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Integrated transport policy: necessity or impossibility?

A Note by the Director (Ditchley 2004/02)
 
30 January - 1 February
 
Over a stormy and wet weekend at Ditchley, we discussed a subject which is capable of arousing similarly strong emotions – Integrated transport policy.  We were fortunate to have had around the table experts from a number of countries and from a variety of transport disciplines as well as those who were responsible for overall transport policy.
We acknowledged at the outset that we were not well equipped to deal in any detail with air and water transport issues, although reference was made to them during our discussions.  We focussed mostly on rail and road and the questions underlying successful transport policy making. 
Before looking in detail at particular modes we considered some of the general factors affecting developments in transport.  It was, we acknowledged, an area which touched all our lives and where strong views were held by most people.  There was public pressure for an effective transport policy and we needed an honest and informed debate.  We held divided views about the meaning of “integrated”.  At one end of the spectrum some thought it a vacuous term devoid of real meaning.  If it merely meant making transport modes work together that could not, on its own, be a policy objective.  It was a means to an end, not an end in itself.  Integration was not mainly about modes but about integrating transport with society’s needs. On the other hand, we were reminded that the British Government had, in the past, set down what it meant by “integration”.  If that definition was no longer satisfactory it could be changed.  One participant thought that, in a small way, integration could be described as putting the various modes together in a coherent manner by, for example, through-ticketing, bus turning circles outside railway stations etc.  In a larger sense it could apply to decisions Governments made to subsidise either companies or modes of transport which could not attract sufficient private funding on their own.  The allocation of such subsidies was intended to drive economic growth and create wealth, defined broadly to include satisfaction by citizens with the quality of the society in which they lived.  In considering whether we could afford the necessary infrastructure we should also consider whether we could afford not to have it.
In general, mobility and travel were thought to be a good thing which enriched society.  But this was affected by a variety of changing factors and perceptions.  Economic globalisation was driving an increased use of all means of transport.  Urbanisation in industrial societies brought with it transport demands.  It also brought awareness of pollution, noise and safety hazards.  Safety presented increasing problems for policy makers.  Some 40,000 people were killed every year on Europe’s roads.  We were told that railways invested some £10 million to save a passenger death while a child could be killed on a road for lack of £50,000 investment.  Patterns of use could, we were advised, also change.  The IT revolution was increasing the number of people who worked from home.
In one participant’s view, transport was unusual in that supply determined demand.  Europe comprised a number of small countries whose rail systems, at least, were not necessarily compatible.  There was, therefore, a strong need for a European-wide approach, and a long-term vision which distinguished between urban and regional transport.  A hall-mark of success, we were told, was consistency, making policies consistent with each other, and above all making transport policy, consistent with land use policy.  It would also help if there were frequent checks that what was being done was capable of meeting the objectives set.
We looked at the problem which was vividly described in relation to New York, but which exists in all other systems – the multiplicity of layers of administration and political decision taking which were not necessarily synchronous with the levels at which revenue was raised.  In the UK over 96% of tax is raised centrally and only 4% locally although some 25% of all expenditure is local.  It was suggested that greater revenue raising powers should be given to local authorities so that decision making could be better aligned with funding.  We were reminded that the taxes raised on transport would pay fully for all the necessary investment but were largely diverted to pay for other areas of Government activity.  What was needed were new structures of governance that linked land-use to a timeframe that was longer than the normal political cycle and examples were given where bipartisan political support had been given to transport boards enabling them to plan for the long-term.  By involving politicians and political parties, it was claimed, planners could have more power and teeth behind their policies.
In general, very few public transport schemes were considered to be commercially viable only on the basis of the fares they could charge.  This meant either large Government subsidies or involving the private sector and the key question was – on what basis?  We were also told that, as a general rule, Governments were reluctant to raise taxes.  If there was a way of bringing in private capital, Governments would favour it.  Ideally, we thought, Governments should set the framework within which investment would take place.  And, added another participant with experience of the public/private interface, Governments should thereafter refrain from tinkering with that framework within the cycle of contracts which had been negotiated within it.  Only if the private sector had confidence in the durability of the assurances they had been given might they be prepared to invest.
