TForward Delivering FINALIST Better Roads Catriona Brown Catriona Brown TForward, A Stepped Approach
Catriona is a busy mum with three young children. Catriona does not have a professional background in transport, but her everyday frustrations with road congestion have motivated her to draw on her background as a lawyer to find solutions.
Prize Team
SIR JOHN KINGMAN BRIDGET ROSEWELL OBE Chairman of the Judging Panel Judge
LORD DARLING LORD WOLFSON Judge Founder
ISABEL DEDRING JULIAN GLOVER OBE Judge Prize Director
LORD FINKELSTEIN Judge The Wolfson Economic Prize invites entrants from around the world and all sorts of backgrounds to propose original, well-argued and informed solutions to big national challenges. The aim is to bring forward fresh thinking to help people, governments and businesses develop practical policies. This year the prize addresses an issue at the heart of every country’s economic future: road infrastructure, and
how can we pay for better, safer, more reliable roads in a way that is fair to road users and good for the economy and the environment?
The way cars are powered, driven and owned is being revolutionised. Soon a world of cleaner, automated vehicles will arrive and old annual charges and petrol taxes will no longer work. A new kind of driving will take a new kind of road and a new kind of funding – ideas needed not just in Britain but around the world. The five shortlisted submissions – of which this is one – show that it is possible to come up with potential answers that can help road users, improve safety, protect the environment, and support our economy. CONTENTS
1. Summary 10 2. Stepped Introduction Of Road Charging 13 2.1 Stepped Approach 13 2.2 The Name “TForward” 13 Step 1: Establish The “TForward” Platform 13
Step 2: Modernise London’s Congestion Charge 15
Step 3: Integrate Existing Road Charging And Parking Schemes 16 Step 4: Update HGV Road User Levy 17 Step 5: Potentially Integrate Public Transport Ticketing 17
Step 6: Integrate EV Recharging Points 17 Step 7: Enable Future AV To Integrate 18 Step 8: Integrate New Road Infrastructure 18
Step 9: The Local Government Deal 18
Step 10: The Highways England Deal 20 3. Political Deliverability 23 3.1 Addressing Public Concerns 23 3.2 The Starting Steps 23
3.3 Political Deliverability And Delivery 24
3.4 Additional Roll-Out Approaches 27 4. TForward International 29 4.1 Business Plan 29 4.2 Establishing TForward International 30
4.3 The UK’s Competitive Advantage 30 4.4 The TForward International Service 31 4.5 Additional Opportunities 32 4.6 Political Messaging 32 5. Insurance And Telematics 34
5.1 Advantages Of Telematics 34 5.2 Roll-Out Telematics Via Insurance 35 5.3 Introducing Road Charging Via Insurance 37 6. Raising Tax From EVs 38
6.1 “Free-Loading” By EVs 38 6.2 The Sooner The Better 39
6.3 New EV Taxes 39 7. Environment 42 7.1 Transition To EVs 42
7.2 Pollution 42 7.3 UK Air Quality Plan 43 7.4 EV Recharging Points 44
7.5 TForward Cost-Effective Recharging Points 44 7.6 Customer Fairness 45
7.7 Electricity Generation 45 8. Good For Road-Users, Economy And Environment 47 8.1 A Better Deal 47
8.2 The Wolfson Select Committee 47 8.3 The Current Taxation Model 49 8.4 Fair For Road-Users, Good For The Economy And 51 Environment? 8.5 Diverting Parking Revenues To Public Funds 58 8.6 Losers From Change 58 9. TForward Technology And Development Cost 60 9.1 The TForward Technology Solution 60 9.2 Managing Procurement 61
9.3 TForward Development Costs 61 10. Financial Analysis 64 10.1 Economies Of Scale 64
10.2 M6 Toll: Funding Road Construction 65 11. Case Study: South Wales 69
11.1 Abolition Of Severn Bridges Tolls 69
11.2 M4 Relief Road 70
11.3 South Wales Metro 71 11.4 TForward Solution 72 11.5 Political Deliverability 75 12. Value Capture 76 12.1 Value Capture Concept 76
12.2 Capturing Value 76
12.3 Reshaping Our Cities 78
12.4 Compulsory Purchase 79
12.5 Resolving The Greenbelt Debate 80 13. Better Procurement 81 13.1 An Opportunity To Build Public Support 81 13.2 The Wolfson Select Committee And Procurement 81
13.3 Beyond PFI 82 13.5 Competition For Investment 85
13.6 Mode-Neutral Commissioning 86 14. Next Steps 87 Appendix: Technology Revolution 88 A.1 Two Worlds Colliding 88 A.2 Today’s Policy Initiatives 88
A.3 Differentiate UK Investment 89 A.4 Funding Infrastructure Solutions 90
A.5 AV On Rails 91 A.6 Extension Of South Wales Case Study 93 1. Summary
TForward Technology Platform Step 3: integrate existing and planned road charging and parking schemes TForward enables road charging to be into TForward (e.g. Dart Charge, introduced in many small steps, without Mersey tunnel, Low and Ultra Low political “cliff-edges”, by central, devolved Emission Zones), and enable them to and local government. upgrade to telematics-based tariffs TForward is a technology platform that Step 4: update the HGV Road User provides a customer interface, vehicle Levy to TForward telematics, and meet satellite tracking (telematics), and a Draft UK Air Quality Plan objectives payment and accounting system that all road charging schemes can link into. Step 5: potentially enable public TForward creates economies of scale, transport “smart” ticketing via and enables new road charging schemes TForward to be started quickly, reliably and cost- Step 6: enable cost-effective effectively. installation of EV recharging points by Technology advances can continually be linking into TForward harnessed by the platform and developed Step 7: enable future AV, car clubs, into optimal transport solutions ride-sharing and innovative apps, to TForward Stepped Approach use TForward An over-arching policy to introduce road Step 8: integrate charging for new charging across the UK is not appropriate. road infrastructure into TForward (e.g. Lower Thames Crossing, potentially A stepped approach allows re-evaluation around Heathrow) of policy at each step, without any presumption that road charging should be Step 9: with the Local Government fully rolled-out: Deal, local and combined authorities can introduce road charging and Step 1: build the “TForward” platform keep the revenue for local road Step 2: modernise the London improvements, and local authorities Congestion Charge to TForward can establish clean air zones proposed variable telematics-based tariffs linked by the Draft UK Air Quality Plan to congestion and pollution, and Step 10: with the Highways England enable expansion of road charging Deal, roll-out road-charging on the where most needed in London, e.g. Strategic Road Network (“SRN”). Blackwall and Silvertown tunnels as already announced (potentially convert Many players can take different steps the London Congestion Charge and forward in parallel, which cumulatively customer database into the TForward builds a critical mass of people platform) registered with TForward.
10 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN Political Deliverability TForward International Steps 1-8 are not especially controversial The UK can “export” TForward by politically. While they are being making the platform available for road introduced, the government needs to charging schemes in other countries show tangible benefits from road charging facing the same challenges as the UK initiatives to mitigate opposition to more with ever-increasing traffic, congestion extended road charging. See Section 3 and pollution, and financing their roads for road-user benefits the government infrastructure. Road charging schemes could be starting to deliver related to road are slow, expensive and risky to set up investment, financial incentive, better (around £160 million for the London procurement, new technology, road safety Congestion Charge). That combined with and the economy. political resistance to road charging, means only limited charging has been Given scepticism of political promises, introduced around the world for roads these actions will be more persuasive with beyond bridges and tunnels. road-users than any intellectual case for road charging. The answer on political Economies of scale with the TForward deliverability is starting to deliver. International platform would make many road charging schemes around the world Off-setting reductions in fuel duty are economic, even on a trial or rush-hour also crucial to winning public support only basis. TForward makes it financially when more extensive road charging is viable for other countries to follow the introduced. UK’s stepped approach to introducing Much decision making about more road charging, and therefore politically controversial extension of road-charging deliverable for them too. (such as extending road charging in Governments looking at road charging London, or under the Local Government schemes have focussed on making a Deal) can be taken in the future at a particular scheme pay its costs, rather devolved or local level where there is a than realising the problem of paying to good understanding of the area’s road administer one scheme can be turned into network and what local people may a business opportunity across all schemes. accept.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 11 The TForward International business Value Capture plan can extend beyond road charging to Value capture initiatives, combined provide: with modernised compulsory purchase • parking payment systems legislation, could re- shape urbanisation • smart-ticketing for public transport with those who benefit paying for • integrated travel information and infrastructure. ticketing enabling Mobility as a Wolfson Select Committee Service, internationally, across multiple A Wolfson Select Committee would be a modes of transport, from different practical way of ensuring actual benefit transport providers, for passengers and as road charging is rolled-out in the real freight world, with its remit including: • payment infrastructure for cost- • ensuring any road charging introduced effective roll-out of electric vehicle is fair to road-users, and good for the (“EV”) recharging points, autonomous economy and environment vehicles (“AV”), apps, and other future • overseeing creation and running of the innovation TForward International platform in the best interests of UK road-users and TForward International has potential for significant profit generation, taking taxpayers a small administration fee from each • overseeing transition to EV and payment processed, given the size of the improved air quality international transport market. Equity • keeping the UK at the forefront of AV ownership can be shared between the and innovation UK government and the private sector • overseeing better infrastructure consortium that will be needed to build procurement practices and operate the platform. Substantial • developing value capture profits could go to funding the UK’s roads. • championing infrastructure funding The UK has competitive advantages innovation for becoming the world-leader for an international transport platform; the UK’s That would increase the long-term impact FinTech expertise, stable and trusted of this Wolfson Economic Prize. political and legal systems, and leading with the London Congestion Charge. Developing and running TForward will create skilled UK jobs and the basis for a new industry. The UK should aim to build critical mass before competitors appear.
12 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 2. Stepped Introduction Of Road Charging
2.1 Stepped Approach For the purposes of this report, the name “TForward” has been chosen, although An over-arching policy to introduce road a creative marketing team may come up charging across the UK is not appropriate. with an alternative. Instead, a stepped approach should The name is short for “transport forward”, be taken, where before each step the and deliberately not limited to roads, as views of the public are listened to, policy road charging could integrate with public adjusted in light of people’s views, transport ticketing, as part of a future and a balanced decision taken (by integrated mode-neutral mobility service, central, devolved or local government as delivering Mobility as a Service, operating appropriate) as to whether or not to move from the same TForward platform. forward with road charging. This is a gradual approach allowing road Step 1: Establish The charging policy to evolve, giving people “TForward” Platform time to express their views and adjust, and ensuring new road charges support The proposal is to establish TForward, a economic activity, are good for the national integrated system providing the environment, and give road-users a fair front-end customer interface, telematics, deal. and back-end IT, payment and accounting mechanics, that current and future road There should not be any presumption that charging schemes link into. road charging will necessarily be rolled- out nationally; the case for each extension TForward is a platform enabling numerous of road charging should be freshly exciting technological advances to be evaluated. harnessed, and developed into an optimal customer-facing transport solution. Future The steps need not happen sequentially, technology is about more than driverless and some steps may run in parallel, or the vehicles, and the UK needs to embrace order reviewed. the benefits that can be unleashed from a spectrum of innovation ranging 2.2 The Name “TForward” from smartphones, to advanced satellite technology and digital management of A road charging scheme would benefit vehicles. TForward would take advantage from a customer-friendly name suitable for of the technology inflexion point we branding. The name might be indicative are at, and apply the best in recent of what the road charging scheme innovation to our roads sector, while delivers, such as better roads or reduced continually incorporating and driving new congestion and pollution (e.g. London’s technological development (discussed “Low Emission Zone”). further at “TForward Technology and Development Cost”).
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 13 TForward would integrate payment Additional benefits include enabling: mechanics for existing road tolling, congestion and emissions charging, i. a stepped introduction of road parking schemes, future road charging, charging HGV levies, lorry parks, EV recharging, ii. existing road charging and parking car clubs, future AV hire, and future schemes to upgrade to variable ride-sharing and other innovative apps, telematics-based tariffs park and ride, and potentially telematics iii. cost-effective roll-out of EV vehicle insurance, and public transport chargepoints ticketing. iv. cost-effective smaller road charging TForward would establish standardised schemes technology protocols to support both v. new technological innovation which telematics and EV recharging points, can take advantage of the back-end enabling mass roll-out. payment system (e.g. AV, and ride- TForward removes significant cost and sharing and other apps) risk from new road charging projects, vi. digital management of vehicles, by providing an existing proven reliable including flexibility to manage back-end payment system, and registered change, with AV and conventional customer base, making projects easier to vehicles mixing together in as yet finance and get started, and speeding up delivery of new road charging schemes. unknown ways vii. Mobility as a Service across different It would be cheaper overall for road-users modes of transport with economies of scale, and technology viii. trials of sophisticated pricing solutions, payment mechanics and customer service not being re-created for structures to better allocate road separate schemes. usage and link it with economic activity Customers would only need one UK ix. different levels of government payment account (charging automatically to a debit card or chosen payment to generate revenue for road method), making payment for using road improvements in their areas infrastructure a straightforward user- x. integrated website and smartphone friendly experience. TForward would travel and EV chargepoint take a small administration fee from each information payment. Whilst new vehicles are generally telematics-enabled, accelerating telematics roll-out to existing road-users and vehicles, to lay the foundation for later telematics-based road charging, could be taken forward by insurers with government support (see Section 5 “Insurance and Telematics”).
14 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN A centralised national system would have with variable tariffs to better address the critical mass to invest in robust cyber- congestion. security, to safeguard people’s confidential The benefits of converting the London information about where they travel, and Congestion Charge platform and database, protect against payment fraud. It would rather than building a new platform, have the capacity to invest in, and evolve include: with, future technological innovation that will change how we use our roads and • most London drivers are already how we pay for them. registered for the Congestion Charge, providing an existing customer base, Step 2: Modernise London’s and avoiding the upheaval of all those Congestion Charge people re-registering with a new scheme The London Assembly Transport Committee has called for replacement of • London is a natural pioneer of road the existing London Congestion Charge charging, given the extent of road with road charging. The Committee congestion, the availability of public considers the Congestion Charge to transport, and younger population. be “no longer fit for purpose - a blunt London has successfully introduced instrument of old technology that the Congestion Charge and Low covers a tiny part of London” and that Emission Zone charge, and drivers “fundamentally, vehicles should be are used to paying for central London charged according to their impact on congestion”.1 roads • London already leads on public This is an opportunity. As an alternative transport integration with transport to creating the TForward platform from devolved to one body (TfL), the scratch, it is recommended that central successful Oyster card, and contactless government collaborates with Transport for London (“TfL”) (under the Mayor of bank card payment London and London Assembly), with an • it would allow London to develop a appropriate sharing of costs, to convert more sophisticated telematics road the existing London Congestion Charge charging platform, at lower cost, if platform and customer database into a shared with central government new national TForward platform, capable of providing the back-end for other charging schemes. Politically this step is deliverable - it is simply modernising the existing Congestion Charge which people are already used to paying, into a more sophisticated telematics system,
1 “London Stalling” report dated 19th January 2017.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 15 It would be a separate matter to be Initially run TForward in parallel with democratically determined in the future the existing charging platform to iron by the Mayor of London and London out teething problems, and encourage Assembly, whether or not to extend voluntary customer uptake of TForward, TForward road charging geographically with a discount if needed. Only then, to cover more of London, or to roll Low when there is sufficient acceptance of Emission Zone and planned Ultra Low TForward, should it become the only Emission Zone charging into TForward, mode of payment. and set the variable tariffs to be charged. This would enable existing road charging An advantage of TForward, is that schemes to upgrade to more flexible TForward would enable gradual telematics-based charging tariffs. geographical roll-out of road charging Parking Schemes: Enable parking schemes across more of London, enabling to link into TForward, including private prioritisation of the most congested and car parks, and parking operated by local polluted areas. It would provide a user- authorities. friendly platform to implement the already promised tolling of the Blackwall Tunnel, The telematics TForward platform would alongside the new Silvertown Tunnel. support variable parking tariffs related for example, to time of day, or events (such If, for any reason, the London Congestion as a football game) affecting demand. Charge could not initially be converted into the TForward platform, either the TForward could also make it economical Blackwall and Silvertown Tunnels, or the for those with only a few parking spaces, 2019 Ultra Low Emission Zone applying to or spaces only available at certain times, the north and south circular roads, would to make those spaces available to the be good alternative anchor schemes for public, since the overhead costs of TForward. running a car park would not otherwise make that viable.2 Step 3: Integrate Existing In Sydney, the “Divvy” app lets offices and Road Charging And Parking hotels rent out unused parking spaces, Schemes a classic example of supply innovation for unmet demand, and the kind of Once the TForward charging platform is innovation (along with parking guidance established (either by converting London’s systems) which might emerge in the UK existing Congestion Charge platform, or to take advantage of the TForward back- creating a new platform), next steps can end payment system and its established be considered. customer base. Road Charging: Existing and planned road and emissions charging schemes can 2 It has been reported that 30% of traffic in a city centre can come integrate into TForward, such as London’s from people driving around looking for a parking space, by the International Parking Institute, 2012 Emerging Trends. Emerging Low and Ultra Low Emission Zones, the technology parking guidance systems aim to reduce this by efficiently Dart Charge, the Mersey tunnel etc. guiding drivers to available parking spaces.
