Cost of living crisis – what will the impact be?

In Germany you will be able to buy a pass for all regional and local public transport for nine euros a month for each of June, July and August

Is the cost of living the new Covid in terms of the impact it’s going to have on patronage and travel trends? If it’s too early to say yet what the medium and long term implications of Covid will be, then that’s certainly true of rising energy prices and all the other inflationary pressures. But let’s speculate anyway.

Usually a squeeze on living costs leads to a squeeze on discretionary travel. In other words a squeeze on the very leisure market that has been seen as public transport’s best hope for growth. At the same time the cost of living crisis could lead to a modal shift to public transport – if the public transport price is right. If it isn’t, then electric cars and push bikes could be the main beneficiaries.

Whilst the Department for Transport has focused on encouraging people to make one-off cheap, discretionary long distance rail trips (via its recent sale of discounted advance purchase fares), other countries have gone for something more universal, more bread and butter. In Germany you will be able to buy a pass for all regional and local public transport for nine euros a month for each of June, July and August. Yes you read that right – nine euros on any public transport vehicle (except the very fast ones) for a month. Northern Ireland has frozen public transport fares and the Republic of Ireland has cut fares by 20%.

There could be fares cuts on a more patchwork basis in England too – given that there is Bus Service Improvement Plan revenue funding available for that in some areas. Mayors too are pressing for simpler and cheaper fares. However, it could well be a mixed picture with different modes doing different things at different times – as well as fares rising elsewhere (and often from a high base).

On the other side of the coin the cost of living crisis could also deter measures to raise the cost of motoring as the politics of doing so gets harder still.

Also in the mix are the key post-Covid trends that have still to play out. Concessionary travel remains well below what it was pre-Covid with Covid concerns and changed habits likely factors. The return to the office remains sluggish as the private and public sectors continue to wrestle with where their new hybrid ways of working should land. And as the return to the workplace continues will there be more combining of leisure and work trips as people add on nights out and shopping to the working day? If travel and patronage trends are uncertain then so is the funding. The last tranche of Covid-related funding expires at the end of September – before BSIP and City Region Sustainable Transport Settlement funding kicks in (for those places that get it). It clearly makes no sense to cut bus networks one month and try and build them up again a few months later – so will there be a way of bridging the gap? All in all a messy picture – but that’s the world these days.

 
Return to Planet Freight

Seven years ago I paid a visit to Planet Freight for one of these columns (PT104) off the back of a report we produced called Delivering the Future – new approaches to urban freight. Then I asked if freight is from Mars is public transport from Venus – given the different policy worlds they inhabit. So in seven years what’s changed and what hasn’t?

Seven years ago freight worked on its own terms (stuff got where it needed to be) even if at the same time it didn’t work (lorries kill cyclists and pump out carcinogens). Overall though it worked well enough (and in a commercial and adaptive way) for the downsides to be brushed under the carpet and for government to largely leave it alone. However, last year freight suddenly stopped working so well. The driver shortage meant that stuff didn’t always get where it needed to. This has benefited railfreight which needs rather fewer drivers to move the same tonnage.

Rail freight’s fortunes rise and fall largely with the fortunes of the bulk commodities that it relies on. With King Coal dethroned, aggregates and containers have been taking its place. And yet this still continues to leave many large urban centres and markets devoid of any rail freight whatsoever. For example, Bradford is the seventh biggest city in the country yet it has no active rail freight facilities. This is partly because in the UK railfreight is mainly about a few companies battling it out on cost over who gets to move bulk freight, whereas in countries like Switzerland and Germany they are still investing to ensure that there are more places where you can move smaller amounts of freight by rail. Which in turn helps explain why rail has a much bigger market share for freight in those countries than in the UK.

Over the same period London broke ranks and stopped tolerating the collateral damage from having an ‘efficient’ road haulage sector. Despite the crude ‘lowest common denominator’ opposition of the trade bodies for the sector, London has pressed on with ratcheting up both vehicle standards and enforcement of safety and emissions. The rapid acceleration in the availability of green, safety and logistics technologies is also helping the sector clean up its act (especially for the larger players), however the degree of illegality in the industry remains shocking. In 2018/19 the percentage of Light Goods Vehicles issued with a prohibition on mechanical grounds was 49%, and 70% for overloading. Operating illegally is not only dangerous, it is also unfair competition given the high safety standards that rail adheres to.

