I gave a talk to the Transport Economists Group in London on 28 October 2015. Much of the material covered can be found in recent articles on this website. One new theme is set out here.

The Government has announced its Road Investment Strategy that commits £15 billion expenditure over the next five years. One stated aim is a ‘free-flow core network, with mile a minute speeds increasingly typical’. How realistic is this?

Let’s consider the past pattern of travel behaviour that has been tracked over the past forty years by the National Travel Survey. Average travel time has stayed steady at about 370 hours a year, or an hour a day, a finding that holds true for all settled human populations. What has changed over the period is the average distance travelled, which increased from 4500 miles a year in the early 1970s to 7000 miles in the mid 1990s, since when this has ceased to grow. Increased distance in unchanged travel time is the result of investment in the transport system that has permitted faster travel – private investment in cars, public investment in roads and railways.

Not time savings

People have taken the benefit of investment by travelling further to more distant destinations, not by saving time in reaching unchanged destinations. This is contrary to what transport economists suppose when they estimate the main benefit of investment as time savings, valued for the extra work or leisure supposedly made possible. In reality, people travel further to have more opportunities and choices. For instance, by travelling faster on the journey to work, you have more choice of jobs accessible from where you live in the time you allow yourself for travel, more choice of homes accessible from your workplace, and similarly more choice of shops, schools and so forth.

So people take advantage of road improvements that permit faster travel to make longer trips as part of their daily routine. This is particularly the case in areas where demand for housing exceeds supply, creating an incentive to travel further in search of affordable properties.

Interference

Daily travel is an important component of traffic on parts of the Strategic Road Network (SRN). Congestion on this network arises near to populated areas, where local users interfere with long distance users. Half the traffic on the M25 is local. Remote from populated areas, the traffic generally flows freely. The conventional response to congestion on the SRN is to add capacity – an extra lane, conversion of the hard shoulder, or an improved junction. Conventional economic appraisal involves multiplying small time savings from such capacity increases by a large number of vehicles and by standard values of time to generate monetary benefits that can be compared with the costs of the extra capacity, to assess value for money.

Small savings

The time savings per vehicle are quite small. The Highways Agency (now Highways England) carried out evaluations of around 120 completed major improvements and found the average time saving to be three minutes at times of peak congestion. There has been debate about the value of such small time savings. One view is to disregard these as too small to change behaviour. Against that, it is argued that small time savings can accumulate as more improvements are implemented, so in logic all need to be counted.

While three minutes is too small to matter for a long distance trip, it is not insignificant for a local journey. So if we add carriageway to a congested section of the SRN, it is the local users who take advantage of the faster travel to make rather longer trips, particularly for greater choice when they change jobs or move house. These lengthier trips generate extra traffic,  which restores congestion to what it was previously. Long distance users are no better off.

Induced traffic

This extra traffic is what is known as ‘induced traffic’, about which there used to be debate – did it arise and if so why? We can now see that induced traffic is the extra traffic that arises because people take the benefit of road improvements that allow faster travel as more opportunities and choices at greater distances, consistent with the evidence of the National Travel Survey, rather than as time saved.

Occurrence of induced traffic is the basis for the maxim: ‘You can’t build your way out of congestion’, which from experience we know generally to be true. This is what transport ministers at one time used to say, when they did not have a big budget for road construction. Current ministers tend to speak rather vaguely about new road schemes ‘creating opportunities for hardworking people across the nation and driving economic growth’, but no doubt hoping that congestion would be lessened, as is seemingly implied by the time saving rationale.

What road construction can achieve is to make land accessible for development. But this needs to be led by planners and developers identifying sites suited for development that are commercially attractive. If such sites require improved road access, then this should be a candidate for funding, whether from a local transport investment budget or a national funding programme, subject to a value for money test. Such local initiatives fit with devolved funding, not as part of a national Road Investment Strategy for which local development is inadvertent or incidental.

Unreliability

If we can’t build our way out, what do we do about congestion? Surveys of road users find that the main perceived problem arising from congestion is unreliability, rather than increased time taken. We can tackle the unreliability problem by providing road users with good predictive travel time information before they set out, so reducing uncertainty in arrival time. This is becoming increasingly possible through digital technologies, which are far more cost effective than traditional civil engineering technologies in meeting the needs of road users. In Britain, we are familiar with roadside variable message signs predicting the time to the next junction – although this tends to be too late to be of much use.

One example of useful predictive travel time information is found at Seattle, where you can input the postcodes of your home and workplace, and the time you want to arrive at work, to be advised of the time to leave home to arrive on time nineteen times out of twenty. A more ambitious example has been in operation in Nordrhein-Westfalen in Germany, where a simulation model of the autobahn network predicted journey times for any kind of trip (although this website seems no longer to be active). Such simulation models may be expected to improve their predictive accuracy as computers become more powerful, faster and cheaper and can process increasing amounts of input data.

