Reports:

10 Year Transport Plan - second assessment report

Chapter Two: 10 Year Plan Outcomes

The Commission welcomed the 10 Year Plan as a step forward in delivering the ITWP objectives. Particularly important was the longer-term commitment to increased levels of funding, addressing problems by looking at options across all modes and the recognition that, to have an impact on congestion, specific targets were necessary. As indicated in the progress report, the review of the plan needs to focus on reviewing the approach to delivering these targets. Overall progress on delivering key 10 Year Plan targets is set out in Appendix 1.

Supporting Economic Growth

CfIT welcomes the additional funding that has gone into transport since publication of the 10 Year Plan and the long-term commitment to sustain these levels of investment that the plan represents. For example, capital expenditure on heavy rail has tripled in the last two years (from £900m in 2001/02 to £2.7bn in 2003/04). It is vital that the level of funding envisaged is maintained over the full plan period and beyond to provide a transport network capable of supporting sustained economic growth.

The Commission recognises the difficulty of cutting traffic at a time of economic growth. This makes the need to address the historic relationship between traffic growth and economic growth (traffic intensity) even more important. In delivering sustainable economic growth, the Government and others must look for ways to facilitate economic growth while reducing car dependency. CfIT is encouraged by recent trends showing that between 1992 and 2001, GDP exceeded traffic growth at between 1-2% per annum, ie the relationship between GDP and traffic growth fell below unity (where a 1% increase in GDP equates to a less than 1% increase in traffic). However, early indications are that this trend was not repeated in 2002. It is believed that traffic growth once again outstripped economic growth, emphasising the continued importance of focusing on traffic intensity.

At the local level, the Commission is encouraged by the progress that is being made in several areas (particularly Nottingham and York), where traffic levels are dropping against a background of continued economic growth. This shows what can be achieved with progressive integrated policies. The Commission considers it essential that more research is carried out into the cumulative effects of small scale and so called 'soft' measures, such as workplace travel plans, bus improvements, cycle schemes and targeted marketing, were these to be applied as a co-ordinated package. There is evidence to suggest that applied intensively, small-scale measures could reduce car travel demand by between 5-10% nationally, rising to between 12-26% in the peak.^[1]

CfIT recognises that there will still be a need for some additional capacity on the road network. The question for Government, in taking strategic road investment decisions, will be how to sustain the service improvements that investment brings into the longer term. Evidence suggests that widening roads in congested areas, without complementary demand management measures, leads to short-term gains that are soon eroded by demand growing to fill the extra capacity.

CfIT's recent paper on delivery of the multi-modal studies (MMS) recommended adopting well-designed demand management measures as central to the successful delivery of MMS recommendations. The report Motoring towards 2050^[2] concludes that we cannot remove or even reduce congestion through road building alone, and that some element of demand management through pricing will be necessary.

CfIT supports the Government's policy that aviation should cover its external costs and believes that, in principle, this should extend to all modes. The question that needs to be addressed in the 10 Year Plan review is whether motorists are covering their costs and, if not, what policy levers are necessary to redress this balance. While this is an area of some uncertainty, research by ITS Leeds for the Department,^[3] suggested some motorists are paying too much while others are not paying enough. Rural motorists and users of uncongested roads are, through the current motoring tax regime, subsidising those who drive in the peak periods on congested roads.

The recent statement by the Secretary of State, that we cannot build our way out of the problems we face and that we need to consider the possibility of radically new policies, such as road pricing is an encouraging first step. It is important that the Government remain at the forefront of the debate as the issues are raised with the general public more widely and the areas of most concern become apparent. Fuel duty is able to impact on fuel efficiency and the total volume of travel. However, it is a blunt instrument that impacts almost equally on those who cause congestion and those who don't. It, therefore, has a disproportionate impact on poor rural motorists who use mainly uncongested routes and those who do not travel at congested times of the day. Vehicle Excise Duty (VED) is an ownership tax and, while recent Budget adjustments have helped to reduce engine sizes within the fleet, it does not address vehicle mileage. In fact changes to the legislation regarding company car taxation have had the largest impact on promoting smaller vehicle engines as well as a shift towards more diesel vehicles.

A fundamental review of how motorists pay to use the road network, focusing more effectively on payment at the point of use, is a prerequisite for balancing supply and demand.

Without measures to deal with the widening gap between the cost of private and public transport through changes to the current motoring tax regime and increases in subsidy for the bus industry, it is questionable whether any congestion reduction target can be met against continuing economic growth.

