House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

TRANSPORT COMMITTEE

 

 

ROAD PRICING

 

 

Wednesday 26 January 2005

DR DENVIL COOMBE, PROFESSOR PETER MACKIE, DR GREGORY MARSDEN,

and DR DAVID METZ

 

MR JAMES WALSH, MR MICHAEL ROBERTS and MR DAVID FROST

MR HOWARD POTTER, MR DEREK TURNER, MR JIM COATES and

MR MARTIN RICHARDS

Evidence heard in Public Questions 373 - 509

 

 

USE OF THE TRANSCRIPT

1.	This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
2.	Any public use of, or reference to, the contents should make clear that neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.
3.	Members who receive this for the purpose of correcting questions addressed by them to witnesses are asked to send corrections to the Committee Assistant.
4.	Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.

Oral Evidence

Taken before the Transport Committee

on Wednesday 26 January 2005

Members present

Mrs Gwyneth Dunwoody, in the Chair

Mr Jeffrey Donaldson

Clive Efford

Mrs Louise Ellman

Mr Graham Stringer

________________

Examination of Witnesses

Witnesses: Dr Denvil Coombe, Transport Planning Consultant, Professor Peter Mackie, Professor of Transport Studies, and Dr Gregory Marsden, Lecturer, Institute for Transport Studies, University of Leeds; Dr David Metz, Centre for Ageing and Health, London School of Hygiene and Tropical Medicine, examined.

Chairman: We have a little housekeeping, gentlemen. Members having an interest to declare?

Clive Efford: Member of the Transport and General Workers' Union.

Chairman: Gwyneth Dunwoody, ASLEF.

Mrs Ellman: Louise Ellman, member of the Transport and General Workers' Union.

Mr Stringer: Graham Stringer, member of Amicus.

Q373 Chairman: Gentlemen, can I firstly say how very welcome you are this afternoon? Did any of you want to begin the session with a statement or may we go straight to questions?

Dr Coombe: I think we can go straight to questions.

Q374 Chairman: Can I ask all of you whether you agree it is impossible to build our way out of congestion without limiting traffic growth?

Dr Coombe: Yes.

Q375 Chairman: Does that mean yes, we can build our way out of congestion?

Dr Coombe: It is impossible to build your way out of congestion. I think the government has accepted this most clearly in relation to the M25. If one wanted to cater for unrestrained demand on the M25, one would have to widen it by an extra three lanes in each direction as opposed to the current plans to widen it by only one.

Q376 Chairman: I trust you are not going to suggest that to anyone?

Dr Coombe: The widening by one is what I have suggested. You can find that pattern throughout the country.

Q377 Chairman: What about limiting traffic growth?

Dr Coombe: Is it a good idea or can it be done? It is a good idea and it can be done through road pricing.

Q378 Chairman: Does anybody else want to comment?

Professor Mackie: Yes. I would like to agree with Dr Coombe. A pure capacity enhancing programme is inconceivable. It is unaffordable. It would be unacceptable on environmental grounds. If you could overcome those problems on the inter-urban network, you would run into tremendous difficulties at the interface between the inter-urban network and the local road network. Therefore, the policy has to be a judicious mixture of pricing, physical demand management and capacity enhancement, all three sets of policies going hand in hand in order to try to manage our road network more efficiently.

Q379 Chairman: Would the point Dr Coombe was making about the suggestion of one lane widening deal with it or are you saying that the mix of measures would deal with the fact that, if you get far more traffic coming off the roads onto the urban areas, you would have a problem with congestion there? Do you think the one lane widening would have that effect?

Professor Mackie: Yes, I think it would. One lane on the M25 is an awful lot of traffic. The compatibility between the capacity on the trunks and the feeders is already a very significant problem as anyone who queues at junctions on the M25 or the M60 knows. It is a problem already and it would be exacerbated by a major investment programme on the inter-urban network with no other supporting measures.

Q380 Chairman: Am I to take it you all agree that road pricing is inevitable or does anybody dissent from that?

Dr Metz: I would not agree it is inevitable. The interesting fact, to my mind, is that the average time people spend travelling has stayed unchanged for about 30 years. People seem to allocate a certain amount of time to travel and go as far as they can in that time to reach the destinations that are attractive to them. If you increase capacity, if you widen the M25, the effect of that is to allow people to go faster. They then go further. Capacity increasing is a bit counterproductive in that sense. My view is that although road pricing is certainly an option to regulate demand, ultimately congestion is self-limiting because we only have a certain amount of time in the day that we are prepared to devote to travel.

Q381 Chairman: Are you really saying that if everything just stops we will have achieved as much as we would by expanding our roads?

Dr Metz: I think congestion deters people from making trips. It encourages them to make shorter trips and shift the times of their trips. In that sense, congestion is self-limiting. You can on top of that impose road pricing if you want to reduce congestion below that natural level but I do not think it is essential. Given the difficulties, which are the subject of your Committee's inquiry, it may be in the event that one will not want to adopt a generalised approach to road pricing. One may prefer to live with the congestion that we live with at the moment.

Q382 Chairman: Do you think those are the alternatives: living with what you have or looking for road pricing as an alternative?

Dr Metz: There may be an alternative that involves the use of information and telecommunications technologies to give excellent, high quality information to travellers so that they can make decisions in advance of their journey with a good knowledge of the kind of congestion that they might encounter. If people had that knowledge in advance, they would plan better their travel arrangements. There might be an overall reduction in congestion on that account, though that is speculation.

Q383 Chairman: To what extent do you think the effectiveness of road pricing would be undermined by people's propensity to travel further?

Dr Metz: I think it could be substantially undermined. If you open a new toll road, for example, which is much less congested, that will encourage people to make longer trips commuting to work, on business or leisure, because those who can afford to use the toll road will take full advantage of it. Given that travel time seems to be invariant, what we see is people finding further destinations to go to that would be attractive to them that would repay the trip in the time they are allocating.

Q384 Chairman: Dr Coombe, would you agree with that?

Dr Coombe: No. First of all, the proposal to widen the M25 by a limited amount has always been a recommendation that goes along with road pricing. The two must go hand in hand, so I agree on that point. I agree also that if you widen alone you will get longer trips but if you charge on a per kilometre basis you will get shorter trips. The work I have done shows that the reduction that you can get through economically optimum road pricing will far outweigh the increases that you would get from road building alone. It is a method by which you can tackle this business of people just using up their time budget. You can constrain the amount of travel that will take place on the road system.

Q385 Mrs Ellman: What about the level of the price of fuel? Does that affect people's travelling?

Professor Mackie: It certainly does. There are plenty of economic studies done by your adviser, among several others, on what sort of relationship there is between fuel prices and the volume of travel. Indeed, it is that sort of relationship which is used to infer what the relationship of a more generalised form of road user charging on the volume and pattern of travel might be.

Q386 Mrs Ellman: It has been suggested to us by at least one witness that it would be better to have high fuel costs rather than road pricing. Would you agree with that?

Professor Mackie: No, I would not. The current price regime, if you like to put it that way, the tariff regime of vehicle excise duty and fuel tax, is not bad at doing some things but it is fundamentally crude. The pattern of congestion and environmental emissions is very variable across space and time. The biggest single benefit of a road user charging system would be a pricing system which better reflected the differential costs of travel at different times and in different places. I agree with you that the choice you have articulated is probably the true choice. It is between going back to the year 2000 and continuing with the fuel duty escalator versus a more sophisticated, more variegated type of road user charging. For me, that is the policy choice compared with the base case of allowing things to continue broadly on the trajectory they have been for the last decade or more.

Dr Marsden: There are probably several other factors that would suggest that in the long term going back to a continuing escalation of fuel prices would be a negative thing. We already see disadvantages for rural road users and I am aware that this government does not like to upset the rural communities too much. If we look towards the role of technology in the future, those people who are buying new cars will be buying cars that are potentially 25 per cent more efficient than the older, second hand cars. In terms of equity and continuing with the current system, we would be seeing loads of people holding onto cars and paying more for every kilometre they travel. If we add to that the fact that, with the improvement in fuel technology, the Treasury is likely to see a reduction in its income from fuel duty over the next ten years, in order to make that shortfall up they will have to increase fuel duty and therefore widen this potential equity gap yet further. I think there is a number of arguments for moving away from fuel tax based on equity issues as well as the concerns that exist over equity with road user charging.

Q387 Mrs Ellman: If there was to be a national decision to have road pricing, how do you think that should be implemented? All at one go or by designating particular areas?

Dr Marsden: One of the most promising routes to implementation may well be initially through some sort of voluntary opt in scheme. If we look at the Norwich Union pay as you drive insurance system which has now gone live on the market for young drivers, they already have in-vehicle GPS systems. They can be charged according to the kilometre for the roads they are on, by the time of day they are travelling. Norwich Union have a waiting list of people who would like this insurance product. They have a fan club, which is most unusual for an insurance company. Obviously the people who wish to take advantage of this product are people who believe that they will be able to save themselves money. There may well be a substantial proportion of small mileage users or users who do not use congested roads who would also feel that that they could take advantage of those sorts of gains within a national road user charge. There may be a section of the market that would find that quite attractive in the short term. That could be a proving ground for the technology and acceptability amongst a proportion of the population. You may then consider rolling that out through perhaps making it mandatory to have this system fitted to new vehicles and, over time, if the technology is there, available in anybody's car.

