I understand why many of you are very sceptical about any proposal to shift the log jam – and the over taxing – on our roads. Many politicians are anti motorist, and do see motorists as an easy source of tax. You should know me better. The scheme I outlined does not increase the revenue take from the motorist for existing travel levels. It offers more motorists the chance of a better deal.
You win if you travel less than the average in your car.
You win if you travel on non toll roads.
You win if you travel on toll roads outside peak hours.
Everyone on the roads wins because there would be more capacity and better management of the roads.
You pay a user charge for using big roads at dear times of day instead of having to pay a tax which you cannot avoid
Our roads are grinding to a halt. They are very badly managed. The motorist is ripped off every day for a rotten service. The phones used to be like that. We were short of capacity and phone lines because they were part of the public spending exercise and rarely took priroity. After privatisation they provided much more capacity, and the companies concerned started paying tax to the Exchequer instead of needing subsidy.Prices fell.
Most of you tell me regularly the state is doing too much and should be smaller. Let’s get it out of the super highways business.
August 27, 2009
Pleased that you understand some of us have concerns with regard to road pricing.
I have concerns because I do not trust Governments to run any sort of franchise, which in effect is what you propose.
If you are road charging at various rates for travelling on the M4 at various times of the day, how long before the A4 which will have increased traffic on it (due to the cost of M4) be exempt.
Who would still pay for refurbishment of the roads.
The existing elevated section of the M4 has been undergoing major refurbishment for the past couple of years, due to rust in the re inforcing structure, which is blowing concrete on the supports, as such the A4 which runs beneath has restricted lanes.
John we are an overcrowded Island, with too many people, and too many cars, with little public transport option in many locations.
Try travelling from Wokingham to Henley by public transport, its three trains and an hour and a half.
Many bus services stop after 6.00pm in Wokingham and I do not regard us as being out in the sticks.
So the car in most areas of the UK is essential.
The problem we have is not raising money, it is spending it wisely. We should be reinvesting the money raised on the roads, back into maintainance and widening, not into traffic restrictions.
Many Countries who have SOME road pricing schemes are much larger in area, France for example is about 5 times larger for a similar population, and you have a choice of reasonable alternatives/routes which are not too overcrowded if you do not want to run on the toll roads.
Last time I travelled from Calais to the South of France (about 10 years ago) cost about £100.00 in tolls.
Use the M6 toll road every working day for a year, its more than road tax on an average car.
If public transport had a more joined up policy then some people would use public transport more, if public transport was less costly than it is, then more people may use it more.
Please do not let us have the confusion of road pricing with its various rates/times as we do for trains, its a nightmare.
August 27, 2009
You have a valid point, and your proposal makes some sense. Less Government interference has a very strong appeal.
However, the Public have learnt to be suspicious of any change to charging systems. We have all noticed that with change comes a price increase, especially where a new infrastructure has to be funded. Also, toll pricing with the accompanied paper trail smacks of Big Brother watching you, and even Channel 4 are tired of that!
Transport is not the same as a telephone line. My family are the only ones who use the telephone/electricity/gas/water services in my house, and I can chose to change to any provider who wishes to be active in this area, if the existing service is not adequate.
If I am not happy with the service provided by a transport franchise holder (either for road or rail) I don’t really have a choice. For roads, it’s either use the trunk road (motorway) or be held up in country lanes. For rail the only practical alternative is the car – it’s not a choice between apples and apples!
I assume that the M6 toll road works because there is direct competition from the original M6 – they have to provide a better service. If they privatise the A3 in Surrey, none of the alternatives (M3, A23) go to the same place.
Even I could be flexible in my choice of destination, it assumes that there are alternatives available within my area. The alternative between an XYZ managed A3 and an XYZ managed M3 is not really a choice. Equally, for many people, they don’t have a choice of when to travel because of the demands of an employer.
JR: I think that most of us reading your blog trust your intent, but you not likely to be the person implementing the scheme, and there will be lots of unaccountable committees before anything is put in place. By the time the System has applied your logic, it won’t be what you proprosed, or what the Public are prepared to accept.
August 27, 2009
If someone wants to build a new road from London to Exeter or anywhere else and charge people for using it then good luck to them. What I do not want to see is a private company taking over existing roads which we’ve already paid for and then charging us tolls to drive on it.