Two kinds of driver

Predictive journey time information can be used by the two kinds of driver on the roads. Those who need to be at their destination at a particular time will know when they need to set out – whether to get to work or a meeting, or deliver time-critical goods. Those who are more flexible may be able to use such information to avoid peak traffic – for instance when on shopping or leisure trips or visiting friends. The more the flexible drivers can avoid peak traffic, the less congestion for those who have to be on the roads at that time – which is win-win.

Anecdotal evidence of the usefulness of digital technologies is to be found in Just-in-Time delivery, offered by efficient road freight haulage businesses who understand the road network well and can manage their vehicle fleets to perform rather precisely. For instance, a haulier working for a supermarket business to deliver from the central warehouse to the stores may be contracted to deliver within 30 minutes time slots, and can do so.

Digital futures

These digital technologies need to be made generally available. Highways England has an important role. The investment case for digital technologies requires monetary values for journey time reliability, which might be available from the latest Department for Transport research on the value of time. The investment case also requires information about drivers’ response to predictive information about journey times, which is researchable, albeit not a static situation since positive responses are likely to increase with familiarity.

A further consideration is the information currently made available by specialist providers such as TomTom or general providers such as Google. It is not clear how reliable is this information or what impact it is having on the functioning of the road network. Nevertheless, there is scope for collaboration between Highways England, which has an interest in the overall efficiency of the SRN, and the private sector businesses that provide information to individuals for reward, directly or indirectly.

Assessment

It is a step forward that Highways England’s recent Concept of Operations recognises the importance of maximising the throughput of people and goods through initiatives such as smart motorways and Intelligent Transport Systems ‘to squeeze every drop of capacity out of what we have’.

So while we can’t build our way out of congestion,  we can manage the problems arising from congestion far more effectively. But to do that, we need a substantial reallocation of planned expenditure within the Roads Investment Strategy. The £15 billion spend over the next five years includes some ring-fenced funds for Innovation (£150m) and Growth & Housing (£100m). However, these earmarks are a tiny proportion of the total, with the bulk of spend devoted to traditional civil engineering work aimed at increasing capacity – a very twentieth-century approach that is not appropriate for the digital twenty-first century.

 

 

 

2015 marks the 50th anniversary of the first data collection of the British National Travel Survey (NTS). The Transport Statistics Users Group and the Department for Transport held a meeting on 23 September at which I was one of the speakers. My presentation is available Metz tsug 23-9-15. This article outlines what I said about air travel. A previous article dealt with daily travel.

Cessation of growth of air travel

Slide 11 of my presentation shows how passenger numbers using UK airport grew rapidly prior to the recession, with grow now seemingly resuming. The Government set up the Airports Commission to look at the case for additional runway capacity. The Commission’s growth projection is shown in Slide 12, based on an econometric model of demand for air travel, a refinement of a model developed by the Department for Transport. The Commission sees passenger number doubling by 2050 and has therefore recommended that an additional runway be constructed at Heathrow.

It is, however, illuminating to disaggregate historic demand by market segment. Slide 13 shows passenger numbers flying between the UK and USA. Growth was strong until 2000, when it stopped. This cessation coincided with 9/11, so no surprise at the immediate dip. What is unexpected is that growth did not resume, so either the effects of the terrorist attack have been long lasting, or other factors have come into play.

Slide 14 shows passengers flying to and from the UK and Japan, displaying a clear peak followed by a halving before bottoming out – seemingly an example of ‘peak air travel’. But could this be a statistical artefact? The data is published by the Civil Aviation Authority (CAA) based on reports of passenger numbers from the airlines. It might be that some passengers whose end destination is Japan are reported as flying to the Middle East if they change aircraft at one of the rapidly expanding hub airports located in this region. However, we have an independent check in the International Passenger Survey which asks returning UK residents where they have spend their time abroad, and departing overseas residents about their country of origin. Slide 15 shows visits to and from Japan – the halving of numbers is confirmed.

The US and Japan are exceptions to the general trend for air travel to and from the UK to increase over time. But these are important, well-established market segments; what we are seeing here may be evidence of market maturity that may in future become apparent in other segments. It seems likely that current econometric models of demand for air travel do not take account of the behavioural factors contributing to the plateauing and peaking seen for the US and Japan and thus are significantly mis-specified.

Time constraints

One factor that may limit air travel is time constraints. For daily travel (ie surface travel) there are only 24 hours in the day and many essential activities to fit in, so that travel time is constrained to one hour a day on average. For flying, it is not the hours in the day, but the days in the year that constrains travel – not the time spent in the air but the time away from responsibilities at home and work. We have no relevant data, but it is likely that for most people such constraints exist in principle and for some they may already bite. Time constraints on being abroad could cause travel to established destinations to cease to grow, or even to fall, as new destinations open up, whether for business or leisure.

