TRANSPORT AND THE ECONOMY

Memorandum of evidence by the Campaign to Protect Rural England (CPRE) to the

inquiry by the Transport Committee

September 2010

Summary

• The economic impact of the recession on rural and sparse areas has led to a higher
increase in unemployment than urban areas. Cutting transport spending is likely to hit rural
public transport services and road conditions harder, while making it more difficult for people
to live and work in the countryside without owning a car.

• Tackling the ‘tourism deficit’ is key to bringing in private spending in sparser rural
areas and keeping public transport – whether for rural dwellers or rural tourists – viable.

• In summer 2010, France announced plans to spend over half its transport investment
on heavy rail, a third on light rail and less than a twentieth on roads. If Britain sticks to
outdated priorities and legacy road schemes, its competitiveness would be damaged.

• Significant cuts in expenditure and the localism agenda mean it is too early to say if
the historic imbalance between capital and revenue spending for transport will continue.

• The removal of the regional tier has created a significant strategic gap in planning
transport and it is currently unclear how it will be filled.

Recommendations

• The Spending Review should be rural-proofed to ensure that the condition of rural
roads does not deteriorate further and that rural public transport offers a viable way to get
around;

• Aviation policy should be reformed so that the impact on the ‘tourism deficit’, in
particular rural jobs, of expanding regional airports can be considered as a material factor in
planning decisions;

• Transport forecasting and appraisal is unfit for purpose and in need of radical reform
to achieve better and more transparent prioritisation of schemes.

• Local authorities should be encouraged to manage demand for road space and keep
public transport affordable by dedicating revenue streams from parking and other charges to
improving services.

• More thought is needed to create mechanisms for effective sub-national planning and
co-ordination. These could include guidelines for Local Enterprise Partnership (LEP)
consortia and a substantive duty to co-operate with neighbouring authorities, including it
being a condition for bidding from the new Local Sustainable Transport Fund.

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Introduction

1. We welcome the opportunity to submit evidence to the Transport Committee on

Transport and the Economy. As a leading environmental charity, the Campaign to
Protect Rural England (CPRE) has worked since our formation in 1926 to promote
and protect the beauty, tranquillity and diversity of rural England by encouraging the
sustainable use of land and other natural resources. We aim for a countryside that is
not just beautiful but also thriving, providing local jobs. With a branch in every
English county, about 60,000 supporters and over quarter of all parish councils
affiliated to us, our local reach is particularly strong.

i) Have the UK’s economic conditions materially changed since the Eddington
Transport Study and, if so, does this affect the relationship between transport spending
and UK economic growth?

2. The economic changes since the Eddington Transport Study in 2006 are both cyclical
and structural. Besides the fact that the country has been in recession there seem to
be structural changes too. These include signs in National Transport Statistics that
traffic increases are less than GDP. There is great potential to increase the
decoupling of growth in travel and economic growth. Investing in technologies such
as broadband, particularly in rural areas where connections are slowest, and managing
demand, such as introducing Lorry Road User Charging, would be helpful.

3. The commitment of the coalition Government to rebalance the economy in areas

where public sector jobs make up a higher proportion of employment means that the
relationship of transport spending and economic growth in different regions should be
considered. It would be better to share growth across the country more evenly, as this
would improve social benefits, reduce economic costs of worklessness and spending
on benefits, and could also bring environmental benefits.

4. It is also important to consider economic differences within regions as well as within

them. 20% of the population live in rural areas (defined since 2003 as those parts of
the country outside settlements of 10,000 inhabitants or more). Key economic facts
include1:

• Although unemployment levels are lower in rural areas and they have
increased by 73% compared to a 39% increase in urban areas between Q2 2008 and
Q4 20092;

• Total Entrepreneurial Activity is higher, in particular a higher rate of business

start ups in rural areas and greater resilience of businesses, due to the higher
proportion of micro-businesses3;

• Pockets of severe deprivation in rural areas can be masked by prosperous

areas and sparsely populated areas, which tend to be on the periphery, have the
highest levels of income poverty4.