16 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN User-friendly: Road charging may not Step 5: Potentially Integrate be intrinsically popular, but the problem Public Transport Ticketing should not be exacerbated by user- unfriendliness experienced with current Public transport ticketing could potentially charging systems. Each charging scheme be integrated into TForward. This would is run independently requiring registration facilitate integrated mode-neutral mobility for the London Congestion Charge, and services extending across public and separately for the Dart Charge etc ... private transport, and future AV. and hunting for change for parking or There are current initiatives to integrate setting up multiple parking accounts. That public transport ticketing, including £30 can lead to people forgetting to register million for Oyster- style ticketing in the and pay, frustration registering on yet North, £80 million for “smart” ticketing in another web-site, confusion visiting a major cities, and the “Pick & Mix Project” new part of the country with different pilot in Scotland.4 tolling, and anger at penalty demands when only some schemes take payment Rather than funding separate schemes, automatically. The customer helpline money could be better spent establishing experience can be dismal. TForward aims TForward in a way that is workable for to make payment mechanics customer- public transport “smart” ticketing, with friendly. public transport ticketing being integrated into TForward over time. Step 4: Update HGV Road People would not need to register for User Levy separate road charging and public ticketing schemes, and TForward would 3 Update the HGV Road User Levy to quickly reach critical mass. TForward telematics, and to meet Draft UK Air Quality Plan objectives. Charging would apply to vehicles from overseas, Step 6: Integrate EV and could be extended to more lorries Recharging Points (rather than only applying to lorries over 12 tonnes). Enable EV chargepoints to use TForward for their back-end payment Telematics tariffs can guide HGVs away and accounting system, to enable from congestion and pollution hotspots, cost-effective national roll-out of and encourage HGVs to make greater EV chargepoints (see Section 7 night-time use of motorways. “Environment”). Lorry parks (to avoid another Operation Stack) could be set up, with lorries 3 The HGV Road User Levy was introduced in April 2014 to even the paying via TForward to use them and the playing field between domestic and overseas HGVs, with the effect that HGVs from overseas are now also required to pay a levy to surrounding roads, thereby contributing to contribute to the cost of wear and tear on the roads. local road improvements so local residents 4 Innovate UK is currently funding a two year pilot in Scotland of the “Pick & Mix Project” to provide young people with a mode-neutral receive some benefit. end-to-end transport service, with the aim of developing a working model that can be rolled out across the UK.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 17 Step 7: Enable Future AV To Step 9: The Local Government Integrate Deal Enable future AV, car clubs and Local and combined authorities carpooling, apps for hailing and ride- participating in the “Local Government sharing, and future innovation, to use Deal”, would identify particularly TForward for back-end payment and congested or polluted local areas to accounting mechanics, and to benefit from introduce TForward charging, with the TForward’s established customer base. incentive of keeping the revenue to fund their own local road improvements. These back-end costs, and processing initial customers, are significant barriers Combined authorities, which generally for start-up businesses and it will help have transport powers over a metro- roll-out of AV, alternative capital models region, are possible early adopters and innovation. How AV will come, (e.g. Greater Manchester and the West and over what time-frame, is unknown. Midlands with their newly elected metro- Having payment infrastructure and a mayors). The TForward platform would customer base in place, will make the UK enable them to start major city schemes attractive and help place it at the forefront in Manchester or Birmingham, but of AV innovation. The introduction of new TForward’s economies of scale would also technology can also create opportunities make a low-tariff rush-hour only scheme to roll-out road charging in parallel.5 in a small town viable. Funding for local roads is crucial, Step 8: Integrate New Road considering people do more day-to-day Infrastructure travelling on their local roads than the SRN, and local roads are needed for that Consider applying TForward road charging “last mile” delivery. to specified new road infrastructure once built. Congestion Charging could be introduced, perhaps initially on a trial basis, at rush- Initial candidates include the new or hour, in target areas affected by higher upgraded roads supporting Heathrow levels of congestion, such as a city centre, expansion, the Lower Thames Crossing, bridge or major traffic junction, and if and the Silvertown Tunnel. Being around successful expanded over time. London, they would benefit from the existing London Congestion Charge customer base, if TForward is developed 5 See Professor Edward Glaeser’s Lightbulb Award winning entry from that platform. TForward could make new road infrastructure viable, such as the previously proposed Gallions Reach and Belvedere River Crossings in east London.
18 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN Emissions The Draft UK Air Quality Plan straightaway, potentially paid for with published in May 2017 includes proposals borrowing to be repaid out of future road for mandating local authorities to establish charging revenues. clean air zones. TForward could facilitate Mayors and local councillors will be this with charging schemes based on sensitive to whether road charging is fair emissions, like London’s Low Emission to their different constituents, and good Zone. for the local economy and environment, There is a difficult political balance and alter or reverse the scheme if not. between people’s concerns with exposure TForward Efficiencies A number of UK to dangerous emissions, compared cities have considered introducing road with diesel drivers’ views they were charging, but met with adverse public encouraged by past tax policy to buy reaction. diesel to help the environment, but are now being punished by a policy about- It would be easier, for example, for local turn. government to introduce (at least initially) limited rush-hour charging at a particular Charging diesel vehicles to drive along a road, bridge or junction, or emissions congested and polluted high street would charging around local schools, than to roll- be easier to justify than some other local out a wider city-centre charging scheme. approaches, e.g. charging diesel cars Small scale local charging projects are hundreds of pounds more for parking made practical and economically viable by permits as currently proposed by Merton TForward, when otherwise the overhead Borough Council in London. cost, and inconvenience for road-users Localism Local government has the benefit starting payment accounts, would prevent of in-depth knowledge of local roads, them getting started. the congestion and pollution hot-spots, TForward shortens the time-scale for maintenance priorities, environmental introducing a scheme, and removes risk, concerns, and how to link charging to making it easier for local government road improvements attractive to local to raise borrowing against future road people. Local government will know the charging revenues. priorities people want addressing, from pot holes, to an additional river crossing, The Local Government Deal may also have or increasing capacity at a key junction. advantages over the “major road network” Different authorities will come up with concept.6 tailored approaches, with variation between urban and rural areas, and take into account access to public transport. 6 The Rees Jeffreys Road Fund has supported an outstanding report (by David Quarmby and Phil Carey published in October 2016, entitled “A Major Road Network for England” at www.reesjeffreys.co.uk/ Rather than road-users suffering transport-reports) making the case for combining strategic local authority-controlled “A” roads with the 4,200 mile SRN, to make an an endless wait for pressing local 8,000 mile major road network, to ensure investment is spread more improvements (unlikely to become widely on the whole network a central government priority), local government can start road improvements
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 19 Funding Central government might give a Step 10: The Highways financial incentive to the first authorities England Deal to pilot the Local Government Deal to get things started, and create examples for The “Highways England Deal” provides other authorities to follow. for full roll-out of road charging across the SRN, with some of the money raised Local authorities are facing severe budget being used to fund improvements to the pressures, with significant maintenance SRN: back-log on local roads, which could make TForward attractive for many.7 a. first, Highways England would Roads have always been thought of as an introduce road charging on all major expense for local government, rather than new SRN road infrastructure built, and as revenue generating assets with the where there is a specific requirement potential to fundamentally augment how (e.g. reducing pollution levels around local government funds not only its roads, Heathrow to enable a third runway). but other key priorities, such as housing. These will act as pilots for wider road Central government might encourage a charging. shift to local governments increasingly b. next, Highways England will identify funding themselves with road charging, by parts of the SRN with the strongest reducing central government contribution basis for road charging, e.g. by to local government budgets, while measuring traffic speeds to identify supporting TForward. higher levels of congestion, or If clean air zones become mandatory particularly polluted areas. for some local authorities, they might constitute the initial small-scale road charging scheme in an area, but also of major roads. provide the basis for later expansion into If local government could fund its roads directly via the Local Government Deal, there would be less need to introduce the major a more extensive road charging scheme road network concept, as they would have a means of raising funding, addressing congestion too. and would have longer-term certainty of funding, for maintaining the strategic local authority controlled “A” roads themselves. The Local Government Deal is administratively more workable than the major A statutory power already exists for local road network concept, as Highways England would not be needing to co-ordinate projects with over 100 local authorities. authorities to introduce road charging.8 7 The 2016 Asphalt Industry Alliance’s ALARM survey estimated that Having TForward operational would make it would cost almost £12 billion to bring the local road network back to a reasonable standard. it practical for local government to move 8 Sections 163 - 177 of the Transport Act 2000. forward and raise more of their own revenue.
20 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN At a carefully planned point in time, d. Highways England can then continue Highways England will roll-out TForward to extend road charging over time road charging to critical mass, in these until full road charging is rolled-out particularly congested areas in a way across the SRN. where clear benefits are demonstrable:
• as a form of demand management the The next section “Political Deliverability” number of vehicles should reduce at sets out substantive areas where the the most congested times and places government needs to be delivering to • some of the road charging revenue make extended road charging on the raised should be used to improve SRN and local authority roads politically these parts of the SRN and key workable. TForward is not a proposal for road charging by stealth, or based on alternative routes, increasing road gimmicky incentives for road-users. It is capacity, so people can see a a long-term, evolutionary and sustainable link between their payments and programme. investment Later, the section “Good for Road-Users, Economy and Environment” sets out At this point, when substantial revenue the economic theory and rationale for is first raised from road charging, to road charging, and assesses in what be politically deliverable, an off-setting circumstances road charging is fair to reduction in fuel duty is essential, so road users, and good for the economy and road-users are not simply gouged for environment. extra revenue. With past failed attempts to introduce road charging, the debate Transition to AV, and how and when has failed to include off-setting road it might have impact, is an unknown tax reduction. A reduction in fuel duty, quantity. It may be the government will combined with a demonstrated cut in be able to receive additional uplift by congestion, alongside road improvements, introducing road charging alongside are crucial to winning public support at introduction of AV using the roads this key time.9 differently, avoiding adverse reaction from road users. Again, the flexibility in the c. road charging introduced on one TForward platform puts the government part of the road system, can lead to in the optimum position for being at surrounding “free” roads becoming the forefront, and taking advantage, of overloaded with traffic. Highways unknown technological change that will England can then move to a strategy come. of “smoothing” out road charging 9 In 2000, petrol and diesel prices were driven rapidly to a level by (and balancing it with any local road the fuel duty escalator which generated enormous public discontent. Governments since have felt they needed to freeze or limit fuel duty charging introduced under the “Local increases, which are highly visible, and this illustrates the public and political sensitivity to road charges. Government Deal”), so roads over a wider geographical area are charged for, but likely at lower tariffs so people do not pay significantly more overall.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 21 STEPPED INTRODUCTION OF TELEMATICS ROAD CHARGING
• establish “TForward” providing back-end payment and accounting mechanics that existing and future charging schemes can link into Step 1 • potentially convert existing London Congestion Charge platform into TForward
• modernise London Congestion Charge to telematics-based variable tariffs Step 2 • potentially expand London road charging beyond current congestion zone
• integrate existing road charging and parking schemes into TForward Step 3 • enable customers to have only one user-friendly payment account
• upgrade the HGV Road User Levy to TForward telematics to meet Air Quality Plan Step 4 objectives and increase night-time motorway use
• potentially integrate public transport “smart” ticketing into TForward Step 5
• enable EV chargepoints to use TForward for back-end payment and accounting, Step 6 for cost-effective roll-out of EV recharging infrastructure
• enable future AV, car clubs, ride-sharing and other innovative apps, to use TForward Step 7 for their back-end payment system
• potentially apply TForward road charging to new road infrastructure that is built such Step 8 as new and upgraded roads around Heathrow and the Lower Thames Crossing
• Local Government Deal enables local authorities to introduce TForward telematics at congested local hotspots and establish clean air zones Step 9 • in return the local authority keeps the money for local road improvements
• Highways England Deal enables TForward telematics to be rolled-out on the Strategic Step 10 Road Network, starting with congestion hotspots
22 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 3. Political Deliverability
3.1 Addressing Public Concerns • TForward providing back-end payment and accounting mechanics In 2005, government plans were for EV chargepoints, car clubs, future announced to introduce road charging AV, ride-sharing apps and other likely to be based on telematics. There were objections to more charges on technological innovation motorists, civil rights objections that it • potentially charging for new road would amount to mass surveillance, and infrastructure (e.g. around Heathrow, an online petition in protest gained over Lower Thames Crossing) 1.8 million signatures. This experience is at the heart of the Many players - central, devolved and question - how can payment models local government, TfL, Highways England, needed for future road infrastructure be insurers, parking providers, EV and AV politically acceptable? Concerns raised by pioneers, and app developers - can move 1.8 million people should be addressed to forward concurrently in their areas. develop better policy. Time and political capital does not need to be spent upfront developing 3.2 The Starting Steps and defending detailed policy for more extensive road charging. Many of the steps set out above in “Stepped Introduction of Road Charging” Nonetheless, the Starting Steps, together are not especially controversial to with insurers promoting telematics, will introduce from a political perspective. Let cumulatively have significant impact, us call these the “Starting Steps”: and build a critical mass of people and vehicles registered with TForward and • establishing the TForward platform linked into the telematics system. The • modernising the existing London Starting Steps may not be big revenue Congestion Charge from its flat-rate, generators, but they can contribute to variable telematics tariffs linked to towards replacing decline in fuel duty receipts. congestion • integrating existing road charging Next, decision making can advance and parking schemes into TForward, democratically at the devolved and local upgraded to enable variable telematics level, where there is good understanding of the local road network, congestion tariffs hotspots, pollution levels, maintenance • upgrading the HGV Road User Levy to and improvement priorities, as well TForward variable tariffs as sensitivity to what local people will • potentially integrating public transport accept. ticketing into TForward
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 23 3.3 Political Deliverability It is a two-way street, and if the And Delivery government wants a politically deliverable policy, it needs to deliver politically in It will take a number of years to introduce real time in some of the following areas. the Starting Steps and deal with teething If the rights steps are taken now, in problems. a few years time, this is how the UK roads environment could look from a That time needs to be used purposively road-user perspective, and resistance to lay the groundwork for more extensive to further extending road charging may road charging, such as Highways England consequently be less: extending charging on the SRN, and substantial local road charging under the • new roads are being constructed, Local Government Deal. There is potential additional roads are planned, and road for greater political controversy, not least improvements are being made, funded because these steps can raise substantial by the VED ring-fenced Roads Fund revenue. • new road infrastructure is being Focussing on building a case, or putting built under the Highways England together a “deal” with the public, that Deal, funded by pilot telematics road makes road charging politically deliverable charging schemes (perhaps on new may be a flawed approach given improved roads supporting Heathrow scepticism of political promises. However good an intellectual case is made for expansion, the Lower Thames Crossing road charging and its benefits, it can still and Silvertown Tunnel) just be met by adverse public reaction to • a modernised London Congestion paying a new tax. Charge with variable telematics tariffs has cut congestion and pollution in previously blighted areas of London The answer to political deliverability is • pioneering schemes under the Local political delivery. Government Deal have reduced local Actions not words. congestion and pollution, delivered local road improvements, and created The politicians will be much better placed clean air zones, and are providing a to extend road charging if they can model to other local authorities point to actions, and a track record of • TForward telematics charging is improvements already delivered. guiding HGVs away from congestion They need to show the system is being and pollution hotspots, with increasing changed, and in return for a new way of night-time use of motorways paying for the roads, people are getting a • existing road charging and parking better system which clearly benefits them. schemes have been integrated into In parallel with introducing the Starting TForward, so customers only have Steps, the government needs to be one user-friendly payment account to delivering some tangible benefits from manage road charging related initiatives.
