or alternative interpretations. In particular, robots would find it difficult to engage in the kind of visual and body-signalled negotiation that occurs between human drivers to settle which gives way when space is tight or priority needs to be ceded to pedestrians, for example. Moreover, the driving performance of a robot would need to be very similar to that of a human driver to ensure public acceptability in mixed traffic. A robotic driver that proceeded particularly cautiously to meet safety requirements would be unattractive to purchasers of AVs. So, the robot driver would need to learn how to drive like a human.

Fatalities involving AVs, although rare, naturally attract attention. It seems likely that the public will expect an AV to perform substantially better than a human-driven car, but by how much is an important question. In any event, it will be difficult to demonstrate the safety performance of AVs in practice. For instance, in Britain there is one fatality per 140 million miles driven, so if AVs are to do better than a human driver, fatalities will be exceedingly rare events. One possible solution is to devise simulations of AV performance so that very large numbers of potential incidents could be studied, but then the problem is how to valid the simulation model as an adequate representation of real-world driving conditions. Whatever the approach, the authorities responsible for safety regulation are likely to have particular concern for public reaction to collisions and casualties involving AVs, both in anticipation and after the event. And the motor insurance companies will be concerned with who is to blame.

Another claimed benefit is that automation might increase the capacity of existing roads by allowing vehicles to move with shorter headways, that is, with a smaller distance between them than the recommended two-second ‘braking distance’ gap on fast roads. The more precise control exercised by a robot might also smooth traffic flows and allow the use of narrower lanes. However, such increases in capacity seem likely to be possible only on roads dedicated to AVs since the presence of conventional vehicles, not to mention cyclists and pedestrians, would require standard spacing to be maintained. In any event, any increase in capacity would be expected to attract additional traffic, so that congestion relief would not be expected. Automation that allowed an increase in road capacity might be of interest to a road authority, but not to individual vehicle owners would bearing the cost of the necessary technology.

There are other potential (and possibly unforeseen) consequences of vehicle automation.  Because AVs would be capable of operating empty, for example when returning to base after dropping off the occupant, they could add to traffic and hence to congestion. Conventional taxis operate without a passenger while seeking a fare, of course, but privately owned vehicles without occupants would be a new source of traffic and may require regulation if congestion is not to worsen. There is also the problem of AVs getting stuck in the traffic flow at critical points in the network or ‘trapped’ in odd places (as has already been happening) and not able to move to safe pausing places, as would a traditionally-driven car.

The prospects for widespread vehicle automation on existing roads with mixed traffic therefore seem very uncertain. Much will depend on whether users see the benefits outweighing the costs. The benefits for private owners of AVs are improved journey quality and the chance to carry out other tasks while in the move. This could allow greater distances to be travelled, but that would increase traffic, so no useful increase in speed or in access seem likely. For taxi operators, the benefits would be saving the labour cost of drivers. A more ‘visionary’ possibility is that of widespread shared use of individually owned AVs, taking advantage of the ability to summons such a vehicle when needed, and avoiding have a privately owned vehicle parked for 95% of the time – a concept advocated by Elon Musk. This could offer efficiency benefits, spreading capital costs over more miles travelled. Yet the experience of individual car ownership is deeply ingrained, both for the certainty of having this means of mobility available when needed and because of the good feelings associated with ownership of an attractive consumer product.

Whatever the type of ownership, the costs of automation comprise the equipment on the vehicle plus remote supervisory back-up in case of unexpected events. There are also the large research and development costs incurred to deliver safe, effective and attractive vehicles – likely to be of a magnitude such that acceptable returns could ultimately only be made through sales to the mass market of private purchasers. In the meantime, providers of robotic taxis and public service vehicles may benefit from the technology, but only if the additional costs of automation are less than the costs of employing a driver that may be dispensed with – by no means a forgone conclusion.

The UK has enacted legislation to regulate autonomous vehicles, implementing the recommendations of a very thorough analysis by the Law Commission. While creating a clear framework to govern responsibilities for vehicles when in driverless mode, such responsibilities will impose likely significant costs of oversight on manufacturers who sell AVs to private owners and on robotaxi operators. It would not be surprising if the human taxi driver were to be the lower cost option, as well as generating less public anxiety in the event of mishap.

What are the priorities – EVs or AVs?