Meanwhile, the white van economy continues to grow (further supercharged by the pandemic) – not just for deliveries but also for trade. This in turn has led to several air quality zone plans running into trouble as the costs of making the growing battalions of vans compliant has collided with the politics of not doing so. The rise and rise of the van also has implications for the battle for road capacity and kerb space – something which the bus sector also has an interest in of course.

Driver shortages (people don’t want to spend their nights sleeping in a lorry cab) mean relying on road haulage to the extent we do now looks less practical (and as environmentally unwise as it ever was). This big change in the dynamics of the freight debate makes the case for a more interventionist approach (to freight). Especially given that the kind of nudges we have seen in the last seven years haven’t been enough to move the dial sufficiently towards the less intrusive, greener, skilled and safer sector that is increasingly the norm elsewhere in the economy.

An interventionist approach that would move that dial would have two main elements. Firstly, investment in the capacity of rail freight and inland waterways (including in terminal and distribution sites). Secondly, making road haulage pay its way in terms of its wider safety, road maintenance and environmental costs would help make it safer and greener but also make rail freight more competitive on price. It could also help further accelerate the booming cycle logistics sector. And it could also make economic what currently isn’t – which is more urban freight consolidation centres to reduce the volume and impacts of deliveries by road in urban centres. Perhaps the biggest difference in seven years is that the debate about freight and logistics has opened up more. It is no longer an afterthought at the end of wider transport strategies. But there’s still a big gulf between passenger transport and freight – big interventionist policies on the former are the norm – but not yet on the latter.

Jonathan Bray is Director of the Urban Transport Group

The article first appeared in Passenger Transport magazine.

Waters isn’t willing to go with the flow

Small countries can do big things on transport – look at the public transport paradise of Switzerland. And when Rhodri Morgan was in his pomp in the early years of the Welsh Assembly it felt like Wales was about to forge its own path. But without that drive from the top, there was a sense that there had been a retreat into the governmental comfort zone of caution and ‘responsible’ inertia. Not any longer. A freeze on road building, modal shift targets, talk of road user charging; whilst other parts of the UK are studiously deferring and avoiding the tough decisions dictated by the climate crisis – Wales is starting to take them on.

The man leading the charge on transport is Lee Waters – the deputy minister for climate change in Wales – who I recently interviewed as part of our series of lunchtime Urban Transport Next events and on who this article is based.

The first indication that something significant was changing in Wales was the Welsh Government defying the UK Government to cancel the M4 Relief Road. Lee said: “Just as important is what happened next. The South East Wales Transport Commission, led by Lord Terry Burns, former permanent secretary of the Treasury, produced a report that looked at alternatives to tackling congestion without building a motorway and that has just been endorsed by Sir Peter Hendy and his Union Connectivity Review.”

The M4 Relief Road decision has been followed by a wider moratorium and review of road building in Wales. Lee says this doesn’t mean there will never be another road built in Wales again but it’s sending a signal to the system that Wales is not doing what has always been done – and that road building shouldn’t be the default or the easy option. It’s also part of a wider ‘new path for Wales’ transport strategy which aims to walk the walk as well as talk the talk on decarbonisation: “The strategy says the right things but what are we going to do about it? And that’s why we have instituted the roads review, freezing all road building programmes, because unless the handbrake is applied the system will keep doing what the system did.”

The transport strategy has some other eye catching elements – including targets for a reduction in car use and for increased modal share for public transport and active travel. Achieving this will require a public transport system that can respond to this opportunity.

On rail, Lee is unhappy that although the Welsh Government now controls rail services in Wales, they don’t control spending on the majority of rail infrastructure. Lee says the UK Government is not giving Wales its fair share of spending on rail: “We have something like 12% of the track in the UK, 5% of the population and about 2% of the rail spend.”

However, the South Wales Metro is an exception where a remarkable transformation is now underway on both trains and tracks: “I think what is really innovative for us is the tram-combination. It will be on road in bits of Cardiff. It will start to really shift perceptions as to what public service is, what it looks like, how attractive it is.”

It has always struck me that the Valleys are a prime example of the case for fully integrated public transport where bus services could feed into railheads which can provide rapid linear services into the heart of the cities in South Wales. Lee agrees. “To get truly joined up, integrated transport we need franchising. We don’t yet have that. We will be introducing a white paper next year. And a Bill to pass Welsh legislation to create a franchising system in Wales so we can move towards one timetable, one ticket, one fare. That is a crucial part of making sure the Metro achieves its potential.”

