Comment
In this section, members of ITS reflect on a topical issue in the transport sector, giving their condensed take on a complex subject.
Stimulus spending and transport - Dr James Laird comments
Transport, as a classic intermediate good, has many long reaching tentacles that touch on all aspects of life - social, environmental and economic. This has two important consequences. Firstly the impact of transport on any one facet is typically diluted because it is very hard to 'lock-in' the benefits to a particular target audience - e.g. lorries. Secondly it means that proponents of new transport projects/policies can re-cast their proposal in the lexicon of the day. Today that lexicon is the economy, but given the fact that transport touches so many facets of society, it is important to look closely at any economic arguments to justify spending on transport as a means to stimulate the economy.
The transport sector contributes approximately £54billion to the UK's GVA - a contribution of just under 4.5%. But its economic importance extends far beyond such stark numbers. Cities are regarded as the economic powerhouses to a service based economy and such city economies are fundamentally dependent on people commuting to work. Tourism is important if not essential to peripheral economies and the easy movement of goods is relied upon by export based industries. Long distance travel is needed to sell products into new markets and to maintain share in existing markets. It is for these reasons that the contributions of transport to the economy have been argued to be much larger than a simple 4.5%. It has for example been argued that the air sector itself contributes 3.6% of total GDP through direct, indirect and catalytic effects. Similarly it is argued that rail freight contributes more than 6 times its direct turnover to the UK economy. Extrapolating these arguments further and one could argue that the majority of the economy is in one way or another dependent on transport.
These are impressive statistics, but are not in themselves a justification for investment. In the Candlemakers' Petition, a famous 19th century French economic satire, the candlemakers petition government to prohibit a foreign competitor with an unfair advantage - the sun. Economic benefits would flow as a consequence, as output of the candlemaking industry and in its supply chain expands. The reality of course is that economic resources would be directed from productive sectors to less productive sectors and some economic growth would be crowded out. Transport is not candles but both are (or were in the case of candles) facilitators to a functioning society and economy. Expenditure on such goods is a necessity, but in an ideal world we would have a cohesive society, a vibrant economy and high mobility with minimal transport expenditure.
It is important therefore that investment, with an economic goal, focuses on creating long lasting effects that improve business performance - what economists term improving the supply side. Investment that drives down the costs of production is desirable. Transport investment can undoubtedly do this, and it can do it at a number of levels. At the local level it can ease market frictions that prevent unemployed workers accessing employment, at the city level it can increase the role of the city centre giving agglomeration productivity benefits and at the national level it can reduce barriers to trade and enhance competitive effects. It is not though necessarily a universal panacea for an economy in strife. At the local level, unemployment cannot be eased unless there are jobs for the unemployed to travel to - so careful economic analysis is needed to identify such locations. Transport projects also deliver their benefits gradually over a very long life time and aside from the direct impacts during construction are unlikely to grow the economy sufficiently in the short term to ease unemployment. Other supply side mechanisms for economic growth in the short term are therefore needed (e.g. skills training) - which transport investment could potentially support.
Whilst in the short term the main impact of transport investment will be the construction related jobs, a substantial investment in transport infrastructure will have a long lasting impact on the supply side of the economy - lowering costs of trade, improving productivity, etc. For this reason it is superior to other 'stimulus' type spending on projects with only a short life - or which have little use value. Similarly within the transport sector investment in useful infrastructure will have a longer lasting effect than revenue support of transport services. Of course transport investment that benefits business also benefits others. This can both strengthen the case for investment and weaken it - if it leads to, for example, excessive commuting as people move house and locate further from their workplace and/or leads to a further shift away from more sustainable forms of travel.
Similar arguments can also be extended to other intermediate goods: the digital economy and renewable energy to name but two. Both have long lasting effects and will improve the supply side of the economy. High speed broadband is also a substitute for some travel - the gas lamp/electric light bulb to the candle! Additionally within the transport sector the argument is not constrained to just transport infrastructure. This is because the ideal of behaviour change in transport is that we can achieve the same or more with less. That is investment in travel behaviour change (of say business trips) could also bring about supply side improvements.
