Friday 21 January 2011

Transport Policy again

The Department for Transport has just laid before Parliament a report entitled Creating Growth, Cutting Carbon; Making Sustainable Local Transport Happen.  It includes the following information:

"According to the Retail Price Index, the cost of buying a car fell by 29% in cash terms between 1999 and 2009, while general RPI inflation over the same period was 29%. However, the cost of car maintenance, petrol and oil, and tax and insurance all increased markedly faster than general inflation. The "combined" cost of motoring (covering purchase price and running costs) fell by 11% relevant to the general rate of inflation. Over the same period rail fares rose by 43% and bus and coach fares rose by 58% "

Meanwhile the Automobile Association, reported inevitably in the Daily Mail, are complaining again about petrol prices:

'Sooner or later, politicians will have to face reality - more and more drivers cannot afford these prices. They are pushing up inflation and taking money from other consumer spending.'

The inexorable rise in the number and mileage of motor vehicles, with the inevitable associated congestion and pollution, is surely related to the fall in the costs of motoring both in real terms and more particularly in comparison to public transport.  The costs continue to fail to cover the 'externalities'.

This, from a briefing note prepared by the Institute of Fiscal Studies, continues to hold true:

"Why, in theory, should a government be concerned to change consumer behaviour through the use of fuel duty? The argument is that the costs of motoring exceed the private costs faced by an individual motorist. There are environmental costs, noise costs, road-damage costs and congestion costs which people may not factor into their decision about whether and how much to drive. This means that the costs to society of motoring exceed the costs to the individual, which will lead to a level of motoring that is both inefficiently high and inefficiently cheap from a social perspective. The duty is therefore a way of forcing the private motorist to take account of these social costs."

I am assuming the list of external costs does not include death, personal injuries and medical costs on the (slightly dubious) assumption that these externalities are covered by motor insurance.  Certainly I would add additional external costs relating to obesity and lack of fitness due to no longer moving ourselves around in the manner we evolved (or were designed if you prefer) to accomplish without the assistance of fossil fuels.

I do not claim to know the price of fuel at which these externalities are properly taken into account but I am very sure the level must exceed that at which at least some AA members have to think about whether they should be saving money by using public transport, car sharing or even a bicycle.  I see no evidence that our society is moving away from motorised transport as being overwhelmingly the default option for moving ourselves around.

I see a test of government mettle looming.

Postscript:  for a more in depth analysis of fuel costs try the Road Danger Reduction Forum who recommend an increase in petrol duty

One thing you learn very rapidly as a cyclist is the dramatic effect of air resistance which is proportional to the square of air speed.  One way to save petrol is therefore to drive at a slower speed.  There are even better reasons to do this, of course, and I have now set myself a voluntary limit of 20 mph in built up areas.  I find this has virtually no effect on the time it takes me to drive anywhere but it certainly does attract aggression from a few other motorists.


  1. As ever, a wonderfully sucinct post. These few paragraphs say as much as needs saying about our car sickness. The notion of "externalised costs" as "good practice" is at the heart of so much injustice not only on our roads but throughout the world and down through history.

    Thanks Martin.

  2. A superb post. Thank you for surmising perfectly why the motorist hasn't lost out over the last decade compared to people like me who do not drive and utilise public transport (and of course the bike!)

  3. Not just the external costs from end-user, though is it. Theres the impact of the oil industry on shipping, drilling, researching new locations (BP are moving to the Arctic region iirc).

    Companies can even do more to solve this. They can secure build cycle parking at low costs, set up car-pool clubs and organise discounts with bus companies. I used to work for the NHS and we'd get about a 10% discount on the buses.

    The AA have been wonderfully daft in their recent press (The Sun article last week is a good example). They know for a fact that there are too many cars for our roads and yet seem to be promoting car use beyond its physical boundaries - after all where exactly will we build new roads to counter this "growth" in car use?

  4. The driving at 20mph in urban areas is a great example of saving fuel, improving road safety and not having any real impact on the motorist.

    One surprising thing I learnt when I started using the cycle instead of the car was how easy it is to keep up with a car over the period of a journey in a town or city. Traffic lights and congestion determine the time taken, not maximum speed.

    Clearly fuel prices are way to low if motorists want to waste it on attaining higher maximum speeds that achieve nothing.

  5. Self imposed 20 limit in urban area is a great idea that I'm trying to stick to myself. I wonder if there is a bumper sticker campaign there...

  6. Am I the only cynic who doesn't believe for one moment that the government impose fuel duty in order to cover 'the external cost of motoring' rather than just to swell the coffers?

  7. @Mike

    It is worthwhil reading the IFS paper that Martin links to in his post. Particularly the section around the passage he quotes.

    On page 9:

    "The fact that real duties have not increased since the escalator
    ended in 1999 suggests that, whether economically or politically, there is little
    scope for using fuel duty merely as a revenue-raising tool in the future."

    Changes to fuel duty have an effect on revenue but are mainly a method of changing behavior... Have a read.

    Now, any loss of revenue due to decreased driving may be another issue altogether ;-)