5. ‘Transport poverty’, where households spend a high proportion of income on

transport, is higher in rural areas as it is becoming harder to live without a car as bus
1
Commission for Rural Communities, State of the Countryside, 2010
2
Ibid., Figure 3.3.1 using data from Office for National Statistics, Labour Force Survey
3
Ibid., pages 131-134
4
Ibid., pages 86-89

2
 networks and local facilities are cut back. Increasing sustainable tourism can help
support rural public transport by increasing passenger numbers. Since 2001, traffic
levels have increased more on minor rural roads than any other type 5 but their
condition has deteriorated the most rapidly 6, making them increasingly unpleasant
and unsafe for walking and cycling.

6. The ‘tourism deficit’ – the gap between what tourists from abroad spend in the UK
compared to what tourists from the UK spend abroad – has averaged £18 billion over
the last ten years 7. Even though more people have been holidaying at home during
the recession, it has not decreased significantly. With London gaining much from
spending of foreign tourists, this deficit affects sparser areas of England
disproportionately. In these areas tourism can provide a major source of employment
and so reductions in spending can threaten the viability of private businesses in the
service sector as communities cease to be viable. Yet the 2003 Air Transport White
Paper states that this negative economic impact of increasing aviation should not be
considered in planning decisions. These sorts of impact should not be ignored and
the Government should formally withdraw that White Paper.

ii) What type of transport spending should be prioritised, in the context of an overall
spending reduction, in order best to support regional and national economic growth?

7. Public spending should be prioritised on schemes that deliver or safeguard jobs,

increase productivity and deliver a low carbon society, where economic growth is
shared fairly between and within regions. Making better use of existing infrastructure
and services, whether by maintenance, upgrades to traffic and rail signals, national
smart cards and promotion (such as Smarter Choices), offers quick wins and jobs 8.

8. In some cases there will be a need to ‘spend to save’ as there is a real risk that severe
cuts to public transport subsidies could reduce services to a point where they are no
longer viable. This could create a vicious circle where higher subsidy levels are
needed per passenger. Investment in Smarter Choices, ‘soft measures’ (i.e. not hard
measures like new infrastructure) such as Individualised Travel Marketing, smart
cards and Travel Plans, could help attract new passengers to public transport and keep
services viable on reduced levels of subsidy.

9. This will be particularly important in rural areas and the Spending Review of the
DfT’s budget should be rural-proofed to ensure it does not have a disproportionate
impact. We very much welcome the announcement of a Local Sustainable Transport
Fund as the previous proposal was for an Urban Challenge Fund that would have
excluded rural schemes. Bidders for the fund should be required to show that they
have considered a wide range of transport options and have listened to the views of
neighbouring authorities. The Fund should be well resourced, as small schemes can
offer exceptional value for money, by using significant top-slicing of the existing
Integrated Transport Block and Regional Funding Advice.

10. An excellent example of the need to shift spending from legacy road schemes to
innovative packages that make better use of existing assets and widen travel choices
is the controversy over the A453 widening in Nottingham, which would cost up to
£194 million. Identified as the top regional priority by the regional and business
5
Ibid, Figure 2.4.9
6
Ibid, Figure 2.4.10
7
Office for National Statistics
8
Ekogen, Employment in Sustainable Travel, 2010

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 bodies, on the basis of it allegedly tackling congestion and creating £320 million of
benefits, it was opposed by CPRE at public inquiry in November 2009 and has now
been put on hold pending the Sspending Review.

11. CPRE highlighted that the Highway’s Agency’s own figures showed that the scheme
would at best lead to the worst congestion along the A453 – the am peak into
Nottingham – still being worse in 2030 that today, albeit less bad than doing nothing.
This is a generic problem with using road expansion to tackle congestion. Increasing
road capacity on congested corridors generates as much as 10% more traffic per
year9, so real time savings are quickly eaten away. Almost half the supposed benefits
of the A453 scheme would be between 2041 and 2071, in other words the scheme
would take a long time even to produce savings to meet its costs and predicted
benefits beyond this could easily be wiped out by future policy changes.