In looking for an effective way of integrating road traffic into an overall transport policy, some of us thought that the first essential was agreement on the fundamental political principles.  Did we look more to markets to resolve the problems or should planning be given priority.  We also needed to agree on the objectives, whether, for example, equity would take precedence over efficiency and cost.  In the view of some, the focus should be on how best to develop, manage and operate the road network.  It would be helpful to evaluate examples of successful policies such as the congestion charge in London or the deregulation of air carriers in the USA.  It might be possible to identify generic factors in such policies which could allow their replication elsewhere.  There should also be mechanisms to facilitate cross-modal dialogue.  Emphasis was laid on the contribution which new technology, including satellite tracking, could make to road planning and possible road use charging schemes.
This led us into an exercise with slightly Old Testament echoes, in which Ten Commandments for a successful Transport Policy were elaborated.  These included technical competence, appropriate jurisdictional and fiscal competences which included the ability to raise funds together with the appropriate transparency and accountability to ensure that they were properly used.  Strong political leadership and a commitment to implementing a policy should be balanced by a clear public mandate.  Importance was also attached to attracting able practitioners capable of delivering such a policy.  Whatever weight might be placed on any one factor, there was general agreement that only a combination of policies would be likely to lead to success;  no single policy would be sufficient on its own.
In discussion, a number of additional points were made.  If funding for roads was decided by central Government then all local authorities would do would be to ask for more.  It was thought necessary to try to educate the public to see roads as a scarce resource.  This led us to a discussion of road pricing policies.  While in rural areas this might not be necessary, it could bring advantages in more congested areas.  It was pointed out that public acceptance had been won in France, Spain and Portugal for quite high tolls to be levied on major motorways.  Two such networks in France were quoted on the stock exchange and their share prices had remained stable for some time.  There were even recent signs of an acceptance of payment, for example for bridges, in crowded urban areas.  Private capital had been forthcoming on the basis of clear mandates and long-term concessions to the companies concerned.  A word of warning was raised.  One effect of road pricing could be to keep the poor off the roads.  This problem of equity needed to be addressed squarely before decisions were taken.
There was general support for the view that freight, which in the EU was expected to increase by 40%-50% in the next decade, particularly following enlargement later this year by ten additional members, was a key issue.  One participant thought that much could be done by increasing the current low level of vehicle utilisation to ensure that more lorries travelled properly loaded.  Another argued for long-distance freight to travel by train and only short haul loads to go by truck.  In the short term much might be done by the active management of road space.  And, added another participant, by the active education of the travelling public.  In Australia, a campaign to offer people personal travel plans had made a remarkable difference.  In Britain, the delays to road building caused by the planning system also came in for criticism.
From this emerged a number of suggested policy measures.  Although these measures were not unanimously supported, the five thought to be most effective, included three short and two longer term measures.  The short term measures were, active traffic management, fuel tax (hypothecated to transport improvements, insisted its advocates, with the Government taking the risk of fuel price variations), and traveller information (about routes, modes and prices).  The longer term measures were land-use policies (claimed to be the essential starting point for all sensible road traffic planning) and charging for road space.
In looking at rail transport, a number of us argued that, for mass transit into cities, there was no alternative to commuter trains.  This was particularly true if flows were above 20,000 an hour but much less so if the flow was below 5,000 where buses might be a cheaper alternative.  It was also claimed that railways had a much greater regenerative effect on local communities than any other form of transport.  This was among the externalities which it was hard to capture in assessing the costs and benefits.  The major problem lay with the high infrastructure costs, which included land-costs, tunnelling under cities etc.  This, together with the need to provide a frequent service throughout the day, and the fact that investment was fixed and up-front, meant that public funds would be required to support a rail system.  (Two exceptions were mentioned but were agreed to prove the rule.)  In looking for sources of funding some suggested a property tax on those whose properties had benefited from proximity to a rail service.
This led us to compare the advantages and disadvantages of railway systems in which infrastructure and operations had been split and those where they had remained integrated.  Where they had been divided, one of the lessons from the UK was the need for contracts in which both parties had confidence about their stability and which, above all, sought to align the interests of the infrastructure provider with those of the operating companies.  The whole should be seen as a partnership or joint venture not as a competition between the two.
