GENERAL CONCLUSIONS AND RECOMMENDATIONS
(5.1) THE CONSEQUENCES OF CHEAP TRANSPORT
Conventional wisdom says the motorist is overtaxed as an easy target for the Chancellor of the Exchequer, but all the evidence shows that – to the contrary – roads cost the country far more than is raised in road specific taxes and charges.
Therefore road users are paying at point of use a much lower price than the laws of economics in a free market would suggest.
When under priced, any goods or services suffer excess demand – this is true of roads – also other transport where price is regulated.
As transport is a facilitator, not an end in itself, cheap transport changes the structure of society. It is very observable how towns have spread out with people enabled to live large distances away from their needs of employment, shops, entertainment, education, health care etc. As people become commuters from rural communities, they displace local people unable to afford the high housing prices, forcing local rural workers to set up home in neighbouring towns and become reluctant commuters.
Businesses have been able to locate large distances from their markets, knowing their markets are mobile with cheap transport to come and buy their products or services, or alternatively they can transport their products large distances to their markets.
Education and Health have been able to centralise and relocate large distances from the communities they serve due to cheap transport being able to move large numbers of pupils and patients to large centralised schools and hospitals.
With people requiring cars to reach all these facilities which they have either moved away from, or, have moved away from them, they use cars for many other journeys which are not necessary resulting in the staggering statistic that 26% of all car journeys are less than 2miles and 60% less than 5miles. 1
These changes are reinforced as a vicious circle: - As the structures of society spread out due to cheap transport, facilities can no longer be accessed locally, therefore more people require to use transport to reach some distance facilities, they may as well use other distant facilities undermining viability of local facilities, more local facilities close down more people need to use transport etc.
Figure (5.1) VICIOUS CIRCLE of DETERIORATING COMMUNITIES
(5.2) TRANSPORT CHARGED AT ITS TRUE ECONOMIC COMMERCIAL PRICE
Giving people back their money with the free choice to spend it how they wish with transport charged at its true economic commercial price – What Happens?
People can still afford to drive their cars if they wish. If there is no change to travel patterns and roads are commercialised, the money pouring into the road companies will enable investment to take place and road capacity can be built to match demand.
But will people choose to spend this money now in their pockets on driving their cars? The survey indicates that many people will change their habits, 60% walking more, 60% using public transport more, and 34% cycling more. This survey is stated preference, but other research based on revealed preference suggests that people will not transfer to public transport in significant numbers, but will reduce the amount of travelling as they access what they need closer to home.
Where the structures of society are still local, people may choose to use these more. Other people may decide to move closer to their needs of employment, retailing, entertainment etc, increasing the value of well positioned properties – reducing the value of properties built away from peoples needs.
Some business may decide to relocate in local communities close to their customers and employees, or change their manufacturing processes to reduce the need for transport e.g. using local materials. Other business may decide to invest more on Information Technology so that more of their employees can work from home and they can reach their customers with much reduced need for transport.
Increased transport costs on Health and Education will encourage relocation of schools and hospitals back in the local communities where they belong. E.g. Where masses of children are transported long distances to schools to get all the specialist teaching under one roof, the education providers may decide to send the few specialist teachers to teach in a different school each day.
This will set up a virtuous circle: - As people decide to use available local facilities they will use transport less; business will then see people preferring not to travel long distances. Fearing loss of business they will decide to relocate in local communities increasing local choice. People will travel less to use improving local facilities, reinforcing to decision makers the need to service people locally encouraging even more to relocate in local communities. This will reduce intimidation of motorised transport. People feeling safer walking and cycling will use local facilities more etc. Other people will decide they need to live closer to their employment, reducing need for commuting and also reducing value of housing in rural communities. These will thus become more affordable for rural workers, reinvigorating our rural communities as places for people to live who work there and who currently are unable to afford housing.
Figure (5.2) VIRTUOUS CIRCLE of THRIVING COMMUNITIES
(5.3) BUSINESS TRANSPORT and ENERGY COSTS
Increased business transport costs will encourage relocation closer to markets, and companies who adapt by reducing their dependence on transport will thrive in the local markets while those slow to change to the new market conditions will struggle and some not survive.
If other countries do not make the same reforms, British companies may be put at a disadvantage. To ensure Britain remains competitive, it will be important to ensure all imports from countries where energy and or transport are not charged the full costs, are charged at entry to Britain the full pollution and other externality costs of the manufacture and transport of those goods. Once in Britain they will be charged for use of the transport system the same as the British.