12. While major investment in roads would lead only to a small reduction in the increase
in congestion (i.e. journey times would be longer and less predictable in the future but
not quite as bad as doing nothing) journey time improvements from investment in rail
would not deteriorate in this manner. Indeed at the public inquiry, CPRE proposed an
alternative package of rail electrification, minor junction changes, lower speed limits
and ‘Smarter Choices’ measures. While the A453 has a Benefit Cost Ratio (BCR) of
3.3, electrification of the Birmingham – Derby railway would have a BCR of 5.1 10
and Smarter Choices a BCR on 4.5 in terms of congestion reduction alone 11.

13. Given the Government’s commitment to change appraisal (in particular the value of
reducing carbon emissions) and the impact on future traffic flows of other proposed
policies, (in particular Lorry Road User Charging) the difference in economic
benefits between the A453 and the alternative sustainable package would be far wider
than the BCR figures quoted. This further illustrates how distant benefits in outdated
road schemes can evaporate as policy is updated and how a fresh look is needed at
current priorities to ensure value for money.

14. Other countries are already ahead of us in terms of realigning their spending to move
their transport systems beyond oil12. For example, the French Ministry of Ecology,
Sustainable Development and the Sea published its draft National Transport
Infrastructure Plan in July 2010 13. Around €170 billion is proposed to be spent over
20 to 30 years in the following proportions: 52% rail, 32% urban public transport
(metros, trams and trolley buses), 9% waterways, 4.5% roads, 1.6% ports and 0.5%
air (predominantly rail connections to airports). This includes measures to make
better use of existing infrastructure, such as electrification and resignalling, as well as
new infrastructure.

iii) How should the balance between revenue and capital expenditure be altered?

15. There has historically been a major issue over the balance of capital and revenue
funding for local transport. The impact of cuts on capital and revenue funding
following the CSR is as yet unknown and the potential for local authorities to raise

9
DfT, Roads: Delivering Choice and Reliability, 2008. Traffic generation is, however, likely to be
much lower during recessions.
10
Network Rail, Network Route Utilisation Strategy: Electrification Strategy, 2009
11
Page 8 in DfT, The Effects of Smarter Choices Programmes - Summary Report, 2010
12
Gilbert & Perl, Transport Revolutions: Moving People and Freight without Oil, 2010
13
Ministère de l’Écologie, de l’Énergie, du Développement Durable et de la Mer, Schéma National des
Infrastructures de Transport (Avant-Projet), 2010

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 funds more easily, such as through Tax Increment Financing (TIF), is likely to
depend on the nature of forthcoming legislation. The extent to which this balance will
continue to be a problem at different levels of government is therefore unclear at
present.

16. Besides new sources of capital, there should be greater encouragement given to local
authorities to secure revenue streams from charges and penalties. These can help
manage demand for road space and subsidise public transport to ensure ticket prices
increase less than increases in the cost of driving. Zurich, for example, has used
parking charges to subsidise its world class public transport network since securing
citizen approval in a 1973 referendum 14. Proportionate increases in parking charges
plus the introduction of Workplace Parking Levies, Road User Charging and
decriminalised enforcement of parking and moving contraventions should be
encouraged, so long as the revenue raised is reinvested in the local area to give people
and businesses more travel options.

iv) Are the current methods for assessing proposed transport schemes satisfactory?

17. It may be attractive to believe that the best transport schemes can be chosen as easily
as the best buys in a supermarket but the truth is far more complex. There are
fundamental problems with current systems of appraisal and forecasting, which are
unfit for purpose15. With the Government’s urgent priorities of supporting and
rebalancing the economy, while cutting the fiscal and carbon deficits, the current
system urgently needs radical reform.

18. Because appraisal is based on a sixty year period, it relies heavily on forecasting.
Other countries, such as France, only consider thirty year periods due to the
substantial uncertainty beyond this. Most benefit is from tiny time savings added up
between lots of drivers over 60 years. This is a very poor proxy for economic
benefits16. Wider impacts such as those on the natural environment or on social
distribution and regeneration cannot be easily valued let alone compared objectively.
A more honest and transparent approach to assessing schemes is needed rather than
pretending it can all be reduced to a single magic number, the BCR.