We were told that in Germany it had become apparent that Government budgets would come under increasing pressure and would not be able to support the full financial requirements of railways in the future.  To meet this, consideration was being given to guaranteeing a certain level of Government contribution to infrastructure costs in return for specified levels of service.  Such a guarantee might be given for ten years.  On that basis it was expected that venture capital would be forthcoming for the service provider.  Problems over state subsidies were not foreseen with the European Commission.  This type of public/private partnership was thought to be preferable to separating infrastructure from operations.  If that happened the former would almost certainly end up with the Finance Ministry and be subject to the vagaries of political decision making and declining investment.  A number of us were strongly of the view that Governments were poor managers of commercial enterprises.  Another added that while a lot of attention was paid to trying to influence the public by consistent use of incentives, it was equally important that policy makers themselves should read the signals they were receiving.
Freight was thought to be an area of natural advantage for rail but on the whole this had been poorly exploited.  Given the ease of containerisation, competition from coastal sea routes and inland waterways was mentioned.  But rail freight supporters pointed to dedicated freight lines, one of which currently existed between France and Spain, as the way forward and as the best way of avoiding the twin bottlenecks of road access through the Pyrenees to Spain and through Mont Blanc to Italy.  High speed trains were seen as a success story with Germany, France and Italy cooperating on the fourth generation and an additional 5,000 km of high speed lines across Europe envisaged in the next decade.  By contrast, one solution suggested for the UK was to reduce, by up to a third, the existing 10,000 miles of track.  The resources saved should be dedicated to improving the key 1,000 miles of the network.  It was thought that variable road pricing targeted at congested roads would highlight parts of the rail network which were  not worth subsidising because the parallel roads would not carry any charge.  A final comment was made by a participant with industrial experience.  From a private sector management point of view “Big Bang” changes to railway operations should be avoided as they represented a high level of unquantifiable risk.  Gradual, incremental change was much easier to handle.  Although some claimed that deregulation might also be considered as a “big bang”, there was general support for gradualism as a way to run a railway.
In looking back at the ground we had covered, we speculated about what had changed and what might change in the next ten years.  Ten years ago no-one would have predicted road user charges in London.  In the decade ahead it seemed possible there would be a much greater emphasis on personal behaviour such as individual travel plans etc.  There also appeared to be the emergence of stable structures for the delivery of railway services in continental Europe.  Plans for road user charging on a wide scale might not necessarily be implemented.  Road user charging was for the future, and would always remain so, commented an experienced participant.  We looked again at elements for a coherent transport policy.  We needed to look beyond 20 years at the forecasts for freight and passenger traffic.  These should be checked for public acceptability and affordability and a division of responsibility made between local, national and international authorities – “Irrational pricing bedevils all of us”.  The EU, it was stated, had completed such a survey with predictions of 40% increases in both passenger and freight traffic.  Proposals had been made which included road charging.  In Europe it seemed that rail was on the attack and roads on the defensive.  It was pointed out that currently the infrastructure to cope with increases of the order of 40% was not in place.  Freight would be the key issue.  The question was how to attract private capital.  This, it was claimed, would only be forthcoming if private investors were confident that Governments or other public bodies would contribute to the infrastructure costs and that such guarantees would continue for a sufficiently long period of time and bear a part of the risk.  A minority argument was advanced for planes and cars as flexible, private and rapidly deployable means of transport, which minimised government management, and which, as low-cost airlines had shown had scope for expansion. 
In a concluding comment the common themes were thought to be the capacity provided, the price charged and the funding.  All were interlinked with the first two determining the quality of the service.  The service could be planned centrally or by incentives.  In the UK, roads were planned centrally, but central planning had not worked well which was why discretionary road pricing was being considered.  Railways had been decentralised through privatisation.  If a national transport policy was thought desirable then it should be set out clearly, be consistent and any public money involved should be declared in advance in a way which made it bankable.  Finally, for a policy to work, it needed able and competent people in both the public and private sectors.
We ended the conference with a reference to of some of the conclusions of the previous Ditchley conference on transport in 1991 which reminded us of the long-term nature of the issues we had been discussing.  It remains to be seen if our predictions or prescriptions on this occasion stand the test of time when we next come to discuss this question.  My thanks go to all those who took part for such an engaged and substantial debate.
 
