The true cost of congestion

High quality transport infrastructure is critical to the success of any economy. It is a vital part of the chain that links businesses with customers and suppliers. As a result, economic growth is strongly linked with the quality and length of a country’s transport network. The ability to travel further and faster opens up new markets and increases economic activity. Access to new markets leads to greater competition, which in turn leads to lower prices and therefore, higher incomes. Restricting a country’s ability to connect can only have a negative impact on economic growth.

The British Chambers of Commerce (BCC), a network of 100,000 businesses representing five million employees, has recently undertaken a significant survey on our transport network. Worryingly, it shows that Britain is now being held back by its inadequate transport infrastructure. The BCC has recently released its 2007 Transport Survey in which the cost of the failings of Britain’s transport infrastructure to its businesses has been calculated at £18 billion. Expectations are that this is set to increase over the next 12 months. The UK is more heavily reliant on its road network than other European nations, yet investment over the last decade has failed to keep up with demand. Increases in car ownership have not been met with increases in road capacity which has resulted in crippling congestion. Road journey times rose for the first time in 1972 and continue to increase today. A new study by traffic information service KeepMoving.co.uk, found that Britain’s cities are amongst the slowest in Europe. In fact, out of the top ten slowest, the UK has six entries with London being the slowest city of all.

The UK is far more reliant on cars than the rest of Europe. Public transport accounts for less than 15 per cent of the modal share for all motorised transport. It is therefore extremely important that the UK’s road network allows businesses to go about their business unimpeded. Yet at the present time, due to chronic under-investment, small and medium enterprises (SMEs) are finding themselves comparatively disadvantaged by our failing transport system.

This is clearly not sustainable. If we are to compete with the burgeoning economies of Asia and elsewhere, we must make the most of our people, their skills and the business environment in which they operate. An efficient, effective transport infrastructure is critical to the success of our company base and to the continuing strength of our economy.

Our members have recognised the need to take action in order to move to a more sustainable use of the existing network. In our 2007 transport survey, we recorded a 78 per cent endorsement for the principle of road pricing. However, this support is not without conditions. The business community would expect that for any road pricing scheme to get the go ahead, it would have to replace the current taxation of road users, and that any monies raised from charging motorists would be ring-fenced for transport infrastructure improvements. Equally as important, it is necessary that the Government invests upfront in the public transport infrastructure, which would naturally see an increased take-up.

Charging users for a scarce resource offers a workable and realistic solution to the congestion that is crippling our road network. It will also have the benefit of discriminating against those who need to drive and those who do not, therefore clearing the roads of unnecessary journeys. Such innovations could have the knock on effect of changing people’s behaviour in order to reduce the cost of travel. People who do not need to travel by car may opt for the train or bus. Hauliers may switch to night time travel which could potentially be cheaper as the road is less congested. The school run, which our members overwhelmingly rated as the chief cause of local congestion, will become less attractive due to increased costs. The possible removal of school time traffic could have the potential to remove nearly 20 per cent of peak time congestion.

Congestion charging is, however, a controversial issue in the UK. In February of this year a petition set-up on the Prime Minister’s website to protest at a possible future scheme received 1.8 million signatures. The facts that the protest were based on were spurious, but it highlighted the negativity with which the British people view any scheme which seeks to add further taxation onto road users.

British motorists are already heavily taxed; government revenues from road users amount to around £47 billion, yet the total government expenditure on the UK’s major roads stands at only £7 billion. British business is wary of further taxation but the BCC and its members are seeking a pragmatic solution from the Government. Any road user charging scheme would have to be associated with a re-evalutaion of the taxation levied on drivers. It would certainly be wrong to charge a road tax whilst then charging people again to use the roads. However, it is also understood that huge investment is required to improve the current network. It is for this reason that we call on the Government to ring-fence any monies raised from a road pricing scheme to improvements in the transport network, including investment in public transportation. This is not to say that road user charging would be the only source of funds for transport improvements. Indeed, we would also expect a large portion of the £47 billion levied on road users each year to be directed back into transport improvements.

It is important for the Government to open a dialogue with the public and the business community; those who will be expected to pay. Support among the business community for road pricing has declined over the last 12 months. When the BCC asked its members whether they would support the principle of road pricing in 2006, we recorded a figure of 87 per cent in favour. By 2007, this figure had dropped to 78 per cent. The reason for such a drop in support is due to the failure of the Government to engage with the business community in the face of widespread criticism. The online petition might have caught the Government off guard, but a failure to show leadership in backing its own policy, preferring instead to duck away from the negative publicity, has seriously dented business confidence. Belief in the Government’s ability to introduce a system that could significantly reduce congestion has fallen since last year. Over half of businesses responding to our 2007 survey stated that they did not believe the Government could produce a system which met their business needs. This is evidently a situation which is counter productive for both the business community and the Government. Above all, the goal should be to provide a high quality transport system that allows goods to move freely and easily around the country.

So can road pricing be successfully implemented around the UK? The obvious place to start is to look at London’s experience and to see if it can be replicated elsewhere. It is important to recognise that in London the situation differs from other cities in the UK. The vast majority of people travelling into and out of London do so by public transport. This simple fact made it a lot easier to impose a charge on the remaining few who did choose to drive. London is unique in the UK in that its public transport provision is so extensive. However, the key goal of the scheme was to reduce congestion and it has been successful. Acceptance comes from seeing results but it can also come from a belief that the authorities are trying to change and improve a situation rather than trying to raise revenues. In London, much was made of the investment that would go into the bus system and it is clear from the increase in the number of buses on London’s roads, and also the investment in high quality bus corridors, that this commitment was acted on. Londoners could trust that the scheme was implemented to do what it was set-up to do. It is for these reasons that the BCC calls for hypothecated funding and upfront investment in public transport. If businesses and the public are to accept paying for using the road network they must be able to see tangible benefits.

However, road pricing is not the only solution to congestion. Capacity enhancements will still be required, while demand management offers the ability to lock in the benefits of extra capacity. The business community can, and is taking measures to reduce congestion through more sustainable travel measures. Responding to local congestion, over 40 per cent of BCC members have stated that they have implemented work from home policies or installed IT and e-business solutions. Businesses can act as a conduit to employees to ensure behavioural change when considering transport decisions. Through business incentive schemes, so called smarter choices, companies can promote employees to travel to work by public transport, to cycle, or even to share capacity in personal motor vehicles. The BCC itself will be working with the National Business Travel Network next year to highlight the benefits of travel planning in reducing congestion to businesses.

It is important for the business community to take a leadership role in pushing for change and adopting more sustainable working practices, but this needs to be part of a partnership with government. Unless our leaders are prepared to take bold decisions on issues such as road pricing, the transport networks that bind this country will become ever more congested to the point that our economic competitiveness will be affected.