As candidates for stimulus spending transport infrastructure and behaviour change are potentially stronger than comparable investment in other intermediate goods. This is because the direct impacts of the transport stimulus (the construction/implementation costs) will mainly occur in the UK. Buying in new digital technologies from the US or wind turbines from Denmark, whilst improving the supply side of the UK economy in the long term, may not have the stimulating effects desired in the short term (apart from the US or Danish perspectives!). A similar 'leakage' argument can be extended to the purchasing of new train/LRT rolling stock from Germany. For stimulus spending therefore a balance has to be struck between long run supply side improvements and short term economic goals.
Stimulus spending on transport can certainly lead to short term economic impacts during the construction/implementation phase, as other forms of capital investment would. Importantly it can also deliver long term economic growth. Unintended consequences of new infrastructure on behaviour and lifestyles can weaken the case for investment and some transport investments may also result in leakage out of the UK economy. It is therefore important to treat all transport investment proposals uniquely. In determining appropriate candidates for stimulus spending careful economic analysis is necessary to identify those proposals that contribute most to the short and long term economic and social goals of government and society more generally.
20 March 2012
Bridging the Digital Divide - Dr Greg Marsden comments
On my travels today I was invited to connect my linked-in network to my flight so I could see who else it might be interesting to talk to on the plane. Ignoring the value I might place on travelling as a bit of space and time for me, it is a reminder of how far and fast mobile computing is moving. However, even in this age of apparently ubiquitous mobile communication and enhanced personal computing in the UK 10 million people do not have access to the internet and of these, 4 million are the most socially and economically disadvantaged in the country. 1 in 4 adults have never used the internet. 39% of people over 65 do not have internet access and 70% of people who live in social housing aren't on-line (data from the Royal Geographical Society).
The BRIDGE (Building Relationships with the Invisible in the Digital Global Economy) has been a three year collaborative EPSRC research project between the Institute for Transport Studies and partners in the Product Design and Engineering Department, Middlesex University and the Engineering Design Centre, University of Cambridge. It started with the premise that over time, non-participation will lead the excluded to become invisible. They will have little influence on the design of new services and will therefore not be able to become part of the potential future market. Reflecting back on the statistics once more, 80% of government transactions are with the 25% of the population that are worst off and least engaged with the internet. It will be difficult to transition to fully automated systems unless the demand and supply side is planned in an integrated manner.
The research at ITS looked at the acceptance and potential for three different types of technology. The first, more automated driving assistance, was used to establish some basic contentions about technology acceptance amongst users of computers versus non-users. Sometimes the obvious result is a relief! Whilst both groups were sceptical this was far more so with the non-computer users. The next two tests were more practical applications. The first of these looked at the role of in-car information systems which gave warnings about speed limits, accidents ahead, congestion and facilities such as pubs and rest areas. This appeared to add to the driving experience even for non-users of computers although less critical information such as rest area location was deemed to be distracting.
The final experiment looked at the role of technological aids for walking such as digital maps, information about buildings, shops and buses, and video contact with friends. Participants walked local areas whilst using tablet computers. The study has found that the social organisation and specialisation of roles within the home have a significant impact on learning to use these technologies; that usefulness is informed by the penetration of social media and technology within their social networks; and that there are indications of positive impacts on physical connectivity in both familiar and unfamiliar surroundings. Participants who are currently not using digital technologies expressed both their desire to learn how to become a user, as well as the obstacles preventing them to do so. Further work has been looking at the interface design issues and how it maps to people's expectations.
So, some new technology appears to have the potential to add to the travel experience of those that are currently digitally marginalised. It is not the case that they don't use these technologies because they don't want to. Different design concerns do emerge for these users although it is not possible from this study to separate out fully the effects of age or income and experience. This is one of many strands of technology acceptance research on-going at the Institute and it looks set to be a growth area. Innovations will continue to be pushed out into the market place and research has an important role to play in anticipating those, shaping them and ensuring they are as compatible as possible with a sustainable and equitable transport system for the future.
The BRIDGE project is led at the Institute for Transport Studies by Yvonne Barnard.