24 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN • new parking providers have entered Financial the market advertising more and • the financial burden on road-users is cheaper parking because they have reduced by TForward International been able to link into TForward generating profits from overseas • pot holes are being filled, and road transport maintenance innovations have been • the financial burden on road-users is introduced, from warm-mix asphalt, to further reduced with value capture, getting a fleet of cold repave machines so those benefiting from new road operating infrastructure (including property • people can see money raised from developers) contribute to the cost, VED and limited road charging with projects like the Cambridge - actually being invested back into road Milton Keynes - Oxford corridor having improvements they can identify with10 successfully piloted value capture • a roads communications strategy is initiatives better engaging with the public to • telematics insurance policies that raise awareness of actual progress and reward good drivers with lower improvements being made, and the premiums are widely available exciting future offered by technology11 • people can choose to avoid the capital • the Wolfson Select Committee has cost of buying a car because ride- been established and is prominent sharing apps, along with car clubs in the media fighting for the public and carpooling, and better integration interest with public transport, have given them a realistic alternative (lower car This is the point at which the government (via Highways England) may be able to ownership amongst young people may extend road charging on the SRN. This reduce opposition to road charging must be in parallel with a significant compared to 2005) reduction in fuel duty, so that road-users can see the road charging is not just to raise more tax. 10 In November 2016 in Los Angeles, 71% of people voted to pass Measure M, a sales tax increase to improve transport. Most people The government should also be could identify with at least one of the improvements in the Measure M package, crucial to winning voter support. working towards other target ambitions. 11 Lessons about engaging with the public can be learned from To achieve them all would set an Crossrail, with its positive messaging about engineering achievement, training and employing people, delivering on time, and adding greater unrealistically high bar, and a number value to the economy than its cost, recently showcased in a BBC are outside the government’s control. series However, progress on some would help create an inspiring forward-looking UK roads environment more receptive to extending road charging:
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 25 Procurement Information Security
• the government has moved on from • TForward has demonstrated robust PFI, and freed the UK from EU financial and information security procurement rules cutting bureaucracy • a balanced debate develops around and supporting more UK jobs telematics data collection, with • mode-neutral procurement is used to privacy concerns set in the context find the best transport solutions, with of widespread mobile phone and fairer apportionment of spend between social media uptake, and telematics road and rail insurance based on a person’s driving habits making insurance more Exciting New Technology affordable for many young people • Parliament is determining the extent • it has become as cost-effective and to which telematics information, with practical to own an EV as a traditional appropriate judicial oversight, is used petrol or diesel car, and sufficient EV to combat crime and terrorism chargepoints have been rolled out, so EVs comprise the majority of new car Safety sales, and air quality is improving as a result • telematics is demonstrably making • AVs are starting to penetrate so our roads safer, for example with more people are thinking about their telematics insurance policies potential identifying dangerous drivers, by • a prototype AV rail test line has alerting emergency services to been built, maintaining the UK at the incidents, or immediately recognising forefront of AV development, and a motorway pile-up and transmitting heralding potential solutions to urban warnings to connected vehicles congestion and inter-city travel heading into the danger zone and onto • they are as yet unknown, but overhead gantries exciting innovation and collateral unplanned benefits are appearing from Quality Of Life government funding into infrastructure • better roads are opening up land for research, availability of the TForward less-costly housing, saving people from platform for emerging technologies, hours in traffic, preventing worsening and telematics technology gridlock, and improving people’s • people can see that technology is quality of life rapidly bringing benefits, and it will take new ways of funding to fully realise that potential
26 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN Economy 3.4 Additional Roll-Out • better roads are making jobs Approaches accessible, including for people in The Wolfson Economics Prize drives depressed areas innovative ideas and debate, recognising • the UK stands as a world-leader in the best solutions combine ideas from new automotive technologies, batteries multiple sources. The TForward platform research, infrastructure solutions, and creates a mechanism for implementing telematics road charging, and the good ideas put forward by other entrants for rolling-out road charging: UK economy is exploiting the export potential 1. Gaming Approaches: making road • roads are helping drive the economy charging fun, such as “road miles” rather than holding back economic with lotteries and auctions, or other growth promotions and discounts, could be made available on TForward’s Demonstrable progress in at least some customer web-site, and administered of these areas will help make wider road by TForward’s back-end payment charging, beyond the Starting Steps, more system deliverable politically. 2. Trusted Brands: persuading retail brands to partner with a road charging scheme, and market with companion products, may be easier if a trusted TForward platform is established, so
Investment brand-owners have confidence there will not be teething problems and customer and account services will be BETTER ROADS properly managed 3. New Technology: can provide Less Better Congestion opportunities to implement road Procurement and Pollution charging. A core objective of the
Reductions Access to TForward platform is to encourage roll- in Road Jobs and Taxation Housing out of new technology by providing the customer base and payment Benefits of Improved Stronger Technology Safety Economy mechanics (which would otherwise be Revolution a barrier to entry) for EV chargepoints, AV, apps and other innovation to come, and TForward is the practical solution for implementing road charging alongside introducing these new technologies
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 27 This entry has not relied on voluntary and drivers might be irritated having to roll-out of road charging as, even if the book journeys before setting-off. financial cost of adverse selection is The TForward platform’s sophisticated addressed (where only drivers financially data collection might help find some better-off with road charging opt-in, e.g. practical solutions for compensating off-peak drivers), this approach does drivers for slow journeys, given people not reduce pollution, or manage peak- make unplanned stops on-route time demand and reduce congestion. (e.g. at shops or service stations), Oregon state’s voluntary scheme (OReGO) and compensation could encourage launched in July 2015 charging 1.5 cents adverse behaviour such as people per mile in return for a fuel duty rebate, deliberately slowing-down. However, but only 1,300 drivers had signed up by such compensation may run counter April 2017.12 Full roll-out will only happen to marginal cost pricing, which implies if the road charging scheme is made charging more if a route is congested, compulsory for the remaining majority of rather than compensating for delay. drivers, which is unlikely to be politically deliverable when that will include rush- TForward is not a quick cheap solution, hour and van drivers. but it is a realistic solution to collecting around £27 billion a year (if fuel duty is to This entry proposes telematics road be replaced), from millions of drivers, in a charging, with its sophisticated differential politically acceptable way that so far has tariffs, rather than a simple road eluded policy-makers. charging formula which does not address congestion (even fuel duty has a weak link to congestion, increasing with fuel 12 Oregon’s Road Usage Charge, The OReGO Program Final Report, consumption in slow-moving traffic). Oregon Department of Transportation, April 2017 The TForward platform will take customer payment on a pay-as-you-go basis, or by regular direct debits, to avoid a situation where customers drive cheaply all year without paying fuel duty, but then struggle to find the money for an unexpected lump sum road charge. The TForward platform could provide the data and technology capacity to compute tailored individual journey prices and bill the driver, although in comparison to a universal advertised road tariff people might perceive their route as over-priced and unfair. Road charging would become highly visible (opacity of fuel duty at the pump means people think less about it),
28 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 4. TForward International
4.1 Business Plan TForward creates an enormous international business opportunity for the UK to build a new industry. The UK’s challenges with road charging, upgrading public transport ticketing to “smart- ticketing”, and rolling-out EV recharging infrastructure cost-effectively, are experienced by other countries around the world, also looking for practical solutions. When governments have looked at road charging schemes previously, they have Mobility as a Service ("MaaS") is a new done so with an isolated approach of concept for a traveller being able to making a particular scheme pay for its seamlessly make a journey combining costs, rather than stepping back and multiple modes of transport, operated realising the problem of paying for by different transport providers, with overhead cost on one scheme, can be integrated travel information and one turned into a business opportunity across combined ticket, to get from A to B. all schemes. TForward International is the business plan for turning that concept into a The proposal is for the government to product. support building a TForward platform that would work internationally. It could be Given the phenomenal amount spent used by other road charging and transport internationally on transport, even with ticketing schemes for both passengers and only a small fraction of the international freight, and for EV chargepoints, around market, the TForward platform could the world to facilitate customer interface generate very substantial profits and back-end payment and accounting. amounting to billions of pounds each year. The long-term profit-making potential of The TForward platform would take TForward International, if it continued a small administration fee from each to grow and take larger market share, is payment processed. Economies of scale, outstanding. given network effects, would enable the TForward platform to be run cost- Those profits, if the platform were to prove effectively. TForward’s IT systems would a commercial success internationally, be up-to-date, and hence both flexible and could go towards replacing fuel duty and scalable. VED, and funding the UK’s roads.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 29 4.2 Establishing TForward 4.3 The UK’s Competitive International Advantage TForward should be established for the An international transport platform for UK road charging market, but in a way road charging has not arisen before that could both work internationally, and because the technology has not been good support all transport ticketing. enough, most road charging schemes to date (e.g. Singapore and Stockholm) have A corporate vehicle would own the been fairly small-scale, and no-one has TForward International platform. Equity yet grasped the opportunity. ownership would be shared between government and the private sector The UK has some unique selling points consortium that will be needed to build for becoming the world-leader for an and operate the platform, including international transport platform. The forward-thinking financial institutions and FinTech sector linked with the City of IT providers. The government should hold London means the UK has the expertise a “golden” share to prevent an unwanted to build and run the technology platform. take-over, which the government might The UK has established stable and trusted later choose to release to maximise value political and legal systems. The London on selling all or part of its shareholding. Congestion Charge is a large and world- leading road charging system. The financial incentive of operating the international platform, would encourage • First Mover Advantage: this business the private consortium to drive creation plan for TForward International should of a market-leading platform for the UK be taken forward, with government in real-time, to create a demonstrably support, quickly - or other players will successful platform ready for international roll-out. The predictable long-term nature seize the opportunity. The UK should of aggregated road charging revenues aim to build critical mass before would be particularly attractive to pension competitors appear. The UK may be funds and insurers. able to gain additional competitive advantage as first mover, leading The Wolfson Select Committee (below) should be given a specific additional remit in developing the standards for (i) to oversee establishment and operation telematics-enablement of vehicles and of the TForward International platform, to people, and (ii) EV “smart” terminals ensure good and fair value is obtained for that recharge when it is off-peak for government, taxpayers and road-users. the grid (see Section 7 “Environment”). Establishing, operating and growing the TForward International platform would 13 Building our Industrial Strategy”, HM Government Green Paper create many skilled and professional January 2017 UK jobs, and cultivate world leading UK sectors in FinTech (financial technology) and innovative automotive investment, underpinning the government’s industrial strategy.13
30 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN • Critical Infrastructure Risk: there of transport (from air travel, to boats, will be inherent caution by other buses, trains trams, and taxis) from governments outsourcing something different transport providers for one as important as their road and journey, national or international, from transport systems. A company that start to end point is part-owned by UK government, • transport providers would be attracted with a track-record of reliable delivery by (i) a substantial international base through an innovative but well- of customers using transport services, regulated system in the UK, could best and (ii) it being easier to operate address such concerns. a single transport network across different jurisdictions • Network Effects: achieving critical • TForward International would be an mass across international transport established reliable payment and would generate extraordinary ticketing system, reducing the risk advantage, but given the size of the of teething problems and set-up risk international transport market, that is and delays, and cost-effective due to a longer-term proposition. However, economies of scale the UK may be able to benefit from • access to the TForward Platform would network effects by first focussing on enable other governments facing geographically close countries (e.g. similar resistance to road charging, to France and Ireland) where there cost-effectively and reliably introduce is already substantial cross-border road charging with a shorter lead time. transport with the UK." It would give the additional flexibility to introduce road charging in small 4.4 The TForward International steps on limited or trial basis, such as Service at rush-hour only, without that being TForward International would have many uneconomic due to overhead costs. features making it attractive to transport Road charging could be viable with providers, passengers, and freight low tariffs, which may be particularly transporters: relevant for the US given its low fuel duty • transition to new capital models, • by piggy-backing on the already with MaaS across multiple modes developed UK regulatory approach of transport, could be enabled (e.g. for privacy and data protection), internationally, rather than only overseas governments could also save nationally. The TForward website on time and fixed costs needed to would provide clear customer travel develop appropriate regulation from and ticketing information, and be scratch, even if they chose to adapt able to put together combined travel the UK approach tickets working across various modes
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 31 • the TForward platform would generate 4.6 Political Messaging extensive travel data, enabling To return to the beginning, Step 1 is sophisticated pricing structures that establishing the TForward platform. From manage peak demand so transport the perspective of the transport minister infrastructure is used optimally and on day one, their job is not to sell an congestion reduced overall blueprint for road charging, but to announce government investment in an 4.5 Additional Opportunities exciting new public/private technology Other potential opportunities for the platform. The following reasons for, and TForward International platform are more benefits of, the platform can be explained: speculative and require critical mass. • access to private sector funding and The TForward International platform could expertise for public benefit be well-placed to provide additional profit • earning overseas revenue from making services, starting with foreign TForward International, for the UK exchange services to support international taxpayer, including to spend on roads payments, and ancillary travel services • helping make the UK an investment such as hotel bookings. hub for AV, new apps, and other Given the extensive road transport innovation data the TForward platform would • cost-effective roll-out of EV recharging be accumulating, it could develop infrastructure competitive advantage (and provide a • user-friendly integrated payment pathway for UK focussed insurers to expand globally) in providing transport system for existing parking and insurance internationally, including for a charging schemes changing insurance market where AV and • enabling “smart” public transport conventional vehicles operate alongside ticketing, and customer-friendly each on the on the world’s roads over a integration of all modes of transport transition period of decades. (MaaS) The City of London might (with effective • modernising the London Congestion regulation) create a new financial market Charge to better address congestion based around the TForward International and pollution platform, creating and trading new • targeted HGV and lorry charging to derivatives based on transportation risk. take their routes away from where people live, and encourage night-time motorway use • enabling emissions charging against the worst offenders (such as lorries and large diesel vehicles) to improve air quality • making the UK the world-leader for transport platform technology
32 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN The case for creating the TForward International platform stands on these arguments alone, irrespective of whether the platform goes on to raise substantial sums through UK road charging. In any event, decisions on UK road charging would be a long time in the future to be made by a future government. That enables the minister to limit any push- back on road charging at the outset. To the extent the minister is drawn into discussion of road charging, it can be made clear that road charging would only ever be introduced if it (i) was offset by fuel duty reductions, and (ii) produced a demonstrably fairer deal for road-users, with road charging linked to emissions and congestion, and proceeds funding much better roads. If TForward International succeeds, earnings from overseas would offset the fixed costs of developing the platform, and could potentially generate substantial profits for the benefit of road-users and taxpayers.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 33 5. Insurance And Telematics
5.1 Advantages Of Telematics
The government can explore rolling-out
telematics via vehicle insurance. The
government needs to consult with the vehicle insurance industry, and adapt or not proceed with any aspects which are not workable from the insurers’ perspective. Collaboration and mutual benefit is needed. Telematics can be described as satellite predicted events such as road works, vehicle tracking, and the technology festivals or sports events, or for brings numerous benefits including: unexpected events such as taking traffic away from an accident. a. Sophisticated Road Charging: b. Cost-Effective Road Charging: telematics offers the optimal model telematics avoids the need for physical for road charging as it can offer road-side cameras to recognise sophisticated tariffs calculated on number plates, enabling fast cost- a range of metrics such as vehicle effective roll-out of road charging model, emissions levels, vehicle schemes. Until all road-users are weight, and which roads, tunnels, telematics enabled, road charging bridges or parking spaces are used, at schemes will still need physical which times. cameras, either to provide a parallel By way of example, the lowest or non-telematics payment system, or zero tariff might be for a small EV to enforce fines for non-compliance driving on a rural or suburban road if telematics are required for use of at the weekend, whilst a diesel HGV particular section of road infrastructure. travelling on a congested route at c. Safety: telematics insurance financially rush-hour might pay the highest tariff. incentivises safe driving, with those Delivery vans servicing the growing driving dangerously having to pay home-delivery market could pay a higher premiums, or in extremis being tariff reflecting their size and weight denied insurance cover (such higher- and impact on road maintenance risk drivers might be early users of Telematics tariff differentials can AV). Telematics insurance policies are be used to reduce congestion and already being taken up by young and pollution, flexibly adjusted in real time other high-risk drivers. according to traffic flows, or for
34 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN Telematics has the potential to alert 5.2 Roll-Out Telematics Via emergency services to accidents, Insurance and immediately transmit warnings to connected vehicles heading into a Accelerating the roll-out of telematics will enable the government to get on with motorway pile-up, or onto overhead more extensive road charging under the gantries. Local Government Deal and the Highways Most importantly this brings England Deal. humanitarian safety benefits, and The government could establish a secondarily avoids the financial costs common telematics technology protocol of road accidents, hospital treatment, that works for the vehicle insurance and long-term care for the seriously industry and with the TForward platform. injured. Telematics can also help The GPS locator might be an app on identify vehicles being driven without a smartphone kept in the vehicle, or insurance cover. a dongle plugged into a vehicle data d. AV insurance: there are open port. Whether it is workable for the questions about how the insurance telematics to be linked to people, rather than vehicles, can be explored so as well industry will manage changing as enabling vehicle insurance and road risk with AVs (of differing levels of charging, it also enables a person to automation), mixing on the roads with use the same GPS locator and TForward conventional vehicles over a lengthy account for integrated public transport and transition period. The government’s MaaS via TForward. approach is for anyone affected by Combining roll-out via vehicle insurance an accident caused by driverless (there are over 26 million UK car technology to claim from insurers, insurance policies), with payment for and insurers to then reclaim from AV existing road charging and parking, would manufacturers.14 help telematics reach critical mass more Telematics can provide the data that will quickly, and would each reinforce each enable insurers to calculate and price other. new and changing risk. It will enable Optically, it will be better if insurers people to pay a one-off insurance charge rather than government, take the lead on when they “hire” an AV. rolling-out telematics. This should allay e. Vehicle Management: telematics opposition to “government” collecting enables digital management of traffic data on people’s movements, given few people object to Google or mobile phone by public sector authorities. The providers collecting such information. It number of private-sector companies will also facilitate a stepped approach managing fleets of lorries and cars to roll-out and avoid any political “cliff- with telematics has recently taken-off. edge” where the government would need to announce a national road charging scheme. 14 Vehicle Technology and Aviation Bill
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 35 The government could take the view that When traditional vehicle insurance policies the benefits of accelerated telematics come up for their annual renewal, insurers roll-out are so great, it would subsidise might offer the policyholder, and the other insurers’ costs to administer transitioning drivers named on the policy, their own people to telematics, e.g. by supporting free telematics dongles or apps linking distributing dongles, and not initially into the TForward platform with the charge insurers an administration fee for benefits of: operating telematics insurance through the TForward platform. That would lower • greater safety, with the telematics insurers’ costs, which could be passed able to notify emergency services and on to customers in lower telematics speed up response time if they are in a premiums, increasing telematics insurance road accident uptake. • assessing whether they could save Telematics insurance could be made money switching to a telematics policy compulsory for new drivers, given many • flexible vehicle insurance options, e.g. young drivers already use telematics pay-as-you-go, or limited mileage or policies, young people are amenable to restricted hours policies new technology, and it could be justified • user-friendly payment system for on safety grounds. Compulsory telematics paying existing road tolls and for some insurance could then potentially be parking schemes extended to cover others, such as those making an insurance claim following • combined user-friendly payment a collision, so that over time a greater system for public transport smart proportion of drivers are covered by ticketing (when available) compulsory telematics. The government might support this by funding accompanying advertising campaigns highlighting the benefits. A pilot project with a forward-thinking insurer is recommended.
36 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 5.3 Introducing Road Charging Stage G: road charging is increased Via Insurance gradually over time to full roll-out of road charging. Alongside increases in road An alternative way to introduce road charging, there is an offsetting reduction charging might be via vehicle insurance, in fuel duty (or potentially also IPT for and acknowledgment and credit is vehicles), along with demonstrable road given to Gergely Raccuja’s primary prize improvements submission considering a mileage-based On balance, this is not considered a road tax with collection outsourced to better approach to introducing road insurance companies. charging, with compulsory telematics More sophisticated telematics-based road insurance likely at some point to become charging through TForward could also a political cliff-edge. However, there be introduced with vehicle insurance, may be room for overlap in approach perhaps via implementation stages as between the TForward stepped approach follows: and introducing some road charging via insurance. Flexibility in thinking is Stage A: create the TForward platform important given the pace of technological Stage B: increase customer uptake of change, and an insurance industry telematics vehicle insurance with the considering how to insure a transition to consensual approaches outlined above. AV, and insurers views would need to be Payment for a telematics policy would be listened to. on a regular or pay-as-you-go basis Stage C: make telematics vehicle insurance compulsory for new drivers (above) Stage D: make telematics vehicle insurance compulsory for others, justified on improved road safety grounds Stage E: have all telematics vehicle insurance policies administered via TForward, creating TForward customer accounts, with TForward providing the back-end accounting, and passing premiums onto insurers, and insurance premium tax (“IPT”) to the Treasury Stage F: TForward (collaborating with Highways England) introduces limited road charging at the worst congestion or pollution hotspots
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 37 6. Raising Tax From EVs
6.1 “Free-Loading” By EVs EVs are “free-loading” without contributing VED and fuel duty. The fuel duty tax base may now be undermined sooner than previously predicted given:
i. significant political and legal pressures to address emissions and increase EV uptake ii. technology innovation potentially driving sudden uptake of AVs (likely to be EVs) iii. resistance at the pumps preventing fuel duty rates being maintained in real terms15
Telematics road charging is the optimal model to replace fuel duty, as it can address congestion, and link revenue with investment. Taxing fuel (whether petrol, diesel or electricity) is a comparatively blunt instrument. However, road charging will take time to reach its potential, and there may be ways to protect the tax base during the transition period. The focus to date has been on tax incentives to accelerate take-up of EVs. In the near future, EV take-up is likely to reach a tipping point when critical mass ensures continued roll-out. EVs need to start paying more in tax, and soon.