To ensure our exporters are competitive in the markets to which they sell,
it will be necessary at point of export to subsidise them by the amount their
destination country subsidises transport for the distance between manufacture
or warehouse and port, and by the amount their destination country subsidises
energy use by failing to charge their own energy users the costs pollution
imposes on health, agriculture, climate change etc. This will of course require
delicate negotiation with other countries. However the foundation has already
been laid at the Rio and Kyoto Summits.
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(5.4) LOSS and POTENTIAL PROFIT of the
ROAD NETWORK
If we take the £337billion (Table
2.2) estimate for the value of the road network and use the most modest
cost of road use over income from road users in taxation a loss of £23billion
(Table 2.3) that represents a loss of nearly 7%. This is appalling management of
a valuable asset costing over £380 for every UK citizen in income tax that
should be in our pockets. If commercialised as proposed, charging an economic
price for use, an asset this size managed properly should return a profit of
8%, £27billion that represents £450 for every UK citizen per year. This is a
net benefit of £830 per year that every UK citizen should be better off by if
the roads were commercialised as suggested with every UK citizens' ownership of
the road network formalised as a shareholding.
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(5.5) RECOMMENDATIONS
Ø All transport costs must become transparent with proper Profit & Loss Accounts and Balance Sheets, including all external costs as well as the direct costs.
Ø All externality costs must be allocated and paid to those who bear them.
Ø All externality costs from pollution, however created, thus including domestic and industrial energy production, must be allocated and paid to those who bear them.
Ø The money saved by the Treasury due to transport and energy users paying all their externality costs must be returned openly to all UK citizens to spend how they wish without political interference.
Ø Safety standards and targets must be harmonised between all modes at the highest possible standard, with no mode able to gain commercial advantage by skimping on safety rules, enforcement, training or technology that another mode has to comply with.
Ø All transport providers must become commercial organisations charging their users a commercial price and receiving no subsidy from the state. Where subsidy is deemed necessary this must be paid only to the user, who will choose how to spend the money in a free market.
Ø The remaining state-owned transport (mostly roads) must become commercial. United Kingdom citizens own these, therefore this ownership should be formalised as share ownership.
Ø The road hierarchy needs to be defined as described in Part 4, Local, County, Trunk, (though not too rigidly). United Kingdom citizens should then be invited to vote in a referendum to formalise their ownership of the roads in their local area, county and for the national Trunk Road network. Financial responsibility and policy would then be transferred from the politicians to the people. All the negative arguments about “fat cats” and excess profits of previous privatisations would be eliminated, as the distribution and use made of the profits will be under the control of the shareholders (all United Kingdom citizens) and if they decide to vote “fat cat” remuneration that is their choice, not the choice of a small number of wealthy shareholders.
The only other major part of the United Kingdom transport network still nationalised is London Transport. Also owned by United Kingdom citizens, this should be privatised the same way – weighting the share distribution so that Greater London residents own the majority. This will be so much better than the public/private partnership method proposed by the Labour Government to keep political control.
This will give true democracy with the people of London who will receive dividends on profits able to take the correct decisions on fare policy to raise revenue for investment and match supply and demand in a free unregulated market, without the furore that either a private company not owned by citizens, or state ownership would induce. The residents who pay most of the fares would be setting them, and would receive dividends on any profits made. If they are dissatisfied it will be up to them to use their shareholders’ vote to change policy within the restraints of financial responsibility.
The citizen shareholders would be able to enter into agreements with private
companies similar to the Government’s proposed public/private partnerships.
However, control with financial responsibility will be with the citizens and
London Transport will be able to develop sustainably without interference from
politicians worried about the next election, fighting with other departments of
state for limited money from the Treasury.
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(5.6) MONEY SAVED BY THE TREASURY
With all transport in the private sector, transport providers must not be subsidised, and with the exception of certain disabled provision, legislation should be enacted to make subsidising transport providers illegal.
The money saved by the Treasury should be returned to all United Kingdom citizens. This could be done by increasing personal allowances to be shown as former transport subsidy on an annual tax statement, so that people know how much they are benefiting by this change and accept the increase in price of transport at point of use.
Those people not paying tax, most of whom are on benefit, should receive this money as transport subsidy payment.
If in the future a Government decided it wanted to subsidise transport, it would have to subsidise the user not the provider, so that the user always makes the choice whether or not to spend money on transport and which mode.
The Government must never again be allowed to take transport choice away from citizens by spending taxpayers money in inappropriate ways to interfere in transport for short term electoral reasons. Nor be able to distort the market to generate the excess transport that has caused such damage to quality of life in the 20th century.
People must choose for themselves how they spend their money!
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1) Bourne Richard, “Transport Trends and Transport Policies”, Transport 2000, London, 1994