Both EV and AV technologies contrast sharply with the transport innovations of the previous two centuries  – the steam railway, the internal combustion engine for road vehicles, and modern aircraft – each of which took advantage of the energy of fossil fuels to effect a step change increase in the speed of travel, the benefits of which people took in the form of increased access to people and places, activities and services, with the greater opportunities for human interactions and choices that this made possible. Likewise for the modern bicycle, a later nineteenth century invention that harnessed human effort. But electric propulsion yields no step change increase in speed, and so not in access, nor does it seem likely that vehicle automation will yield such an outcome either. The case for deploying EVs is to reduce the transport sector’s carbon emissions, a key strategic objective. The case for AVs is to improve the quality of the journey, as perceived by individual purchasers, or to reduce operating cost of robotaxis if that proves feasible. Evidently, EVs are much more important than AVs as regards policy concerns about climate change.

Accordingly, competition amongst auto manufacturers to introduce new and better EVs is very desirable, regardless of their origin. Uptake by purchasers is constrained by anxieties about charging possibilities – the concern about ‘range anxiety’ – the least for those able to use home chargers in the driveway, but still a deterrent where long distance trips are contemplated. In the long run, provision of public charging points would be a commercial matter, as are roadside filling stations, but in the short run we have a chicken-and-egg problem that justifies government financial support for the provision of more retail charging outlets, as well as regulatory initiatives to speed the enlargement of the electricity transmission and distribution system.

The new Labour government has issued a consultation paper on industrial strategy. Eight growth sectors are identified, including advanced manufacturing, in which context it is claimed that up to 56 gigawatt hours of electric vehicle battery manufacturing capacity is planned for the UK so far, and that we are on our way to reaching the 2030 capacity requirements expected by the sector. The Chancellor of the Exchequer’s Budget Statement of 30 October allocated over £2 billion up to 2030, to support the zero-emissions vehicle manufacturing sector and supply chain.

The previous Conservative government was very supportive of driving forward vehicle automation, enacting legislation to support that aim, emphasising the benefits to the industrial economy rather than the transport system. However, there was no mention of support for AVs in the new Chancellor’s Budget Statement – a reasonable decision, in my view. There has been little development of the technology in Britain to the point of on-road deployment without a safety driver, in contrast to the position in the US and China. Moreover, the lack of UK-owned car manufacturers does not suggest that this technology is likely to be first rolled out here at scale, even though there are UK tech enterprises gaining investor support, notably Wayve, which is applying AI to self-driving in on-road trials and hopes to partner with vehicle manufacturers.

Vehicle automation is progressing incrementally, yet the goal of widespread driverless operations across the whole road network still seems elusive, while it remains to be seen whether the benefits to road users are sufficient to justify the higher capital and operating costs involved. The benefits of vehicle automation for both industrial and transport policy do not seem to be great. It is conceivable that public transport or freight vehicles could operate in driverless mode in some circumstances – at low speed on campuses, in dedicated lanes or roadways, or on set routes on which hazards are minimised. But the economic case, based on the costs savings of a human driver, may be difficult to justify.

The top technology priority for transport policy has to be the switch to electric propulsion of road transport, to which UK and European legacy manufacturers are giving high urgency. Yet establishing viable product ranges competitive with Chinese providers is proving difficult. Besides, the possible emergence of acceptable and attractive automation raises a strategic question of priorities for manufacturers beyond the switch to EVs, bearing in mind Tesla’s twin track development of an electric, automated robotaxi, as well as the progress being made by the Chinese auto industry in combining electric propulsion with automation. Who would bet against Elon Musk, given his record in pioneering EVs, reusable rockets and ubiquitous satellite communications? And who would bet against the Chinese in any technology that the state designated as strategic.

The current pace of digital and electrochemical technological change is fast in comparison with that of the auto manufacturing business whose timescales for new model development are long. In these circumstances, it is hard to have confidence that good decisions are being made by those with power to influence outcomes. Yet decisions cannot be avoided. 

The above blog was the basis of commentary published in Local Transport Today on 18 December 2024.

Car useTravel

The previous Conservative government had initially been supportive of Low Traffic Neighbourhoods (LTNs), consistent with its positive attitude to promoting active travel. But before the general election of July 2024, it swerved, recognising the unpopularity of some schemes, seen by some as anti-motorist. In my own neighbourhood, the local authority engaged residents on a proposed LTN scheme last summer, which generated a good deal of opposition from those that thought they would be adversely affected, and a petition of more than 3000 signatures. The environmental scrutiny committee of the local authority held a meeting this week at which deputations could express a view. I had previously prepared a note on the topic, and had the opportunity to make a short oral presentation. The substance of my note follows, omitting specific references to locations in the neighbourhood.