This is part of a monthly blog on research projects at the Institute for Transport Studies by the Director, Dr Greg Marsden
(G.R.Marsden@its.leeds.ac.uk).
Winter Weather Disruption – Dr Greg Marsden comments
Britain and much of Europe has been under a blanket of freezing weather, bringing snow and ice across much of the country for an extended period. The severity of the weather has not reached those seen in late 2010 but it was still significant enough to see Heathrow airport drastically cut capacity earlier in the week and to witness renewed levels of public anger at the inability of the UK transport system to perform well in extreme weather. One estimate of the costs of the disruption on just one day was £280m.
Simon Calder, writing in the Independent, earlier this week suggested several easy remedies. These included more rights for train travelers affected by delays, penalizing transport companies that do not get their staff in place in anticipation of the bad weather, lower speed limits and construct extra capacity. These are all things that can be done at a system level. Reports by Begg and Quarmby following the events of last year provide a few more. Many of these suggestions will have merit and be taken forward – but there is not the space here to discuss them further. Instead, should we ask a more fundamental question about our own travel patterns, the expectations we have and the expectations that are put on us?
The Disruption project www.disruptionproject.net is studying the extent to which travel patterns are actually more adaptable than we currently anticipate. We change job, home and the types of activities over time and we make much more frequent re-evaluations of where and at what time we do things. Our choices are often influenced by the actions of other household members. One example would be the knock on impacts of a school age child being ill or a school closing for training or bad weather if there are no full-time carer roles in the household.
We make assumptions about the availability and quality of transport services when we make our location decisions and it is here that the problem may lie. Over time, as transport networks have expanded, then the ability to commute longer distances have increased. Distance though brings vulnerability to adverse events such as accidents on the network or weather. Typically, the further out from cities we are the less choice of alternative ways of travelling we have.
This brings us back to thinking about the winter weather problem. The current default policy position is to attempt to keep transport networks operating as fully as possible for as long as possible. As Heathrow have found, where the network is built around operating at or near capacity, this can quickly break down. On the roads, even when roads can be kept clear, conditions can be treacherous and accidents are commonplace, leading to additional jams in conditions which are difficult to tackle. There are very significant costs in the machinery, manpower and chemicals required just to maintain the operation of the core network. There is however, little guidance as to how we should use this precious resource. People struggle in to work because they think they should. For some jobs this is unavoidable but for others it is possible to reschedule and restructure. Could we embrace this further and have both a plan for the use as well as operation of the network in extreme conditions? If, for example, a reduced size and frequency public transport network could be guaranteed to operate who should use it? Could there be differential pricing or some sort of “priority card”? Should it be made clear to people that if you live within walking distance of these priority routes that you will not be penalized for failing to reach work on time? Would it be more cost-effective to have winter weather travel planning? One of Norman Baker’s remits in the Department for Transport is to consider alternatives to travel – this seems like an opportunity to put this into practice.
This article might lead to a sustained period of the warmest winters on record. However, all of the policy prognoses are for climate change to bring more extremes of weather and, therefore, one might expect more weather related disruptions. For now, it is back to looking out of the window, checking the websites and hoping that the gritters have done their stuff. Maybe in future we will have learnt some different lessons and also be reacting to the potential disruption by working smarter. That might have financial gains and safety benefits as well as distressing the winter disruption experience. If you are interested in further findings on the Disruption project please contact Dr Greg Marsden. The research is funded by the Engineering and Physical Sciences Research Council and involved partners at the University of Aberdeen, Brighton University, Lancaster University, University of West of England, University of Glasgow and the Open University.
This is part of a monthly blog on research projects at the Institute for Transport Studies by the Director, Dr Greg Marsden (G.R.Marsden@its.leeds.ac.uk)
http://drgregmarsden.wordpress.com
Can Transport Help Cities in the Fight for Economic Growth? – Dr Greg Marsden comments
The recent economic downturn has focussed attention on the role of city policies in generating growth. In January 2012 the Centre for Cities published updated statistics showing that unemployment is a particular problem in urban areas. Whilst in general towns and cities in the north have performed worse than those in the south, the pattern is uneven. Why has Bradford performed worse than the rest of the Leeds city region and why has central Manchester fared better than Leeds? Does transport policy have any impact on this?