Time abroad does not relate simply to frequency of air travel. If you spend two weeks away in one place, that involves one return flight. If you spend two separate weeks away in different places, that involves two such flights. We have information on frequency of flying from the National Travel Survey (NTS), not from the seven-day travel diaries (which wouldn’t pick up most air travel), but from a specific question  (NTS0316) about how many times respondents flew in the previous 12 months. This question has been asked for nine years, with the outcome shown in Slide 16. The pattern is stable, with over half the respondents reporting no flights abroad in the past year. I call these the ‘Infrequent Flyers’ – some fly rarely, some never, and some may have flown regularly in the past.

Infrequent Flyers

These Infrequent Flyers are of interest as a potential source of future demand for air travel, if their needs could be better met. We know something about them from the NTS, which collects information about the personal characteristics of respondents – age, gender, income, socio-economic status, place of residence. Slide 17 shows how the proportion of infrequent flyers declines with increasing income, as expected since affordability would be important for those on low incomes. However, 30 per cent of those in the top quintile don’t fly, even though they could very probably afford at least one trip, so that other factors are important.

Most of what we know about the characteristics of people who fly comes from surveys of passengers at airports carries out by the CAA. But of course the Infrequent Flyers are not usually seen at airports. However, earlier this year the CAA commissioned a household survey of attitudes to air travel which, like the NTS, includes this group. One example of the findings is shown in Slide 18, where it can be seem that the biggest single barrier to flying by the Infrequent Flyers is budget constraints.

So the Infrequent Flyers might fly more often in the future if their incomes rise faster that the costs of travelling abroad – hard to judge how likely that is. One important affordability factor that has boosted air travel in the past has been the growth of the low cost carriers (budget airlines), but market penetration seems largely complete as regards short haul leisure markets, with the prospects for long haul very uncertain. So the affordability boost may now be largely historic.

Assessment

Slide 19 summaries my conclusions on the prospects for the growth of air travel. There is emerging evidence consistent with market maturity as an important consideration. A likely factor limiting growth is time constraints, a topic worth researching. The prospects for the Infrequent Flyers travelling more often are unclear, in part because further price reductions seem unlikely. Altogether, the growth of demand in the future seems a good deal more uncertain than is generally supposed.

 

 

 

 

 

 

 

2015 marks the 50th anniversary of the first data collection of the British National Travel Survey (NTS). The Transport Statistics Users Group and the Department for Transport held a meeting on 23 September at which I was one of the speakers. My presentation is available Metz tsug 23-9-15 . This article outlines what I said about daily travel. A future article will deal with air travel.

Slide 2 of my presentation shows the main NTS time series, continuous over 40 years (the first data collection 50 years ago was a one off). This covers all modes except international air travel and is derived from 7-day travel diaries, hence covers daily travel. Journey frequency has remained broadly at about 1000 trips a year on average over the period, and average travel time has held steady at around 370 hours a year, or an hour a day. What has changed is the average distance travelled, which rose from 4500 miles in the early 1970s to reach 7000 miles in the mid 1990s, with no further growth in the past 20 years.

The growth in distance travelled, in the unchanged amount of travel time, is the result of investment in the transport system – private investment in more and better cars, and public investment in infrastructure. People have chosen to take advantage of faster travel to reach more distant destinations, not to save time going to previous destinations, to take advantage of increased opportunities and choices. For instance, by travelling faster on the journey to work, you have more choice of jobs accessible from where you live in the time you allow yourself for the commute, and more choice of homes accessible from your workplace; and similarly fast travel allows more choice of shops, schools and so forth.

Benefits of transport investment

Transport economists suppose that the main economic benefit of transport investments takes the form of journey time savings, which are valued because this permits more productive work to be carried out or more valued leisure to be enjoyed. However, the constant average travel time found in the NTS is evidence that there are no such time savings in the long run. So time savings must be short run, succeeded by changed travel behaviour as people choose more distant destinations. This means that we are appraising the value of long lived infrastructure investment based on short run time savings, which is not sensible.

We should ask what is the long run benefit from transport investment. This can be seen in East London, Docklands and beyond, which is being regenerated through rail investment – Docklands Light Railway (Slide 3), Jubilee Line Extension, Overground, with Crossrail under construction. Public investment in the rail system makes land accessible for development by private sector developers who construct residential and commercial property, which accommodates London’s growing population, both homes and employment. This is both the strategic narrative and the causal mechanism whereby transport investment facilitates economic growth. It is not sensible to value these rail investments on the basis of notional short run time savings. The real value is seen, for instance, in the high rents paid for office accommodation at Canary Wharf, reflecting both the access made possible by rail investment and the high value of the economic activity carried out there.