Key to reducing congestion in urban areas will be the effective introduction of urban demand management measures. The London and Durham initiatives have shown that, politically and technically, it is possible to introduce urban congestion charging schemes as part of a much broader package of measures aimed at improving the quality of life. While recognising that it remains too early to draw any firm conclusions, the London scheme, in particular, appears to be working far better than most expected, showing what can be achieved through appropriate pricing levers. It has also shown that effective change can be introduced successfully in the face of hostile media comment. The atmosphere surrounding the charging debate has changed dramatically since the London scheme was introduced. It was welcome that the Prime Minister raised the issue of congestion charging in his recent policy pamphlet^[4] and recognised the early success of the London scheme.

CfIT view: the key underlying principle is to aim to reduce the traffic intensity of economic growth, allowing economic activity to flourish while minimising the attendant growth in traffic. Coupled with measures to improve access to key services and better coordination between land use and transport planning to support integration, this will be the key to achieving sustainable economic growth. This should include full consideration of the role of properly integrated demand management measures to retain the service level improvements associated with any new road capacity over the medium to long term.

As a necessary precursor to the possible introduction of nationwide congestion charging after 2010, CfIT recommends a fundamental review of how motorists pay to use the road network, aimed at focusing more effectively on payment at the point of use, as an essential starting point in balancing supply and demand.

Challenge for the 10 Year Plan review
Is the Government committed to the use of effective demand management measures (including road pricing)? If so, how are these to be co-ordinated with capacity improvements in the transport network, to maintain the benefits into the longer term?

Social Inclusion and the Costs of Travel

The removal of the fuel duty escalator in the 2000 Budget and the expected return (in the medium term) of crude oil prices to lower levels than presently seen (coupled with improved car specifications and fuel economy), look certain to reducing further the real cost of motoring. This, and cost pressures on the bus and rail industries, have widened the gap between the cost of motoring and public transport fares.

The traffic and congestion forecasts in the 10 Year Plan were based on assumptions about motoring costs (including that fuel duty would rise in line with inflation), bus fares rising in line with inflation and rail fares falling in real terms (with quality improving). In fact, duty on petrol and diesel has fallen in real terms since 2000 by about 6p per litre; bus fares have increased by approximately 3% above inflation; and rail fares are being reviewed against a worse than anticipated operating environment.

Against this background, it is hardly surprising that progress in delivering increased bus patronage has been mixed. The UK bus industry receives the lowest subsidy in Europe, meeting 68% of its operating costs through fares and other commercial sources (CPT Facts 2003), and while rail and bus receive similar levels of subsidy, buses carry about five times the number of passengers and deliver far greater social inclusion benefits.

In London the Mayor has developed a pro-bus strategy to complement the introduction of congestion charging. As a result, patronage is growing strongly, albeit at an increasing cost to the public purse. Good progress is also occurring in some other urban areas, such as Brighton, York and Cambridge. However, the national picture (excluding London), continues to show a slow decline.

The Social Exclusion Unit pointed out that in reviewing the priorities in the 10 Year Plan it must also be recognised that the spend profile of the current 10 Year Plan is skewed in favour of those who travel most, ie those in the upper income quintiles. CfIT considers this a key issue in reviewing the balance of expenditure.

The Government is currently reviewing public subsidy for the bus industry and CfIT's report on best value produced far-reaching recommendations. The bus needs to be assisted in competing effectively with the car. One key issue, as noted above, is the comparative cost of motoring and bus fares. More public subsidy is needed to support the bus industry, targeted to deliver most effectively the Government's transport priorities of relieving congestion and countering social exclusion.

Unless we bring better incentives and more public funding to the bus sector we will miss the best and cheapest opportunities for providing alternatives to the car. CfIT's bus subsidy recommendations, if implemented in full, offer the chance to reverse the historical decline in bus use and improve social inclusion.

CfIT view: more public subsidy is needed to support the bus industry, targeted to best relieve congestion and to counter social exclusion. This should be focused on improving access to key services and reducing fares to the full range of socially excluded groups.

Challenge for the 10 Year Plan review
How will the transport barriers to social inclusion (particularly the growing differential between private and public transport costs) be overcome?

Reducing Pollution

The Commission welcomes the good progress being made both nationally and locally to ensure that the UK meets its commitments under the Kyoto Protocol to reduce its greenhouse gas emissions to 12.5% below 1990 levels by 2008-12. The UK remains on course to meet this target (one of the few EU member states in this position). In terms of local air pollution, emissions of NO_x and PM₁₀ continue to fall, driven by the impact of progressively tighter EU legislation and improvements in vehicle and fuel technology. The Government expects to meet its objective for NO_x for 2005 and PM₁₀ for 2010 over most of the country.