August 27, 2009
What a quaint idea you have of the public finances: ‘taking over existing roads we’ve already paid for’. Perhaps if there were no public debt or unaccounted liabilities this might make a bit of sense, but its rather Alec Douglas Home and his box of matches, if you can remember that far back!
The same applies to Nick, who thinks hypothecation is the answer. Trying to balance the Budget is what Chancellors perennially do (present company clearly excluded), so having their hands tied is just not on.
August 28, 2009
You may think the idea of charging someone only once for something is quaint. I do not. The idea of paying over and over again for the incompetence of others seems to be an idea which is currently being promoted as a good thing. I suppose it is if you’re on the receiving end of the plunder. Not so great for those of us who are constantly being being robbed.
August 28, 2009
So which bit of which road did you pay for and when; and how much and how many times did you pay for it? If it were a charge you would be able to answer that question, but as roads are paid for through taxes you cannot. Except to say you pay too much for too little and are being robbed.
August 27, 2009
What is important in any road pricing scheme is to ensure that the costs impose the right incentives to get the result we want. I think the result we want is roads that enable us to travel efficiently. That means we should avoid charges like the London congestion charge and the M5 toll motorway, since they provides more revenue as the congestion increases. We need schemes where increased congestion decreases the profit the franchisee makes.
So I suggest looking at methods that charge according to your average speed along the road. The faster you go the more you pay. That way the franchisee has an incentive to make sure that the road is clear.
reply: I agree – anyway by only tolling some roads and leaving free alternatives there will have to be a better service
August 27, 2009
Hypothocate the tax.
Road users pay for the roads.
Rail users pay for the railways
Bus users pay for the busses.
Very simple, and let the market decide.
Nick
PS. The problem is the 8 trillion of debt that the Tories and Labour have run up on your credit card. That’s why its tax tax and more tax, and not even a Tory government can stop it.
August 27, 2009
Lateral thinking:
We are a very overcrowded island and, apparently, we are liable to get even more overcrowded.
Deal with that first: here are some unpopular and purely personal suggestions. For all those of my Labour Friends who red this, let me assure them that this is NOT Conservative party policy…..
1. Stop more or less all immigration now. Make it like Australia. Restrict people coming in.
2. Cut housing allowances which are, frankly, ridiculous at the moment.
3. Reform Welfare so that it pays people to go to work rather than be “workless”.
4. Reform the dole/education/health systems so that it becomes impossible for people who haven’t contributed to get stuff. Like the old stamps system.
August 27, 2009
Don’t all these proposals make it easy for the rich businessperson to travel at peak times, and harder for nurses, carers, and anyone else who isn’t wealthy? That’s why I oppose the London congestion tax.
Why should the roads be for the rich?
Reply: That’s why I also oppose the Congestion charge. My proposals will cut the cost of motoring for most on lower incomes
August 27, 2009
Basic economics suggeests that because roads are free at point of use (what does that remind us of?) they are over-used to the point of congestion. Because of the negative externality of congestion, the social optimum and nash equilibria are NOT at the same point. The real costs of time and energy spent in jams are appalling, in the order of tens of billions per year.
The proper free market, indeed textbook, response is to apply tolls until the two of them are brought together. For all its faults and silly environmental overtones, the London congestion charge is a perfectly good free-market concept for distributing scarce day-time road space in the capital.
The point about there being only one feasible road for most journeys is a good one. In practise, the consumer choice will not be between competing roads, but between travelling or not at all. This will mostly hold even if charging is applied only to peak hours (thought it would push a lot of freight into overnight deliveries, which would be useful).
Hence competition will be difficult to encode through directly competing services; we should look to leasing the roads under a lowest-tariff-wins auction. Penalties should be applied to the operator if the road becomes congested, incentivising them to keep tolls as low as possible to keep traffic moving and cover maintainence costs, but no more.
Finally, I appreciate that free people have a right to move from A to B. But they do not have a right to move from A to B along free roads, rail, or jet provided at some other poor sod’s expense! The former right is inalienable, and the latter clearly is not. Roads are not free, and congestion is a negative externality. Even Hayek and Friedman would admit a case for tolls here.