19. There have been suggestions that the DfT will rely less on its New Approach to
Transport Appraisal and instead rely more on the Treasury Green Book’s five stage
approach. The first stage is the strategic case, which checks to ensure that spending
proposals fit with policies and priorities, the second is the economic case, which
selects the proposal with the highest Net Present Value (NPV) of proposals that have
passed the first stage. There is a serious risk that transport schemes whose funding
has been frozen may now simply be assessed on their NPVs, without considering
their strategic case, in other words their fit with wider Government priorities. Many
road schemes in particular would be unlikely to have a valid strategic case, even if
they may appear to have a high NPV.

v) How will schemes be planned in the absence of regional bodies and following the
revocation and abolition of regional spatial strategies?

14
Page 143 in Mees, Transport for Suburbia: Beyond the Automobile Age, 2010
15
For a fuller critique see the forthcoming CPRE campaign report on High Speed 2.
16
Network Rail, Prioritising Investment to Promote our Economy, 2010

5
 20. There is considerable uncertainty about how transport schemes will be planned as the
regional tier has been abolished without consideration about how best to carry out its
strategic functions. While there were a number of problems with the regional tier,
such as its use to impose top-down housing targets, it did fill a strategic gap between
the local and the national.

21. In the last year or so in some areas the regional tier was getting to grips with the need
for a real change in transport priorities to tackle carbon emissions and reduce the need
to travel. It may take time for new structures, such as the Local Enterprise
Partnerships, to develop a thorough understanding of the new transport agenda. The
fact that they are to be aimed at economic growth rather than wider objectives –
including but not limited to reducing carbon emissions – may lead to a disconnect
with the DfT’s priorities. Their focus should, CPRE believes, be on delivering
‘sustainable growth’, defined as economic growth that can be ‘sustained and is within
environmental limits, but also enhances the environment and social welfare, and
avoids greater extremes in future economic cycles’ 17. LEP membership should be
broadened to include wider civil society, including from the social and environmental
sectors.

22. CPRE’s recent report, The Bigger Picture, highlights the need for a level of planning
between the local and national levels to:

• Set a spatial framework – to manage projects with impacts across authority

boundaries, such as rail schemes, and integrate planning for development around
them;

• Manage debate between local authorities – to resolve disputes about the level
and location of development and regional funding priorities as well as balance local
concerns with wider objectives;

• Maintain an overview of implementation – as national monitoring may be too

broad brush while local monitoring may not pick up cumulative issues.

23. Previously local authorities would normally deal with government regional offices
rather than directly with departments. The combination of the abolition of
government offices, regional assemblies and development agencies, and significant
reductions in staff at the DfT could impact severely on the quality and timeliness of
decision making. Rather than having regions agreeing among themselves on strategic
spending priorities, it could mean the DfT having to decide between competing local
priorities. As a result, power would be centralised rather than localised.

24. Local Enterprise Partnerships (LEPs) are supposed to fill the gap but many of the
proposed LEPs are made up of two or even just one county. The fear is that rather
than ushering in a new era of co-operation, the LEP bids will generate a new
competitiveness between neighbouring areas, making sub-national co-ordination less
rather than more likely. It is this type of regional co-ordination that, in countries such
as Germany, has been crucial in providing the framework for high quality regional
transport.

17
Definition from CLG and BERR, Prosperous Places: taking forward the Review of Sub-National
Economic Growth and Regeneration, 2008

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 25. Although the Secretary of State has suggested 18 in a recent speech the possibility of
strategic consortia of LEPs, there would still be a gap between strategic long-distance
initiatives like high-speed rail and short-distance travel such as cycling. It is for what
he described as ‘intermediate journeys involving complex routing across suburban
and rural areas’ where strategic planning is most needed, whether to provide real
alternatives to driving or managing congestion.

26. A new duty to consult has been suggested as a way forward to ensure better co-
ordination of local planning. The danger is that this would merely be a procedural
‘tick box’ duty. A substantive ‘duty to co-operate’ with neighbouring authorities is
needed with a simple, swift yet transparent, process to resolve disagreements.

CPRE
September 2010

18
Rt Hon Philip Hammond MP, Speech on sustainable transport, 10 September 2010