The evidence is not as strong on this as it could be. Work in the US suggests that transport is one of a series of factors which can influence the relative growth of cities. Certainly the UK government sees transport infrastructure as one of the main means of bolstering growth, underlined by the Chancellor's major new road, rail and local public transport investment plans announced in late 2011. In addition Mary Portas' report on the future of the high street for the Department of Communities and Local Government highlighted how sensitive high streets are to parking pricing policies.
So, does what types of transport projects and policies should cities adopt to give themselves the edge? Should they, as Portas argues, eschew more significant demand management policies or should they, as Stockholm and London have done, adopt major new charging schemes and trade on the dual benefits of an innovative image and a revenue stream for future investments? These questions are part of a multi-disciplinary project on 'Competitive Cities' being led by Dr Simon Shepherd at the Institute for Transport Studies.
Early work has looked at the motivations of decision-makers in local government in different towns and cities of four major city regions in England. It showed that towns and cities both compete and collaborate to maximise their own competitive position. The major cities are seen as the main powerhouses of growth, with other towns and cities trading on particular distinctive skills sets or tourist offers and spill over effects from the major cities. Working together they can act as a more powerful voice to argue for investment from central government.
Underneath this collaborative veneer however exists a series of strong competitive forces which clearly influence the policies adopted.
- For parking policy, the principal concern is over the strength of the retail offer. Whilst major cities typically have a strong and distinctive offer which can compete with out of town centres they still price to limit the loss of trade to these malls. For smaller towns the potential loss of trade to other towns and sub-regional shopping centres has a major impact on pricing. Here, Portas' analysis seems to overlook the limited role that towns and cities often have over parking policy, with much being held in part or in full by the private sector.
- For potential congestion charging policies the main cities will be the leaders with the minor towns and cities acting as a potential second tier of follower cities. It appears that the main rationale for major cities to consider adoption is the step-change in government investment in alternatives to the car prior to the scheme opening as well as the on-going revenue stream to fund future investments. The major cities here seem to focus on investment packages that work for them rather than worrying about the price in other major cities - at least within limits.
Whilst much of the competition focuses on economic growth and attracting high value GVA jobs to their areas, the environment remains an important concern in what makes a city attractive. Similarly, the types of investment that are felt likely to attract new jobs are not the same as those that will get the long-term unemployed back to work.
Whilst this snapshot of the early findings is interesting in its own right, it is only one part of the research programme. The remainder of the work is trying to understand how we can predict the likely responses of cities and towns to different potential future scenarios where there is increased use of parking charging or congestion pricing. Work by Andrew Koh, David Watling and Simon Shepherd has begun to flesh out the likely responses of local authorities if charging is adopted. Consider for example if Nottingham adopted a congestion charge - what might Leicester and Derby do? Would they be able to get more out of jointly planning an approach to charging or should they act in isolation? Who wins and who loses? This work is adopting game theoretic techniques to look at the bi-level problem of leader and follower cities and it is extending existing understandings by allowing for the potential for the interaction between several leaders. This work is complex but could provide an understanding of the strategies that might unfold between cities. There is then a question as to how these strategies might play out if we allow the transport and land-use system to adapt over time also - a further stage in the project.
It is too early to provide definitive answers to how cities might behave and what the impacts of working in collaboration or in isolation might be. It does seem clear however that city decision-makers see themselves as acting in competition and they see transport investments and transport demand management as important tools in that competition. Given this, we need to move beyond existing transport modelling approaches. We can no longer treat the decision-maker as an isolated individual seeking to optimise some kind of welfare function for the citizens of the city. The decision-making criteria vary significantly with different policy decisions and there is clear evidence that decisions are not being taken in isolation from those in other towns and cities - even those at some distance.
There simply isn't enough evidence to inform city decision-makers about how best to set their policies for economic advantage so much of the current decision-making must be viewed as experimental. What we can say from the work to date is that competition between cities does matter to decision-makers and to the decisions they are taking - this work should open the door as to how to ensure that this leads to the best possible outcomes.