15 The OBR has forecast fuel duty receipts may halve within 20 years.
38 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 6.2 The Sooner The Better 6.3 New EV Taxes The sooner any additional EV taxation is The Treasury has to date understandably introduced the politically easier it will be: resisted pressure to reduce or remove VAT on EV purchases. • EVs are not yet widely-owned so there are fewer people to object The Treasury might like to raise as much • given the purchase-price for EVs, tax from EVs, as fuel duty currently raises from petrol and diesel vehicles, the first-wave owners are generally so transition to EVs does not undermine affluent, often using the EV as a the tax base. Since fuel duty is such an second vehicle, and less sensitive to a effective, and difficult to evade tax, this is tax increase a challenge. • more affluent drivers can be more TForward can improve the EV taxing concerned with the practicalities of options available to the Treasury, and recharging and access to chargepoints, three are considered: which can be supported by EV 6.3.1 VED for EVs taxation • many EV owners are concerned EVs could start paying VED. The key to about the environment, and EV making this politically deliverable is to taxation could help support renewable use some of the initial revenue to roll-out EV chargepoints. The government policy electricity generation for EVs could be establishing TForward and its • it can be explained new EV taxation is strategy for rolling-out chargepoints (see the same as (or less than) fuel duty on Section 7 “Environment”). petrol and diesel, and justified as fair • if EVs are not taxed more heavily Making EV recharging more widely available is a better way to encourage soon, EV owners could resist road relatively well-off people to purchase EVs charging, since they will not be than an excessive tilting of tax treatment paying any tax which could be cut towards EVs. That in turn will help make to offset widespread road charging EVs accessible to less well-off people, (as is proposed for fuel duty to make since reaching critical mass of EVs on extending road charging under the the road is the key to bringing down their Highways England Deal politically price. deliverable)
Any additional taxes can also be applied to AVs (which may well be EVs), which is politically easy now when people are not yet using AVs.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 39 That argument turns a tax-raising policy Chancellor William Gladstone: from potentially being perceived as anti- “But, after all, what use is (electricity)?” EV, into a policy which can be presented as pro-EV and environmentally positive. Michael Faraday: “Why, Sir, there is every probability that you In addition: will soon be able to tax it!” • VED need only be levied on new EVs (WEH Lecky, Democracy and Liberty, 1889) (avoiding backlash from existing EV owners) as it is the potential rapid future increase in the number of EVs 6.3.2 Higher EV Recharging Tax that threatens the tax base The TForward platform creates a separate • VED on EVs might rise over a few metering and payment mechanism for years to the £140 standard rate (and chargepoints linked into it. TForward initially without the additional £310 would invoice and collect payment premium if the EV list price is over from the customer, and pay any tax to the Treasury. If public chargepoints are £40,000). Pre-announcing such an required to operate from the TForward increase might also bring forward EV platform, that enables an alternative tax sales rate to be applied to the electricity. That • to help sell the April 2017 VED could be a powerful tool for the Treasury, increases, VED raised in England and make at least some contribution to from 2020/21 is hypothecated to recouping fuel duty. a new ring-fenced Roads Fund to Public chargepoints are currently subject provide certainty of funding for to 20% VAT on the electricity. TForward Highways England and the SRN.16 could apply: With VED going into the Roads Fund, • a VAT rate higher than 20% (if EU if some of that fund is used to install VAT rules no longer apply post-Brexit), chargepoints, it will make VED easier or politically to introduce for EVs.17 • a specific new tax (potentially with The government could also consider 20% VAT then levied on it, as with protecting the overall tax base by raising fuel duty) VED relative to fuel duty, as VED will no longer be threatened by transition to EVs. 16 Ring-fencing VED is not a new idea, and hence Chancellor Osborne’s statement that he “will return this tax to the use for which it was originally intended”. In 1909, then Chancellor Lloyd George dedicated VED to roads so they could be self-financing. Between 1920 and 1937, VED was paid into a separate road fund, although in reality the money was not properly ring-fenced from other government spending (a practice advocated by Winston Churchill as Chancellor). 17 Given the government spends around £9 billion annually on the roads, and VED currently raises only around £6 billion annually, hypothecating additional VED into the Roads Fund does not mean the government is making more money available for the roads
40 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN However, too high a tax on public EV 6.3.3 Earlier Road Charging for EVs charging would incentivise EV users to TForward is rolled out on a step by step charge vehicles only at home paying just basis to avoid political “cliff-edges”. One 5% domestic-rate VAT, and impede roll- such step might be to apply early road out of chargepoints.18 charging to EVs before other vehicles. There have been various customer To make early implementation workable complaints of over-charging at public the road charging could be: chargepoints. If public chargepoints operated from the TForward platform, • priced at a low initial level (and if low as well as lowering installation costs, relative to fuel duty it should have TForward could ensure government- little impact on EV take-up) approved standards on pricing and • applied only to new EVs (to avoid consumer transparency, creating room for both price reductions for customers and a backlash from existing EV owners) tax increase. • calculated on a simple per mile basis. New vehicles can transmit Such a higher recharging tax could be mileage data remotely. The vehicle’s introduced more easily soon, when there is scope for prices to fall, and before many GPS timeline (needed for more people are charging EVs on the public sophisticated telematics-based tariffs) network, and, as with fuel duty, could be would not be needed, so avoiding relatively invisible. Only a basic TForward early-stage privacy objections platform will need to be operational, so particularly as mileage data is already implementation would not be delayed. collected at MOTs • given a name linking to environmental
18 Domestic electricity is subject to 5% VAT, but because people benefit, such as the “Clean Air Fund” could evade TForward metering and a higher tax rate by connecting (even if it was illegally) directly to their own domestic supply, in or “Renewable Energy Fund” (without practice it may not be workable to apply a higher tax rate to domestic recharging. There are other theoretical approaches, such as giving strict hypothecation) each household a fixed number of electricity units at 5% VAT, but • allow the registered owner to select applying 20% VAT to units used above this (broadly catching the additional electricity that will be used domestically to charge EVs on- a billing and payment option through mass), but politically difficult given people’s sensitivity to utility bills. TForward, such as direct debit
Although not required for the stepped approach to rolling-out TForward, applying road charging early to EVs, would help TForward reach critical mass earlier. This would benefit the economy and environment earlier, as well as ensuring fairer tax treatment between EVs and other vehicles.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 41 7. Environment
7.1 Transition To EVs Introducing taxes on EVs, so they do not threaten the tax base so seriously, is key to enabling the government to drive an environmental agenda of increased EV uptake. Increased EV uptake reflects more than preferential EV tax treatment. For a relatively affluent initial EV ownership base, funding chargepoint roll-out is a more effective way to increase EV ownership to critical mass (see Section 6 “Raising Tax From EVs”).
Increasing taxes on EVs, so they are Unfortunately, the time and cost to shift similar to petrol and diesel vehicles, and vehicle stock back away from diesel, now using some of that initial revenue to fund its negative impact is fully appreciated, chargepoint roll-out, can be presented as leaves a difficult long-term legacy an environmentally positive policy. (although sales of diesel cars have been on a declining trend since May 2016). 7.2 Pollution Diesel emissions from vehicles are only part of the air pollution problem, with Transition from petrol and diesel vehicles, substantial pollution also coming from to EV or perhaps hydrogen, taking other sources such as machinery and gas emissions (and noise) away from roads boilers, and vehicle braking particulates. where people live, is one of the most However, the government’s focus is now environmentally beneficial roads policies clearly on roadside NO2 emissions from to take forward, and addresses air quality diesel, since it is roadside NO2 levels concerns, specifically complying with legal which are breaching legal limits. NO2 limits.19 Diesel emissions harmful to human 19 The government has previously stated an ambition to have all cars health, such as nitrogen oxides and and vans effectively zero emission by 2050. particulate matter, are now recognised 20 The Royal College of Physicians estimates air pollution across the UK is linked to around 40,000 premature deaths every year. as a significant public health issue, and a Research recently published in the Lancet, that followed nearly two political priority, in the UK and globally.20 million people in Ontario over 11 years, suggests an increased risk of dementia for people living near major roads. The recent emissions scandal revealed 21 Greenhouse gas emissions from road traffic decreased every year from 121 million tonnes in 2007, to 108 million tonnes in 2014; DfT under-reporting of diesel emissions. Partly Road Use Statistics Great Britain 2016. because of such under-reporting, UK VED policy had incentivised diesel over petrol, to lower carbon dioxide emissions that contribute to climate change.21
42 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 7.3 UK Air Quality Plan In response to a court order the government published its updated “Draft UK Air Quality Plan for tackling nitrogen dioxide” in May 2017. The plan concludes that: “road transport is still by far the largest contributor to NO2 pollution in the local areas where the UK is exceeding limit values. Addressing road transport emissions therefore presents the most significant opportunity to tackle the specific exceedance problem ... The solution involves effective and appropriately targeted actions to: a. reduce emissions of NO2 from the The Mayor of London now proposes to current road vehicle fleet in problem launch an Ultra Low Emission Zone in locations now; and April 2019 across the whole of London for heavy vehicles, but also for cars and b. accelerate road vehicle fleet turnover vans using London’s north and south to cleaner vehicles” circular roads. Since that charging scheme will apply to most pre-2015 diesel cars, Proposals include mandating local London’s north and south circular roads authorities to establish clean air zones, may provide a suitable anchor scheme reconsidering tax treatment of diesel for TForward, if the current London vehicles, regulatory changes to encourage Congestion Charge were not suitable. alternatively fuelled vans, updating the HGV Road User Levy, potential scrappage Amidst a heat wave in June 2017, the schemes, and retrofitting more heavily Mayor of London triggered an emergency polluting vehicles. air quality alert, with warnings displayed on the underground, road signs and at Chancellor Osborne began to address bus stops, alongside City Hall advice diesel emissions (and falling tax receipts to commuters to avoid London’s most from CO2-efficient vehicles), by removing polluted areas. TForward tariff flexibility the CO2-based VED incentive for diesel would enable temporary road charging cars registered from April 2017. to be applied when weather or another TForward would enable local authorities event caused a spike in pollution levels, to establish the clean air zones, extending to encourage people to alter their routes beyond just buses (see “The Local away from the worst affected areas. Government Deal”), and update the HGV Road User Levy to address emissions.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 43 7.4 EV Recharging Points 7.5 TForward Cost-Effective Commentators (and potential providers!) Recharging Points often describe the need for EV The government approach to EV recharging infrastructure. Using the word chargepoint roll-out considered in the “infrastructure” almost implies a need Vehicle Technology and Aviation Bill for a grandiose solution involving paying (“VTAB”) before the 2017 election billions to large companies to install the included potentially requiring motorway chargepoints. There are already over services and large fuel retailers to install 11,000 chargepoints in the UK. chargepoints. Keep it simple. Keep costs low. Do not TForward offers a better approach, over-engineer. encouraging cost-effective chargepoint A chargepoint is simply three things: roll-out by many players. TForward creates the back-end payment and 1. a back-end payment and accounting accounting system, an information system website, and customer base, that all 2. installation by an electrician chargepoints can link into, removing this 3. a terminal taking user account details, expensive up-front capital cost and barrier to market entry. with a plug socket and electricity meter • we have over 26,000 electricians Sometimes the best economics is not in the UK.22 TForward could enable grandiose erudite theories, but basic independent electricians to do the thrift and common-sense. How would the installations, avoiding the inflated typical person spending their own money go about installing a chargepoint? rates of large corporations. It creates an opportunity for electricians to set up competitive local installation businesses, perhaps in teams with other tradespeople like plasterers and asphalt layers to make good installation channelling, supported by and training apprentices • TForward enables installation costs to be recovered over time. The user pays to recharge, the money is accounted for by TForward, taking a small administration fee, and paying tax directly to the Treasury, and the balance is passed onto the chargepoint operator, which can apply the margin (over electricity cost) against their
22 NICEIC roll of registered contractors original capital spend
44 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN • the capital cost can be spread amongst If chargepoints were required to operate a large number of players including via the TForward platform, TForward private car park owners, motorway would be able to apply government- services, petrol stations, retailers and approved standards to the market, including clear website and smartphone EV manufacturers information about location and pricing • recharging points can be rolled out in of chargepoints, with real-time updates small numbers, making it cost-effective about which chargepoints are vacant and for small businesses in working order, and appropriate pricing • TForward could facilitate shared levels. chargepoints being installed outside blocks of flats 7.7 Electricity Generation • allowing private householders to A transition to EVs will require additional install chargepoints accessible from electricity generation; from non-carbon public roads outside their houses, sources if climate change emissions are to and make some money via TForward be avoided. The government target is to from charging third parties, might be cut carbon emissions by 80% by 2050.23 a way to efficiently roll-out recharging Roads of the future which generate their infrastructure own energy from solar, wind, ground- • TForward provides a solution for the pumps and other energy sources might be 24 various existing networks which have part of the solution. different payment and access systems Credit is due to the UK for being at the fore-front of impressive research into The Autumn Statement 2016, announced improved batteries, to increase EV range, £80 million for business chargepoints, and also to store excess off-peak energy, and £40 million for the Plug-In-Car Grant. including that generated by intermittent This funding may be more effectively used renewables such as wind, tidal, wave and establishing TForward. solar. Electricity generation has inherent inefficiency with grid capacity built to supply peak demand, but inability to 7.6 Customer Fairness efficiently store much of the excess off- VTAB included provisions for chargepoint peak energy generated. interoperability and mandatory available EV recharging has a significant role to user information, in part to ensure play, as EVs charge mainly over-night customer fairness, against a background when it is off-peak for the grid. EVs can of customer complaints about being then function as a mass national battery overcharged for public recharging. storing the additional off-peak energy
23 Climate Change Act 2008 24 Dr. David Williams has received a Lightbulb Award from the 2017 Wolfson Economics Prize for developing these ideas.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 45 generated, and limiting any additional generation capacity needing built to support mass-EV ownership. Higher taxation of public recharging, used more at peak-time, along with variable electricity tariffs, can also play a role here (see Section 6 “Raising Tax from EVs”). Government should take the lead on establishing a common technology protocol for chargepoints so they can link into TForward and communicate with the grid. This will enable smart metering that helps balance supply and demand on the electricity grid, with chargepoints that can be mass-manufactured and sold cheaply. TForward provides a single solution both to facilitate road charging and roll-out EV.
46 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 8. Good For Road-Users, Economy And Environment
8.1 A Better Deal 8.2 The Wolfson Select In the UK: Committee
• each year the government raises There is a role for a dedicated House of Commons select committee. Given around £33 billion in road taxes, but the unwieldy official names of some of only spends around £9 billion of that the select committees, for ease it shall on the roads; a difference of around be referred to as the “Wolfson Select £24 billion each year25 Committee”. • our roads are hugely successful with Whatever the theories and rationales a staggering 36 million vehicles behind road charging being fair to travelling 320 billion miles, carrying road-users, and good for the economy nine out of ten passenger journeys, and environment, the Wolfson Select and transporting over two-thirds of our Committee would be a practical way of freight each year26 ensuring people actually benefit as road • that success has led to congestion, charging is developed and rolled-out in which can be considered a problem, the real world. or alternatively as representing
unsatisfied customer demand, which 25 In 2015/16 fuel duty raised around £27 billion, VED raised around £6 billion, and spending on the roads was around £9.3 billion, if linked with the right infrastructure Transport Statistics Great Britain 2016 and DfT Tables TSGB 1310 and 1303. OBR predicts fuel duty receipts rising to £27.9 billion for investment, can unlock the economic 2016/17. That does not include the additional VAT (£12.2 billion in 2012) raised potential in our roads on fuel, vehicle purchases, and other motoring goods and services. • road investment is an opportunity to 26 DfT Road Use Statistics 2016, and Provisional Road Traffic Estimates Jan - Dec 2016 create access to jobs and less-costly 27 A CEBR report dated 22nd February, 2017 ranked Britain’s road housing network 27th in the world. • vehicle pollution is now recognised as one of our biggest health challenges, increasing the relevance of alternative fuels, EV, improved batteries and power generation
It is only fair to give road-users a better deal, and save people from wasting endless hours in traffic, given how much more road-users pay in road taxes than is spent on roads.27
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 47 The Wolfson Select Committee would have The Members of Parliament sitting on the remit to: Wolfson Select Committee would be able to fight for the interests of road-users • ensure any road charging introduced paying for the road charging, and fairness is fair to road-users, and good for the for the losers from change. economy and environment The Wolfson Select Committee could • oversee the creation, and scrutinise the provide cross-party oversight of the running, of the TForward International Conservative 2017 manifesto commitment platform, in the best interests of UK “to deliver a better deal for customers road-users and taxpayers and sharper incentives for investment • oversee transition to EV, including efficiency” through a new approach to roll-out of EV recharging points, transport infrastructure. demands on electricity generation, and Being called before a select committee improvements to air quality for questioning before the media about • help keep the UK at the forefront delays, cost overruns, or profiteering of AV and other vehicle and at the expense of the taxpayer or infrastructure innovation, and infrastructure users, is a daunting encourage roll-out of new technology prospect for many corporate managers and professional advisers. • develop value capture • oversee better infrastructure An effective Wolfson Select Committee procurement practices, and scrutinise could save billions, particularly with delivery of infrastructure projects a proactive focus on projects as they develop rather than afterwards. • continue to develop infrastructure funding innovation, increasing the Parliamentary select committees have long-term impact of this Wolfson become much more effective since 2010, Economics Prize when the appointment of MPs by party whips, was changed to election by a secret ballot of MPs. That has empowered
the MPs sitting on select committees
to challenge and hold government, the
civil service and big business to account.
Consider recent high-profile select
committee scrutiny of matters such as
phone-hacking and multinational tax
avoidance.
48 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 8.3 The Current Taxation 8.4 Fair For Road-Users, Model Good For The Economy And Under the existing UK system, roads Environment? are primarily paid for out of the taxes How can we pay for better, safer, more VED and fuel duty. Transition to EV, or reliable roads in a way that is fair to road- other fuels, could undermine fuel duty in users and good for the economy and the its current form and there is a need for environment? government to plan for replacing declining fuel duty receipts (see Section 6 “Raising Understanding how different rationales Tax From EVs”). Many countries around affect different groups of people, and the world are in a similar position and impact on the economy and environment, also need solutions. is crucial to rolling out road charging in a way that is politically acceptable and Fuel duty is an unsophisticated form of attractive to people. road charging, increasing with mileage, and to a limited degree congestion (and Any new road charging scheme needs to therefore better than a flat charge per be designed for the future, not just today, mile). Fuel duty does not reflect the cost and consider technological change and of infrastructure used. Rather than taxing future rationales for road charging. future vehicle fuels more (or accepting The over-arching rationale for road the revenue loss), road charging using charging must be to improve people’s telematics and improved technology, quality of life, including by generating could be better targeted and fairer. economic growth. Investment in the UK’s VED previously incentivised vehicles with roads will generate economic growth. lower CO2 emissions, but to preserve The UK’s roads are congested to the VED revenue now that most new vehicles point they frustrate people getting to have lower CO2 emissions, VED changed work, distribution of goods, and business from April 2017 so it will no longer be logistics, and that holds back the based on CO2 emissions. Similarly, while economy. low or zero VED rates now incentivise Some commentators note that when accelerated EV take-up, in future VED new roads are built they induce more receipts can be preserved by increasing traffic and quickly become congested, the VED rate for EVs. Therefore, in and that when vehicles get faster people contrast to fuel duty, the VED tax base travel further, and conclude it is pointless does not need to be threatened. However, to keep building new roads. That is replacing VED with road charging would mistaken. Those additional journeys, and give drivers a marginal rather than fixed people travelling further, are products of a cost, which could prompt behavioural growing healthy economy. change to less congested routes and cleaner vehicles.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 49 How Road Charging Can Improve Quality of Life
Current Rationales Fair to Good for Good for for Road Charging Road-users Economy Environment
Raising money for building, 1 improving and maintaining roads
Demand management to cut congestion, and spread peak 2 demand so infrastructure is used optimally
Emissions reduction to improve 3 air quality ? ?