Strategic Road Network

Constant average travel time also provides an illuminating perspective on investment in the Strategic Road Network, shown in Slide 4 where the colour coding indicates the degree of congestion, from black through red and amber to green. In general, congestion occurs near to population centres, where local traffic impedes long distance users. On the M25 around London, for example, about half the traffic is long distance and half is local, importantly people going to and from work, which generates morning and evening peak congestion. Such congestion is seen by the Department for Transport and its roads agency, now known as Highways England, as a reason to increase capacity by adding carriageway. Evaluations of completed major schemes of improvement on the Strategic Road Network show average time savings at peak hours to be about 3 minutes per vehicle. Multiplying a few minutes by a large number of vehicles and by the standard monetary values of time yield economic benefits sufficient to justify the large investment in expensive civil engineering works. This is an example of justifying investment in long lived infrastructure on the basis of short run time savings.

But what happens in the long run? Faster travel resulting from widening the road is to the advantage of local users who can exercise more choice of jobs and homes, when they come to change these, by travelling further in the same amount of time. This generates extra traffic – known as ‘induced traffic’ – which restores congestion to its former level, so that long distance road users are no better off. This is the basis for the maxim ‘You can’t build your way out of congestion’, something that UK Transport ministers used to say when they didn’t have a big budget for roads investment.

What investment in the road network achieves is improved access that facilitates local development. This may be inadvertent as a consequence of misconceived efforts to tackle congestion. Or it may be intentional in support of local plans agreed between developers and planning authorities. However, it is difficult to devise a national road investment strategy on the basis of such local needs.

If we can’t build our way out of congestion, how can we tackle this challenge? Surveys of road users indicate that the main problem with congestion is the uncertainty of journey time. To deal with this we need to provide road users with good predictive journey time information before they set out, so they can plan their trips to arrive on time. This is increasingly possible as the digital technologies get faster, cheaper and more powerful. Digital technologies are very likely to be far more cost-effective than civil engineering in improving the performance of the road network.

Peak or Plateau

Returning to Slide 2, we see no growth over the past 20 years. About three-quarters of the 7000 or so miles travelled each year on average is by car, so it is no surprise that car use per capita has also changed little over this period (Slide 5). This is found not just for Britain but for the developed countries generally, and is known as ‘Peak Car’, although ‘Plateau Car’ might be a better term since, while it is clear that cessation of growth of car use started well before the recession, it is not certain that long term decline has set in.

Since per capita travel by all modes has stabilised, future total travel demand will be driven mainly by population growth, which in Britain is significant. But the pattern of demand growth will depend on where the additional inhabitants will live. If they are to be housed on greenfield sites, they would use cars and the road system would need to be enlarged. If, however, they are housed in existing urban areas where the scope for additional road capacity is limited, then public transport investment would be important.

Peak Car in London

London is an example of a city with a rapidly growing population with no greenfield sites suitable for house building, so that the brownfield sites and infill are being developed, and people are living at higher densities in existing properties. Slide 6 shows how London’s population grew until 1940, followed by a 50 year period of decline as people left a damaged, overcrowded city to seek a better quality of life in new towns, garden cities and the like. But around 1990 the tide turned as people saw again the attraction of city living, with numbers now projected to reach 11.3m by 2050.

While London’s population has been growing for the past 25 years, car traffic and car use has not (Slide 7). This is because of road capacity constraints. Having begun to build elevated motorways in the 1960s to accommodate growth of cars, this approach was abandoned in the face of popular resistance to the damage created in the urban environment. The historic street network has been retained, but with reduced capacity for vehicles on account of bus and cycle lanes, more pedestrian space, as well as parking controls in the inner boroughs and the congestion charging zone in the centre.

If the population of London is growing but car use is not, it follows that the share of journeys by car must be falling, as seen in Slide 8. Car use (driver and passenger) has fallen from 50 per cent of all trips in 1993 to 37 per cent currently. Walking plus cycling has changed little (cycling is growing, but from a low base), while bus and rail have increased, the result of substantial investment.

In Slide 9 the car share of trips in London is extrapolated to cover the century 1950-2050. Data prior to 1993 are based on the assumption that car use in London grew at the same rate as car ownership nationally, which we know from vehicle registrations. Future data is based on the assumption that London’s road capacity will not be increased but that rail investment will continue, in line with the policies of the Mayor and Transport for London. On this basis, the share of journeys by car will decline to about 27 per cent by 2050, despite which (or perhaps because of which) London is very likely to continue to thrive economically, culturally and socially.

The peak seen in Slide 9 I designate as ‘Peak Car in the Big City”. This shift away from car use in successful cities, as exemplified by London, together with the cessation of car use per capita nationally, are helpful in mitigating transport greenhouse gas emissions, as I previously described. The peak marks a transition: from an era in which the growth of travel demand was driven by increasing income to an era in which it is driven by population growth; and from the twentieth century in which increasing prosperity was associated with increasing car ownership to the twenty-first century in which increasing prosperity is associated with decreasing car use in successful cities (and static car use per capita beyond).