He goes on: “I do think the commercial bus industry has been very effective at kicking sand in our eyes in developing these various different partnership models which essentially are designed to buy time and to keep the status quo. But the status quo is broken. So, having seen the difficulties Manchester have been having in implementing this, and how long they have taken, and that they have more resource than most of our authorities, it has made us realise we need to take a different path. So, before the election we were going down the partnership model route and now we are changing direction… we are now co-producing with Welsh local authorities a different model where we use Transport for Wales as a centre for strategic expertise… but we co-produce, genuinely, with local authorities how that works in practice.”

He continues: “Through that different approach hopefully we can get action faster than some of us have been able to do through the current legislation.”

There’s more to come on roads too – including a default 20mph speed limit for residential roads, a big shift to active travel and, intriguingly, the strategy also talks of establishing a framework for equitable road user charging. On active travel he says that progress so far has been a ‘curate’s egg’. He namechecks Cardiff as somewhere that “has showed bold leadership, reallocating space from cars into active travel, putting resources of their own in”.

He continues: “We are going to reward boldness so if Cardiff has got ambition… then we will overfund Cardiff and defund somebody else… and I hope that will show an example to others.”

On road user charging, he says: “I am bold, not stupid, so what I am not going to do is something that is counterproductive, so it is all about the timing. So, my feeling is we need to put in place first some of the changes which show there is a practical alternative to the car.”

Lee is a student of politics and of how things get done. He’s seen it from all angles. “I viewed the ring from different seats in the auditorium as a political speech writer, political journalist, campaigner, as a policy wonk, as a back bench member of the parliament and now as a minister. It is fascinating comparing those different points of view and understanding how to make the system move.”

He quotes Nye Bevan on how the coattails of power are always disappearing round the corner. He says: “Having chased the coattails of power constantly I am privileged to have the chance to be the transport minister in Wales but clearly I don’t hold all the levers.”

He’s well aware of the potential for backlash. “We have seen through the anti-vax movement there are going to be at least 20% of people who are going to be obdurately opposed to this, as there always is. I was struck by some clip I saw on YouTube the other day – vox pops about when seatbelts were introduced in America. The stuff people were coming up with, was exactly what people are saying on vaccinations today. We are getting it about 20 mile an hour speed limits as well. This feeling of authority taking away their liberties and freedoms and telling them what to do. That cannot be dismissed or minimised as a political force or be capitulated to, but we cannot ignore it.”

Alongside that, there’s the capability, capacity and enthusiasm of officialdom throughout Wales to pursue such a radical agenda, and the attitude and influence of a UK Government which Lee says is stuck in the road building past.

He says he finds the job “exhausting” but “having just come back from COP, the science is terrifying. Transport accounts for 17% of emissions. Transport has been given a free ride for too long in playing its part in bringing those emissions down. That has got to change”.

At the end of the interview, I ask Lee whether he really can change the way Wales travels? “I don’t know but I am going to give it a bloody good try.”

Jonathan Bray is Director of the Urban Transport Group

This article originally appeared in Passenger Transport magazine

Listen to the Urban Transport Next podcast with Lee Waters, or watch back on YouTube

Funding and a finely balanced future

Now that the dust has settled from Comprehensive Spending Review, it’s becoming easier to see through the smoke and mirrors and work out what actually happened. The question people often ask is ‘is it new money?’. And ‘is it more money?’. All depends on what you are comparing it with. Which previous year’s actual spend are you looking at and which projections of which spending review are your starting point? It is especially tough to come to a firm conclusion when old funding streams are replaced by new ones (who can say how much would have been in the old funding stream if it had been continued)?

What we can say is that DfT did better as an ‘unprotected’ department than it has at recent blockbuster fiscal events. Like other unprotected departments the better than expected economic forecasts have fed through into spending. But it still depends on what your comparison point is. For example, revenue spend is still projected to be lower than it was in 2010/11 in real terms. However, capital spend is much higher than it was back then. But a high DfT capital budget has been the case for a while given pre-existing commitments to HS2, investment in the rest of the rail network and a bloated national road programme.

What we can say for sure though is there was good news for mayoral combined authorities which benefitted from capital spending packages (City Region Sustainable Transport Settlements) which were at the upper end of expectations, at the upper end of what those city regions were asked to bid for, and more than they were getting under previous comparable funding streams. By bundling up what were formerly separate funding streams into a single longer term funding stream there is also now greater certainty which allows transport authorities to plan and deliver schemes more efficiently and effectively than with fragmented, stop-start funding. It will also mean significant capital investment in active travel, in light rail systems and in buses (bus priority and greener buses in particular).