The previous government commissioned a review of the evidence of the impact of LTN schemes, which reported in March 2024. A total of 99 schemes were identified, of which 82% remained in place and 18% had been removed. The main conclusions derived from all the evidence collected were that LTN’s are effective in reducing traffic on internal roads, although outcomes for boundary roads were mixed; air quality on internal roads has improved, but that on boundary roads varied; and impact on walking and cycling has been mixed.

Transport for London has summarised experience of LTNs in London, concluding that the evidence to date consistently shows that they are having a positive impact on the lives of people living and working in London, although the impacts take time to develop.

There have been academic studies, notably Thomas and Aldred’s review of 46 London LTNs for which monitoring data was available, finding substantial falls in traffic within schemes, but on boundary roads little change in the overall average traffic but substantial variation across schemes.

In general terms, it would be desirable to reduce through traffic within the nighbourhood, the magnitude of which seems to have been increasing in recent years, likely due in part to the wide use by drivers of satnav that indicates the fastest routes, often on smaller roads that are best suited to walking and cycling.

The evidence presented in support of the proposed LTN includes historic traffic count data for many of the roads. But no information is available on the origins, destinations and purposes of trips, which means that traffic modelling of likely outcomes of the scheme is not possible. Gathering information on trip origins, destinations and purposes requires considerable effort and expense, employing household and roadside surveys, GPS and mobile phone data, and in general would only be attempted for proposed major road schemes, not for proposed LTNs. So one can only speculate about likely changes to traffic flows in a specific case. But because implementing the LTN does not involve major and irreversible road works, a trial-and-error approach is justified, encouraged by the findings of the 80% success rate noted above and by the withdrawal of 20% which failed to meet expectations.

Nevertheless, some questions about likely changed traffic flows may be posed. For instance, judging by the difference in flows at the morning peak between school term time and holidays, there is a fair amount of ‘school run’ traffic. This seems likely to be mainly the consequence of residents dropping off children at schools outside the neighbourhood, as well as non-residents driving children to the secondary schools within the neighbourhood. But without knowing which schools are the destinations, it is hard to estimate to what extent such trips would persist with the implementation of the LTN (the alternative being more children making their own way), but taking more time and covering greater distances, so generating more traffic to offset the reduction in through traffic having no business in the neighbourhood.

In the absence of traffic modelling of likely flows with the LTN in place, we can only pose questions about the key outcomes:

  • The net overall traffic reduction: the extent to which the reduction in through traffic is offset by increased distances travelled to addresses in the neighbourhood by residents, delivery vehicles, taxis etc, as well as increased distances travelled by residents out of the LTN.
  • The extent of diversion to boundary roads.
  • The extent of ‘disappearance’ of traffic.

‘Disappearance’ refers to the way in which traffic reduces in response to some impediment to flow. Time is always a constraint on travel. Impediments such as congestion or, in the present case, the need to travel greater distances, prompt some drivers to make alternative choices where feasible: an alternative route where delays are less, an alternative mode of travel, an alternative time of departure, an alternative destination (for instance for shopping), or not to travel at all (such as ordering goods online). There is good evidence for the reality of traffic disappearing, although the extent depends on the nature of the location. The availability of good public transport is helpful. One possible source of traffic disappearance would be if parents bring forward the point in time when they cease to take their children to school by car, letting them travel independently by public transport or on foot.

Entry of vehicles into the LTN is intended to be controlled by a mix of fixed barriers and camera-enforced controls, both forms open to use by cyclists and pedestrians. Given the inevitable uncertainties about travel volumes, both for individual roads, internal and boundary, and in aggregate, two varient approaches are worth considering. First, to exempt residents from penalty charges for passing camera-enforced traffic filters. This would allow residents to take the more direct route, reducing traffic in the neighbourhood, while blocking through traffic. Second, the camera-enforced traffic filters might operate only at peak times, as for Healthy School Streets, preventing the bulk of through traffic.

It would be usual to implement the LTN for a trial period before a decision on firm plans. It is common with such schemes to initially implement by means of an Experimental Traffic Order, which is limited to a period of 18 months while the effects are monitored and assessed, after which decisions are made whether or not to continue with the changes on a permanent basis. A commitment by the local authority to a reliable means to assess local opinion would be desirable, based on data from monitored traffic flows before and after scheme implementation. It is worth recalling that the local Neighbourhood Plan was adopted by the local authority in 2020 following a local referendum.