Dr Coombe: I agree with all that. I think there are other things that can be done in the shorter term. The first thing is to encourage the local authorities to implement congestion charging schemes where congestion is sufficient to warrant it. That is not always a given but that is what the government is currently doing with the local authorities. I think that is the right thing to do. The thing that they are not considering at the moment, which they should in my view, is a modest motorway tolling. This only should apply where the motorways are to be widened.

Q388 Chairman: Do you want to give us a definition of "modest"?

Dr Coombe: Yes. The level of charge should be set just to return the traffic flows on the widened motorways to the pre-improvement levels so you do not get a net increase on the local roads as you would if you charged on an unwidened motorway, but you lock in the level of benefits on the widened sections. The point about that and promoting congestion charging is that you get the nation used to paying for road use. Trying to roll out a national system in one go is going to be hugely complicated and I think it would probably be very difficult to do.

Q389 Mrs Ellman: You have mentioned local authorities introducing local congestion charges; yet hardly any outside of London have done that. Perhaps one. That is extremely limited. Why is that and what can be done to change it?

Dr Coombe: I am working with one local authority very closely at the moment. My view is that they have yet to take into the depths of their consciousness what the government is offering them: the trade-off between greater control of buses and the implementation of charging. That is a new idea to them. Secondly, they have yet to see congestion in many places rising sufficiently high for them to think about charging and grappling with all the political difficulties. They need to be taken through the future, to be shown the future, how difficult it is going to be, and to have the benefits of having control over the buses fully explained to them.

Professor Mackie: I would like to agree that in many cities there are questions about whether congestion is really bad enough for long enough to justify the costs of introducing a scheme at this point, certainly a local scheme, but I would like to add a further consideration which is that, in my view, many cities perceive themselves as being in spatial competition with one another. Even strong cities like Manchester and Leeds will have to consider the possible impact of road user charging in their areas on their attractiveness relative to Bradford, Wigan, Liverpool and the next cities in the league table. Those in turn will need to consider the attractiveness of their cities relative to the big towns slightly further down the league table. Without any kind of national or regional policy which gets around this spatial competition problem and the possible impact of out of town in a weak planning environment, I think there will be great reluctance by the city fathers to approve.

Dr Metz: On the question of roll out, whether at national or local level, one would need to be quite cautious in particular because there is the problem of the low income motorist which has to be addressed. These are people who have to use a car at peak times to get to work because public transport does not work for them. It is not a problem in central London of course. There is plenty of public transport. It is not a problem with a toll road because there is the alternative untolled road. If we go for any kind of generalised road pricing nationally or in a particular area, the problem of the low income motorist is potentially serious. These are motorists who already spend between £30 and £50 a week on motoring costs. That may be 25 per cent of household expenditure. They could well find it difficult to bear the additional cost of congestion charging. An existing analysis by the Department of Transport and others has given insufficient weight to this point. In any kind of roll out, one would want to pilot what was being tried and address very carefully the implications for those on low incomes.

Q390 Mrs Ellman: It has been suggested that a charging scheme could be fiscally neutral. Do you think it is possible to implement that at the level of the low income motorist?

Dr Metz: It could be fiscally neutral in aggregate for a whole population but what you would have to ascertain would be the winners and the losers. If it turned out that low income motorists were net losers, as they might well be - I am thinking of people who are locked into shift working which requires them to go to work at peak times, who cannot use buses or public transport because they do not go where they need to go. In the long run, of course, they can change where they live and work but in the short to medium term that is not feasible. If significant numbers are going to be seriously out of pocket, there is a real problem of equity and politics. Further studies on the applicability of road pricing, whether nationally or locally, really ought to address this carefully.

Dr Marsden: On the issue of revenue neutrality, if we have a system which is revenue neutral across the whole of the UK, that would seem to imply, unless the Department of Transport has an as yet unknown agreement with the Treasury that somehow more funds are going to be coming into transport, that there are no extra funds available for investment to compensate those people who might need to make journeys by other modes. Without some form of increase in net income from the charge, it is hard to see how attractive this will be to a number of cities because essentially it will amount to a redistribution of how much you pay across the country with no change in transport spending. Certainly Peter and Denvil will have other views about the reasons why we should not adopt a revenue neutral system.

Q391 Mr Stringer: Dr Metz, you said that the time people spend travelling in this country is a constant. Professor Glaister has said that the time people spend commuting and travelling in London is longer than elsewhere in Europe. Is there something peculiar about English people where we choose our norm at a longer period of time than people elsewhere?

Dr Metz: One first distinguishes between total travel time and commuting travel time. Total travel time varies according to factors like gender and geography. For example, people who live in London spend more time travelling than people who live in rural areas. The national average for Britain's total travel time is about one hour per person per day. For younger people living in London, it is about 1.4; for older people living in rural areas, it is about 0.7. Data that the Commission on Integrated Transport have assembled comparing Britain and other European countries has focused on commuting time. Our figures are rather higher but in other countries where total travel time is looked at you find the same uniformity of total travel time of about an hour per person per day, regardless of GDP per capita. It is quite remarkable to find this.

Q392 Mr Stringer: There is a European standard at which English British people spend more time commuting than on leisure travel? Is that accurate?

Dr Metz: Yes.

Q393 Mr Stringer: I am not sure how important that is but it is very interesting. Professor Mackie, in your evidence, you say that there is a lack of political will or perceived necessity to face the issue of congestion through pricing but in your answers to Mrs Ellman you indicate that the problem is not that bad in most of our cities.

Professor Mackie: I intended to indicate that the local, political judgment is that, faced with a local scheme which is going to (a) cost money to implement, (b) impose certain risks and (c) agreeing with you, a situation in which perhaps congestion is serious for four hours of the day, there are questions about the cost-effectiveness as against the risk of going for it at local level.

Q394 Mr Stringer: By what measure would you say the congestion in Liverpool, Manchester, Leeds and Newcastle was serious?

Professor Mackie: I would have a rule of thumb that when you get to, say, speeds being achieved of 10 or 12 miles an hour congestion is beginning to be serious. I know most about Leeds and for the radial routes into Leeds city centre you are talking about those sorts of conditions for three or four hours a day, Monday to Friday. At that point, congestion is becoming serious.

Q395 Mr Stringer: It is the speed of the traffic, not the time it takes you to get from A to B? I realise these are related factors but they are relatively compact cities. A commuter journey to the centre of Leeds does not take very long, does it?

Professor Mackie: It depends where you are coming from. I have taken a rather city orientated focus to your question. Clearly, there is a whole different ball game out there on the motorway network for people making inter-urban or extra-urban to urban journeys where reliability is a major factor and where it may not be congestion so much per se as the uncertainty as to when there will be blockages which prevent you from accomplishing your journey in anything like the expected time. That may be the limiting factor.

Q396 Mr Stringer: If you were the Secretary of State, would you prioritise urban congestion charging or inter-urban motorway road pricing? What do you think is economically more important to the country?

Dr Coombe: In my view, it is the inter-urban network, certainly the motorways, certainly the ones that are in the government's national priority list at the moment. The M6, M1 and M25 are now congested for three hour periods, morning and evening. The inter-peak periods are now so high that within a few years, certainly less than ten, they will be at today's peaks. What goes along with the long journey times that then arise is unreliability. You have to factor in a substantial amount of the mean journey time that you expect in order to guarantee arriving at a particular time. One of the great benefits of reducing congestion will be a greater reduction in unreliability.

Q397 Mr Stringer: Do you think the M6 toll road has been a success?

Dr Coombe: It has been a success in very limited terms.

Q398 Mr Stringer: Do you think it is a model for future development of the motorway system?

Dr Coombe: No. Those two questions deserve different answers. It has been a success in that it has attracted and taken a substantial volume of traffic, a large part of which has come off the existing road network. My concern about all this kind of approach - the M6 Expressway as well - is that unless you apply some kind of control to the existing road network you get the opportunity for the relief conditions to be taken up by further traffic. I understand from recent counts that one is beginning to see that effect on the existing M6 in the west Midlands now. There is more growth than you would naturally expect because conditions have been relieved. The way forward on this is to have a tolling system that goes beyond the new road. That is, you apply a modest level of tolling on the relieved roads in order to control growth on those roads as well. All this comes back to the point that Peter made earlier, that there is an optimum combination of charging and capacity. Therefore, one needs to be sure that one is not providing too much capacity simply because it is a convenient way of doing it. I certainly feel that is the case with the M6 Expressway where the multimodal study argued for a single lane and it is now looking as though people might be thinking it is easier to provide an extra two lanes in each direction. That seems to me to be the wrong thing to do and quite probably over-providing capacity.

Q399 Mr Stringer: If I can take you back to urban areas, I think you said earlier that local authorities had not woken up to the fact that the government were offering local authorities more control over buses as a trade-off against some sort of traffic restraint or congestion charging. Can you comment on that? Does it not strike you as odd that the government is not dealing with the congestion charge by deregulating buses as a way of dealing with congestion, rather than using it to centrally control things locally in the local area?

Dr Coombe: I think there is a lot of sense in the policy and the way they are linking the two things together. Certainly local authorities need control over the public transport system and in many places buses are providing the public transport system.

Q400 Mr Stringer: Is that not a good in its own right?

