Transport spending:Getting more from less

Paul GodierTransport Planning Society 26th January 2011

The challenge

Cut of about 20% by 2013/14 (Labour PBR)

Local authority spend too

Total saving needed ≈ £3½ billion p.a.

Balance of tax & spend?

The key goals of the economy & climate change remain

Expenditure savings 1 - efficiency

Some already built in to existing projections

Many examples of further scope: Midlands Highways Alliance – joint procurement etc

£11m pa Shropshire CC – whole life road maintenance – save 24% Norfolk CC – Integrated Transport Unit – save £0.6m pa

Network Rail – ORR require 21% pa saving by 2014

We suggest a realistic aim of 7½% cumulative - saving £1.3 billion p.a. by 2013/14

Expenditure savings 2 – bus subsidy

Key opportunity – restructure concessionary fares for the elderly

Package together with: Faster smartcards & Incentive Per Passenger Pre-loaded value Multi-modal

Potential saving of £400m p.a.

Interim options – charge per card/flat fare

Expenditure savings 3 – and some high VFM addbacks

Road capacity investment to be reduced

Increased spend on high value areas: Road safety Smarter choices

Rail ‘grand projets’ – beware ‘crowding out’

Green taxes

Fuel duty +2p

Air passenger duty +25%

Simple lorry charging scheme

Could raise £1½ billion p.a.

We are not arguing for hypothecation, but…

Decarbonisation

Looming fiscal hole – falls in VED & fuel duty yields

Loss estimated at £4 billion by 2020 & rising

More congestion as motoring gets cheaper

Step forward…road user charging Also makes short term road spend unworthwhile Can be phased Once in, reduces case for public transport subsidy

Private sector

Community infrastructure levy

Business rate supplement

Workplace Parking Levy

Estimated £¼ billion p.a. from these sources

Opportunity for regulated utility model for national roads

Infrastructure Fund for pension investment may assist also

The scorecard

£bn p.a.

Efficiency 1.3

Expenditure cuts (net) 0.4

Taxes & charges 1.5

Private finance .25

Total 3.5

Approx. potential annual savings

In summary

It’s tough, but…

…there’s a menu of options that could: Make a big contribution to short term fiscal need Still deliver a great deal on the economy & climate change Tax ‘bads’ not ‘goods’ Elicit private sector help Fix the looming hole in fuel duty & VED

Full report at www.bit.ly/tsgmfl or Publications on CfIT site

What’s happened?

DfT resource DEL cut 21% over 4 years

Capital DEL only cut 11%

Burden on fares and Local Authority funding

Local Sustainable Transport Fund (30% less than Congestion TIF)

Tax Increment Financing