The engagement phase for this particular scheme has concluded. I expect the next phase will be a formal consultation on a modified plan that responds to the concerns expressed, as far as feasible. I also expected that the outcome of that will be a trial implementation, which is likely to show that some of the concerns will not be borne out in practice. A key question will be whether there is a significant increase in traffic on the boundary roads. If not, I would expected the LTN to be made permanent.

Car useTransport

In general, transport in the UK has been regarded as a well-regulated sector. It is not surprising, given the obvious potential for public harm, and the high profile of any errant behaviour or system failures. Vehicles, drivers, infrastructure, and service provision by operators are all subject to safety and customer protection regimes. But technology and business practice move on, generating new issues to be addressed. Generally, this happens on a rather piecemeal basis when new modes, technologies, or commercial models emerge, but not always then.

Accordingly, under the Boris Johnson government, the Department for Transport launched its Future of Transport Regulatory Review in 2020 in the form of a call for evidence, initially focused on three areas: micromobilty; flexible bus services; and Mobility as a Service. Other topics that have been considered under this broad initiative included the future of flight, and modernising road vehicle standards. There has also been a look at ‘regulatory sandboxes’ as a means to introduce temporary or specific place-based regulatory flexibilities to support innovation. Yet addressing such topics ad hoc seems to have so far yielded little in the way of useful regulatory advance in any of these fields, let alone others of concern such as secure digital payment systems, customer data protection, and standards of information provision, for example.

One area that has been subject to full consideration is the regulation of automated road vehicles (AVs), an area where the last government seemed to believe there to be a major new industrial development and employment opportunity. The Law Commission was asked to recommend a regime to govern responsibilities when vehicles are operating in driverless mode, whether as ‘robotaxis’ or individually owned vehicles. The outcome was the Automated Vehicles Act 2024, which had broad political support. There is now in place a comprehensive legal framework that developers, operators and insurers of AVs might see as helpful in making clear their legal responsibilities, which, however, might be seen as quite onerous compared with arrangements in countries where the main development of the technology is taking place, the US and China in particular. UK developers of AVs are limited in number and their commercial prospects are unclear.

To be sure, the regulatory regime being put in place for AVs is forward looking and intended to encourage innovation. But the implications for the wider transport system and the management of the road network as a whole, particularly in urban areas, are consequential matters that also need careful consideration, a topic recently reviewed by the International Transport Forum and the subject of an exploratory project report by the National Infrastructure Commission.

Another fast-moving technological development area is aviation. Here a comprehensive sectoral regime operated by the Civil Aviation Authority is well established to oversee safety, security, the efficient use of airspace for maximum public benefit, and to protect the consumer interest. The CAA has set up an ‘innovation hub’, the purpose of which is to create an environment where innovation in aviation can develop in line with the CAA principles. These include ‘pilotless‘ planes and drones. A recent review endorsed the view that CAA is a world class regulator that is fit for purpose, delivering high quality services to the aviation and aerospace industry and the consumer. Moreover, the CAA and DfT are consulting on the creation of a new UK Airspace Design Service that would act as a single guiding mind for modernising the design of UK airspace, exemplifying the CAA’s proactive approach to innovation.

A further sector-wide regulator is the Office of Rail and Road, which originally was solely charged with regulatory oversight of railways, including holding Network Rail to account for stewardship of its network, its funding, as well as protecting the consumer interest in respect of services provided by the train operating companies. The ORR carried out a consultation in 2015-16 on its approach to innovation, following a prompt from the government. The ORR has taken the view that innovation is led by the rail industry and where appropriate it would be supported by the overall regulatory framework, including the duty to promote improvements in railway service performance and promote efficiency and economy on the part of providers of railway services. So, compared with the CAA, the ORR’s approach is relatively passive.

Since 2014, the ORR also has some oversight of roads, but this is limited to the engineering performance and efficiency of National Highways in England in respect of its network, not to other roads. The ORR’s remit does not allow it to address the benefits to road users of new road investments – whether the outturn from investment in new road capacity meets expectations – nor whether the strategic road network is being efficiently utilised (unlike the CAA’s concern with the efficient use of airspace). Again, there is a lack of intention actively to foster technological innovation for the strategic road network, or to analyse and prioritise the optimal use of capacity, and identify where enhancement is most justified.