August 27, 2009
I see you have studied some welfare economics. One thing missing from your analysis is that many peak hour road users do not currently have a choice of working hours. Their employer sets the hours, and has no incentive to vary them. Employers should pay the added costs of peak hour travel – by whatever mode – so they have the economic incentive to balance between their business needs and the externalities of peak hour congestion and peak capacity demands for throughput.
August 27, 2009
Thanks Mark,
Yes, indeed, inflexible commuting times will limit the opportunity for non-peak hour use for many users (but freight/HGVs should be more flexible – not an insignificant point). More correctly, I suppose we should state that the individual marginal value for peak as opposed to non-peak travel is likely to be very high.
I agree with your conclusions, generally. One supposes that employee compensation packages will change to reflect travel costs, or employers will move to locales better served by public transport, or less congested, or adopt more flexible hours. Over longer periods I suspect it might push us back towards a workforce more concentrated about places of work; and urban rather than suburban living.
August 27, 2009
Even if such a ridiculous idea could be implemented, it would result in the road user being insulated from any higher price during peak hours, and thus not having the motivation to find a different mode of transport. Which kinda negates the whole point of the exercise.
#@~’#!% economists …
August 28, 2009
Well, to behonest, I doubt most users would be insulated in the sense you mean it.
Employers wouldn’t be able to just randomly pony up a load of cash to their commuting employees with no other changes. Although the belief that all business is sat on a mysterious pile of money with which they are doing nothing has been a feature of Labour fiscal policy…
In real life, business would have to either raise prices, adopt flexible hours, re-locate themselves, or one of a 100 other things to reflect the rise in costs. Business which was able to minimise their peak hour commuters would enjoy a cost advantage over those that couldn’t. And bully for them! We’d get the same goods without the additional congestion.
In short, I don’t see a reason why road pricing would function differrently from any other cost consideration in a business model.
August 29, 2009
Not so: if your reason for travel is not work, then you pay the peak travel cost yourself. If as a commuter you have a viable choice of alternative to the car, then you either pay to run your car or an off peak fare on public transport (regardless of your working hours), with your employer paying the peak element if you are required to travel during peak hours. On that basis public transport ought to be competitive cost wise.
We already know that it is necessary to make the employer pay, because employers show no sign of reflecting the peak cost of a season ticket in their business decisions on working hours – leading too many employees to add to road congestion because the motorist doesn’t pay a peak charge other than in time wasted in traffic jams and a related fuel inefficiency penalty compared with being able to drive to work at a steady 60mph, because without congestion charging road is cheaper than peak public transport.
August 30, 2009
Freddy I agree.
Mark where do you get off suggesting that Employer’s are just awkward people trying to make life difficult for employees. We work the hours our customers demand.
School hours determine most people’s working hours change requests. If you have no business at 7am, and you’re not in an administration function (where work can be done at any time) how can you bring people in when their job dicates there is no work for them to do? We have people starting at 8am, 0830, 0900, 1000, 1445, 1745, and 2230, by far most people are more content to start at 0900 or 0910 if their train can’t get them in on time. I offered one girl to change to a 0930 start when she moved farther away, she didn’t want to because she couldn’t afford to lose the pay and didn’t want to work later to make the time up.
Can I ask what size of organisation do you work for, if you work, and is it public or private sector?
August 27, 2009
Alistair.
You say the roads are free to those who use them, not really true when you add up:
Vat on Car purchase
Car tax on car purchase
VED on car registration
Fuel duty.
Insurance tax on insurance.
Soon to be showroom tax on car purchase.
Speed camera fines.
All adds up to about five times more in tax receipts than is spent on the roads per year.
As said before, we already raise the money, the fact of the matter it is hijacked to go elsewhere.
Gordon Brown is the modern day Dick Turpin.
August 28, 2009
Alan,
I just meant “Free-at-point-of-use”; like the NHS. Not “Free” in the general sense. Sorry for any confusion.
Obviously, yes, we are taxed massively (indirectly) for the use of roads, and I share your concern about the level of road-related taxes. I believe the sum is about £30B, in total, of which less than a third is ever ploughed back to infrastructure. Disappointing, really, as infrastructure spending is one of the few areas of government spending which actually benefits the economy.
August 27, 2009
“Penalties should be applied to the operator if the road becomes congested, incentivising them to keep tolls as low as possible to keep traffic moving and cover maintainence costs, but no more.”