Dr Coombe: Yes. The question is where do you get the money from to do that if you do not have some revenue stream like you would get from congestion charging.

Q401 Mr Stringer: The assumption in your answer is regulating buses in the metropolitan areas outside of London would have a cost attached to it?

Dr Coombe: It would. The operators run the commercially viable network. If you want to change that, you are very likely to require subsidy.

Q402 Mr Stringer: Even though, prior to the Mayor of London taking over regulated buses in London, effectively run at very little subsidy?

Dr Coombe: London is special. An awful lot of people want to move around in London. The road system is very inadequate in London and it is very congested. These are conditions at the far end of the spectrum. This is not the case in other places where the car is much easier to use.

Q403 Clive Efford: Dr Coombe, you said you would favour inter-urban road charging. Did I understand you correctly?

Dr Coombe: As a way in. That was the question: where do we start?

Q404 Clive Efford: The question was what of the surrounding network and the displacement. You did say in answer to a later question about the M6 that you would have charged for the surrounding road network with a lesser charge. Would you apply a similar approach to an inter-urban charging system?

Dr Coombe: My way in is through linking charging to improved roads so that you can introduce what I call a modest level of charge in association with widening. The modest level of charge is designed not to increase traffic on the local road system. It does not decant. It is a way of getting people used to paying for use of the road system. It is only a start and it is certainly not the end point. That, coupled with congestion charging, will just alter the climate and enable the political process to get its weight behind developing more comprehensive systems.

Q405 Clive Efford: What about the overall impact? If, for instance, the alternatives to using a car are not available on an already over-congested public transport system, what impact will road charging have on people's ability to travel and people on low incomes who do not have any alternative to participate or keep travelling to work?

Dr Coombe: I agree with Dr Metz. The Achilles heel of road pricing is how to compensate the low income car owner, who will continue to use the road system and pay the charges. Taken as a whole, continuing car users will probably lose. They will gain less through relief of congestion than they would pay. Within that spectrum, there will be winners and losers. The business people and people on high incomes will have a net gain and the people at the bottom end of the spectrum will not. Because they are continuing to use the road system, they are the people who would find it very difficult to make their journeys using public transport and they are therefore the people who are very difficult to compensate in any way at all. It is one of the things I pointed out a few years ago. That is a prime area for big research.

Q406 Clive Efford: What form of technology would you suggest to be used for a road pricing scheme, a tag and beacon scheme or any other form?

Dr Coombe: I think the ultimate is a distance based charge using GPS technology like the Norwich Union scheme. To implement that nationally is a big effort so one would have to go for smaller implementation using whatever technology is around. The London scheme has demonstrated what you can do with the available technology.

Q407 Clive Efford: Has not the London scheme put a block on other cities moving towards congestion charging in the sense that, if you cannot raise the sort of money that we were anticipating originally in London, how are other cities going to make it pay for itself?

Dr Coombe: I have not heard that argument. That is not the prime argument that one hears against implementing congestion charging and of course it is not the only way of doing it.

Q408 Clive Efford: It is certainly not the only way of doing it but it is true to say that London has not raised the sort of money that was originally talked about when the scheme was introduced.

Dr Coombe: Derek Turner will be able to give you better information on that than I.

Q409 Clive Efford: Has there been a problem with the technology in the Norwich Union scheme in terms of coverage?

Dr Coombe: It is a very small scheme.

Dr Marsden: No. They have yet to find anywhere on the road network in the UK through their trials where they have not been able to get enough coverage points on the roads to work out which road people were on. There may be sections of roads - they have done trials in the middle of London - where they do not get a signal but they get enough signals from along that route to be able to pick up where that vehicle is. They have done quite extensive trials. Clearly, it is a commercial product so they would not be rolling this out commercially if they did not feel they could get an accurate enough picture back.

Q410 Clive Efford: You would say that the technology has reached a stage now where we could begin to roll out a national road charging scheme?

Q411 Dr Marsden: It is a pilot of 5,000 cars at the moment but it is 5,000 cars today and I do not really see that we would have to wait ten years before that could become far more mainstream. I am sure it will become far more mainstream as an insurance based product in that time period. Whilst I accept that setting up a national billing infrastructure and some of the important issues might be considerably more complex for a national road user charging scheme, the ability of that technology to prove itself over a period of less than ten years is almost certain.

Q412 Mr Donaldson: Would an alternative tolled motorway network in the UK be a welcome development?

Professor Mackie: No, particularly if it was private sector. I would like to align myself with what Dr Coombe said a few moments ago. The M6 toll was a policy mistake for a number of reasons. One is that if you give away a 53 year unregulated franchise you lose control over what you can do with that bit of the network. You may need to reacquire that control subsequently if you are interested in a national scheme. Is there not a nightmare scenario in which the government works towards the creation of a national road user charging scheme by various little bits of franchising up and down the country, to different multinational companies; some local authority schemes with different local authorities, and the problem of bringing them all together in an integrated way into a national scheme becomes impossible? We already have a situation in Italy and Spain where you have many different toll motorway operators. Trying to achieve interoperability and consistency between the different operators is an extremely difficult thing to do. Quite apart from the questions which Denvil has raised about efficiency and locking the benefits in and so on, I think there are also issues about public control over what is a very precious, valuable, scarce resource, ensuring that we have a viable way forward. I would like to agree with Mrs Ellman that the question of how we get from here to there is the $64,000 question in this inquiry. The private toll motorway route is, in my view, not the correct answer.

Q413 Mr Donaldson: Dr Coombe, in your written evidence you predicted that traffic levels on the M6 corridor would increase if the M6 Expressway is built and you expanded on that theory earlier. Is there any benefit in the construction of an expressway of that nature?

Dr Coombe: It would have economic benefits, yes. It will provide shorter journey terms, by in the short term. Even if traffic levels returned to the point where congestion was much the same, you would still have more people travelling and therefore there would be some benefit attached to it. That misses the point. We are supposed to be developing a sustainable transport system. That word has many meanings but one of them is that you have some control. The authority, the government at whatever tier, can exercise some control over the way in which the public facility is used. That is why I was arguing for some kind of comprehensive charging across the existing as well as the new roads.

Q414 Mr Donaldson: Finally, do you think that the M6 toll road has had the anticipated impact and have drivers responded as you would have expected?

Dr Coombe: The cars appear to have.

Q415 Mr Donaldson: What about the drivers?

Dr Coombe: I have no knowledge. The goods vehicle usage seems to be low. The goods vehicles do not seem to have changed by much on the existing road network. They seem to be less attracted by it. As expected, the signs are there that traffic is beginning to rise again more than at the natural rate of growth on the relieved roads. That is the danger.

Q416 Mrs Ellman: Professor Mackie, I take the point you make about the problem of the private sector setting charges but are you implying that there should be just one authority that sets the charges for the whole country, although the charge might vary in different parts?

Professor Mackie: I might take issue with the words "one authority". I believe that there should be a comprehensive approach to the pricing of road use. I would like to think in terms of some kind of tariff in which fuel duty and vehicle excise duty probably remain as elements but with additional elements added on top of them. There are complex issues about who gets the revenue and how the revenue is split between the Highways Agency and your government, the divvying up of the revenue within any such scheme. I do not have a settled answer to exactly how to do it, but from the user point of view we ought to be working towards a single, seamless interoperable system with single billing, in which it is like the British Telecom tariff or some system such as that, with the question of what Leeds and Liverpool get dealt with in a different part of the system.

Q417 Mrs Ellman: Are you saying it should be a national decision about how all this would work?

Professor Mackie: Yes. I believe that fundamentally breaking the logjam and relying on local authorities to make the running and do the business was perhaps an acceptable try at a way into the forest but fundamentally, ultimately, it will come down to your government to make the running at national level if we are to get from half a per cent of vehicle kilometres being charged to a more sensible number such as 30, 40 or 50.

Q418 Mrs Ellman: If a national lead was taken, are you within that ruling out local authorities' schemes? Do you think there should be any such thing?

Professor Mackie: I do not know.

Q419 Chairman: There are very few people who say that to us. I would like to ask about Dr Metz's point which I think is very valid. Can you manage by discriminatory tariff to protect those who have to use wheel transport whether they like it or not, because they will have the oldest, most tatty cars anyway?

Dr Metz: We can learn perhaps from other parts of the transport sector - for example, the budget airlines. If you travel by a budget airline, you know that everyone on that flight is paying a different fare. The general rule is the earlier you book the less you pay. A similar thing happens on the railways. If I book to go to, say, Birmingham a week today, I can pay the full second class fare of £33 or if I pay today and use a saver card I can pay less than £10. The airlines and the railways do this for commercial reasons. They want to get people to travel. What this system means is that people with low incomes can take advantage of the low fares that are on offer in advance. This is what economists call discriminatory pricing and it is distinct from market clearing pricing, which is where everyone pays the same price. It is market clearing pricing which has been the whole focus of the tariff structure for road pricing. The idea of road pricing is the charge may vary according to the time of day, the day of the week, section of the road, class of the vehicle, but every vehicle of the same class will pay the same charge regardless of the ability of the driver to afford it. My suggestion is that we should enlarge the scope of our thinking about road pricing to include discriminatory pricing. In other words, the pricing that recognises that people have different affordabilities. The way the budget airlines and the railways work is there is a trade-off between time and money. We all have the same amount of time but we have different amounts of money so our trade-offs are different. If we do not have much money, we are willing to sacrifice convenience in timetables by committing ourselves to a particular train or plane.