For road vehicles more generally, there are important examples of regulatory approaches that both drive and support technological innovation. Tackling the harms from tailpipe emissions of petrol and diesel enginned vehicles has been effected by regulations within the portfolio of the Department for Transport that have driven down emissions of air pollutants and by the ZEV Mandate, a legal requirement for a minimum percentage of each manufacturer’s new car and van sales to be zero-emission each year.  Regulations made by local authorities to create urban clean air zones (in London known as the Ultra Low Emission Zone) also help incentivise the switch to electric propulsion, a once-in-a-century transport technology innovation. While the propulsion systems and physical impacts of individual classes of vehicles are a DfT matter, concern for overall emissions and air pollution lie elsewhere – with the Department of Environment, Food and Rural Affairs (Defra) and Department for Energy Security and Net Zero (DESNZ).

When it comes to new modes of travel, the Department for Transport again seems to be following rather than leading, with actions in fits and starts, for example in making regulations allowing trials of rental e-scooters to be fast tracked and expanded in response to proposals from local authorities. The intention is to understand usage, safety, and environmental impacts, and to explore changing travel patterns since the coronavirus pandemic and as e-scooters become more embedded in public life. Only e-scooters participating in official rental trials may be used legally on roads. It is expected that a decision will be made in due course about legalisation of e-scooters as a vehicle class, and about the appropriate regulatory regime, which may include a requirement to park rental e-scooters in prescribed bays. E-bikes are already legal and treated as ordinary bicycles if of limited power, but the problem of inappropriately parked dockless rental e-bikes prompts complaints and pressure to regulate.

In contrast to the supportive approach to e-scooters, and a permissive approach to e-bikes, as innovative mobility technologies, there has been inaction in several other significant areas. This includes updating the historic taxi and private hire legal regime, with minimal recognition by the authorities of the merits of ride hailing as an innovative means of summoning a taxi, exemplified by Uber’s struggles to get acceptance in London. This involved a number of court cases, which found in favour of Uber, while the company lost some other cases concerned with the employment status of drivers, which nevertheless has not seemed to impact on the provision of the service. Uber’s digital request and booking/payment system has proved very popular with users as a better means of getting a taxi compared with licenced black cabs or conventional private hire vehicles, as well as being sufficiently attractive to drivers so as to offer customers an acceptable level of service. But this outcome was no thanks to a taxi regulatory regime having a remit to foster innovation. On the contrary, taxi regulation is historic, not modernised for the digital age, rightly concerned with the protection of customers, less defensibly having the effect of protecting the trade of established black cab drivers. There is a marked contrast between this reluctance to welcome innovative approaches to taxi services and the progressive stance towards automated vehicles, including robotaxis.

In terms of road usage, beyond the urban areas where e-scooters and ride hailing taxis operate, regulation of the inter-urban system roads is confined to vehicle and driving licence holding, vehicle type approval and performance – handled by a number of specific agencies like DVLA and DSA – with speed limits and other rules of the road embodied in the Highway Code – an historic regime that has not generally recognised advances in innovative technologies.

One technological innovation that has been widely adopted is digital navigation, applicable to all travel modes to replace conventional maps. In the road context, this is generally known as satnav and is offered by a number of providers including Google Maps and Waze via free-to-use smartphone apps, and others who provide input to equipment installed by vehicle manufacturers. A key element of many of these offerings is to indicate the fastest route in the light of prevailing traffic conditions. Digital navigation is changing the way drivers use the road network in three main ways: local users are attracted to new capacity on major roads, pre-empting the additional capacity intended for longer distance business users and so weakening the economic case for the investment; longer distance users can divert to local roads that offer faster journeys than on congested major routes, roads that are well suited to active travel; and predictive journey time information allows more efficient use of the network.

At present, provision of digital navigation is a free-for-all, funded by sales of direction-finding to businesses that wish to attract clients to their premises, as for Google Maps; or by the sale of services to vehicle manufacturers that fit navigation as original equipment, as for TomTom. Road authorities generally seem to be paying little if any attention to these developments. Yet there are opportunities being overlooked to make better use of the road network, both urban and inter-urban, including buses services.