I’m sorry, that’s complete nonsense. The operator will reduce congestion by RAISING tolls, causing more traffic on their road to divert to alternate routes.
#@~’#!% economists …
Reply: there would be a maximum toll as part of the sale agreement
August 28, 2009
Freddy,
Apologies for being an economist (actually, I’m not, but I’ve been mistaken for one in poor light :-).
Perhaps I didn’t express myself clearly, but you seem to have the right idea in part. Naively, yes, the operator would indeed seek to avoid congestion penalties by raising tolls, just as he would seek to maximise profits by selecting the monopoly price. Indeed the operator profit function will look something lke this:
[ tolls * User(tolls) ] – [Penalties(Users)] – fixed costs
Where congestion penalties are some fucntion of users, and users are some function of tolls (the demand curve).
So what stops him? And how does this differ from a monopoly model?
Well, the point of my original post is that the LOWEST toll bid will win the franchise auction (i.e. lowest tariff per projected user). Hence competing operators CANNOT select the maximum profit tolls – they will be underbid by other operators and not get the franchise in the first place! As with any free market, bid competition between potential operators will push toll price down to the level associated with the social optimum, so long as congestion scales are priced appropriately.
This would have the added benefit, as I see it, of removing the need for a “maximum toll” as part of the sale agreement, though we might put one in for safetys sake.
Yes, some traffic will divert to other (less congested) routes, or drive “off peak” when tolls are likely to be a lot lower (or free). That’s rather the point – and it will lead to a better allocation of scarce peak hour road space to users who value it more.
Cheers.
August 28, 2009
“Perhaps I didn’t express myself clearly, … ”
You expressed yourself perfectly clearly. You were just wrong.
“…but you seem to have the right idea in part. Naively, yes, …”
Excuse me while I write out 100x :
I am a guest in Mr Redwood’s place, and I will not rip his other guests a new one, no matter how much they need it.
August 28, 2009
Freddy,
We seem to have some distance between us, and I’m not sure I understand the basis of your critique. If you could spell out precisely where you feel I am in error, in terms of premises or reasoning (perhaps with some maths of your own?) it would greatly help discussion.
I feel that simply gain-saying my position doesn’t add anything useful. This is a well above average forum, and I’m sure we’re both keen to live up to the normally high standards of comment here.
Cheers.
August 27, 2009
Years ago you could put your car on a train and freight it and you all the way to Scotland—Brockenhurst was a loading station, why cannot we still do this?
I had elderly friends who used to put their car on board to go all the way up to the Edinburgh festival, the drive up even then was hopeless, so the car and train was easy and relatively economical.
It is so easy to get your car on the train to clear off to France-
Why oh why is life so darned difficult here?
The rail companies have not thought things through.
My little rural station has a facility for loading sand and gravel from lorries to cart it all the way by freight train to London for the Olympic build.
This train is an old fashioned heavy looking diesel with nearly a village length of wagons-
If this sort of thing can be done, surely a modified goods train can do the same sort of thing for holiday makers and their cars to the S West country too?
Why can’t heavy road transport be container-ed up to their destinations on trains either?
The railways have just not engaged their brains , and the transport wallahs from all sides need to brainstorm a bit more.
We need trains like the Americans or Canadians don’t we?
August 28, 2009
True Belle
Yes have used the motor rail service from the south of France to Calais a number of times in years past.
Reason:
The journey by car (if only one driver) is sensibly completed in two days to avoid fatigue.
The train is overnight only (late afternoon – early morning) so you gained another day in the sunshine and arrived fresh at your destination ready for the ferry and a cooked breakfast.
The cost of the motor rail was about equal (in low season times only) to the cost of petrol, tolls, and an overnight stay in a hotel.
It was not ecconomic in the high/mid season, so we always drove down to the South of France in August and motor railed back in September.
Motor rail may just be ecconomic (depends on fares) for a very long trip, but unlikely for shorter routes.
August 28, 2009
That’s interesting.
I imagine that the vast majority of road journeys in this country are over shorter distances where motor rail is not economic. The maths might look a bit better for freight rather than pax, especially if roads were charged.
August 27, 2009
Just how is it my fault we have road congestion when I never agreed to an open door policy, why am I to blame for rising pollution or landfill problems.
these problems are not caused by the British people., they are cause by the very same people who now wish to profit from this mess.