Q420 Chairman: You made the very point yourself that people tend to accept something like tolling even though they cannot really afford it because they have to get to a particular job at a particular time. Is it not a contradiction in terms to say they can use the same facilities but as long as it is four o'clock in the morning when the job starts at seven?

Dr Metz: No. If they book ahead and commit themselves ahead to using a particular bit of road at a particular time, they will get a better fare.

Dr Coombe: We have not talked so far about what you do with the revenues. There will be very substantial revenues with a properly designed pricing system. One of the points that is often made is that the important thing is that you recycle these revenues in an economically beneficial way. Then you get this upward spiral of economic benefit which derives from road pricing. One of the things to think about in that general theme is how to spend the money such that the low income people do not need to travel substantial distances in order to find work. In other words, you feed the money back into regeneration schemes which provide local work. One of the phenomena we came across in Yorkshire was the substantial distances that people were travelling simply because there was not work for them locally. It was always seen as a criticism of any road pricing scheme that we would be penalising these people. The answer is to generate the jobs through investment of the net revenues.

Q421 Mr Stringer: There has been a recent pamphlet I think by the British Chamber of Commerce which used the concept of motorway density to argue for greater capacity on the motorway system and said that we had the twelfth lowest motorway density in the unexpanded European Union. Are you familiar with the concept and is it a useful argument? Are we suffering economically because our motorway density is lower than other European countries?

Dr Coombe: I do not think it follows. There is this optimum combination of infrastructure and price that you pay for travel. That is the key that you need to work on. It is not a question of just charging alone or providing infrastructure alone. It is a combination.

Q422 Mr Stringer: Just on the infrastructure question, are we at a disadvantage because, according to the measure of motorway density, we have less than most other European countries?

Dr Coombe: I cannot answer the question but it does not seem to necessarily follow to me.

Dr Marsden: The alternatives to our motorway network: we have some very high standard A roads compared to the alternatives to motorway networks in a number of other European countries so relying on any one particular measure can be a bit distorting sometimes. Without being able to get to the bottom of it, perhaps there is more we ought to look at to be sure we get a good measure.

Professor Mackie: Dr Metz and I probably disagree on this point. I am a subscriber of the Sir Alastair Moreton thesis that we are underpriced on transport infrastructure in this country and we are also underinvested. If we price the capacity properly, that will give us a much more secure basis for deciding the places where capacity is genuinely short and worth providing and will provide a way of locking in those benefits. I agree with your question to the extent that I believe that pricing is not an alternative to investment and investment is not an alternative to pricing. We will need both in order to maintain the quality of our accessibility and fundamentally our economic competitiveness in a European context.

Q423 Mr Stringer: What should be the government's objective in its transport policy with respect to the motorway system in this country?

Professor Mackie: That is a big question. Its first objective should relate to efficiency and promoting the efficiency with which people, goods and logistics providers are able to reach the places that they wish to visit, recognising the kind of behavioural responses that have been referred to by others. There are clearly objectives to do with safety and environmental protection which are extremely legitimate. There is also an issue to do with equity. Clearly, there are issues to do with the 100,000 car owners who are the poorest of the car owning population but in general car ownership and use tends to be the upper 70 per cent of the income distribution. I would see the poverty issue as being specific and applying to pockets of the population rather than being a macro question for all 20 million car owners. Indeed, one of the difficulties with road pricing is precisely that it is likely to hit highly articulate, vocal and influential people within the population, unlike bus deregulation.

Chairman: On this Committee we are probably quite clear about the articulacy and the fact that they are very vocal.

Q424 Clive Efford: Dr Coombe, why is it people drive? Why do people suffer congestion? Why do they get into their car?

Dr Coombe: Because they like the lifestyle that goes with it. There has been quite a sea change over the last couple of decades. There has been a dispersal of business activity and industry from the inner areas to the suburbs to locate next to the good road system that we have provided. People have moved out of the inner suburbs again to live in better quality houses. Once you get that dispersal, it is very difficult to provide public transport alternatives so they start to build a car dependent lifestyle.

Q425 Chairman: How are we going to evaluate the schemes in the interim between what we have now and this national road pricing system in the future?

Dr Marsden: I think the London model is extremely good. They have certainly spent a lot of money and time and given a lot of thought to examining the state of play beforehand and the monitoring that they have conducted throughout. Valuable lessons will be learned for any schemes being implemented anywhere else in the country, despite the fact that London is different to other places. We need the data and the information.

Q426 Chairman: Is that taken into account at the design stage? Do we say to government, "This is one of your basic first commitments on any new design and build scheme"?

Dr Marsden: I think they ought to be financially supporting thorough evaluations because it is one of the things that will get trimmed back if people are looking for a revenue stream out of a scheme.

Dr Coombe: It is absolutely sensible to plan road schemes now on the assumption that there will be an optimum road pricing system at some point in the future. If you do otherwise, you will overprovide capacity in the event that road pricing comes in and you will have an inefficient system in the future. I think the government gave you precisely that answer in their response to you on the multimodal study inquiry. They said that all road schemes would be robust in the event that road pricing was brought in, which can be interpreted to mean what I have just said.

Chairman: On that very interesting note, thank you very much for coming. We are very grateful to you all.

Examination of Witnesses

Witnesses: Mr James Walsh, Head of European and Regulatory Affairs, Institute of Directors, Mr Michael Roberts, Director, Business Environment, CBI, and Mr David Frost, Director General, British Chambers of Commerce, examined.

Q427 Chairman: Good afternoon, gentlemen. I am very grateful to you for coming this afternoon. Could I ask you to identify yourselves for the record?

Mr Walsh: James Walsh from the Institute of Directors. I am head of European and regulatory affairs.

Mr Roberts: Michael Roberts, director of business environment at the CBI.

Mr Frost: I am David Frost. I am director general of the British Chambers of Commerce.

Q428 Chairman: Did anyone have a little homily they wished to deliver or may we go straight to questions?

Mr Roberts: I think straight to questions.

Q429 Chairman: Do you agree it is impossible to build our way out of congestion without limiting traffic growth?

Mr Walsh: Yes, I do. We certainly need extra capacity. That is very important indeed but we also desperately need to reduce the measure of road pricing, preferably with a national scheme. We need to tackle Britain's transport malaise from both sides, from the demand side for the pricing mechanism and the supply side for extra roads and public transport capacity.

Mr Roberts: I would suggest that in practical terms it would be impossible to provide sufficient capacity as your only approach to addressing future demand, but it does still need to be part of an overall transport policy to improve the transport system in this country.

Q430 Chairman: Is congestion the biggest problem we have to face in this country?

Mr Roberts: It is probably up there as one of the top problems alongside the environmental challenges posed by transport, particularly with regard to climate change. From the business community's point of view on a daily basis, congestion is the number one problem.

Q431 Chairman: What size road building plan would the business sector like to see?

Mr Roberts: Something significantly in excess of what is currently being taken forward.

Q432 Chairman: Could we have a little more precision?

Mr Roberts: One of the ways forward on this would be to look at some comparable, developed economies to identify the extent to which they have provided roads to address their transport needs. We had a look at other countries in Europe, for example, two years ago and looking at the relative densities of the road networks in Europe ----

Q433 Chairman: "Europe" is rather a wide term. Which European countries did you look at?

Mr Roberts: We looked specifically at France, Germany and the Netherlands. In terms of overall road network density compared with land area, we have something similar to what you would find in other countries but where there is a significant difference is in terms of what we would call premium routes, motorways and trunk roads, where the UK has a lower level of provision than you would find in, say, France or Germany.

Q434 Chairman: By what factor?

Mr Roberts: If I take the EU average, we provide something less than half that average.

Q435 Chairman: What scale of building is the business sector looking for?

Mr Frost: From the British Chambers of Commerce point of view, we do not believe that you can build your way out of this. We certainly do not want to concrete over vast swathes of the countryside but it is absolutely clear there are major, strategic highways within the UK that need a significant amount of work. Whether that is widening or expressways put on the side, we are looking at the M1, the M60, the M4, parts of the M25 and the M62.

Q436 Chairman: Mr Roberts, I should have asked you whether your figure took account of A roads when you were talking about the European averages.

Mr Roberts: I believe it does.

Q437 Mr Stringer: Does that imply that you would like us to have twice as many motorways?

Mr Roberts: No. There are differences in geography between ourselves and some of the other countries I have mentioned. I am not suggesting that there is an absolute mirror image that we should be seeking to achieve when we look at what happens elsewhere. I was suggesting that it provides an indication of the scale of underprovision of that particular form of road compared with other countries.

Q438 Mr Stringer: The result is counter-intuitive, is it not? If you take a country like France or Spain which are considerably larger than this country, you would expect when you go on the motorway from Madrid to Seville or Paris to Lyon for the density to be lower rather than a compact island like us. I am surprised you are so modest in your objectives for road building.

Mr Roberts: I suggested that the overall road network density is similar between the different countries.

Q439 Mr Stringer: I am talking about the high quality motorway systems.

Mr Roberts: We have a lower level of provision.

