Paying for no jam tomorrow

Oct 10 2007 by David Rosser, Western Mail

Recently the Cardiff Chamber of Commerce made a call for the introduction of road pricing across south east Wales. The purpose of the call was both to fund an improved transport infrastructure, providing major improvements to the road network and more investment in public transport, and to tackle congestion.

The fact that a business lobby organisation was calling for additional charges to be levied not something you see happen every day – demonstrates both the importance of a reliable transport system to business, and the extent of the concern that what we have in south east Wales is rapidly becoming a barrier to our economic prospects.

At the same time the Department for Transport is providing funding to half a dozen English cities to introduce their own forms of traffic management schemes, likely to involve some form of road pricing or London-style congestion charging.

There is no doubt that economists can build a sound case for road charging. If you need to ration a scarce resource – in this case tarmac at certain times of the day – then introducing a pricing model can provide an economically efficient solution. If it costs £5 to drive from Caerphilly to Cardiff in rush hour then those people for whom that journey is worth £5 or more will pay, and those for whom the journey is not worth £5 will travel at another time, or make other arrangements. We thus allocate the road space to those to whom it is worth the most.

But convincing the nation’s economists is not really the issue. To make road pricing a reality will need the acceptance of road users – both personal and business – their numbers are too great for politicians to introduce such a scheme without broad acceptance of the need. What are the issues that will determine whether we can make a system of road pricing work, and gain the buy-in of drivers?

The first surely must be hypothecation and additionality – long words for making sure that all the money raised by road charging goes into improving the transport system and that it is truly additional spend – not allowing the Government to reduce its existing commitment. One interesting aspect of the Chamber’s announcement was that it did not call for revenue neutrality – lowering fuel duty to offset road pricing, for example. It was not just aimed at tackling congestion but at raising more money to invest in the transport system. There is little trust between the motorist and the Government currently, with significantly greater sums raised from motoring taxes than are spent on the road system. Will the Government be able to convince drivers that extra taxes will really be spent on transport and will motorists accept that spending on public transport will make their lives easier?

And this leads us to the second critical factor. No system of road pricing (unless punitively expensive and therefore politically unacceptable) will achieve anything other than a minor change in behaviour unless there are real alternatives available. And so any business or commuting traffic will need significant improvements in public transport – not just the quality but capacity and reliability. Buses will need to be acceptable to the middle class commuter, and will need to get to their destination more reliably and quickly than the car. The rail network will need longer, newer trains, running more frequently and to time. A very real challenge.

The last major issue is around the practical implementation. Do we accept the inevitability of a series of local charging schemes and keep our fingers crossed on the issue of interoperability? Or do we look for a big bang approach with consistent technology and pricing rules across the country? Central London has its own system, the Severn Bridge has its toll. Bristol is looking at congestion charging, the new M4 around Newport is likely to be tolled, and some are calling for Cardiff to have a congestion zone. The Chamber calls for a unified charging system covering south east Wales which will help local commuters and local businesses. But a unified charging system across the UK would help those planning longer journeys, ensure consistent technology and could then allow some changes to motoring taxes to provide as much flexibility to achieve behaviour change as possible.

So these are some of the very major issues we face. Relatively quick fixes on a local or regional basis, or taking longer to design and implement a national scheme? Making the case clearly and convincingly to the motorist – are we trying to solve congestion, raise more cash to spend on roads and public transport (and in what proportion) or are we trying to price motorists out of their car to address climate change? Given the lack of trust, government needs very clearly to be able to explain the problems and how the solution will work – muddling up the arguments will be counter-productive.

That more money is needed to be spent on the UK’s transport system is not really in doubt to anyone who regularly uses it. Convincing motorists that they should be the ones to pay is not going to be easy.

David Rosser is director of CBI Wales.