Curiously, legislation has long been in place to allow providers of digital navigation to be regulated. This dates back to 1989 and requires what were then termed ‘dynamic route guidance systems’ that take account of traffic conditions to be licensed by the government. The intention was to facilitate the introduction of a pilot route guidance system, known as ‘Autoguide’, that had been developed by the government’s Transport and Road Research Laboratory and required roadside equipment to be installed – a good example of forward-looking regulation to support innovation. The licence could include conditions concerning the roads that should not be included in the route guidance, the provision to road authorities of information on traffic conditions, as well as the right to install roadside equipment. In the event, the Autoguide pilot did not proceed, due, I suspect, to the limited computing power available at that time. Nevertheless, the legislation has remained on the statute book although no licences have been applied for or granted.

The possibility of achieving more efficient use of the road network through provision of better information about traffic conditions to both road users and road authorities was recognised early on by John Wardrop, a traffic analyst at the then Road Research Laboratory, in a seminal paper published in 1952. He postulated two equilibria. The first states that, under equilibrium conditions, traffic arranges itself in congested networks in such a way that no vehicle can reduce its costs (time and money costs) by switching routes. For this to happen in practice, drivers would need to have perfect knowledge of all feasible routes and travel times. Digital navigation may be seen as improving such knowledge, thus enhancing network efficiency, yet with a number of independent providers that may offer conflicting advice, it is hard to assess to what extent increased efficiency is being achieved.

Wardrop’s first equilibrium assumes that road users make decisions without regard to the impact their choices may have on others – a ‘selfish’ equilibrium. According to his postulated second equilibrium, the average journey time would be at a (lesser) minimum if all users behave cooperatively in choosing their routes to ensure the most efficient use of the whole system. This would be the case if an omnipotent central authority could command them all which routes to take. Traffic flows satisfying Wardrop’s second equilibrium are generally deemed system-optimal, and the loss of efficiency from this to the selfish equilibrium is an example of what is known as ‘the price of anarchy’.

Economists argue that a more socially optimal outcome could be achieved if the costs imposed by the marginal road user on others, by adding to congestion, could be internalised by a congestion charge, thus modifying behaviour by reducing demand through higher vehicle operation costs. However, implementing road pricing is difficult in practice, and there are issues of equity, so a question worthy of investigation is to what extent a more socially optimal outcome could be achieved through flexing the routing advice offered by providers of digital navigation – ‘nudging’, not compulsion

The likelihood that improved operational efficiency could be achieved through digital navigation is suggested by the wide use of such routing and navigation systems by the competitive road freight sector. Everyday experience of online shopping indicates the use made by logistics businesses of digital technologies to manage, track and predict flows of goods, often offering delivery time slots of two hours or less, all done algorithmically. This points to techniques to achieve operational efficiency on congested road networks that might be extended to the generality of traffic in a way that could be far more cost effective and less carbon generating than civil engineering technologies.

The competing providers of digital navigation services are generally uncommunicative about their operations, while highway authorities appear to show no interest in the impact of this technology on the functioning of the road networks for which they are responsible. One kind of opportunity for mutual benefit would be when the network is under stress, for instance on the occasion of major incidents, peak holiday flows, bad weather and the like. It is probable, and certainly worth further investigation, that coordination between highway authorities and digital navigation providers could make better use of available capacity. There is also the possibility of improving operations at normal times, including avoiding routing through traffic via unsuitable minor roads. There is therefore likely to be scope for coordination that would improve outcomes for road users. This might be through the parties acting voluntarily for mutual benefit, or through the updating and implementation of the 1989 regulatory regime.

Although, by and large, the transport sector is functionally regulated to avoid calamity, there are obvious gaps that could usefully be filled to the benefit of users and to give innovators a sound basis upon which to progress their new ideas – or at least try them out with appropriate dispensation. This is particularly the situation in respect of the operation of the road network. As well as concern for safety and customer protection, all regulators should have a remit to encourage innovation that offers user benefits, since making effective use of existing infrastructure is preferable to creating new capacity, given the need to achieve the Net Zero climate change objective.

The new Labour government has set up a Regulatory Innovation Office, with the aims of supporting regulators to update regulation, speeding up approvals, ensuring different regulatory bodies work together smoothly, informing the government of regulatory barriers to innovation, and setting priorities for regulators which align with the government’s broader ambitions. This is an ambitious and potentially extensive agenda. Yet it will be disappointing if the emphasis solely on novel and exciting new technologies, a possibility suggested by one initial topic, the role of drones as a form of connected and autonomous vehicle technology – surely a rather niche market. In contrast, there is much scope for encouraging innovative approaches in the mainstream emerging transport technologies, where the new Office could hopefully play an influential role.

This blog post is the basis for an article that was published in Local Transport Today 0f 31 October 2024.

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.