It is hardly possible to forecast a peak of the kind seen in Slide 9. A transport planner in London in the 1980s, thinking about the future, would see a 40 year trend in population decline, a 40 year trend in growth of car use, and would extrapolate both in to the future, as would a transport model. What the planner and the model would fail to foresee is the change in the economic structure of London and changed attitudes to urban living and car use. Models assume continuity between past and future, relying on historic relationships (elasticities and the like) to predict the impact of change in exogenous factors such as income and population growth, oil prices, and technological developments. However, the peak phenomenon implies a break in continuity and the need for forward-looking relationships. This is difficult for modellers to cope with since the bulk of the data they have for model calibration is historic.

The peak of car use in London occurred in 1990, 25 years ago, yet the modellers at the Department for Transport responsible for the National Transport Model still do not recognise this – they are in denial about Peak Car. In consequence this Model projects big increases in car traffic in London – depending on the scenario of up to 37 per cent by 2040 in the most recent Road Traffic Forecasts. This is hard to reconcile with the historic trend (Slide 7) and the plans of the Mayor, which do not involve increasing road capacity. The Model is not consistent with observed behaviour in London, nor with the evidence we have for other big cities.

Assessment

To think about the future, we would best focus on the invariant average travel time (Slides 2 and 10). The hour a day has hardly changed in 40 years, and probably for a lot longer, and is found in all other countries. The scope for increase is limited by the 24 hours of the day and all the other activities we need to undertake; and for decrease by the activities we need to reach beyond the home, as well as by the need to get out and about regardless of destination. So it would be sensible to constrain all transport models to hold average travel time constant in the long run. This would change model outputs when used to analyse the impact of a proposed investment, comparing the ‘do something’ with the ‘do minimum’ cases. Rather than time savings, the output would be changed access, land use and land value, which would be appropriate when the purpose of the investment is to stimulate economic growth – comprising population growth and productivity growth, both of which involve land use change.

My conclusions as regards daily travel are summarised in Slide 20. The NTS provides clear evidence that there are no travel time savings in the long run, and that there has been no increase in per capita travel for 20 years, the basis of the Peak Car phenomenon. The current theoretical frameworks for investment appraisal and forecasting are inconsistent with this evidence and hence need to be rethought. Using an economic framework inconsistent with the evidence results in sub-optimal investment decisions.

I see three problem areas. In my view we are investing too little in urban rail because we do not recognise the economic benefits associated with changed land use. Urban rail allows successful cities to grow to higher densities, which results in agglomeration benefits – economic, cultural and social – and which also mitigate greenhouse gas emissions. We are investing too much in civil engineering works on inter-urban roads in the futile hope of reducing congestion, although there is scope for supporting development where planners and developers wish to develop sites that require improved road access. And we are investing too little in the digital technologies that are likely to be far more cost-effective than the expensive civil engineering technologies in dealing with congestion. What we need here is to put monetary values on journey time reliability and to understand the response of road users to predictive information about journey time, as a basis for investment appraisal of digital approaches.

 

The UK Government Office for Science is running a Foresight project on the Future of Cities. I was asked to contribute an essay, the key points of which are:

  • Successful cities are characterised by growing populations as people are attracted to work, study and live. As population density increases, agglomeration effects contribute to economic productivity and to similar cultural and social benefits.
  • Increasing population density precludes enlarging the road network to accommodate growth of car-based mobility. Instead, rail systems must be expanded to provide fast and reliable travel for those who work in the city. So the share of journey by car declines.
  • In London, car use peaked at 50 per cent of all trips in around 1990. It has now fallen to 37 per cent and should fall further to 27 per cent by mid-century, on the basis of current projections and policies. This will make a significant contribution to mitigating transport greenhouse gas emissions.

Plans are being developed for additional road crossings of the River Thames in East London. Downstream of Central London there are at present two road tunnels (Rotherhithe and Blackwall), a ferry at Woolwich, and a bridge/tunnel at Dartford on the M25 orbital motorway. These are subject to delays at peak times, and the limited possibilities for crossing the river are seen as an impediment to the growth of East and South East London.

However, building additional road capacity runs counter to the general direction of transport policy in London in recent years, which has been to invest in additional rail capacity but not in road capacity. The result has been a steady shift away from car use while London has thrived economically, culturally and socially. So are additional river crossings a sensible idea?

The case for additional river crossings has been made most forcibly in the report of a Commission on East Thames Crossings, set up by the Centre for London and chaired by Andrew Adonis, a former Secretary of State for Transport who is a visionary thinker. Four new crossings are proposed: a tunnel at Silvertown to relieve congestion on the Blackwall Tunnel; a crossing – preferably a tunnel – at Gallions Reach; a bridge further downstream at Belvedere-Rainham; and a further bridge to supplement the Dartford Crossing.

In the view of the Commission, the ‘case for action is now overwhelming. New crossings will improve access to jobs, customers and suppliers, increasing business productivity and employment. The increased accessibility will also provide a boost for house building, so helping to tackle London’s severe housing shortage. Crucially, new crossings will also connect otherwise somewhat isolated communities to the opportunities which are now beginning to spread across the area.’