Q440 Mrs Ellman: Mr Roberts, you said that congestion was a major problem for business. Does that mean that business will be prepared to pay more and be charged more for driving if that makes journeys more predictable?

Mr Roberts: Yes, but the caveat to my answer is that currently road users of all forms, not just business road users, contribute significantly in road tax revenues to the government. I think they would want some comfort to paying additionally to what they pay at the moment through taxation would deliver improved quality of service.

Q441 Mrs Ellman: Would they be prepared to pay if it was better? The CBI survey that you quote says that the annual costs of congestion are £20 billion. If charging was to improve that, would business people be prepared to pay?

Mr Roberts: Yes, if they had some degree of comfort that they were going to get a return in terms of improved service. That is a pretty important caveat.

Q442 Mrs Ellman: Are there any other comments?

Mr Frost: There has been a sea change in thinking from the business community, an understanding of the amount paid in taxes through motoring generally and an appreciation that if we are going to get major, new, strategic highways built or roads widened in the UK, that money is not simply going to come from the Exchequer. Therefore, innovative ways of raising that finance will have to be developed. I think the construction of the M6 toll has acted as a precursor to the development of other ideas and has been a concept that has been rapidly embraced by the business community.

Mr Walsh: I agree. There is no doubt that business is indeed prepared to pay more as long as it can see that it is clearly getting more back.

Q443 Chairman: Both of you have said this but, forgive me: in what sense? On the whole, my experience of businessmen - I mean no disrespect - is that they are not easy to convince that they ought to pay more for services.

Mr Walsh: Our argument is that the whole equation of road pricing should be revenue neutral. By that we mean that you get a combination of returning funds raised to motorists, both through reductions in taxation - most probably excise duty on fuel - and through putting some of the funds into extra road capacity. If businesses and motorists in general can see that they are getting that payback through a reduction in their straightforward costs, through taxation or through extra road capacity, they will say, "This is a very acceptable deal. We will support it."

Q444 Chairman: Does that except the fact that motoring is getting cheaper in real terms?

Mr Walsh: Our members feel that the costs of congestion are rising. Congestion is an increasing business problem and business cost. Although you are absolutely right in that improved technology and fuel consumption are delivering some cost savings, the costs of congestion are rising at the same time.

Q445 Mrs Ellman: When you say that this should be revenue neutral, what do you mean by that? Neutral to the individual motorist? What do you think it means?

Mr Walsh: It means as much as businesses pay in extra costs through road tolls or road pricing and road charges, they have to feel that that same amount of money is coming back to the benefit of the motorist. Essentially, that the extra funds are ring fenced.

Mr Roberts: The debate about revenue neutrality is more complex than was first suggested. Revenue neutrality applied across road users as a whole would probably be desirable in the early stages - I am being deliberately vague - of the introduction of, say, road pricing, as an important test and an important means by which government establishes trust with the road user that charging is intended to be a way of dealing with the problem of congestion, for example, rather than simply raising more money; but, over a period of time, if that trust is indeed established with the road user through this and other means, there may be a case for saying that you need to move away from revenue neutrality as a way of financing future transport improvements, either specifically in the road network or more general in the transport network. There is still a lot of discussion to be had with road users generally, not just business but personal users of the road network, to establish whether that is indeed the way that you take it forward, but I do not think one should automatically assume that revenue neutrality must always be part of any charging scheme.

Q446 Mrs Ellman: If there was a national decision taken to have road charging as a policy, who should set the charges? Should that decision be taken nationally by government, by local authorities or a combination of both or someone else?

Mr Frost: There must be some form of overall national strategy and not simply an ad hoc group of programmes developing. On the back of that, what we would clearly want to see is some form of national payment portal where, if a motorist or a haulier was driving from one part of the country to another with different schemes, they would not have to keep paying endless different charges through different mechanisms. There must be some clarity and a national scheme. Overall, we would understand if a national programme was developed.

Q447 Mrs Ellman: Should there be local authority charging schemes?

Mr Frost: If local authorities had full community support in doing that and clearly are involved in the business community in that process of determination, we are not opposed to it, as long as the moneys that are raised are put back into improving public transport and transport infrastructure within the boundaries of that local authority.

Q448 Mr Stringer: Edinburgh, Bristol, and Nottingham have at different times proposed car parking charges. In Nottingham's case, there is a road pricing scheme being considered. Have your local members supported those schemes?

Mr Frost: To varying extents because they are different types of schemes being proposed in different areas. I think in the case of Nottingham there has not been support because what has been proposed is a workplace car parking levy. There is a very strong view that, if there is going to be some form of road pricing, that should apply to all sectors of the community and not just target those in employment and those in business. Therefore, it has not been supported by the business community.

Q449 Mr Stringer: Does your local Chamber in Edinburgh support the congestion charging scheme?

Mr Frost: The Edinburgh Chamber of Commerce is working with the authorities up there on that scheme, yes.

Q450 Mr Stringer: They are actively campaigning for a yes vote in the referendum?

Mr Frost: They are following with interest, not going as far as campaigning for.

Q451 Mr Stringer: What does that mean? That they are not opposing it or that they are supporting it?

Mr Frost: Exactly. They are not supporting it or opposing it at the present time.

Q452 Mr Stringer: They are sat firmly on the fence?

Mr Frost: At the present moment, they are monitoring progress.

Q453 Mr Stringer: Can you give us further insight? Is that because the different businesses who comprise the Edinburgh Chamber have different views and they cannot reach agreement?

Mr Frost: I can only speak for the one business group that we represent. I will come back with further information.

Q454 Mr Stringer: That would be helpful. You also said that money should go into local transport schemes if it is raised from a local congestion charge. Could it not go into another public good? One of the academics before us previously said that the money from these schemes could usefully go into regenerating areas which would help business, which would concentrate commercial activity and that would help transport.

Mr Frost: There is a large degree of cynicism by the business community in terms of road taxation. They do not perceive it as motoring being cheaper. What they see is essentially somewhat over £40 billion being collected and a considerably smaller figure being spent on road improvements. The concern would be that the money was collected from some form of local road pricing scheme and that simply was used as a substitute for the existing expenditure; then that money was siphoned off to support some other area of local authority activity. The driver for this seems to be very strongly the need to improve public transport within localities and therefore the view from business is, okay, if that is the explicit intent, the money that is raised should be clearly earmarked against that.

Q455 Mr Stringer: Do you think the M6 toll road has been a success?

Mr Frost: I think the M6 toll road has been an enormous success and the business community would say so. When we did the research, it was clearly seen as a major, strategic highway. This was not a road purely for the west Midlands. The evidence that we have now is that the business communities that appear to be benefiting significantly are those in the north west, those in the east of the country and those in the south east.

Mr Walsh: Our members feel the toll road has been a significant success. We asked them in a survey that we ran a few months ago and we included mention of it in our written evidence to you, I believe. 84 per cent of our members who use the toll road say they have faster, shorter journey times and better traffic flow. They are very enthusiastic. The one note of scepticism was about the HGV charges. Those have now been reduced from £10 to £6 since we conducted the survey. We have no up to date data on how the current level of charge is going but I would imagine it is better received.

Q456 Mr Stringer: Do you see it as a model for developing a motorway system in the future or do you think it is just a one-off that is relevant to that particular corner of the country?

Mr Walsh: I do not see it as a one-off; nor does it have to be the only template that we follow. We should certainly be looking for building extra capacity. It seems to me the Expressway proposal for the M6 north of the toll road is not so different from the principles we have seen put into action with the toll road itself. It is a new motorway, probably built by a private provider being allowed to raise revenue subsequently through tolls. Yes, I think it provides a good model to follow and a good lesson to learn, especially about how you have to make sure that you have your prices set at the right level to maximise the use of the motorway and smooth out demand as effectively as possible.

Q457 Clive Efford: Has the view of your organisations changed towards congestion charging or inter-urban road tolls in the light of the experience of the London congestion charge and the M6 motorway toll?

Mr Frost: In the survey that we carried out last year, there was a significant percentage that did support the concept of road pricing. In the case of London, the London Chamber of Commerce did accept the congestion charging. It was opposed to the extension of it and a price hike but it believes there should be perhaps some fluidity in the structure. There should be windows within the day which would allow certain sectors to get through.

Q458 Clive Efford: Mr Walsh said earlier that his members recognised that there was a cost of congestion to their business. Do your members accept that?

Mr Frost: Absolutely. A survey that we did equated that out as being something of the order of £27,000 per year to business, which came out at £15 billion a year to the economy.

Q459 Clive Efford: They are opposed to the congestion charge in London?

Mr Frost: No, they are not opposed to the congestion charge in London. They supported the congestion charge but they are opposed to an extension of the congestion charge within London.

Q460 Clive Efford: What about the issue of whether your views have changed over the last five years in the light of the experience?

Mr Roberts: From the CBI perspective, the experience with the London charge has not altered our support in principle for a move to road pricing subject to meeting a range of conditions. There have been issues of concern in London about the way in which it is operated. Some of those are procedural about how the fleet system is operated. I know there certainly has been a concern among certain parts of the business community, particularly in retail, about the extent to which the charging scheme may have an impact upon their business. The important thing to remember with regard to the London scheme is that it is a reasonably crude scheme. It is a flat charge which operates for a large part of the day. It does not vary according to time of day; nor does it vary according to particular locations in the capital. Those of us who are supportive of the use of road charging in principle see the value of it in time as being a flexible tool which is responsive to road conditions which vary either by geography or by time. The London scheme does not really offer that.