Future Rationales for Road Charging
Enabling roll-out of AV and 4 future technology
5 Enabling new capital models ?
6 Consumer Choice
Government Revenue Rationales
Raising money to improve 7 public transport ? ?
Raising money for other 8 government spending ? ?
50 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN Those improved journeys also benefit people’s quality of life. People spend too much time stuck in traffic.28 Investing in roads so people’s time is not wasted and they have more choice about where is practical to live and work, and can easily travel to see family, along with all the other aspects of life facilitated by road travel, improves people’s quality of life. Using TForward to introduce road charging in many small steps allows the actual effect on road- users, the economy and environment of each step to be assessed. If a particular road charging scheme is not beneficial, it can be reversed or altered, without the problem being rolled-out further.
8.4.1 Rationale: Building, Improving and Maintaining Roads Road charging creates the crucial link between demand and investment, so that road-user demand generates revenue, capital investment can be repaid from that revenue stream, and road-users can benefit from improvements made with the investment. That linkage is missing with the current taxation model. Telematics enables sophisticated tariff structures, establishing an even stronger link between demand and investment (and in that respect telematics is preferable to a simple charging formula per mile). Road charging can be fairer and result in better economic resource allocation, with those using the road infrastructure paying for it.
28 The average UK driver spends an estimated 235 hours each year behind the wheel.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 51 Road charging enables investment to flow 8.4.2 Rationale: Demand Management to where it is most productive, and market Without changing how we pay for our forces to select between competing and roads, demand (with congestion and potentially innovative approaches. pollution) for using our roads is expected If a business has customers queuing, it to increase with: will seek to increase supply, by employing more staff, opening longer hours, or • population growth increasing the total opening another outlet. A permanently number of journeys congested road demands a similar • growth in the size of the economy increase in supply. Building a new road increasing demands on road will not always be an option, e.g. into a infrastructure tightly-packed urban centre, but where • growth in the home delivery market it is, charging to use the road can fund • demand for driverless AVs from people its construction, and bring forward new currently unable to drive themselves, supply to meet unsatisfied demand. including some disabled and elderly Road-users will want to see road charging people and adolescents revenue well-spent. There have been too • demand for driverless AVs from many examples of public procurement people preferring the comfort and costs spiralling out of control amid project delays. Improving procurement convenience of private driverless travel practices is an opportunity to build public so they can work or rest support for road charging to support the • new mobility services as some people economy with new roads, while being will make private car journeys from fair to road-users (see Section 13 “Better which they were previously dissuaded Procurement”). by the capital cost of buying a car
52 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN Road charging facilitates demand Draft UK Air Quality Plan (see Section 7 management and economically efficient “Environment”). allocation of road space. Without road 8.4.4 Rationale: Enabling Roll-Out of AV charging, demand is by default managed and Future Technology through queuing/ congestion. The less value people place on their time, the more We know AV and other technology willing they will be to make a journey, innovations are bringing incredible ignoring the time value of others they change, which can benefit road-users, delay. Road charging brings marginal the economy and environment, but we cost to the road-user closer to the societal do not know when or how. The proposed cost, including congestion and pollution, TForward road charging system has stopping journeys being made where the the necessary flexibility to enable, and benefit is less than that higher cost. take full advantage of, AV and future technology innovation. Without charging for using road infrastructure, traffic levels are likely to We do not yet know if AV and grow faster than new road infrastructure conventional vehicles will drive alongside can be financed by government. each other on the same roads? We do not know if AV will lead to some roads, Another aspect of demand management or perhaps lanes on roads, becoming is that variable road charging tariffs can dedicated entirely to AV? Might AVs spread peak demand across a greater share bus lanes, with bus drivers (and time-span, e.g. by incentivising flexible potentially eligible taxi drivers) trained working, or night-time haulage. Therefore in how to interact with AVs? Will less road infrastructure needs to be AVs platoon and use road space more built to meet peak demand, and road efficiently? Will AVs travel on rail lines infrastructure is used more efficiently. (see Appendix)? Will young people lose 8.4.3 Rationale: Emissions Reductions interest in learning to drive a car? In the early transition stages, with only a Road charging can be linked to reducing small number of AVs, will they reduce or vehicle emissions, encourage EV uptake, increase congestion? and establish clean air zones under the
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 53 The flexible TForward platform would: Capital and Marginal Costs: Currently with private vehicle ownership, people a. provide the back-end payment commit upfront to paying the capital cost mechanics for people paying to of a vehicle, and an advance annual VED “hire” an AV (and pay for associated charge. The capital is used inefficiently insurance), enabling embryonic AV given a car typically spends over 90% of schemes to get started in the UK and its time parked (and taking up valuable 29 help keep the UK at the forefront of space). this global transition When people make a choice between b. allocate and charge for road space so different modes of transport for a journey, that AVs and conventional vehicles such as private car, bus, train or other pay fairly for the road and parking public transport, this financial model space they take up - encouraging fundamentally affects that choice. If a person is already committed to paying the efficiency innovation such as AV capital cost of a vehicle, the marginal cost platooning and less parking of using that vehicle for any one journey (principally the cost of fuel including fuel Human driver error is the biggest cause duty), may then be significantly less than of road accidents. If AVs transpire to be buying a ticket to use the competing safer, will that mean higher insurance modes of transport. premiums for people choosing to drive compared to AV? TForward could This is compounded because the fuel provide the telematics data for calculating duty paid for any particular journey insurance risk and tailored premiums, is not linked to the cost of the road and the back-end payment system for infrastructure used. customers to pay for that insurance where It is a market distortion that financially customers temporarily “hire” a vehicle. pre-determines, preferring to use a private 8.4.5 Rationale: Enabling New Capital vehicle on the road for a journey, rather Models than another mode of transport. A flexible road charging system like Nine out of ten journeys in the UK are TForward can enable new capital models, made by road.30 Would it be such a high bringing road-user and economic benefits, proportion with a different financial model by allocating and charging for road and that spread vehicle capital cost equally parking space used. This would enable (i) across each road journey? Would it be MaaS pricing structures to be created, (ii) this proportion if a road charging scheme public transport to compete more fairly charged specifically for road infrastructure on price (currently it is often cheaper to used, rather than such costs being met drive, ignoring capital cost, than pay for (many times over) by fuel duty and VED? a bus or train ticket), and (iii) rail freight to compete more fairly on price with road 29 A 2012 UK study by the Royal Automobile Club reports on average haulage. a car is only driving around 3-4% of the time. Typically 80% of the time a car is parked at home, and another 16% of the time parked elsewhere. 30 It is noted that includes bus journeys.
54 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN In the future the cost of “hiring” a This new funding model could potentially conventional vehicle or AV (via MaaS, have a revolutionary impact on vehicle a hailing app or car club) for a journey ownership and road usage, and transport might principally comprise: more generally. A substantial proportion of journeys currently made by private i. a contribution towards the capital cost vehicles on the road could in future of the vehicle become journeys made on public ii. any road charging (which might vary transport. That has profound implications with peak times and congestion) for planning future transport capacity. iii. fuel costs (which might be electricity, MaaS: Mobility as a Service is an and any tax on that electricity) extension of today’s apps, car clubs iv. insurance (currently a substantial cost and car-pooling31, combining with for car clubs, but telematics could public transport, into a full mode- effectively monitor use or abuse of neutral transport service. This would “hire” vehicles giving users direct be “intelligent mobility” using data to responsibility for tailored insurance combine multiple forms of transport to provide optimal customer-centric transport premiums) options for getting from A to B. v. the vehicle provider’s profit margin In the US, using mobility service providers A behavioural shift to MaaS (rather than to replace traditional provision of public private vehicle ownership), and a policy services and infrastructure has started shift to road charging, could give rise to with innovative trialling of mobility a more even playing field between the services by Uber: cost of private road travel, and the cost of using public transport.
Parking permit holders given free Uber journeys Local government subsidising Uber rides, from home to the station, to save building a instead of supporting bus services, in low new car park population density areas
(New Jersey) (Florida)
Uber cars being considered instead of Some new appartment blocks giving residents ambulances for non-emergencies Uber credits instead of parking spaces
(Washington DC) (LA)
31 French car pooling company, BlaBlaCar, has 35 million members in 22 countries and was valued at €1.4 billion in its last round of funding. Car-sharing company ZipCar’s global fleet reached 15,000 vehicles.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 55 MaaS offers the potential of a new capital 8.4.7 Rationale: Improving Public model where people do not conventionally Transport own a car, but have the flexibility to pay Whether road charging to raise money to access a vehicle when and where for public transport is fair to road-users, it suits them, or to share the cost of a or good or bad for the economy, largely journey with other travellers, with a few depends on where and how it is done. taps on an app. Customers need not be Road charging to improve public transport tied to a specific vehicle, but could select has been a key rationale for the London the appropriate size and type of vehicle Congestion Charge, and Londoners have for each journey. seen the benefits in public transport MaaS enables a new generation of road- investment. users to question if car mobility requires Critical Mass: Where the public transport traditional car ownership. It offers an system has enough critical mass to give ageing generation new opportunities to road-users a genuine alternative, then stay mobile. Commercial users might in increased investment in public transport the future call AV vans and lorries on can be fair to road-users. Where the bulk demand. of commuters cannot reach work by car 8.4.6 Consumer Choice (as in London and many major European cities) investment in better public Today’s roads only offer one customer transport can be good for the economy service at one price (via general taxation). and environment. That is very different to other modes of transport. From airlines to Uber, people Where a higher proportion of travellers expect to pay more to travel at peak times depend on roads, and public transport or to congested places. Equally, they does not provide an effective alternative, expect to pay less for less popular options, it is not clear that road charging to invest e.g. flying at 3 a.m. using airports distant in public transport is fair to road-users, from city centres. or benefits the economy.32 Many UK towns and cities are too small to be able In the future, road charging, along with to make rail or trams financially viable, AV and new capital models, could lead although buses can be effective. to price differentials for alternative road services, creating consumer choice, and allowing people to pay according to the value they put on their time. Premium service, ensuring a faster and more reliable journey time would come at a cost. However, such premium revenues can cross-subsidise journeys at less popular times or on uncongested routes, benefiting those on a tighter budget. Road charging can be win-win as it allocates road space better than queuing. 32 In Los Angeles 83% of people drive to work, compared to 7% using public transport. Despite investment in public transport and population growth, the actual number of people travelling on public transport has declined since the 1985 peak.
56 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN AV and MaaS: There could in the future 8.4.8 Rationale: General Government be a clearly beneficial rationale for Revenue spending on public transport with road Road charging could be used to replace charging revenues, if AV and other MaaS declining fuel duty revenues, and to services can “plug” the gaps around continue to raise around £24 billion more limited public transport (e.g. getting each year than is spent on the roads. If people from a train or bus station to their road charging is used to raise money for home or workplace). (non-transport) government spending, That would create a genuine public that is not obviously fair for road-users. transport/ AV/ MaaS alternative for There could theoretically be benefit to road-users. AV and MaaS could make the economy or the environment if the small-scale public transport infrastructure revenue were spent to benefit them, financially viable for smaller towns. Then but such arguments are unlikely to be there could be benefits for road-users, the politically persuasive. economy and environment if additional It can at least be argued road charging investment is made into improving public revenues going to general government transport from road charging revenues. spending would be no more unfair to Actual UK Spending: In the UK in recent road-users than current VED and fuel duty years investment for major transport (provided any road charging introduced is projects has largely gone to rail rather revenue neutral). than the roads, generating some sense A more persuasive argument is that the of unfairness for road-users paying for rate per mile charge on the less congested that investment through VED and fuel and polluted roads could be set lower duty.33 Whilst the theoretical case for than the current fuel duty cost for most using road charging revenue to pay for vehicles, so being fairer to road-users who public transport can be made, that needs would pay less than they do now. to be understood against the context of actual spending in the UK. The successful The government could still protect its London model with revenue reinvested tax base, since the higher road charges locally, could potentially be applied to necessary to improve traffic flow on some other major UK cities, but charging more congested roads and at busy times generally for road use in order to fund rail are likely to raise more money than fuel investment nationally (e.g. HS2) is unlikely duty for driving on them does now. The to benefit the economy or be seen as fair revenue gain to government on such by road-users. roads can also be fair for road-users, since they should enjoy faster journeys (due to demand management), which can 33 A CEBR report dated 22nd February, 2017 found UK rail investment in 2015 to be almost nine times that for roads investment, with benefit the economy and environment. £186,000 spent on rail infrastructure for every million passenger miles, This in turn can finance lower costs to but only £21,000 for roads. road-users on uncongested roads and at quieter times, ensuring that overall road charging is fair to road users generally, as well as good for the economy and the environment.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 57 8.5 Diverting Parking Revenues Less well-off peak-time drivers in To Public Funds congested areas will be particularly affected, although may find some Currently road-users pay substantial compensating benefits: amounts for parking. Where road charging • everyone benefits from economic is introduced (such as in a city centre), that means less vehicles travelling into growth generated by investment in that area, which means lower demand the roads. Road charging is not a zero for parking, and less revenue for parking sum game; for every pound paid in providers. road charging, particularly with the Where that is private (rather than local right investment, a greater amount government) parking provision, the effect of wealth is generated for the wider of introducing road charging is to divert economy private sector parking revenues, to public • altering travel patterns to avoid road sector road charging revenues. The exact charges, and therefore travelling more substitution will depend on elasticities of cheaply, since road charges paid by demand and supply. others can fund offsetting fuel duty That means not all road charging is a new cuts cost to be borne by road-users. That will • enjoying less congestion on existing improve the arguments for some road routes when road charging funds new charging schemes being fair to road-users, capacity, e.g. drivers staying on the and good for the general economy. M6 benefit at the margin when better- Overall reduced parking demand due off drivers pay to use the M6 Toll to road charging (which might be instead exacerbated by a shift to AV) could • using more public transport, potentially mean some parking areas, particularly improved with increased investment on valuable urban centre land, are re- developed. Alternatively, some parking from road charging revenues areas might transition into service centres • using bus, and park and ride, with for maintaining and recharging AVs. increased services now viable, and shorter bus journey times from less 8.6 Losers From Change congestion Any road charging scheme will have winners and losers. Depending on tariff structures, a scheme might disproportionately adversely affect a particular group, from rural drivers making longer journeys, to van drivers making urban deliveries, or those travelling to work at rush-hour. It is inevitable as road charging changes the economics of where people live and work.
58 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN The proposed approach of introducing road charging in many small steps, allows the actual effect on people of each step to be measured, and if a particular road charging scheme is not overall fairer and giving most people a better deal, it can be reversed or altered, and the problem not rolled-out further. The gradual stepped introduction over many years, also enables people and businesses to adjust over time, so fewer people lose out, as they take into account implications for travel costs when they move house or job, choose a school for children, or locate a business. With the Local Government Deal, local councillors will be highly sensitive to the impact of any scheme they introduce, and attuned to the effect any road charging scheme is having on their constituents, and ready to amend or reverse a scheme where it is not right. Local councillors are best placed to take into account the interests of all constituents, including those who will benefit from less pollution and faster travel times, rather than only those most concerned about paying. There is a similar obligation on Highways England to monitor and understand the fairness for road-users of any road charging it introduces on the SRN, with oversight from the Wolfson Select Committee. Any road charging introduced should generate more benefits for more people, than it does costs for those disadvantaged.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 59 9. TForward Technology And Development Cost
9.1 The TForward Technology • a centralised information cloud Solution collating real-time information about road networks, other transport The TForward technology platform would systems, and geo-social data from the be an integrated IT system providing the travelling public, enabling the digital front-end customer interface, and back- management of vehicles, and MaaS end payment and accounting mechanics, that current and future road charging • integrated travel information, pricing schemes link into. The platform would use and smart ticketing options on a web- telematics-based road charging, matching site and app timelines of GPS positioning data for • customer on-line access to their travel vehicles within active charging schemes. accounts similar to on-line banking, It would be built as a scalable system able with customer options for travel and to grow from its first UK road charging accounting text and email updates scheme, into the TForward International • further potential revenue streams platform providing: from charging insurers for driver data • vehicle GPS timelines to trigger for calculating telematics insurance matching billing against location and premiums (with driver consent perhaps time-related tariffs for all participating incentivised with a road charging charging schemes discount), and private sector fleet • mobility as a service (MaaS) across all management and others for data modes of transport, including AV, for passengers and freight
60 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 9.2 Managing Procurement Procuring a large IT platform needs to be well managed. Perhaps the most notorious Developing the TForward platform is best example of poor public procurement was broken down into different stages, with Connecting for Health. This NHS IT project each part of the platform scalable and saw costs rise from an initial estimate of able to inter-link, so only a basic platform £2.3 billion to around £20 billion and was is needed initially to get up and running, described by the Public Accounts Select and the full TForward International Committee as one of “the worst and most platform can be built-out over time expensive contracting fiascos”. once success and profitability has been demonstrated: To avoid such a scenario, TForward as a public/ private joint partnership, must a. first, identify an anchor road charging incentivise private sector companies scheme as a base for developing the to keep procurement costs down, and TForward platform (e.g. converting the delivery on-time. TForward is likely to London Congestion Charge or Dart be profitable, in contrast to the not-for- profit NHS, so key IT providers can be Charge, or start with a new scheme compensated as equity holders, making such as the Silvertown Tunnel) it in their interests to develop an optimal b. establish telematics protocols and EV platform to market, rather than drive-up recharging standards, so telematics fees. insurance and EV chargepoints that Establishing one platform to manage link into TForward can be rolled-out payments from multiple road charging c. develop the TForward platform to schemes, rather than administering allow processing of other payments each scheme separately, while using the supported by vehicle GPS timelines, same platform for other payments based e.g. parking charges, HGV Road-User on vehicle GPS timelines, can create Levy significant value. Government is needed d. scale-up the TForward platform to to facilitate this, and can thus capture cover more road charging schemes much of the value. However, to develop a suitable and adaptable technology and support widespread Local platform cost-effectively, government Government Deals and SRN charging needs to co-invest with private sector e. later, exploit network effects from partners and share value created with TForward’s customer base to add them. functionality for public transport ticketing, so TForward can develop as a full international mobility as a service (MaaS) platform
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 61 9.3 TForward Development It also identifies a key requirement being Costs “advanced data encryption and sharing technologies that ensure that your The technical challenge in establishing personal information and transactions are TForward International should not be sent and stored securely”.34 underestimated. It will require levels of There is a similar choice in developing financial security almost equivalent to TForward’s technology platform: a bank, and information storage and processing capabilities similar to a mobile • like Starling Bank, TForward can phone company. develop its full technology platform Crucially, the whole technology platform in-house, including back-end data can be cloud based and is unencumbered processing and potentially bespoke with legacy systems. This facilitates security encryption programming development of flexible, secure and • alternatively, as with the Atom Bank customer focused technology solutions. analogy, TForward could facilitate road The primary front-end user interface can charging by integrating a third party be designed for mobile phone or iPad use, database programme with bought-in with a variant for PC use, rather than vice versa. GPS positioning technology, and focus its IT development on the front-end The closest analogy for developing user interface TForward is probably an internet challenger bank, e.g. Atom or Starling. The first option is ideally more attractive Atom Bank launched in April 2016 after with greater flexibility to support later raising £100 million of finance. It is development. However, if only limited reported that “Atom hasn’t built its core customisation is needed of third IT systems from scratch, instead building party database and GPS software (as on commoditised banking software ... customisation can hinder later vendor and building a unique front-end (the upgrades), the second option could work mobile app) on top”. Atom Bank’s Chief and facilitate a faster launch. Innovations Officer justifies the approach on the basis that “the core engine needs Some road charging schemes to be bulletproof, located in a bullet proof implemented around the world have had environment. It doesn’t need to be too high collection costs. With gradual roll- fancy” (Edward Twiddy interview with out, initially TForward development costs, Techworld 22/317). potentially by analogy with challenger Starling Bank, which has raised £70 banks in the £70 - £100 million range, million but has yet to fully launch, has will not be spread across a large number taken a different approach and describes of vehicles and will be high relative to itself as “a tech business with a banking revenue raised. licence”. It states “By building our bank ourselves, we can ruthlessly pare down our scope and focus on what our 34 Greg Hawkins, Starling Bank website article dated 18th October 2016 customers need”.