Transport for London (TfL) is preparing plans for the Silvertown Tunnel with the intention to seek powers to build in 2016, and is developing the concepts of new bridges at Gallions Reach and Belevedere. The Department for Transport (DfT) is considering two options for a Lower Thames Crossing at or beyond Dartford.

Questions

The proposals for new river crossings raise two key question: whether the additional road traffic that will result is likely (a) to be sufficient to foster a worthwhile amount of development, and (b) so big as to cause significant additional congestion on the road network. TfL has issued a report on the traffic impact of new crossings, based on a demand model. The assumption is that use of the new crossings will be charged, with tolls set at the rate for the Dartford crossing (£2.50 for a car at peak times). It is also assumed that the Blackwall Tunnel will be charged, to prevent diversion from the adjacent Silvertown Tunnel, although that would result in diversion of some traffic to non-charged crossings upstream.

The findings of the traffic modelling are quite complex but generally indicate reduced congestion while overall flows across all crossings are little changed. This is because the model does not allow for any land use changes that could occur as a result of changes in travel accessibility. However, the hoped for development as a result of the new crossings would depend on land use changes – new homes and new places of employment. So the modelling underestimates the likely growth of traffic and provides limited insight into the consequences for congestion.

We know from the National Travel Survey that average travel time remains unchanged in the long run at close to an hour a day. This means that investments that increase speed of travel result in people making longer trips to access more opportunities and choices, which in turn results in changed land use and enhanced land and property values reflecting the greater access. So we may expect that if new crossings are built, they will fill with traffic to the point where congestion inhibits further growth – the basis of the maxim that you can’t build your way out of congestion. The benefit will be seen as development of land and property, which is what is desired, but congestion would not be relieved.

How much development may we expect from additional river crossings? TfL’s assumption is that these will have one general traffic lane and one HGV/bus lane in each direction. So the scope for growth of car-based commuting seems limited. A further constraining factor is the tolls assumed both to help finance the new crossings and to manage demand. At £2.50 per car per traverse, this adds £25 to a regular weekly commute, on top of the usual running costs (average for all households £34 pw), which could be enough to deter most drivers who are not accustomed to paying tolls for travelling to work.

A study commissioned by TfL from the consultants Atkins considered the scale and distribution of the economic benefits of additional river crossings. The study identified property market areas in East London and how these might benefit from additional connectivity by car. The conclusion is that the northern side of the river has over twice as much floor space capacity that could support employment than on the south side, with the majority of this difference in the office sector. This potential imbalance in employment growth, combined with a relatively even distribution of potential housing growth, would lead to a greater demand for trips from those on the south side of the river commuting to the north, reinforcing the need for new river crossings.

Atkins estimate that in East London there is potential capacity for over 243,000 residential units, 2.5 million sq.m of office, 440,000 sq.m of retail and 1 million sq.m of leisure floor space. The biggest net improvement in connectivity, of the options considered, is from Silvertown + Gallions Bridge, which would result in a gross impact of around 20,000 additional residential units and 400,000 sq.m of commercial floor space. This increase is modest, the consequence of increases in access of less than 10 per cent across the wider area, and prompts the question of whether building new river crossings represents the best value for money in improving connectivity and stimulating development. The alternative would be more radial rail routes to central London, consistent with Atkins’ observation that while demand for housing in East London is strong, only sites with good links to the employment centres of central London are coming forward for development.

Width of the river

There is an inherent problem with river crossings in East London – the width of the river. If this were as narrow as in west London, then many more bridges would be possible (subject to repealing the navigation rights of tall ships, which could likely be justified). If the Thames were twice as wide as it is, then intermediate crossings at Gallions and Belvedere would be ruled out on cost grounds. With the width of the river as is, a couple of additional crossings between Blackwall and Dartford are feasible, but even with these additions, there would still be substantial constraints on cross-river traffic.

Perhaps the best use of new road crossings would be for buses , but to carry useful numbers of commuters over the distances to access employment opportunities, a Bus Rapid Transit system would be needed, with dedicated lanes protected from other traffic and fewer stops than on normal bus routes.

Assessment

The broad approach developed in London in recent years has involved investing in rail but not increasing road capacity – an approach that has contributed to the economic success of the city. Professionals and business people are willing to use rail for work journeys since this is faster and more reliable than car travel on congested roads. This helps free road space for commercial and public service vehicles. So the proposal to build additional road crossing across the Thames seems retrograde, particularly when new rail crossings have been and are under construction.

There is an opportunity cost for new river crossings – what could be done by spending the money in another way. Arguably, new and improved radial rail routes into East and South-East London would be likely to stimulate more development, both housing and commercial, taking advantage of lower land costs beyond central London.

Of the proposed new crossings, the two most likely to go ahead – Silvertown and Dartford – are seen as strategic routes where investment is justified by the present high levels of traffic and expected population growth. A further crossing at Dartford would be funded from DfT’s enlarged road construction programme. It is the two crossings in between, mainly for local traffic, that are most questionable – and therefore not evidently a high priority.