Q461 Clive Efford: You would see the London scheme as a stepping stone to a system that would charge by road use, so according to the amount of use you make of the road you would pay more?

Mr Roberts: Yes.

Mr Walsh: I do not think the London scheme has caused us to change our view which has been in general to support road pricing but it certainly caused us to develop it. It has been a very useful case study. As an organisation that supports road pricing, we very much want to see the London scheme being regarded as a success. I do not think we can say it has been an unequivocal success. We have asked our members what their view is and whether they would like to see more urban charging schemes. The balance of opinion is narrowly against seeing more urban schemes. There are two main reasons for that. The first is the fairly crude nature of the scheme. It is not particularly flexible over the course of a day and so on. The second is that one of our criteria that we judge road pricing schemes by is that it provides extra road capacity or public transport capacity. Obviously, in a major city like London, it would be impossible to provide extra road capacity. Our members clearly feel that there has not been enough effort put into adding capacity on the public transport side. Those are two weaknesses that give rise to concern: the rather crude nature and the fact that it has not provided the extra capacity that members want to see from road pricing schemes.

Q462 Clive Efford: On a pricing scheme, what sort of issue should be taken into consideration when setting charges?

Mr Walsh: The business impact is very important. There is still not a lot of evidence on this but there have been a couple of surveys. The London Chamber has done some work and John Lewis also commissioned a survey from a group of pretty well respected academics. Both those found there was an adverse business impact on the retail sector, restaurants and the like. That is a very important concern and that needs to be very carefully borne in mind. We would propose that in a future urban congestion charging scheme it would be very important to assess first the likely business impact. Unless a positive business case can be proven, we would be very wary of supporting future schemes.

Q463 Clive Efford: What about the wider costs of car travel - for instance, air quality and environmental costs? Should they be taken into consideration or should it purely be the costs of motoring?

Mr Walsh: You have to take those wider factors into account but you will appreciate that our prime concern, representing our members from the business point of view, is primarily on the business case side.

Q464 Clive Efford: Mr Frost, do you have any comments since your survey was quoted on the issue regarding what should be taken into consideration when setting the charge?

Mr Frost: The business impact must be very much to the fore because if the net result is that you have an exodus of businesses away from those urban areas you have gained very little. Yes, I understand about the importance of air quality but the point is often made by businesses that it is far worse in terms of air quality and pollution to have cars stacked in congestion than allowing them to free-flow through, putting in extra capacity.

Q465 Clive Efford: What should happen to the revenue raised through road pricing? Do you have any views on what that money should be spent on?

Mr Frost: It should be reinvested either in additional road capacity or public transport infrastructure.

Mr Walsh: We would very much agree with that but there is also a case for looking at reducing the costs of road use associated with taxation. Clearly, that has to be paid for in some way.

Q466 Clive Efford: Would your organisations say that the political will to deal with road congestion exists at local level?

Mr Frost: No.

Mr Roberts: I do not think the will is sufficiently strong across a range of areas in the country. One of the critical issues that now needs to be addressed by policy makers in central government is to identify ways in which local authorities might be incentivised to make that decision, where it makes sense economically to introduce a pricing system.

Mr Walsh: I do not think we detect that there is widespread political will in town halls up and down the land to go for local charging schemes but that may simply reflect the fact that there is only a relatively small number of urban centres which have sufficiently severe congestion problems to warrant the major investment required in getting a scheme up and running. Could I come back with one more point on your previous question about what use the revenue should be put to? I stressed the importance of putting in extra road capacity. Part of our case is that you should take a slice of those revenues and use them to reduce motoring taxation and there is one important reason for that, which is that if you put prices on road use you will find there are some road users who may not see the benefit from extra capacity, perhaps they do not live near one of the new roads or they are not on a new bus route. If we have a cut in motoring taxation, preferably on fuel duty, all road users would benefit.

Q467 Clive Efford: Mr Frost, you said no to that.

Mr Frost: The evidence would seem to show that this has been talked about endlessly for a number of years and no one has got on and done it apart from London. It is part of a wider malaise that has certainly been expressed to us through the business community about the fact that we know there is extra road capacity needed. Major strategic routes like the M6 toll took 20 years and two public inquiries to get a 27 mile piece of road built. We are talking about the earliest date for the M6 expressway being completed as 2016. We live in a globalized economy with significant pressures on business and congestion is a very significant part of this. Why does it take so long to get major road schemes developed in this country?

Q468 Clive Efford: You see it as an issue relating to major road schemes. Would you see it as introducing charges for the existing road system? You are concentrating very much on paying for new capacity, are you not?

Mr Frost: That is correct, yes. In terms of time, this has been talked about for many urban areas, but it has just been talk.

Q469 Clive Efford: Are there any urban areas where the Chamber of Commerce are calling for a charging scheme that has not been introduced?

Mr Frost: No.

Q470 Chairman: Finally, I just want to ask Mr Roberts a question. You talked about an independent regulator. The history in the last four years of so of independent regulators has not been overly impressive. Do you think the accountability that that would provide would be enough?

Mr Roberts: I think the important point about the need for a regulator stems from my point earlier about the need to build trust between government, whether that is national or local, and the road user who may be paying in a different way for road use. The principle of a regulator, although in practice there may be difficulties associated with setting up such a body, is a strong one in that there is a need for an arm's length body to establish transparency about the ways in which charges are implemented and to ensure the money that is raised is then spent in a manner which is both appropriate and acceptable to the road user who ultimately is paying that charge.

Q471 Chairman: Very briefly, gentlemen, if we have a national pricing scheme, should it be brought in all in one go or phased in?

Mr Walsh: It would be marvelous to think that we could jump from where we are now to a nationwide all‑singing, all‑dancing scheme, but I think in practice that is impossible. I think the likelihood is that we are going to advance in a fairly piecemeal fashion, as we are doing at the moment. We have advanced over the last few years from having one major urban charging scheme to one significant toll motorway in the Midlands. I suspect we are going to continue to develop in that way. The interesting crunch may come when we get to a stage, I hope sooner rather than later, when we have got the satellite technology available to run a proper national scheme.

Q472 Chairman: You have been a bit skeptical about the economic benefits of the London scheme. Would you accept inter‑urban congestion is a major problem?

Mr Walsh: Intra‑urban congestion?

Q473 Chairman: Yes.

Mr Walsh: I am not clear what you are asking about. Are you asking about the motorways or urban areas?

Q474 Chairman: Motorways.

Mr Walsh: We accept there is a major problem of congestion on motorways.

Q475 Chairman: Do you not think we could bring it all in in one go?

Mr Walsh: I think it is unlikely to happen and I think recent history proves that we are advancing in a piecemeal fashion. We have got the M6 toll. We are now talking about a possible expressway.

Q476 Chairman: Do you want an overall scheme, Mr Frost?

Mr Frost: I think it would be nice. History would tell us that our ability to introduce high‑tech computerized systems of this sort of scale in the country has not exactly been a giant success story. Equally, in Germany, where trials have taken place, it has not been a big success either.

Q477 Chairman: They got there eventually, did they not? Mr Roberts, is that your view?

Mr Roberts: I would agree that we need to work towards the implementation of a national scheme which implies a phasing and a programme of activity. I think the critical thing is for there to be a clear sense at the outset of where we want to get to. I think the danger is that we may indeed end up with a piecemeal approach and with different types of charging schemes being taken forward. If there is not a clear sense of what these are supposed to add up to when that national scheme is eventually possible then I think there is a danger of perverse consequences, of different systems running to different rules and not achieving the maximum economic benefit. Work towards a national scheme, do not implement it as a "big bang" approach, but be clear about what you want to achieve at the end of the day. The Government needs to start taking some decisions now if we are likely to have a chance of seeing a national scheme implemented within the next ten years.

Chairman: That is very helpful. Gentlemen, thank you very much indeed.

Examination of Witnesses

Witnesses: Mr Howard Potter, Member, and Mr Derek Turner CBE, Past Chairman, Institution of Civil Engineers Transport Board, Institution of Civil Engineers; Mr Jim Coates, Chairman, and Mr Martin Richards, Member, Institute's Road Capacity and Charging Forum, Chartered Institute of Logistics and Transport (UK), examined.

Q478 Chairman: Gentlemen, good afternoon to you. May I ask you to identify yourselves for the record?

Mr Richards: I am Martin Richards, representing the Chartered Institute of Logistics and Transport.

Mr Coates: My name is Jim Coates. I chair a forum in that Institute which interests itself in this problem.

Mr Turner: I am Derek Turner. I am a former chairman of the Transport Board and an independent consultant.

Mr Potter: Howard Potter, a Member of the Institution of Civil Engineers Transport Board.

Q479 Chairman: Does anyone have anything they want to say to start or shall we go straight to questions?

Mr Coates: Straight to questions.

Q480 Chairman: Is it impossible to build our way out of congestion without limiting traffic growth?

Mr Coates: I think we would probably agree with the evidence you had from most of the other witnesses this afternoon that the answer to that is yes. My Institute would agree with what a lot of other people have said, which is that we do need some more road construction perhaps particularly at junctions which tend to be the bottlenecks in the inter‑urban network. There is a problem in the urban areas, but there is a limit to how much you can do by increasing the capacity of the road network. Perhaps in the urban areas it is the capacity of the public transport system that has to take the strain.