We asked for longer term, consolidated funding for local transport (to bring it more into line with the longer term funding deals that national roads and rail already enjoy) so that’s a tick in the box. It also provides a base to go further through revitalised Local Transport Plans which we are told will be refocussed around carbon reduction. This would also be a positive step forward. It makes sense for transport authorities to have single transport plans – and they were only sidelined in the first place due to the constant quest for policy novelty that comes with a constant churn of ministers and advisors in a country as centralised as this one.

Now for the not-so-good news. The funding for transforming bus services in England is a lot less than was expected and indeed as was pledged by the prime minister. We were expecting £3bn of transformational bus funding to deliver on the bus strategy’s aspirations. To increase service levels where there are bus services. To provide new services where there aren’t. To make buses greener and to cut fares. Our members were asked to submit ambitious Bus Service Improvements Plans to government by October 31 in order to achieve those objectives. However, instead of the £3bn, we have £1.2bn for transforming bus services (plus over half a billion for zero emission buses).

his is still a lot of money – and an increase in dedicated bus funding from what was available before. Plus, there is more dedicated funding for bus for the mayoral combined authorities in the City Region Sustainable Transport Settlements. The problem is that given bus networks and bus use were declining pre-pandemic, and that the pandemic delivered a further hammer blow to a struggling sector, even £3bn wouldn’t have been enough. Not enough for every part of the country to make their bus networks cheaper, denser and greener – given it would be split by capital and revenue, by 79 English local transport authorities and over three years. To give a sense of the level of spend that would have been needed Bus Service Improvement Plans submitted by larger urban areas were often of the order of £1bn. If it was a big ask of the promised £3bn to meet the objectives of the bus strategy in full, then the reduced levels of transformational funding now available for bus (particularly revenue funding) definitely won’t be enough to achieve those aspirations.

On top of this, the cost of keeping public transport running every week is higher than it was before the pandemic – because patronage is lower than it was before the pandemic. These costs are likely to rise further due to inflation and rising labour costs (as bus operators raise wages and conditions to attract and retain drivers). The government is providing welcome recovery funding for both bus and light rail to the end of the financial year. But it is uncertain whether this recovery funding will be enough (it’s based on projections on patronage which may prove to be optimistic) and it is uncertain what will happen after April 22 when patronage is still likely to be less than it was pre-pandemic. All of which could mean that money meant for improving services could be eaten into in order to either maintain the status quo or control the rate of decline. In short, the prospects for the bus remain fragile.

What else did we learn from the spending review? The ‘save the Union’ project is a significant driver of transport policy. A big enough priority to outrank decarbonisation where necessary (as we saw in the Air Passenger Duty reduction for domestic flights). The ‘save the Union’ project overlaps with the prime minister’s enthusiasm for big transport infrastructure and probably also contributed to keeping a zombie national road building programme lumbering on – though with some limited scaling back.

The spending review showed that the government also continues to rely primarily on tech fixes for the decarbonisation of transport and certainly doesn’t want to be seen to raise the cost of motoring. So, the fuel duty escalator is suspended again – whilst there is substantial investment in zero emission cars.

The tougher decisions necessary for modal shift and decarbonisation are deferred; in particular a fundamental realignment of the relative cost of private and public transport. However, away from the Comprehensive Spending Review and other big government policy documents, it’s a fact on the ground that environment focussed charging schemes are now becoming a more common feature in urban areas as more and larger charging air quality zones come on line. Meanwhile various think tanks (including the Tony Blair Institute for Global Change) are on manoeuvres, rolling out the pitch for road user charging for when the Treasury is ready to make its move on this (which it will have to at some point as more of the car fleet goes electric).

And outside of the game changer of road user charging, Number 10 is very clear that they see City Region Sustainable Transport Settlements and Bus Service Improvement Plans as a way of accelerating the transition of more road space from private cars to space for people on foot, on bikes and in buses. The vote of confidence for further light rail investment and expansion in the City Region Sustainable Transport Settlements is also encouraging.

Overall, the future for public transport is finely balanced, with perilous balance sheets thanks to Covid and the relative costs of using private and public transport skewed the wrong way. At the same time there is a capital funding base to build on, road space allocation slowly gaining favour, and the climate crisis contributing to unparalleled political support for the idea of modal shift. We are also starting to see more of the tough decisions being taken (like charging zones). Perhaps it’s the extent of that boldness on those tough decisions – both nationally and locally – that will swing it one way or the other.

Jonathan Bray is Director of the Urban Transport Group