62 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN However, the telematics scheme could quickly come to apply to many vehicles and cost-effectively raise substantial revenue. Certainly, TForward will be more cost-effective than numerous independent schemes. That £70 - £100 million estimate for establishing TForward, compares favourably with £162 million for the London Congestion Charge, although this is subject to TForward using an anchor scheme’s existing ANPR cameras for enforcement. Were the anchor scheme for TForward to be the London Congestion Charge or Dart charge, initial dual running of telematics and ANPR camera enforcement would allow a smooth and gradual transition to telematics, and telematics uptake could be encouraged by a small discount. This would allow TForward’s IT processing and storage capacity to be built up gradually. When telematics for that road charging scheme later became mandatory, road-users could be given the option in the early years to share only GPS timeline data within the perimeter area of participating charging schemes. In the November 2016 Autumn Statement, Chancellor Hammond announced £450 million of funding for digital rail signalling technology (long-used on France’s TGV and across Europe) which enables trains to run closer together creating additional rail line capacity. Similarly, the TForward International platform enables a future with digital management of vehicles to create additional road capacity, and if the political arguments stand for rail, they are stronger for roads.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 63 10. Financial Analysis
10.1 Economies Of Scale TForward creates substantial economies of scale. Road charging schemes are expensive to set-up, and expensive to run. The London Congestion Charge cost £162 million to set- up, and around £80-90 million annually to run.35 As shown by the graph below, London Congestion Charge revenue increased from £222 million in 2012/13, to £257 million in 2014/15, partly reflecting an increase in the standard daily charge to £11.50, but collection costs were little changed:
London Congestion Charge £m
Source: Transport for London
Road charging schemes generally have substantial fixed costs, which do not vary significantly with changes in the amount of revenue collected, implying clear economies of scale. Financial data for the Dart Charge and Severn bridges tolls also show greater variation in revenue than costs:36
35 “Where has the money gone?”, BBC London 26th May 2017. The London Congestion Charge set-up costs included installing a large network of cameras, the need for which is reduced by telematics technology. 36 There are differences in the accounting treatment of capital costs. The £77 million which Severn Crossings plc reports as cash flow from operations for 2016 may better reflect net proceeds than the £45 million officially cited, since that is reduced by a depreciation charge set to reach a net zero book value for the Severn bridges when they return to the public sector. Meanwhile, Highways England accounts for Dart Charge classify £26.4 million ‘impairment to income’ for non-collection of fines as expenditure. For consistency this is categorised in the bar chart as lower total revenue rather than within costs. It should also be noted that up to £32.4 million of £38.9 million expenditure still within costs is ‘for the implementation of Dart Charge and renewal of road, structures and technology schemes’ might properly be considered capital.
64 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN Key road charging schemes 2015/16
Source: Severn Crossing plc Annual Report and Accounts 2016, Highways England Dartford-Thurrock river crossing charging scheme Accounts 2015/16, TfL Annual Report and Statement of Accounts 2015
The amount by which the £1.029 billion the economies of scale savings would be (at 1989 prices) which Severn Crossing plc very substantial. is allowed to toll on the Severn bridges, exceeds the £387 million value of the 10.2 M6 Toll: Funding Road construction contract for the second Severn bridge, indicates the inefficiency Construction of self-standing tolling schemes. It is Another important road charging also notable that two-thirds of the 184 scheme to consider is the M6 Toll, the people employed by Severn Crossing plc only substantial stretch of standard UK are engaged in tolling or administration, motorway run by the private sector. rather than maintenance.37 However, its financial results are not Crucially, TForward can reap economies disclosed although quarterly traffic data of scale by (a) integrating current tolling is published. Matching that against schemes, (b) acting as a flexible platform published toll charges gives a revenue for future road charging schemes, and (c) estimation for 2017 of £96.6 million (see supporting other charging (e.g. parking, table: “M6 Toll Revenue Calculation” at EV and AV). A far higher proportion of the end of this section). revenue would represent net proceeds to the public purse. If TForward expands On its face this is a substantial amount internationally, and into public transport, of revenue, given the M6 Toll operational
37 Severn Crossing plc annual report and accounts 2016
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 65 concession runs for 40 years. Nonetheless, Key implications are: debt funding for the scheme needed to be restructured in 2013. The M6 Toll 1. relief roads are likely to require owner described traffic levels, which underwriting by the public sector are less than a quarter of the un-tolled 2. setting tolls at a level to repay M6, as ‘disappointing’ in June 2005 construction costs of a particular after 18 months of operation. HGVs and road is not the best way to deal with commercial traffic predominately use the congestion generally on the road un-tolled M6. Highways England assessed network impact on M6 congestion as ‘small’. 3. where there is a relief road, or Worse, M6 Toll income declined competing road, Highways England substantially between 2007 and 2012 as should have a role in pricing the toll for traffic fell 28%, reflecting the precarious both roads, so congestion is properly market position of toll roads for which managed (e.g. when the Lower Thames there is a free alternative. The economic downturn after 2007 not only made road Crossing is completed and competing users keener to economise on tolls, it also with the Dartford Crossing) reduced traffic flow on the competing M6, thus undermining the congestion reducing TForward’s economies of scale mean a benefit of the M6 Toll. larger part of revenue raised goes towards road funding. These implications are assessed in the South Wales Case Study regarding the planned M4 relief road.
M6 Toll Traffic Volumes (Q1 vehicles/ day)
Source: M6 Toll website www.m6toll.co.uk
66 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 2017 Q1 vehicles/day data published by M6 Toll Average Work day Weekend Total 44942 50849 30399 HGV 5848 Assuming non-HGVs are cars and that same % travel at weekend implies: Average Work day Weekend HGV 5848 6617 3956 Cars 39094 44232 26443 Tolls vary day to night. Assume 90% day and 10% night similar to Dartford: Day-time vehicles Work day Weekend HGV 5955 3560 Cars 39809 23799
Day-time charge Work day Weekend HGVs (£) 11.00 9.60
Cars (£) 5.50 4.80 Multiply day-time vehicles by day-time charge: Day time HGV revenue (£) 65505 34177 Day time car revenue (£) 218950 114235
Night-time vehicle Work day Weekend HGV 662 396 Cars 4423 2644 Night-time charge Work day Weekend HGVs (£) 8.60 8.60 Cars (£) 3.80 3.80 Multiply night-time vehicles by night-time charge: Night time HGV revenue (£) 5690 3402 Night time car revenue (£) 16808 10048
Add day-time and night-time: Work day Weekend HGV revenue (£) 71195 37578 Car revenue (£) 235758 124284
Multiply night-time vehicles by night-time charge: Night time HGV revenue (£) 5690 3402 Night time car revenue (£) 16808 10048
Add day-time and night-time: Work day Weekend HGV revenue (£) 71195 37578 Car revenue (£) 235758 124284 Add five work days and two weekend days HGV revenue/week (£) 431132 Car revenue/week (£) 1427360 Total weekly revenue (£) 1858492 Multiply total weekly revenue by 52 Total annual revenue (£ million) 96.6
Source: M6 Toll website www.m6toll.co.uk and author’s assumptions and calculations
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 67 Severn Bridge
68 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 11. Case Study: South Wales
11.1 Abolition Of Severn the public less cynical about commitments Bridges Tolls given if any future road charging were to be introduced in South Wales. The Severn bridges tolls are expected There are winners and losers from any to be abolished in 2018, given the May change in government policy: 2017 Conservative manifesto commitment to this, with the Welsh government and a. most people who regularly use the Assembly supporting abolishing the tolls. Severn bridges will want the tolls The current toll on the two Severn bridges abolished is west-bound only at £6.70 for cars, and b. there will be negative implications for £20 for HGVs, paid at a tolling plaza, others, notably people who travel on rather than using free-flow technology. the M4 around Newport (without using Tolls raised £98 million in 2015. Following the Severn bridges), since the abolition abolition, the £7 million annual bridge of the Severn bridges tolls is expected maintenance costs will instead be met to increase traffic flowing onto that from general UK taxation.38 part of the M4 by 10% worsening The current tolling arrangements end after congestion.40 the capital cost of building the southern bridge has been recouped. That sum of £1.029 billion at 1989 prices is expected to be reached around the end of 2017, at which point the Severn bridges return to the public sector and management by Highways England. The UK government can continue tolling until further costs (mainly relating to latent defects in the older northern bridge) are recouped later in 2018.39 With the Severn bridges tolls the politicians are actually doing what they previously promised, and ending tolls once they had repaid the cost of constructing the new bridge (in contrast to Dartford). Conceivably, this could make
38 Severn Bridge Crossing plc annual report and accounts 2015/16. Welsh government response to UK government consultation The Severn Crossings: reducing toll prices and other issues. 39 Severn Bridges Act 1992 40 Professor Stuart Cole, quoted by BBC Wales 16th May 2017
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 69 11.2 M4 Relief Road ii. the “Blue M4 Relief Road”: the less expensive blue route based on dualling Roads are crucial in South Wales for and grade separation of the existing linking people’s employment in Cardiff, A48 and use of Newport’s “Steelworks Bristol and around Newport, to their Road”, at an estimated cost of around homes there and in the valleys to the £600 million and potentially capable of north, and west towards Swansea. completion more quickly.42 The M4 (the “Original M4”) is chronically Development of proposals for the M4 congested around Newport, particularly at relief road started long before the 2007/8 the Bryn Glas tunnels, which constitute a financial crisis, since when actual M4 pinch point north of Newport. There are traffic in South Wales has been lower two main competing proposals for an M4 than originally projected. However, the relief road: need for an M4 relief road is now made i. the “Black M4 Relief Road”: the more pressing by abolition of the Severn black route comprising 14 miles of new tolls and the 10% additional traffic this is motorway to the south of Newport expected to generate on the M4 around at an estimated cost of £1.1 billion, Newport, and which the public inquiry optimistically intended to open in 2022, must now consider. but with a public inquiry only now underway41
Source: based on Professor Stuart Cole’s route map and “blue” route proposal
41 By routing traffic away from residential area close to the Original M4, the black route is estimated to bring beneficial cuts in NO2 concentrations for 12,475 properties to the north of Newport, while only having an adverse NO2 impact on 117 properties, DEFRA/DfT “Draft UK Air Quality Plan for tackling nitrogen dioxide”, May 2017 42 See Professor Stuart Cole “A Cost Effective Solution to Relieving M4 Congestion Around Newport”
70 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN Traffic projections frequently prove pollution levels, as shown for South Wales inaccurate for new roads, often in this case study. significantly underestimating actual traffic 43 growth. Analysis by the CPRE shows 11.3 South Wales Metro enormous variation of between 0.1% and 109% in the uplift in traffic relative to A South Wales Metro45 is proposed, at background levels across thirteen road a cost of around £600 - £750 million46 schemes studied.44 Different schemes vary but final funding arrangements are still in how much extra traffic they induce not confirmed. Project funding had been as oppose to re-direct from other routes, expected to include around £200 million of with implications for setting road charging EU funding which is now uncertain with tariffs if the rationale for a new road is to Brexit. relieve congestion elsewhere. The Metro is a concept for improved Traffic predictions are never certain, public transport links around the “Cardiff plus AV could arrive and add to Capital Region” (encompassing Bridgend, the unpredictability by increasing or Cardiff, Newport, Monmouthshire to decreasing road demand. The TForward the Severn, and valleys to the north) by flexible charging system would allow building new transport infrastructure, and tolls to be increased or reduced in future improving and better integrating existing years, so as to address actual rather infrastructure. than projected traffic and congestion and
Source: Welsh Government (proposed Metro for South Wales) Proposed Metro for South Wales
43 See Highways England Post-Opening Project EVolutions for all road projects costing over £10 million 44 The End of the Road? Challenging the road-building consensus, Campaign to Protect Rural England 45 Refer to http://gov.wales/docs/det/publications/160224-metro-information-brochure-en.pdf 46 The capital cost is estimated at £600 - £750m. In addition to the capital cost, the Metro is expected to be subsidised by the taxpayer by around an additional £180m each year - over the first 15 year franchise period that adds around another £2.7 billion in funding costs.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 71 The Metro is intended to increase There is currently no satisfactory accessibility of deprived valleys alternative to the M4 through the Bryn communities across the South Wales Glas tunnels for many road-users, so coalfield, to make them more attractive road charging alone cannot offer a full for inward investment, as well as help congestion solution. However, charging people commute from them to Cardiff, the road-users a small sum for using the Bryn region’s main employment centre. Glas tunnels in the morning and evening peaks would spread that rush-hour traffic Importantly, procurement for the more evenly, with some road-users Metro is on a mode-neutral basis. foregoing or re-timing their journeys. Four preferred bidders are currently developing alternative proposals bases on It would not be worthwhile investing in a combination of traditional rail, light rail road charging infrastructure just to apply and express bus services. Different options a small charge at the Bryn Glas tunnels at have varying implications for use and morning and evening peaks, particularly potential electrification of some, if not all, if this would only be necessary until an of the Valleys rail lines into Cardiff. The M4 relief road opened. Linking into the innovative option of using one of these TForward platform would make this viable. rail lines to trial AV on rails as part of developing the South Wales Metro concept 11.4.2 Demand Management on the Blue is considered later (see Appendix). M4 Relief Road Were the less expensive “Blue M4 Relief 11.4 TForward Solution Road” chosen, TForward flexibility would create other innovative options, such as By using South Wales as a case study using variable peak-time charging on the for the rationales for road charging, and more congested of the Original M4 or the evaluating fairness for road-users, and Blue M4 Relief Road to balance demand benefit for the economy and environment, between them. Real-time tolling and travel it is clear a key advantage of TForward is time information would be displayed its flexibility for low, peak or temporary on roadside signs, and on smartphones tolling, so road charging can meet specific and satnavs, encouraging road-user objectives reflecting the different rationales behavioural change to alter their route for road charging. according to their time/cost trade-off.
11.4.1 Demand Management Before the A small price signal would be sufficient M4 Relief Road is Built to balance traffic between the two routes, given they will be similar in capacity and An early use of the TForward platform specification. could be to manage congestion at the Bryn Glas tunnels on the M4 north of Newport. A small charge would not make a Queues at this pinch point are likely to significant contribution to the cost of lengthen substantially, and continue for building the Blue M4 Relief Road, but it a longer part of the day, after the Severn costs around £500 million less than the tolls are abolished and traffic levels rise by Black M4 Relief Road. around 10%.