 

 

I spoke at a recent conference in London on Rail Station Regeneration and Development, which considered how economic growth and urban regeneration might be unlocked through station developments. This article is based on my presentation.

Construction of new railways has always been important for economic growth by making land accessible for development. In 1850 the United States’ economy was not much bigger than Italy’s. Forty years later, it was the largest in the world – the result of the railways that linked the east of the country to the west, and the interior to both. Land was developed for farming, mining, industry and homes, and both population and productivity boomed.

Something similar, albeit on a smaller scale, has been happening in East London, Docklands and beyond, where public investment in urban rail – Docklands Light Railway, Jubilee Line Extension, Overground, with Crossrail under construction – has made brownfield land accessible for development by the private sector as new commercial and residential property. This helps accommodate London’s fast-growing population, for both employment and homes, and illustrates how investment in transport can facilitate economic growth.

Transport economics

This direct relationship between transport investment and economic growth via changes in land use, with resulting uplift of land values, is not how transport economists see matters. They suppose that improvements to the transport system allow users to save travel time – time which is valued because it allows more productive work or more desirable leisure. However, travel behaviour has been monitored for the past forty years through the National Travel Survey, a key finding of which is that average travel time has remained unchanged at close to one hour a day. This shows clearly that in the long run there are no time savings from new investments. Time savings are short run and disappear as people take advantage of improvements that permit faster travel to venture further for more opportunities and choices – which in turn gives rise to changes in land use, as we see in East London.

The nineteenth century was the great era of the railways in which the energy in coal was harnessed to allow speedy travel between stations according to the timetable. But in the twentieth century, the motorcar became dominant, allowing door-to-door travel at any time of choice. However, its very success has limited car use in cities on account of traffic congestion, and the railways are undergoing a revival. National rail passenger numbers have doubled over the past twenty years, as have rail trips within London.

Growing demand for rail travel

This growth of rail demand is expected to continue, driven by population growth. In London and other big cities, the population is increasing, partly the result of the growth of the service sector which prospers in the dense agglomerations of city centres. But successful cities do not attempt to provide for more car use – rather, they invest in rail that offers speedier and more reliable travel for work journeys than the car on congested roads. So car use falls as the population grows. For instance, the car was responsible for 50 per cent of all trips in London in 1990, now down to 37 per cent. Car ownership in London and driving licence holding by the urban young are both declining, which boosts demand for national rail for interurban travel. And the growth of economic activity in city centres leads to more commuting by rail from beyond the city.

So rail travel is in a growth phase, driven by population growth and revival of city centres, which seems likely to run for as far as can be seen. This prompts investment in the rail system, both public investment in infrastructure and private investment in rolling stock. This in turn means more passengers on existing routes as well as on new routes. Hence there are many opportunities for land and property development adjacent to stations.

Opportunities for development

Two recent reports review the opportunities for development at or near stations.

Network Rail commissioned a study from the consultants Steer Davies Gleave in 2011 on the value of station investment. One interesting finding concerned the uplift in rateable values of property adjacent to station improvements in Sheffield of 67 per cent, which is more than three times the corresponding increase for the city as a whole, reflecting increase in the quantity of commercial development and the value per square foot. Analysis of the developments following station investment at Manchester Piccadilly indicated an increase in annual rental value of about £10m.

The Independent Transport Commission issued a report in 2014 about the spatial effects of High Speed Rail, based on evidence from European experience of how such major infrastructure investment can transform urban landscapes and their hinterlands. Lessons include creating opportunities for development by the private sector through partnership working with multiple funding sources.

However, the Department for Transport’s approach to economic appraisal of transport investments focuses on the saving of travel time and disregards changes in land use and enhancement of land value, since to include the latter would be double counting. But disregarding land use change means neglect of real, observable changes in market values that reflect the increased economic value of land and property made more accessible by the transport investment. Such economic benefits have spatial distribution of central interest to decision makers, as well as socio-economic distribution, including potentially big gains to existing property owners who might be induced to contribute to the financing of the investment.

Dissatisfaction with the DfT’s approach led Transport for London (TfL) and Transport for Greater Manchester to commissioned a report from the economics consults Volterra Partners that highlights the mismatch between the standard approach to transport appraisal, which focuses on welfare benefits to travellers, mainly as time savings, and the impact of transport investments on wider economic potential, both spatial and temporal developments. TfL is preparing a business case for Crossrail 2, the planned new SW-NE rail route across London, consistent with the Volterra report.

Need for new thinking about investment appraisal

At present, the officially endorsed methodology for economic appraisal of transport investments, which focuses on time savings benefits, is at odds with the business case which takes account of changes in land use. For real world decision makers, the latter is what matters, as exemplified by the plan to extend London’s Northern line tube to the Nine Elms development beside the River Thames. About a quarter of the £1 billion will be provides by the developers of the new residential and business properties, with the remainder from earmarked enhanced business rates. This business plan has been endorsed by all concerned. In contrast, the formal economic appraisal was barely relevant to decisions, being based on notional time savings by those travelling to the location in the future, plus an estimate of notional agglomeration benefits.