Personally I think we have been stitched up AGAIN.
August 27, 2009
It currently costs the best part of £5 to use the M6 toll. the road is 43km long. 12p a km. My VED is £35 a year. So i get about 300km a year. A little internet research suggests M6 toll is not exactly a run away success for the owner / operator.
The motorway network is already operated by private companies. My understanding is that they are set targets relating to operating efficiency of the road length they manage. It would require huge investment to switch our current network to a tolled system.
August 27, 2009
I’m sorry, Mr Redwood, I think this is a lousy idea, and not just because it atttracts economics students talking balderdash.
When the Tories get to power, they need to start taking steps immediately that will have a noticeable effect on the deficit within 2010. Implementing road tolling will not start bringing in revenues to the government for several years, quite possbily not until the next parliament. In the mean time, it will make you highly unpopular, particularly with many people who might have just voted for you.
You also cannot expect to just replace petrol tax with revenue from roads – you also have to let the concessionaires make a profit. You think they will be able to do this from efficiency gains – I am not so sure. Remember, most of the workmen you see doing road works are already in the private sector, doing contracts for the public sector. And any new works will require lane closures – leading to further congestion – while they do the works and/or acquisition of new land for widening. I can’t see you delegating compulsory purchase powers to a private sector company, so you will still have strong involvement of the public sector no matter what, just like in every other country in Europe that does this.
I could rant on at length about some of the impracticalities on this and the previous thread, but the basic message is simple: this would be hugely unpopular, and it won’t deliver any cashflow to the government any time soon. While I admit to being a political naif, I cannot believe that this is a sensible thing to be looking at in our current circumstances.
August 27, 2009
If you really want to reduce congestion in a practical way, look at what it will take to get long-distance freight off the roads and onto the railway. Big lorries cause a disproportionate amount of wear and tear on the roads and slow things up dreadfully; get rid of them. (One of the few areas where I agree with the EU.)
There was a company called Central Railway a few years ago which was trying to implement a lorries-on-train service from the Midlands down through the Channel Tunnel, which would have provided cheaper freight shipping and would have removed a huge number of lorries from the roads of southern England. That’s the sort of thing which could and should be done.
August 28, 2009
That’s interesting, Freddy.
Do you know of any data on the cost per ton-mile for this option? It would be nice to make a comparison with road freight.
August 30, 2009
Freddy, the Royal Mail took much of their postal freight off the rails and put it back on the roads a couple of years back, see news.bbc.co.uk/1/hi/england/2934052.stm and news.bbc.co.uk/1/hi/england/devon/2967712.stm because it wasn’t viable, if it is not viable for the Royal Mail how is it for other smaller competitors?
How many disruptions to the free movement of freight have you heard about in the past twenty years. The majority of freight is moved at night when most people are tucked up in bed and don’t see it.
I don’t know if heavy loads over the greater distances are more cost effective on rail, but if they are then you can be sure the private sector transport market will be using it as margins are very tight in this industry sector.
August 28, 2009
Well, if despite valid scepticism, Toll roads are to be the future, why not give the franchise holder authority of all relevant issues. One thing that would make them more popular would be a higher speed limit for cars. And we can try out the idea now on the M6 Toll. I suggest 100mph, perhaps introduced in annual 10mph steps.
August 28, 2009
Please, just forget about road pricing. The issue is dead. The people of Greater manchester killed it. Whenever it has been put to a vote, it has been rejected, the only reason the London “Congestion Charge” came into being was the people were not allowed to vote on it.
August 29, 2009
Dear John,
May I just pick up on your itemised list?
You win if you travel less than the average in your car. What if I drive more than the average, not so much from choice as from necessity?
You win if you travel on non toll roads. What if I need to travel on the toll roads, not so much from choice as from necessity?
You win if you travel on toll roads outside peak hours. What if I need them only at peak hours, not so much from choice as from necessity?
What you’re proposing would add bureaucracy, and a new layer of government regulation. It would also add costs to business people who need to use the roads.
To improve roads, allocate the money and call in some appropriately qualified engineering firms. Do it at public expense because they are a public service. Don’t give us another rail privatisation, please!
From our starting position – all roads in public ownership – it only makes sense to privatise if there can be (1) diversity of provision, and (2) proper market forces giving proper risk/reward incentives. Neither of these are available where the product is a road.