72 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 11.4.3 Financing the Black M4 Relief Road Using the TForward platform would allow the toll to vary according to congestion The Welsh government is currently conditions, both on the Black M4 Relief proposing to finance construction of an M4 Road and Original M4. In its early years, relief road partly from its existing capital with the relief road having ample capacity, roads budget, and partly from additional including sufficient capacity at peak times, borrowing, including new powers devolved that would likely imply a lower toll at under the Wales Act 2017 to borrow a peak times, to increase the relief road’s further £500 million. diversionary impact and ability to alleviate There is opposition to the Welsh the Bryn Glas tunnels pinch point on government’s preferred Black M4 Relief the Original M4. In future decades, were Road, some environmental, but also traffic levels and congestion to continue to against the estimated cost of at least £1.1 increase (we do not know if they will), a billion. This single investment in South- higher charge might be required at peak East Wales would take much of the roads times on the relief road to ensure at least capital budget for the whole of Wales, and that route remained free flowing. TForward there are concerns construction risks may gives the needed flexibility to respond to increase the budget and delay completion. uncertain future developments. The Black M4 Relief Road would be built 11.4.4 Cardiff City Centre Road Charging to higher specification than the Blue M4 Once the M4 relief road is complete, flow Relief Road and the Original M4. This of traffic to Cardiff is likely to increase, means some road-users would likely be exacerbated by plans to build twenty prepared to pay a toll to use the Black thousand new homes on the outskirts M4 Relief Road, and road-users benefiting of Cardiff. This in turn may underpin from the better faster Black M4 Relief the following rationales for modest road Road would be contributing to its cost. charging in Cardiff: However, there is a lesson from the • funding extension of the A4232 to private M6 Toll road. Only a relatively small proportion of road-users, and rarely complete a ring-road around Cardiff. HGVs and commercial traffic, opt to pay Space restrictions within Cardiff limit a relatively high M6 Toll (currently £5.50 opportunities for further new road for cars, and £11 for HGVs), even when building the alternative (“free”) M6 is congested. • demand management to reduce and Setting a toll for the Black M4 Relief Road spread peak rush-hour demand on the at a price point that would fully fund its roads in and out of Cardiff construction would lead to relatively few • using the flexible TForward tariffs to road-users using the route, given the alternative competing Original M4, and keep traffic flowing for the many major thus fail to alleviate congestion at the Bryn sporting events now hosted in the Glas tunnels. The toll would need to be centre of Cardiff set at a lower level to significantly relieve congestion on the Original M4.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 73 • reducing emissions and pollution in a renaissance. Cardiff, unlike London, Cardiff. From the political perspective, has sites on its outskirts suitable for there are those who want vehicle inexpensive (i.e. not multi-storey) emissions cut, but also those diesel car parking drivers who feel they were encouraged to buy a diesel car by past VED This case study focuses only on Cardiff policy, and fear being punished by for simplicity, but similar considerations an about-turn in tax policy. Whatever will apply for traffic management into Bristol and Newport, and to a lesser balance is struck between those extent Swansea. However, smaller interests, the ability to use TForward city and population size can make the to disincentivise harmful emissions as economics unviable for sufficiently deep well as congestion, will increase the public transport connections to offer a number of times when it is attractive real alternative to car transport. This is to deploy TForward to manage city particularly true for rail, although funding centre traffic buses can still be cost-effective for smaller • raising funding for the South Wales centres, and design of the South Wales Metro will need to reflect this. Metro (which the Welsh government may otherwise struggle to pay for). This case study does not consider the Using road charging to fund public rationale for road charging to replace transport improvements could be declining fuel duty revenues. This is because road charging, along with justified as the Metro with large decisions about how to spend the numbers of stations across South East proceeds, are devolved to Wales, Scotland Wales would be giving commuters a and Northern Ireland, while VED and fuel genuine alternative to the road. It is duty are not devolved. important the Metro is affordable for people on low incomes who can least afford road charging, given the Metro’s purpose of increasing the accessibility of deprived valley communities, and revenue from road charging could help deliver this • making “park and ride” schemes (and increased bus services generally) economically viable with sufficient critical mass to run enough buses to make them convenient and attractive for people. Park and ride may suffer from a humble image, but it is a low-infrastructure inexpensive approach, and effective, and deserves
74 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 11.5 Political Deliverability Whether any new tolling arrangements in South Wales were fair to road-users, and good for the economy and environment, can be monitored, and if they were not working, flexibility with TForward would allow tariffs to be changed or schemes suspended. There are many combinations of how tolling might work in South East Wales from the TForward platform in the future. The focus is on raising revenue to fund transport improvements, given the need for these, and that the Welsh government lacks the power to give money back by cutting fuel duty. This example does illustrate how there might be gradual transition from tolling the Severn bridges to flexible, variable or peak tolling of some other key roads and access points in South Wales. That is not something people are currently used to, but offers:
• gradual transition • better congestion management • addressing vehicle emissions • raising money to pay for the M4 relief road, Cardiff ring-road, and South Wales Metro (which are transport improvements most road-users in South East Wales can identify with) • potentially a fairness promise that total road charging would not raise more than the Severn Bridges tolls did (£98 million at 2015)
Whether this is seen as potentially desirable may depend on whether the Welsh government can deliver its transport goals without this additional revenue stream. TForward would facilitate this option for giving people a better deal.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 75 12. Value Capture
12.1 Value Capture Concept 12.2 Capturing Value With value capture, the value added 12.2.1 Economic Growth and Taxation to land by making it accessible for New and improved transport links development with new transport links, generate economic growth by facilitating is captured to help fund the transport residential, commercial and industrial use infrastructure, so those who benefit from of the newly accessible areas. Government the infrastructure pay for it. shares in the economic growth through Unfortunately, in the UK, this rarely taxation, e.g. additional business rates, happens in practice with much land income tax, corporation tax and VAT on either already built on or protected new economic activity. from development (e.g. green-belt). This The value of additional economic suggests a need to re-evaluate the UK’s growth and its benefits to society, will compulsory purchase, green-belt and often exceed government expenditure planning regulations in light of the wider building the infrastructure. Such cost/ social and economic benefits of value benefit analysis creates the economic capture: justification for the investment. Crossrail • funding new transport infrastructure has successfully communicated that its • regenerating depressed areas construction cost of around £15.8 billion is • replacing run-down legacy building estimated to generate around £42 billion for the wider economy. stock with modern, safe and energy- efficient buildings
• creating accessible land to help resolve 47 Refer to “Fixing Our Broken Housing Market” White Paper dated 7th February 2017. The government has described the housing market as the housing crisis with high quality “broken”, stated at least 250,000 new homes are needed each year, aims to build a million new houses by 2020, and has identified the 47 development need for competition to break the control a small number of large commercial house-builders have in restricting new housing supply.
Realising land value increases to fund transport infrastructure has excellent precedent: (i) parts of London’s Underground were paid for by land made accessible for new suburban housing, and (ii) increasing land values funded much late nineteenth century United States railway building from East to West coast.
76 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 12.2.2 Land Development Tax 12.2.4 Financing Timing Constraints Planning legislation could be amended, to There is a timing challenge, with permit development around new transport development costs needing to be paid up- arteries, subject to a Land Development front as infrastructure is built, but value Tax being paid by property developers for not being realised until after transport is planning permission based on hectarage operational, and buildings have been built of land (unlike the current Community and sold. Borrowing to fund development Infrastructure Levy). This could capture adds to the cost, and is a greater for the public much of the uplift in land barrier to smaller developers. To help, values generated by new transport the government might accept deferred arteries and permission to develop land payment for Land Development Tax or around them. planning permission, until buildings are built and being sold. 12.2.3 Selling Planning Permission 12.2.5 Pilot Value Capture An alternative mechanism to a Land Development Tax, would be to sell East-West Rail and Cambridge-Oxford planning permission for particular Expressway road improvements are projects. This could give control over proposed for the Cambridge - Milton the development standard, and raise Keynes - Oxford corridor. This is an more money per hectare than the opportunity immediately before the Land Development Tax because more government for value capture of the of the variable surplus value of each increasing land values with new building. development could be captured. Emphasising the crucial link between transport arteries and housing, the If planning permission were sold by National Infrastructure Commission (NIC) auction this could prove an effective way reported that a shortage of housing of maximising revenue for government, represents a fundamental risk to the not least by reducing uncertainty for success of this area, and consequently, private bidders as to what they will investment in transport links must be be allowed to build. Different auction “properly aligned with a strategy for new models would allow the form of planning homes and communities, not developed in permission to be developed privately or isolation”.48 publicly and allow for different options. Mix or environmental restrictions could It is recommended the government still be required by government, with a uses the Cambridge - Milton Keynes - trade-off faced between how prescriptive Oxford corridor to pilot alternative Land these were and revenue raised for the Development Tax, and sale of planning public sector. permission, models to raise funding for this corridor. This could help develop an optimal value capture model to roll out 48 The National Infrastructure Commission (“NIC”) became an nationally on future infrastructure projects, executive agency operationally independent of government in January 2017, and reference is to its interim report of November 2016. overseen by the NIC.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 77 12.3 Reshaping Our Cities all the surrounding land accessible (in contrast to a railway where access is In the UK our towns and cities typically limited to stations)49 form in a roughly circular shape around a v. existing urban residents and centre, and were built in a previous age before modern population and transport businesses might locate along these levels. Roads are now too narrow for transport arteries, reducing pressure the volume of traffic, and new-build is on crowded urban centres then squashed on top. Chronic traffic vi. new development would connect congestion results. via the transport artery to existing The world is urbanising and needs towns and cities, with the benefit of solutions that do not result in endemic being able to share their established congestion. Consider an alternative model social and economic base. This draws which: on David Rudlin’s winning Wolfson a. provides fast, high-capacity, efficient Economics Prize entry promoting transport arteries (i) between towns garden cities connected by trams to and cities, and (ii) orbiting around existing settlements. A step forward town and cities; and from today’s trams to the potential b. sites new developments along these offered by AVs, could enable the transport arteries, so that the shape of distance between new and existing urban development becomes clusters settlements to increase without losing along a line. connectivity benefits
Transport arteries might be today’s 49 HS1&2 fail to effectively capture for the government the potential motorways, or entirely new kinds of increase in the value of the surrounding land. The government has not sought to introduce specific value capture initiatives. Because they are futuristic AV arteries. They might be sited railways with people only able to embark and disembark at designated on new routes, run alongside, or be built train stations, they do not make all the land surrounding the new rail lines easily accessible, in contrast to a road which could have above, existing road and rail lines (see access slip-roads continually along the route. Discussion of potentially building a new city on the HS2 line at Toton (between Nottingham Appendix). and Derby) highlights (i) land surrounding the rail line needs a train station to benefit from increased accessibility, (ii) more train stations slow rail journeys overall, (iii) there are only limited candidates along a Potential benefits include: rail line in the UK for large development. i. with this change in geometry much structural urban congestion could be avoided ii. value capture could fund the transport arteries iii. land could be made accessible to help resolve the housing crisis iv. an expressway with regular slip roads, or AV artery with regular embarkation and disembarkation points, could make
78 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN New AV transport arteries have the 12.4 Compulsory Purchase potential to connect people over greater distances, and change where The UK’s compulsory purchase regulations the geographic balance lies between are too slow, expensive and cumbersome, economies and diseconomies of and would benefit from an overhaul to agglomeration. Just as railways brought better balance protections for property communities together, investing in arteries owners, against wider public interest in between and around towns and cities re-development investment. with emerging transport technologies It is not in the best interests of could make a new model of urbanisation residential occupants to live (and bring possible. up children) in run-down houses and There is an opportunity to utilise planning flats by noisy polluted roads without regulations to ensure the best lay-outs, green space. With a more pro-active with buildings set-back and shielded approach residential tenants could be by trees from the transport artery, helped to find somewhere better to emphasising high-quality architecture rent, while residential owners could be and sustainable design, and utilising the fairly compensated so they could re-buy garden city concept.50 Development must somewhere better. not be uncontrolled unsightly US-style Commercial operations can re-locate with strip development. appropriate support. Perhaps the main The new developments could be purpose- complaint from SMEs potentially subject built AV zones (walking and cycling to a compulsory purchase order (CPO) is friendly), saving valuable land from business uncertainty and the length of the parking and garages, with buy-in from process. Public inquiries do not consider people living there from the start. compensation, but promoters helping affected businesses to relocate would be There is an opportunity to regenerate better than giving standard “negotiations depressed areas and brownfield sites are ongoing” inquiry responses, while made accessible by the new transport relying on eventual CPOs.51 arteries, and bring wider employment opportunities for people in these areas. The 2017 Conservative manifesto stated “We will reform Compulsory Purchase Orders to make them easier and less 50 The government has announced the creation of 10 new garden expensive for councils to use and make it towns and cities, and 14 new garden villages, since the Wolfson Economics Prize 2014 relating to garden cities. easier to determine the true market value 51 Compulsory Purchase Reform by Richard Guyatt and Colin Smith of sites”. Media briefing suggests this is May/June 2016 at www.compulsorypurchaseassociation.org aimed at helping councils and housing 52 Theresa May pledges council house revolution, Sunday Times, 14th 52 May 2017 associations build more social housing. A promising initiative, but it could be taken further so Highways England and developers also benefit from reformed CPO rules when developing transport schemes and housing.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 79 12.5 Resolving The Greenbelt A potential resolution to this debate Debate would be AV fast, high-capacity, efficient transport arteries between, and orbiting, There is continuing debate between those towns and cities with new development wanting to uphold greenbelt protections sited in clusters along the arteries: preventing urban sprawl, and those a) we need and have transport arteries maintaining it is necessary to build on the between towns and cities, which greenbelt to resolve the housing shortfall. inevitably route through greenbelt, and In its recent housing White Paper, the by containing development along these government maintained its protection for AV arteries it would avoid a more general the greenbelt, stating it is only to be built sprawl into greenbelt; on in “exceptional circumstances”. b) orbital arteries around towns and In contrast, Professor Cheshire53 cities could be built around the edge of has contended the UK’s planning greenbelt. regulations have failed by preventing The potentially attractive deal for existing greenbelt becoming available for house- local residents would be that in return building, leading to the housing crisis, for development, they would benefit from and excessive commute distances AV transport routes, reduced congestion from beyond the greenbelts adding to and pollution, shorter journey times congestion. Some question the amenity and greater connectivity and economic value and accessibility of parts of the opportunity. greenbelt, and propose selective building on the least attractive and lowest amenity The combination of better arrangements parts, offset by new protections for more for value capture, and bespoke charging valuable landscapes. Travelling around through TForward for people travelling on the UK reveals vast areas of countryside the new transport arteries, would generate which are not built on, in stark contrast to revenue sufficient to finance higher cramped areas of housing. quality, and therefore more welcome, development than previously, alongside an improved public realm.
53 See publications by Professor Paul Cheshire, Emeritus Professor of economic geography at the LSE, including “Turning houses into gold: the failure of British planning” and “Greenbelt myth is the driving force behind the housing crisis”.
80 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 13. Better Procurement
13.1 An Opportunity To Build road infrastructure through a platform Public Support such as TForward. Reducing the financial cost of procuring 13.2 The Wolfson Select and maintaining road infrastructure, will go a long way to helping answer Committee And Procurement the question of how we fund our roads. To enable the Wolfson Select Committee TForward is part of the answer, providing to be effective, all proposed infrastructure for efficient and cost-effective road contracts over a specified threshold charging. The Wolfson Select Committee value should be published for 60 days is another part of the answer, but for scrutiny by the public and the procurement practices must also change. Wolfson Select Committee, before the Without improvements to procurement contract commencing. The Wolfson Select practices, there is a danger any new Committee should be able to extend the funding raised, will dissipate in ever initial 60 day period where it considers escalating project prices. Public support further scrutiny is necessary. for new infrastructure can be undermined The Wolfson Select Committee could if people perceive (i) their money is badly scrutinise delivery of infrastructure spent, or (ii) projects are delayed without projects post-procurement, and investigate good reason, particularly when the sums the amounts paid to contractors, involved are very large. financiers, and the government’s Whilst costs have been well controlled professional advisers. When it is necessary on some transport projects (e.g. Crossrail) or desirable to vary a contract, as is often on others, such as electrifying the Great the case, the Wolfson Select Committee Western Mainline, procurement costs have could provide political and parliamentary soared. oversight to ensure that such variation is genuinely in the public interest, and seen This applies to all aspects of government to be so. procurement, from health through to defence. The sums involved are £3.5
staggering, such that even small £3.0 improvements in procurement practice would deliver tremendous returns, and £2.5 take pressure off the ever-larger national £2.0 debt. £1.5
This problem can be turned into an £1.0 opportunity. Improving procurement £0.5 practices so people perceive the price paid for infrastructure as fair, is crucial if £0.0 the public are to support paying for future 2012 2013 2014 2015
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 81 The Public Accounts Select Committee In 2011, the Parliamentary Treasury scrutinises public spending, but it is Select Committee reported on PFI and after-the-event, and cannot prevent concluded, in the words of its Chairman, mis-spending before it happens. Other Andrew Tyrie MP, that “PFI should be select committees have been frustrated brought on balance sheet. The Treasury when the government will not disclose should remove any perverse incentives contracts as “commercially sensitive”. unrelated to value for money by ensuring Instead, government contracts should be that PFI is not used to circumvent disclosable as there is a public interest, departmental budget limits. It should also and the government should not agree to ask the OBR to include PFI liabilities in contractual confidentiality restrictions. future assessments of the fiscal rules.”. 13.3.2 Optimal Packaging of Risk 13.3 Beyond PFI Some PFI investors made returns seen We have the experience of 25 years of as excessive, particularly on some early private finance initiative (“PFI”) projects PFI deals. They were paid a substantial with a capital value around £55 billion, premium for taking construction funding, committing current and future generations planning and regulatory risk, which of taxpayers to payments of over £300 often did not materialise. When interest billion over the life-time of the projects.54 rates fell dramatically after they had There are PFI success stories, such as been awarded the deals, that drove the southern Severn Bridge where tolling up the value of the revenue stream, will shortly repay its construction costs, which investors were able to sell on at and both Severn bridges return to public significant profit. The government could ownership with the tolls then abolished. have avoided much of this, and the Notwithstanding, some PFI deals have political back-lash, if it had packaged the given poor value for money. risk differently. We already see PFI being used less There is an established infrastructure frequently, and now is the time for industry actively looking for projects to government to move away from PFI while invest billions of private money into now, interest rates are low. if provided with an investment model which generates a revenue stream (such 13.3.1 Off-Balance Sheet Incentive as a toll road) to repay capital investment. PFI’s off-balance sheet treatment enables politicians to fund infrastructure with private sector capital, without adding to 54 Guardian, 5th July 2012 (the absence of comprehensive easily available current numbers tells its own story). government borrowing and the national debt at the outset. The financial problems typically do not emerge for several years, and can be left for the next political administration.
82 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN Different private sector infrastructure the construction contract, at the players bring different attributes. A procurement stage, notwithstanding common failure to date, accentuated by timing pressures to skip this step. This PFI, and what now needs to be done, is is particularly important when interest a better breaking down of the risks and rates are low, and the net present roles in a way that matches the different players, so the risks and obligations can value of such later costs is therefore be optimally allocated: higher. d. Revenue management: outsourcing a. Construction funding: the government companies, e.g. Capita or G4S, have should finance construction with generally been considered best placed government borrowing. The to manage revenue collection, such as government is able to borrow at far a road toll. However, there have been lower rates of interest, particularly substantial fixed costs charged for given quantitative easing, than a each separate project, and this could private company can borrow to fund be more cost-effectively delivered infrastructure construction risk, and it through TForward. is uneconomic for the government to e. Revenue stream risk: the government pay a premium to a private company should generally wait to sell the for this. revenue stream (e.g. as with HS1) b. Planning and regulatory risk: the until the infrastructure is operational, government is best placed to carry with construction and planning risk these risks and should retain them, as removed, and the actual usage level the government itself influences them. and revenue generated is known. c. Maintenance risk: the principal Removing those uncertainties contractor that constructed the increases the valuation of the future asset can be best placed to carry revenue stream. maintenance risk. Using the same principal contractor for construction The value of the revenue stream is and ongoing maintenance, with that affected by interest rates, with the contractor’s branding attached to government receiving a higher price for the asset over its life-time, removes the revenue stream when interest rates incentive to cut corners during are low. Pension funds and insurance companies are the natural buyers of construction. the revenue stream, given they are If the government intends to keep prepared to pay a premium for long-term the revenue stream, the government predictable income. Revenue streams that should take a long-term view of the are very sensitive to the economic cycle, investment needs of the infrastructure e.g. the M6 Toll competing with a free and negotiate, say, a 30 year alternative (above), are less valuable to maintenance contract alongside them.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 83 13.4 EU Procurement Rules While protectionism would drive up Leaving the EU may free the UK costs, removing restrictions on buying from mandatory rules requiring public domestically when the price difference procurement to be advertised across the is marginal, allows greater commercial EU, and awarded according to the EU’s flexibility, and may increase public definition of best value: support for new infrastructure. • this incurs procedural cost and delay To illustrate, the Queensferry Crossing • awarding contracts can be less (a road bridge over the River Forth near commercially astute Edinburgh) is opening in summer 2017, • the bureaucratic pre-qualification at a cost of around £1.35 billion. The process before companies are eligible mandatory EU procurement process was to bid, limits competition, and can followed for the 37,000 tonnes of steel required, awarding contracts to China prevent smaller companies from (24,500 tonnes), Spain (8,500 tonnes) and participating Poland (4,200 tonnes), notwithstanding the • long-term supply contracts may need environmental costs of transporting the to change flexibly, which can be best steel. Subsequently, the UK steel industry managed with good collaborative was in crisis at Redcar, Port Talbot and relationships with preferred other plants, causing unemployment suppliers, but this is restricted by EU and wider economic damage. There procurement rules were allegations of China dumping steel at below production cost, and the • a significant proportion of business UK government has been restricted is awarded by the UK government assisting the UK steel industry by EU under EU procurement rules goes to state aid rules.55 other countries, while some question whether UK businesses receive equivalent opportunity
Queensferry Crossing
55 The UK steel industry has had limited reprieve with the fall in the sterling exchange rate since the EU Referendum in June 2016, and management changes have been made at the top of TATA.