This Note reflects the Director’s personal impressions of the conference.  No participant is in any way committed to its content or expression.
 
PARTICIPANTS
Chairman  :  Mr Robert Kiley
Commissioner, Transport for London
CANADA
Dr Gordon Chong
Chairman, Go Transit
 
Ms Patricia Jacobsen
Chief Executive Officer, Greater Vancouver Transportation Authority (GVTA) (2001-);  Council Member, Greater Gateway Council
 
Dr Robin Lindsey
Professor, Economics, University of Alberta (1982-)
 
Mr Trung Ngo
Vice President, Strategy, Markets and Product Planning, Bombardier Transportation (2003-)
EUROPEAN UNION
Mr Alfonso Gonzalez-Finat
Director, Trans European Networks, Energy and Transport, European Commission
FRANCE
M François Lagrange
Chairman, National Commission for Privatisation (1998-);  President, Institut National de Propriete Industrielles (Patent Office);  a Governor, The Ditchley Foundation
 
GERMANY
Dr Johannes Ludewig
Executive Director, Community of European Railways (2002-);  CEO and Chairman, Deutsche Bahn AG (1997-99)
        
UNITED KINGDOM
Mr Robert Ayling
Chairman, Holidaybreak plc;  formerly Managing Director and Chief Executive, British Airways plc (1995-2000);  a Governor, The Ditchley Foundation
Sir Patrick Brown
Chairman, Go Ahead Group
Mr Matthew Elson
Senior Policy Adviser, Prime Minister’s Policy Unit, 10 Downing Street
Mr Graham A Ewer CB CBE
Chief Executive, The Institute of Logistics and Transport
Professor Stephen Glaister
Professor, Transport and Infrastructure, Imperial College;  Member, Board of Transport for London (2000-);  Member, Steering Group, National Road Pricing Feasibility Study
Mr Peter Hendy
Managing Director, Surface Transport, Transport for London;  formerly:  Divisional Director, London and South East, FirstGroup plc
Mr David Holmes CB
Chairman, RAC Foundation
Mr Richard Hunt
Chief Executive, Aviance UK;  Fellow and President, Institute of Logistics and Transport
Ms Juliette Jowit
Transport Editor, The Observer;  formerly:  Transport Correspondent, The Financial Times (2000-03)
Mr Adrian Lyons
Director General, Railway Forum
Mr David McMillan
Director, Transport Strategy and Delivery Directorate, Department of Transport
Mr Brian Nimick
Director General, Confederation of Passenger Transport UK
Mr Steven Norris
Non-Executive Chairman, Jarvis plc;  Chairman, National Cycling Strategy Board, Motor Cycle Industry Association;  Minister for Transport (1992-96);  Conservative MP, Oxford East and then Epping Forest (1983-97)
Mr Derek Palmer
Steer Davies Gleave;  formerly:  Director Technical Affairs, Institution of Highways and Transportation
Professor John Polak
Head, Centre for Transport Studies, Imperial College London
Professor Tony Ridley CBE
Emeritus Professor of Transport Engineering, Department of Civil Engineering, Imperial College
Mr Archie Robertson
Chief Executive Officer, Highways Agency (2003-);  former:  Director of Operations, Environment Agency for England and Wales
Mr Tony Travers
Director, Greater London Group, London School of Economics and Political Science
Ms Shriti Vadera
Member, Council of Economic Advisors, HM Treasury
Professor Alan Waller
Vice President, Supply Chain Innovation, Solving International;  Visiting Professor, Cranfield Centre for Logistics and Supply Chain Management, Cranfield School of Management
Mr Tom Winsor
The Rail Regulator
Mr Christian Wolmar
Freelance Journalist;  Author;  formerly:  Transport Correspondent, The Independent (1989-97)
Mr Michael Woods
Head, Operations Research, Rail Safety and Standards Board
        
UNITED STATES OF AMERICA
Mr Tim O’Toole
Managing Director, London Underground, Transport for London
The Hon Bradford Race
Adviser, Dewey Ballantine LLP;  Board;  formerly:  Secretary and Chief of Staff to the Governor of New York State
Mr Robert E Skinner Jr
Executive Director, Transportation Research Bord (TRB) (1994-);  formerly:  Vice President, Alan M Voorhees & Associates