Q481 Chairman: Supposing we were to widen the motorways, how would we then deal with the extra traffic that was generated in the urban situation?

Mr Coates: I do not think I know the answer to that question, Chairman, but I agree with a lot of what Dr Coombe said about that.

Q482 Chairman: Anyone else want to comment on that?

Mr Potter: In my view there is a need to go towards a phased introduction of road pricing both on an inter‑urban basis and on an urban basis. The priority must be to address the most critical inter‑urban corridors. Regardless of the urban situation, a lot more can be done and should be done in parallel with trying to encourage local authorities to move down the congestion charging route.

Q483 Chairman: Such as?

Mr Potter: Such as not waiting, for example, until the panacea or perfect road pricing scheme is introduced and not delaying the introduction of other measures to do with demand management. I am talking about sophisticated parking schemes, I am talking about more innovative physical solutions and introducing and encouraging more information and use of public transport and innovative ways of that order. A lot more could be done and it should not be delayed whilst waiting and praying in aid of some future charging system.

Q484 Chairman: Do you want to identify for us your definition of the more critical inter‑urban corridors?

Mr Potter: Yes. I would suggest that the corridors of the M6, Manchester to Birmingham, London, Birmingham, the M40 corridor and the M4 corridor within a few years are going to be at a very, very critical stage. I believe that there is a case for selective improvement in a fashion not dissimilar to Dr Denvil Coombe's projection, where there is a mixture of physical improvement which is then paid for in a very transparent way. I think that that is the way to progress, whether it is done on a widening basis or by some parallel motorways, as was suggested for the M6 expressway. I must confess that I have experience of the M6 toll having been a senior technical adviser on that scheme. I believe that that is the way forward, some selective improvements with pricing bolted into it and not forgetting that those corridors are capable of taking public transport and, indeed, attracting public transport.

Q485 Chairman: Anyone want to add anything else to that?

Mr Coates: When you look at the map and see where the greatest congestion is, in addition to some inter‑urban lengths, on the motorway network it tends to be in and around the big cities and it tends to be in the morning and evening peaks. During the rest of the day the situation is not so severe. If we found suitable pricing regimes to deal with the problem within the major cities that might in itself bring quite a lot of relief to the motorway network. The M25 is an obvious case in point. Members of the Institute that I represent are involved in the logistics business and it is these long distance freight movements that they are particularly concerned about.

Q486 Chairman: Would you like to add to that Mr Turner?

Mr Turner: I think it is a balanced approach that needs to be taken. What Dr Coombe described is very much that, treating these inter‑urban roads as a corridor. Your question about identifying which are the critical corridors is all about a level of service and what Mr Coates has just said is very much related to a peak period level of service at the junctions of these key corridors.

Q487 Chairman: So we can say they should be around cities, at particular times and very largely connected with the specific pattern of movement?

Mr Turner: Absolutely. We are aiming to address it in a corridor approach so you do not get transfer.

Q488 Mr Stringer: Mr Potter, you said that local authorities should be encouraged to introduce congestion charges. Do you not think they are in the best position to decide if congestion is a problem? Why should they be encouraged?

Mr Potter: The effect of growing congestion on the economy is so serious that there ought to be a lead taken by central government because it is in the best position to do that not just for the urban areas but also for the inter‑urban areas. It can provide financial inducement. What it cannot provide is the economic confidence of each individual urban area and it cannot automatically provide decent public transport or alternative means of transport. Money can help to provide the latter of those two.

Q489 Mr Stringer: Do you know of any objective measure that would allow me or this Committee to compare congestion in Leeds, Liverpool, Manchester and Newcastle?

Mr Potter: Yes. I would have thought that a comparison of average journey speeds over the day is probably the best indication of that. There are other measures that one can think of, but that would be the simplest, through probably a typical radial approach into the city centre from the outer edge.

Q490 Mr Stringer: Which city has the worst congestion?

Mr Potter: I can only estimate, I do not know exactly, but I would have thought London.

Q491 Mr Stringer: I have not mentioned London. London is a case in itself.

Mr Potter: I know Bristol, Manchester and Birmingham quite well, I had an office in Birmingham, and they are comparable, but no one city stands out. I think there is always a different perception from people in those cities about how serious congestion really is and there does need to be a careful measurement of this.

Q492 Mr Stringer: Do you know of any academic study or any other study which would show the economic impact of congestion in urban areas? I am not talking inter‑urban congestion, I mean just in urban areas.

Mr Coates: There was a study done for the Department of Transport a few years ago by Leeds University, which I am sure Professor Mackie will have been involved with, which was looking at the cost of congestion on different parts of the road network.

Q493 Mr Stringer: That is rather a different point. That is a simple time issue, is it not? It could be that if you have congestion you have a positive economic impact because people go to work earlier and come back later. I am not looking at time spent in cars, I am looking at a serious study that says that because there is congestion measured in this way the economy of this city is suffering.

Mr Turner: I am not aware of any. Perhaps my colleagues might.

Mr Richards: It is an interesting concept, but I am not aware of any. I am aware of an American study that argues very much that congestion is a good thing because it implies that society is thriving, but I think it is a rather questionable assumption.

Mr Coates: I think it is true, though I have never seen a study that specifically went into the detail of this, that if you get growing congestion and a shift of travel patterns from buses to private cars the capacity of the road network leading to the city centre falls. You cannot get so many people in in the day in a large number of cars with one person per car as you could when more of those people are traveling in buses. I think congestion has this downward spiral effect of making it more difficult to gain access to the city centre and making the city centre a less attractive place. I think there is a lot of evidence, but it is difficult to disentangle the underlying causes for commercial companies, the retail trade and populations moving steadily out of the centres of our major cities for the past 100 years or more and I think congestion is part of that problem. If you want to try to perhaps not reverse it but at least prevent it from getting a lot further then making the accessibility of the city centre better is very important and I would myself think that reducing congestion and, in particular, making it easier for buses to provide a better service was an important part of that.

Mr Potter: For eight years I was chief transport engineer and planner for Docklands where there was a good deal of peripheral congestion. There was not very much activity going on in Docklands, but the aim was to regenerate the area economically. The market research that I have been part of in the quest for more evidence, precisely what Mr Stringer is looking for, is saying that in order to maximize the development potential for inward investment etcetera, etcetera there is a strong desire for both quality and choice of access and that means public transport of different types, a degree of private transport and preferably fixed track system transport as well. That is the kind of evidence there is. It is very difficult to draw the link between the economic performance of an urban marketplace and the quality of transport.

Q494 Mr Stringer: If we accept, which I am not sure that I do, that there should be a congestion charge or a road pricing charge in urban areas, who should set that charge?

Mr Potter: At the end of the day, if we ever get to the so‑called panacea of global satellite assisted charging by the meter and by the hour etcetera, etcetera, there should be a national base level of charge modified, supplemented or even reduced by a regional component, which might be through the tax component of fuel in regions that are clearly struggling economically, plus an urban/environmental dimension. The last one of those points can only be determined by the local authority. There is a role at a regional level and certainly a role at the national level.

Q495 Mr Stringer: And a composite charge set by each of the three?

Mr Potter: I am afraid that would be the end solution.

Q496 Mr Stringer: Anybody else?

Mr Coates: I agree broadly with that. I think it is important that the details of the charging in urban areas should be under the construction of the local authority because it needs to be part of their overall transport strategy for the area, but I think that needs to be within a framework of general principles set down at a national level so that there is some consistency over the country as a whole and so that people traveling in various parts of the country are not faced by a bewildering variety of different kinds of charge. The modeling work that was done for the Department's feasibility study looked at different levels of complexity of charge and came to the conclusion that a fairly small range of different levels of charge on different sorts of roads would bring most of the benefits and that you did not have to go to the lengths that I think the RAC foundation were recommending two weeks ago, which is that the charge should vary minute by minute according to the level of congestion on the road network. I think we would think that that was perhaps being too complicated and it would be better if you had your AA book that told you what the levels of charge were in different countries so that if I came to Manchester I would know what I was letting myself in for.

Mr Richards: That is absolutely fundamental. If we are to use charging to affect behaviour people must know in advance of making the travel decision what the charge is that they are going to incur. It goes right back to the Smeed Report of 1964 on road pricing which said that charges must be set in advance.

Q497 Mr Stringer: Who should set the prices for the use of the inter‑urban motorway system?

Mr Richards: Perhaps now that we have the regional transport organisations ---

Q498 Mr Stringer: Which regional transport organisations are those?

Mr Richards: The regional transport boards that have been set up to whom expenditure decisions are now devolved. If local authorities are going to be responsible for local transport then local authorities must have an influence on charges on their local networks.

Mr Turner: I think the answer really is that it is horses for courses. If you have got a defined urban area which has got severe congestion like we had in London then it is right that it is the local authority that ought to be setting the level of the charge. Let us say it is an inter-urban road of significant importance to be a national road, the national authority should be responsible for setting the charge and needs to do so in the regional context. We were talking earlier about the diversions on to side roads. A framework needs to be established for charging if it is to be rolled out across the nation as a whole.