84 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 13.5 Competition For The small size of many road projects Investment means it is difficult to justify costs to promote them to the public. Road Roads have lost out to rail in the spending further suffers because of competition for government funding, “nimbyism” from those adversely affected despite the majority of journeys being by the specific geography of works but made on the roads. Road taxes generate not compensated. The path of least around £24 billion more each year than resistance has been to give in to green is spent on the roads, and much of this protestors since the early 1990s, with is spent on rail and other public transport Swampy and the Twyford Down protest without the underlying investment against the M3. There can be easier rationale being understood by the public, political gain for the government if money creating a sense road users are not goes to uncontroversial areas like health getting a fair deal. or education, and investment in the roads has suffered as a result. It remains to be seen whether the ONS acting in 2014 to bring Network Rail’s Road charging through TForward will debts belatedly onto the government’s generate revenue linked to specific road balance sheet will help level the playing infrastructure and help make the case field. for re-investing that revenue into road improvements, which can in turn benefit the economy and road-users.
ComparingComp aring spendspend on heheadlineadline iinfrastructurenfrastructure pr projectsojects il lillustratesustrates rai railldw dwarfingar ngroa roadd (Ap(Approximateprox imate/ es/ estimatedtimatedam amounts)ounts)
HS2 £50 - 80b 50
40 Crossrail 2 £27b 30 Crossrail 1 GW £15.8b 20 Electrifi on £2.5 -2 .8b 10
0 Road Rail Silvertown Tunnel £0.75b M4 Newport Relief Road Queensferry Lower Thames £1.1b Crossing £1.35b Crossing £4-6b
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 85 13.6 Mode-Neutral Commissioning Procuring bodies should use “mode- neutral” commissioning whenever possible. That means competing transport proposals can be put forward for road, heavy or light rail, tram, bus etc. without pre-determining which is the best form of transport. This is the basis of tendering for the South Wales Metro. It creates competition for Network Rail for rail infrastructure spending, and allows AV and new technology to compete. HS2 is not due to be completed until at least 2033. There is a danger it will become a white elephant, eclipsed by new technology, a risk accentuated by delay. Real consideration was not given at the commissioning stage as to whether the staggering £50-80 billion taxpayer spend56 would have been better spent on new motorways, or new transport solutions utilising innovative AV technology.
56 When HS2 was first approved the estimated cost was £43 billion. That did not include the trains, which increased the estimate to around £50 billion, which has since been revised higher. Separately, the IEA has independently estimated the cost may be around £80 billion.
86 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 14. Next Steps
The Wolfson Economics Prize should lead • work with the DfT and insurers to practical policies that government can to develop a common telematics take forward. This entry is not intended to standard, and appropriate steps be just an intellectual exercise that sits on for accelerating telematics vehicle the shelf. insurance roll-out The first practical steps to take by the end • work with the DfT on supporting of this year to move forward with creating EV recharging points through the the TForward International platform are: TForward International platform • seek high-level support from the by developing technical and Treasury, DfT and Highways England interoperability standards for the TForward International platform • identify the right private sector joint There is a compelling political case for better roads connecting people and venture partners employment, opening up new areas for • identify the building blocks with IT housing, saving people from endless hours providers for an optimal TForward in traffic, reducing pollution, enabling International platform business and distribution, and driving our • assess existing road charging schemes economy. for technical suitability for conversion The UK can create the TForward into the TForward International International technology platform, platform empower its world-leading research and • identify the first anchor road development community, embrace AV charging scheme for the TForward and innovation, and realise international International platform. This should opportunities for the TForward platform. include discussion with the London That will put in place a solid financial base for funding roads, so road-users, Assembly and Transport for London, the economy and environment reap the as the London Congestion Charge, benefits. Blackwall and Silvertown Tunnels, and Ultra Low Emission Zone, are potential Giving people dramatically improved candidates roads through TForward and a step by step approach without any political “cliff- • work with the DfT to identify a pilot edge”, in return for today’s road taxes local authority clean air zone to deliver and tomorrow’s alternative funding, is under the Draft UK Air Quality Plan practically and politically deliverable.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 87 Appendix: Technology Revolution
A.1 Two Worlds Colliding A.2 Today’s Policy Initiatives Two worlds are colliding. The world of In a fast changing world, the UK needs traditional car manufacturers that, until to identify the best government policy, now, have essentially followed the same R&D spending, and investment strategies business model since Henry Ford started to implement now. These should not mass producing the Model T in 1908. presume to predict the future, but have Disruption is coming from the tech world the greatest likelihood of delivering comprising giants like Google and Apple, better roads in a way that is fair to road- along with many new kids on the block, users and good for the economy and such as Uber, Cruise and Lyft. environment, with focus on:
We are in the midst of witnessing a a. finding congestion, pollution and “land grab” for a whole new intelligent infrastructure solutions for the UK’s automotive industry with driverless roads in the near term, where there vehicles and extraordinary new vehicle is no space to expand conventional technologies. Billions are being laid on the table, as the giants and start-ups intensely roads. As well as financing our roads, compete, and increasingly partner engineering solutions need to be found with each other, in a rush to generate to enable expansion of roads capacity competitive advantage. There will be b. managing a (potentially lengthy) winners and losers, and some market transition period where conventional consolidation is inevitable. vehicles and AV may need to operate in tightly-packed spaces alongside each other, cyclists, pedestrians and other hazards c. enabling the UK to benefit from (often unforseen) technological change d. putting the UK economy at the heart of a new multi-billion pound automotive industry
88 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN The UK government deserves credit for A.3 Differentiate UK the steps it has been taking including Investment £690 million for tackling congestion,57 bringing forward the Vehicle Technology Most current global funding is into (i) and Aviation Bill, establishing CCAV,58 EV and AV, (ii) vehicle connectivity, creating a £100 million Intelligent and (iii) hailing and ride sharing apps. Mobility Fund, publishing a code of That can deliver extraordinary vehicle practice for testing AV on UK roads, improvements, but the focus is on the and extensive funding support including vehicles, rather than road infrastructure. AV trials at Greenwich (GATEway59), The UK could differentiate its approach Bristol (Venturer), and Milton Keynes and and aim to make itself a world-leader in Coventry (UK Autodrive). road infrastructure solutions, both for itself The UK is punching above its weight and export to other countries with tightly- attracting AV development, with Volvo packed urban centres.61 There would and Nissan choosing to test AV in be less direct US competition62 than in London in 2017, and Oxbotica to trial developing AVs: a fleet of AVs travelling from Oxford to London in 2019.60 • whilst AV technology can help resolve congestion, with innovations such as ride-sharing, reduced parking 57 Announced by Chancellor Hammond in the 2017 Spring Budget need, platooning, parking guidance 58 The Centre for Connected and Autonomous Vehicles (“CCAV”) is a joint policy unit set up by the Department for Business, Energy & apps, and increased automation on Industrial Strategy and the DfT. motorways - much development 59 GATEway develops the Ultra PODS that have operated along tracks at Heathrow’s Terminal 5 for around five years, which have carried emanates from California with its wide over 1.5 million passengers eliminating the need for 700,000 bus journeys. multi-lane roads, without roundabouts, 60 The trial assesses how AVs interact with each other in a fleet. The AVs are to make the journey without human intervention, and and limited pedestrian access - and an insurance company will be assessing risks at each stage of the journey. may not apply optimally to UK urban 61 Highways England is expected to promote innovation through its centres supply chain with Road Investment Strategy 2. Crossrail developed the “Innovate 18” strategy for capturing and exploring pioneering • it is not good economics to spend and innovative ideas throughout its supply chain, with over 800 ideas submitted, leading to over 300 innovations and over 100 shared ideas UK taxpayers money on developing being adopted. technology likely to be primarily used 62 The Obama administration announced $4 billion AV investment over 10 years. Consider the prevalence of automotive innovation unveiled on US roads, unlikely to end up being at the CES 2017 technology event in Las Vegas. Ford, General Motors, Tesla, Uber, Apple, Google’s Waymo, Shanghai Automotive - to name built in the UK for export, and where but a few - are investing billions. the intellectual property ends up being exploited outside the UK. Whilst the UK road user will benefit from AV innovation, these innovations will be paid for and developed in any event for the dominant US market
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 89 A.4 Funding Infrastructure over rail in the US may mean US-centric Solutions AV development has focussed on roads, overlooking the potential in other modes How best to empower innovators to find of transport. AV might inter-link road road infrastructure solutions? Open and and rail transport systems, constitute a lateral thinking is needed: light rail solution, or more fundamentally re-invent both modes of transport for an • whilst EV and AV are exciting, there optimal mobility solution. is a danger the hype is crowding- Road infrastructure is inter-related with out “mundane” innovations, such other infrastructure sectors. Consider the as developments in construction impact of AV on public transport, or on techniques for road-widening, bridges the energy sector if most vehicles become and tunnelling, pre-fabrication, powered by electricity, or the implications materials innovation, improved traffic of drones making commercial deliveries. signalling, warm-mix asphalt, cold Technological innovation is a key driver repave machinery, and locating and of future infrastructure demand, but the filling pot holes agents of change are unknown, making • funding competitions could support long-term infrastructure decisions difficult. development of the TForward The more closely involved the UK is in International platform and associated developing innovation, the better the technologies, resolution of any likelihood of anticipating change, and improved long-term investment decisions, practical implementation challenges, supported by flexible charging through the and lateral application of the TForward platform. technology for collateral benefits and cost-savings • encourage an open approach to infrastructure mobility solutions beyond the traditional automotive area. The exclusion by AV funding competitions to date of research into rail (such as “AV on Rails”) or other modes of transport may be misguided
AV can be thought of as potentially combining the best attributes of private cars and public transport, with new capital models meaning an increasingly blurred distinction between private and public transport. The domination of road
90 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN A.5 AV On Rails Perhaps over time further rail lines could be converted to dedicated AV transport In the UK rail lines are transport arteries - with AVs travelling continually along going straight into the heart of our the tracks - rather than trains travelling congested urban centres. AVs could intermittently. The value capture initiatives develop for use on rail, as well as on road, for realising increases in land values to take advantage of this. could provide funding, given regular Stand back and look at these arteries embarkation points would make more of at rush-hour. There can be a large gap the surrounding land accessible, compared - from a few minutes to half an hour - to trains with long distances between between trains travelling along the line.63 stations (see Section 12 “Value Capture”). The surrounding roads are filled to the In the UK, rail lines and stations moth- gunwales with traffic. balled with the 1960’s Beeching cuts, That is an horrendous waste of a major which have not since been built over, transport artery, in a congested urban might potentially be resurrected as new centre where there is no space to expand AV arteries. conventional roads. The under-utilised rail There are export opportunities to many line capacity between trains needs to be cities around the world with unused rail used. capacity between trains. If under-used urban rail lines were A.5.1 Assembly Line Economics converted to dedicated AV use, that could help address urban congestion Henry Ford gave us a truly great by maximising capacity through-put innovation; mass production of the down those crucial arteries with vehicles Model T and its combustion engine continually travelling along them. AVs along assembly lines, to enable mass car might travel along existing rail lines, or ownership (and the foundation for mass alternatively on specially designed tracks. production underpinning today’s standards It is plausible with foreseeable level 5 AV of living). After reigning for more than a technology, from a safety perspective, century, the combustion engine might be by not having to contend with human about to give way to EV, and mass car drivers, cyclists or pedestrians on the ownership might transition to car-sharing tracks. and mobility service arrangements.
It could be extended to moving AVs at Henry Ford did not design the factory high-speed on inter-city rail lines. Electric assembly line to only send one widget trains receive power from overhead lines along every half an hour. or a third rail. AVs could do the same, overcoming battery limitations on high- 63 It is acknowledged main train stations in London and certain other speed and long-distance travel - the major cities have trains going in and out on their lines every 3-4 electricity infrastructure is already present minutes, although that is still unused potential capacity between trains. on electrified rail lines.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 91 Nonetheless, Henry Ford’s assembly by a responsible human), allowing line economics may still be the future “mix and match” of road and rail of transport, but instead of applying • the ability to drive a conventional assembly line economics to factory vehicle into an AV pod that travels widgets only, we should think of our rail along the line, but allows the lines as the assembly lines that need to efficiently and continually transport conventional vehicle to continue the vehicles along them. journey beyond the reach of the line • platooning AVs together to maximise If the accountants and management capacity consultants analysed rail line efficiency, • building double-tier tracks along in the same way as they quantify factory assembly line efficiency, their priority lines for greater capacity spreadsheets would demand vehicles • AVs which are comfortably big continually moving along the rail lines. enough, and designed for wheeling in prams, double-buggies, wheely-bags, A.5.2 Research AV on the Rails bicycles, wheelchairs, and possibly Much research is into AVs travelling on even mobility scooters roads, rather than AVs travelling along • placing small commercial depots along rail lines, possibly because US-centric the line, where AVs could deposit funding focuses on solutions for US-style roads, or due to lack of easy accessibility deliveries for onward distribution to rail lines for testing. by conventional vehicle, and where people could collect a delivery waiting The current GATEway trials at Greenwich, for them, enabling commercial based around the Heathrow Ultra pods which run along tracks, might provide AV distribution and home delivery through technology suitable for taking forward on AV the rails. • perhaps converting one or more conventional inter-city rail lines to Imagine the potential if desirable features maglev, which AVs could travel along could be developed, such as: at very high speeds • junctions enabling an AV to change from one line to another • regular passenger embarking and disembarking points along the line to get people closer to their destination (rather than concentrating congestion at main stations) making more of the land surrounding the line valuable for development • designing AVs which could travel along tracks, and switch to a conventional road (perhaps then driven
92 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN A.6 Extension Of South Wales Case Study The South Wales Metro procurement is on a mode-neutral basis, and anticipates integrating a combination of different modes of transport. There are four approved bidders currently engaging in competitive dialogue with the Welsh government, actively weighing-up the trade-offs between heavy rail, light-rail and rapid bus transit for different parts of the Metro.64 Mode-neutral procurement allows the possibility of part of the Metro comprising AVs travelling along rail lines. There are existing rail lines running through the heart of Cardiff, and linking Cardiff with Newport, the Valleys and beyond. The roads alongside these arteries are already severely congested. The South Wales Metro aims to deliver modernisation and some increased capacity on these train lines.
64 Phase 1, an extension to Ebbw Vale and capacity improvements on that line, are already under construction or complete. Phase 2, intended to run to 2023, is not finally determined but is expected to include a focus on electrification of core Valley rail lines and other improvements to the wider South Wales rail network. Further phases beyond 2023 are still to be determined, although construction of new light rail is under serious consideration.
TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN 93 Source: Google Maps
A map of Cardiff shows the benefits Commercial distribution could benefit from of high-capacity usage of existing rail AVs transporting goods along the line to arteries. What if rail lines were converted a diffused network of small local depots. to dedicated AV use, with AVs travelling The combined estimated cost of the continuously (rather than intermittently as proposed black route M4 relief road and trains do) maximising capacity. Customers South Wales Metro is at least £1.7 - £1.85 could benefit from: billion. It would not be disproportionate • many embarkation and disembarkation to deploy some of that money on testing points close to destinations a new AV rail line solution that could • not stopping at other people’s stations transform transport infrastructure. • the comfort of private travel and reduced pollution • operation and ticketing integrated through TForward
94 TFORWARD DELIVERING BETTER ROADS / CATRIONA BROWN There is a good candidate for a test site: the spur rail line linking Cardiff Bay station to the city centre. This is a short distance of only 1.2 miles with a single carriage train shuttling slowly back and forth about three times an hour. There was a proposal around fifteen years ago to run ULTra pods between Cardiff Bay and the city centre, and although it was not taken forward at that time in Cardiff, those pods are now used at Heathrow and are being further developed with the current GATEway trials at Greenwich. The South Wales Metro project has already stated an ambition of improving the link and adding connectivity with Cardiff Central mainline station. Cardiff Train line between Cardiff Queen Bay has successfully regenerated and Street Station and Cardiff Bay Station an innovative AV pilot would add to its appeal.65 Source: Google Maps If successful, the AV artery could extend to other rail lines emanating from Cardiff 65 A replacement bus service on Lloyd George Avenue would prevent Central station. This gets right to the disruption whilst converting and testing the new AV artery. There is excess road capacity for the replacement bus service with the four- heart of a solution for transport in Cardiff, lane Lloyd George Avenue and Bute Street running parallel to the train line (historically it was a dock since filled in) with the narrow roads at and potentially many other congested each end prevent these roads being used to full capacity. urban centres, as well as inter-city 66 Refer to “EU Procurement Rules” below regarding steel supply from transport between those urban centres. overseas for the Queensferry Crossing. Constructing new tracks for AV may need steel, providing an opportunity to support local steel production and cement political buy-in.66 In South Wales, the Port Talbot steel works are only 30 miles west of Cardiff with a train line running directly from the steel plant into Cardiff city centre. Further specialist steel production is located 12 miles east of Cardiff along the same line in Newport.
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