If you are interested in further findings on the Competitive Cities project please contact Dr Simon Shepherd (S.P.Shepherd@its.leeds.ac.uk). The research is funded by the Engineering and Physical Sciences Research Council.
This is part of a monthly blog on research projects at the Institute for Transport Studies by the Director, Dr Greg Marsden (G.R.Marsden@its.leeds.ac.uk)
http://drgregmarsden.wordpress.com
The Case for High Speed Rail - Professor Chris Nash comments
Of course, building high speed rail lines is an enormously costly business, and particularly so in Britain. Whilst the density of development and extensive use of tunnelling are obvious reasons for this, studies have also concluded that there is an element of inefficiency in our costs which it should be possible to drive out, whilst our cost estimates also include an adjustment for appraisal optimism which may not be justified when the initial estimate is so high. At 90m euros per route km the estimated cost of HS2 is twice that of the most expensive lines built in other countries to date. Inevitably also as with any transport infrastructure its construction and use will bring noise and disruption to some areas, including in this case an area of outstanding natural beauty in the Chilterns.
The two big benefits of high speed rail according to both the earlier study and those undertaken by the HS2 time are time savings and additional capacity. There is extensive research on the value people place on time savings, and this is used to inform the valuation of leisure time savings. But for business travel time savings, the valuation is based on the wage rate plus overhead cost of employing labour, on the assumption that this is the cost saving resulting to the employer. This approach has been widely criticised for inter city travel by train, where travellers may work on the train. On the other hand there is nevertheless evidence of a high willingness to pay for time savings by employers, perhaps because of other benefits, such as the ability to undertake more meetings in a day and save repeat journeys or overnight stays. More research on this is needed. Clearly improved reliability and reduced crowding are also of particular benefit to business travellers; both should be effects of high speed rail.
The increased capacity provided by high speed rail will not simply benefit passengers on the line itself. Even the first phase from London to Birmingham will also carry trains to North West England and Scotland, relieve the southern part of the West Coast main line of most of its fast services, and freeing up capacity for commuter and freight trains. The extension to Sheffield and Leeds will also provide relief for the Midland and East Coast main lines. How important this relief is depends very much on the growth of rail traffic. Before the recession both passenger and freight traffic were growing rapidly; whether and when growth returns to those levels is a key uncertainty in the case for high speed rail.
Two other benefits that are often cited for high speed rail are savings in carbon and wider benefits in the form of promoting economic growth. Regarding carbon, whilst high speed rail remains more energy efficient than air, and than all but the most efficient cars, it uses a great deal more energy than existing trains. There is also energy used in its construction, and it generates travel that would not otherwise have taken place. The result is that there is no great energy saving from high speed rail. There may be carbon benefits in the long run as electricity production is decarbonised, but with existing and projected mix of fuel to generate electricity this does not appear to be a very great benefit.
Wider economic benefits come if projects actually raise labour productivity (beyond that already accounted for in time savings), reduce distortions due to monopoly power or attract extra people into the workforce. Existing practice in Britain assumes that such effects are confined to major urban areas, so the only wider economic benefits attributed to high speed rail in the official appraisal are the result of improvements to commuter services into the cities by the freeing up of capacity on existing tracks. Whether there are in fact wider economic benefits from improved inter urban transport remains hotly debated. There is some positive evidence from schemes elsewhere, but such effects do not seem always to occur, and in any event it is very difficult to tell whether what has happened is simply relocation of growth in output that would have occurred anyway as opposed to truly additional benefits. A better understanding of the likely impact on the UK economy of bringing five of our city regions closer together is needed so as to move beyond unsubstantiated claims about employment generation and the North/South divide.
In short then, those who argue that there is no business case for HS2 are exaggerating. On the basis of reasonable assumptions the social cost-benefit case looks good, although it will not come close to commercial viability so in times of severe constraints on government spending the alternative uses of the funds must be carefully considered. But there are very big uncertainties surrounding it, and to the extent that these uncertainties could be reduced by further research, it would seem prudent to undertake that research before committing to such a huge level of expenditure.
Prof. Chris Nash
Research Professor
January 2012