The problem with the DfT appraisal methodology is exemplified by the economic case for High Speed 2, the planned new rail route linking London to the cities of the Midlands and the North, where the benefit:cost ratio is about 1.4 based mainly on time savings. However, the political case for this very large investment is focused on its potential to promote economic development in the cities beyond London. But the time savings benefits tell us little about where and to what extent economic development may be expected to arise.

Part of the difficulty in estimating economic benefits from HS2 is that it will improve the connectivity of London with the cities to the north, such that there is inevitable uncertainty about where the benefits will accrue. Will there be a net gain to the UK economy as a whole, or will activity be shifted from one place to another? Will London suck in economic activity from elsewhere? Will the other cities, with lower property values, gain at the expense of London? These are difficult questions that involve much uncertainty, where outcomes will depend on a variety of supporting measures that the cities concerned might implement.

What is clear is that the standard analytical framework is not up to the task. Reform is needed, focusing on understanding the occurrence and value of changes in land use that arise from transport investment. Transport economists need to get out of the mental silo that has allowed them to disregard changes in land use. They need a wider framework for investment appraisal, comprising both methodology and practice, which recognise that the benefits of transport investment are seen as developments to which other stakeholders will commit. Such a framework would foster partnerships between transport authorities, developers and planners, which standard methodology fails to do.

The problem of spatial distribution is not unique to HS2. Consider the car park at the station of a town well located for commuting to the big city. Its existence allows a flow of economically active people out of the town. Is there potential to create a reverse flow on otherwise under used trains by developing the air space above the car park into a business centre with rents lower than in the city?

Assessment

The standard DfT approach to appraising rail investments is not fit for purpose since it disregards changes and land use and enhancement of land values that are the main long term benefit. Rethinking is needed.

There are good prospects for continued growth of demand for rail travel and good opportunities for developers to work with planning authorities and transport undertakings to realise benefits from rail investment.

 

 

Peter Headicar, a thoughtful academic who has written extensively on transport and planning, has authored a very worthwhile paper issued by the Independent Transport Commission. This takes as its starting point the report on Traffic in Towns by Colin Buchanan, published fifty years ago.

We decided not to adapt our cities to accommodate the car, as Buchanan had suggested. Instead we expanded the inter-urban road network, much of which now serves both long distance traffic as well as people making local journeys, the latter impeding the former. What policy options we now have remain unclear. What we surely need is the kind of deep thinking exemplified by the present paper, particularly as regards the relationship between transport and land use, and which contrasts with the superficiality of most official analysis.

I gave a presentation at the annual conference on Smarter Travel held in Birmingham on 5-6 February 2015. My topic was the policy context for smarter travel measures. I prepared a short article for the conference organisers which was published ahead of the meeting, see Metz Smarter travel article 1-12-14. My presentation is here: Metz Smarter Travel 6-2-15

My theme is that we have a good idea of how to achieve sustainable travel in Big Cities, exemplified by London, where the city is thriving while car use declines. Smaller cities are more of a problem, however.

The Department for Transport has published a report on understanding the drivers of road travel, prompted in part by the debate about Peak Car – the cessation of growth of per capita car travel seen in Britain and many developed economies. This is accompanied by a literature review prepared by RAND, a consultant.

DfT concludes: ‘after a decade of virtually flat traffic levels – driven in part by falling company car use, rising costs and stagnant or falling incomes – the outlook is for traffic at an aggregate level to continue growing again – as these factors stop having an impact or trends reverse – and population growth of 16% (to 2037) continues to mean many more millions of people wanting and needing to travel by car. But this traffic growth may continue to be at a slower rate, in line with the growth seen in the decade before the recession (an average of 1% per annum) as more people live in cities and urban areas and have access to different modes of travel, as the link between incomes and traffic weakens, and as other factors such as homeworking and online shopping continue to grow and reduce car demand.’

DfT promises new road traffic forecasts as well as an Analytical Strategy to tackle the key gaps in evidence. However, the more important task is to rebuild the National Transport Model as an open and transparent model available to all. The NTM appears to be projecting car traffic growth at twice the rate of population growth, which seems too high. The Model needs to be unpacked and its workings scrutinized in detail.

London is probably the city with the best travel and transport statistics, thanks to the efforts of Transport for London, published annually as the Travel in London Report series. Report 7 was recently issued.

Chapter 8 deals with the relationship between transport, travel demand and land use, both historically and for the future. The evidence is clear that development of land responds to the improved access arising from transport investment. This is of course not surprising – the earliest railways did just that. What is surprising is that conventional economic analysis of transport investment proposals disregards the increased value of land made more accessible. This is why investment appraisal based on the value of time savings to travellers is hard to relate the benefits to the economy that are the modern motivation for transport investment.