The existing voluntary agreements between the European Commission and motor manufacturers have been successful in reducing CO₂ emissions from cars. Assuming the voluntary agreement targets are met, there will be a 25% increase in new car fuel efficiency over 1995 levels by 2008, when the existing agreements run out. However, these agreements relate only to cars. They exclude lorries and buses, which contribute a disproportionate amount to the total CO₂ emissions. Figures from 2001 show that Heavy Goods Vehicles (HGVs) buses and Light Goods Vehicles (LGVs) contributed nearly 40% of CO₂ emissions, while making up about 12% of the vehicle stock.

Carbon Emissions (Ktonnes)
	2000	2001
Buses	1,065	989
Lorries	7,564	7,712
Cars	19,824	19,526
LGVs	3,426	3,481
M/Cycles	132	141
Total	32,011	31,849

Source: Air Quality Group, AEA Technology

CfIT consider that more action is needed to reduce emissions from these vehicles (in particular LGVs, which, based on outputs from the previous version of the DfT National Traffic Model, are forecast to increase from 4.2 MtC in 2000 up to 5.6 MtC by 2020). For example, in 2002/03, only £1.13m of grants were paid from the Department's Clean Up Haulage Fund, for the retrofitting and/or purchase of cleaner HGVs.

The Sustainable Development Commission (SDC) has undertaken an audit of the UK's Climate Change Programme. The SDC's findings endorse the expected achievement of the UK's Kyoto Protocol target but consider that without further measures, the UK will fall well short of the Government's goal of reducing CO2 emissions by 20% from 1990 levels by 2010. For example, the audit assessed as insecure (ie low security of projection) the 10 Year Plan's and Scotland's Sustainable Distribution Plan original projected combined saving of 1.6MtC(revised down to between 1.1- 1.4 MtC for England alone in the 10 Year Plan Progress Report)^[5].

The SDC's audit also assessed that carbon emissions from international aviation emanating from UK airports (which do not count towards the Kyoto Protocol target) could increase from 4.0MtC in 1990 to around 12.3MtC in 2010 and 18MtC in 2020 (compared to the DfT's own estimates of between 14-16 MtC^[6]). The importance of this is highlighted by the fact that the impact of aviation on climate change is increased beyond that of CO₂ alone by the range of secondary emissions released and their specific effects at altitude. These effects include increased tropospheric ozone, contrail formation and stratospheric ozone depletion7. Estimates used by the Department suggest this increases the impact by a factor of 2.7^[7]. This is a measure of the importance of aircraft induced climate change other than from the release of CO₂.

The Energy White Paper sets out a strategy for putting the UK on a path towards a reduction in domestic CO₂ emissions of some 60% from current levels by about 2050. In the long term this is likely to require a radical set of polices and options involving maximum uptake of low carbon technologies such as biofuels and/or fuel cells and hydrogen fuels. The likelihood is that there will also need to be movement to control traffic growth so that savings are not negated by increased traffic, especially in the more polluted urban areas where there would need to be absolute reductions in traffic levels. In the short term, efforts will need to be focused on improving the fuel efficiency of conventional vehicles, in particular lorries and buses, with the possibility of further voluntary agreements (or more formal regulation if voluntary agreements prove unsuccessful or unpopular) for the period beyond 2008.

CfIT view: to sustain the benefits of improved engine efficiency and better fuel consumption over the long term, the existing focus on technological improvements needs to be supplemented with measures to address traffic growth, particularly in the most congested and polluted areas. Without these measures, there is a danger that the benefits associated with improved efficiency will be negated by traffic growth.

There also needs to be a greater emphasis on reducing CO₂ emissions from lorries and buses, in particular LGVs, that are not covered by existing voluntary agreements.

Challenge for the 10 Year Plan review
Will improvements in vehicle and fuel technology alone deliver the more challenging carbon targets set out in the Government's Energy White Paper or will measures be needed to reduce traffic, especially at the local level?

Bus photo: Courtesy of Ealing Community Transport.

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1: Lynn Sloman, Transport for Quality of Life (2003) Less Traffic where People Live: how local transport schemes can help cut traffic. Royal Commission for the Exhibition of 1851, University of Westminster and Transport 2000 Trust.
2: RAC Foundation - Motoring towards 2050, May 2002.
3: Institute for Transport Studies, University of Leeds (1998) - Surface Transport Costs and Charges.
4: Progressive Politics, Policy Network 2003 2nd Edition.
5: UK Sustainable Development Commission, UK Climate Programme a Policy Audit (Feb 2003).
6: Aviation and the Environment, Using Economic Instruments, DfT, March 2003.
7: Aviation and the Global Atmosphere, Intergovernmental Panel on Climate Change, (1999).

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