Q499 Mrs Ellman: The evidence from the Chartered Institute of Logistics suggests that we may not get value for money with the charging system and that is in relation to the costs of technology. Could you say how you think we should proceed?

Mr Coates: We were commenting on the conclusion in the feasibility study report that if we had a national charging system then it should apply to every road throughout the country. If you look at the figures in the report, it shows that for over 80 per cent of the miles that people on most of the network travel the appropriate charge would not vary very much, it would be fairly low and it would not be very different from what we are paying at the moment through fuel duty. We think that at least to begin with and perhaps even in an ultimate system it would be more cost effective just to concentrate on the worst 20 per cent of the miles and apply the electronic charging there and continue to collect an appropriate level of charge for travel on the rest of the network through the fuel duty. We would prefer that identified element of the fuel duty to be reclassified as a charge and not a tax which would help the Chancellor in achieving his Golden Rule. Perhaps I could add to something that we were saying in answer to the previous question. We think there should be some sort of external regulation of these charges so that if part of the charge work did continue to be collected through the fuel duty that would come within the remit of an external regulator. It is true that perhaps in the long run every vehicle will have the electronic device in it and so in principle you could monitor movements of vehicles everywhere and charge electronically everywhere, but you have to have some sort of enforcement system. In London it is the cameras. If over most of the road network the fuel duty would be a sufficiently differentiated charge why would one have cameras stuck up in country lanes and quiet roads where you do not need to have the complexity of an electronic system? We have not got a final view on this because we have not seen all the details of the costings which are in the Department's report, but we question whether the conclusion the feasibility study came to is right on that and we think it needs to be looked at in more detail.

Q500 Mrs Ellman: How will such a system work? Who would decide which areas were controlled by charges?

Mr Coates: You would have certain corridors and you would have certain areas with boundaries.

Q501 Mrs Ellman: Who decides which areas come under which system?

Mr Coates: You would look at the cost of congestion on different parts of the network. That information is available but it needs to be developed in more detail. You would then have a series of either area schemes for the major urban areas or corridors for the inter‑urban roads to which the electronic charging regime applied. No doubt on maps in the future things would be a different colour so that you would know which roads were subject to charging and which were not.

Q502 Mrs Ellman: Who would take the decision, the Government or the regulator that you referred to?

Mr Coates: We think that it needs to be both central government, that is the Highways Agency for the inter‑urban network, and the local authorities for the areas. Where they come together then there needs to be some sort of agreement between them and we think there should be a regulator to help that discussion take place.

Mr Turner: The Institution of Civil Engineers believes that a national scheme is an advisable policy to pursue. What the Institution of Logistics and Transport is suggesting is a practical way of a step towards achieving that but as a consequence it would mean a framework that would be set at a national level so that it would be a national framework to determine which corridors would be used and, where the level of service would be sufficiently low that it would warrant it, which areas where the congestion was sufficiently severe in the urban areas to warrant it. It would be a national framework but it would be determined, as I said earlier, at either a local level because it is purely an urban area issue, or at an interface between the Highways Agency and the local authority where there is diversion potential to develop the roads.

Mr Richards: One way of dealing with this question is by having performance targets, level of service targets, which is exactly how the Singapore system works. The charges are varied every three months in order to achieve target average speeds on the different parts of the network.

Q503 Mrs Ellman: What about the use of tag and beacon technology in that forum?

Mr Turner: Tag and beacon technology is an interim technology which we have looked at very closely as a potential in London. It is a technology which is here now and would be usable now but it does not give us the flexibility to be able to do a national charging scheme. I would see it as either limited to the major highway network or as part of a stepping stone to a national charging scheme. You could imagine tag and beacon technology on perhaps the motorway network and its parallel routes whilst we were waiting for a GPS system to come into practice. However, I am not as sceptical as some about the viability of the GPS systems. It was not viable for the London scheme because the London scheme has a very defined boundary and it is true that GPS systems are not accurate enough to get literally down to the nearest 100 millimetres. However, they are accurate enough to deal with which road you are on, which is what we hear from the Norwich Union work, which would enable you to get a distance based charging system established as a result of the current GPS system. We are seeing that operating in the Norwich Union arrangement quite satisfactorily and also elsewhere in Europe in terms of what is happening to a large degree in Germany.

Q504 Mrs Ellman: What should happen to the revenue raised by a charging scheme?

Mr Coates: The government's feasibility study report, if I may say so, tries to have its cake and eat it. It talks about all this lovely revenue that can be invested in better public transport and more roads and it talks about cutting taxation. The same pound can only be used once so there has to be some combination of these things. The estimated cost of operating the system in the government's report is very high and we hope that that is excessive and that the cost will come down, but inevitably the cost of running the system takes some of the revenues, so that part of it is not available to reduce taxes. If you look at where the congestion is worse and where therefore most of the payments would be made, where the revenues would come from, it is in major cities. There is a table in the government's feasibility report, and it is B11 in Annex B, which shows the average charge on all roads, which would be 1.9p per kilometre, but on rural roads operated by the Highways Agency zero and on rural roads that are the responsibility of local authorities it would be minus one. In London it would be 14p a kilometre, in other large cities it would be 13p and in other urban areas between two and five pence. Because that is where the congestion is most of the payments would be being made in big cities. We think that in order not to disadvantage cities, in order to keep that economic purchasing power within them, that money needs to be recycled in the urban area, not to be siphoned it off and given to people to make travel very cheap in the countryside, which people in rural areas might think they would like, but if they found huge increases in traffic on their roads they might not be quite so keen on. This is a difficult issue which we think needs to be analysed more and be subject to public debate and discussion, because it is very important in getting the public and the local authorities to feel there is anything in it for them to be quite clear how much revenue there is going to be and where it is going to be used.

Q505 Clive Efford: Mr Turner, what happened to all those drivers that used to sit in the congestion charge area in London?

Mr Turner: A large majority of them transferred to the buses. There was a significant rise in ridership on the buses. Some transferred onto the inner ring road and there has been perhaps a ten per cent rise in traffic on the inner ring road but we have reorganised the operation of traffic signals so the journey times for diverted traffic are very much the same, and some traffic did actually disappear.

Q506 Clive Efford: To your knowledge has there been any study of the impact of the economics of driving? Now that we are paying a five pounds congestion charge is it still as cheap to drive around London? Does that mean that people have considered that public transport is the cheaper or more viable option rather than paying the congestion charge?

Mr Turner: A retrospective study of that is part of what I understand TfL are proposing to do as part of the work. It certainly was not part of my proposals for the after study when I was there. Obviously, beforehand we did that work as well in predictive mode and it demonstrated that there was an economic benefit to the introduction of congestion charging. My personal view of the way the changes have turned out rather than the predictions is that I still think there would be an economic benefit as a result of the total scheme, and in fact quite a large one.

Q507 Clive Efford: What I am trying to drive at is, what do you think the potential is for raising large amounts of revenue to reinvest in regeneration of public transport for future road pricing or motorway pricing schemes?

Mr Turner: I think the potential in urban areas where there is a significant amount of congestion is quite high. It is true that the revenue raised in London was less than we originally predicted but that was for a number of reasons. One was that the original predictions were based on a significantly lower number of exemptions and discounts. The second thing was that the amount of impact the charge had on people travelling was greater than we expected so we got fewer people paying the charge. The third thing was that at the time when we did the original predictions the cost of enforcing and operating the charge was speculative because there was not an established market place in which we could know what the estimates were going to be. As a consequence of it being the first scheme, when we went out to tender the market place was very conservative in its pricing in view of the fact that the cost of failure would be very high.

Q508 Clive Efford: What do you think the implications are of that for schemes in other urban areas, given that this is London, a very big city? Has that become a disincentive or has it made people question more whether it is viable to introduce it?

Mr Turner: Unfortunately I think it has but my view is that the cost of implementing the schemes will now be lower because the true cost of operating them is now clearer and also, if you like, we gold-plated the London scheme because it was the first scheme and we had to ensure that it actually did work and there was all the other de-risking that we had to do which should mean that the costs will be less. I think that is beginning to emerge from those studies that we are seeing in other places throughout the world.

Q509 Clive Efford: Mr Richards or Mr Coates, the Local Government Association told us that the main reason that they have not implemented schemes elsewhere is that they cannot use the money to reinvest in public transport. Do you have a view on that?

Mr Coates: Under the law they can but there is a great problem. Public transport is mainly buses. Although there may be places where investing in a light rail scheme would be a good thing most of the existing public transport systems are buses and outside London they are deregulated. Mr Livingstone was able to let contracts for a very large increase in the number of bus services to accommodate people who switched from car to bus and as a bus user I can say that that has led to a very big improvement in London's bus services. In the rest of the country that is more difficult but there is this carrot which the government is offering to local authorities who are willing to think about congestion charging, which is that they be given some more control over the bus services and might be able to do something a bit similar to what was done in London but it is not quite so straightforward.

Mr Potter: The legislation does enable them to hypothecate those revenues. That was a big breakthrough some years ago.

Mr Turner: The one thing that the recent change has given is the potential for greater day-to-day control over the running of the existing services. With regard to the hypothecation of the revenue and the revenue transfers the benefit that we had in London was that we could actually have more direct control over the existing services. That is only beginning to emerge as a result of the government's attempt to make those changes.

Chairman: Gentlemen, you have got it all in; you were wonderful. We are very grateful to you.