In our latest ESRC-sponsored Ask the Expert seminar, Professor David Metz argued that conventional transport economics has reached a dead end, and that an intelligent transport policy requires modelling and forecasting methodologies to be updated for the twenty first century.
With the long awaited decision to build a third runway at Heathrow announced on Tuesday, this week’s Ask the Expert is particularly pertinent. The Social Market Foundation welcomed David Metz, honorary professor in the Centre for Transport Studies at University College London, former Chief Scientist at the UK Department for Transport and author of ‘Peak Car: The Future of Travel’ (2014) and ‘The Limits to Travel: How Far Will You Go?’ (2008), and asked: are transport investment decisions made in the best way?
The short answer: no.
Britain does not have a coherent transport policy. Recent decades have been characterised by somewhat erratic public investment decisions. We closed unused railways and then experienced a doubling of passenger numbers, prompting huge new investment. We gave up making substantial investments in motorways, but have now chosen to revive the road construction effort in a big way. We vacillate on road pricing, introducing congestion charging successfully in London but backing off elsewhere because of local opposition. Not to mention the decades of delay on a decision about whether to build additional airport capacity.
Professor Metz argues that the inconsistencies of Britain’s transport policy in recent decades, including these U-turns in rail, road and airport investment decisions, are attributable to two shortcomings in analysis:
- Economic appraisal remains fixated on time savings as the primary benefit of transport investment, despite evidence to the contrary, and disregards important benefits we actually see such as changes in land use and uplift in land value, and their spatial and socioeconomic distribution;
- Forecasting is reluctant to acknowledge the phenomenon of ‘peak car’, i.e. that the average distance travelled by car has peaked and is now in decline, and instead models car use as still increasing.
Using data from the National Travel Survey, a world-leading resource, he shows that both assumptions – that the primary economic benefit of transport investment is time savings, and that car use is still on the up – are outdated for the twenty first century. The result has been the failure of conventional transport economic analysis to identify the real benefits of investment and who gains from them. It has led to bias against urban rail investment in favour of inter-urban road investment, and against digital technologies in favour of expensive civil engineering projects.
Given that the Department for Transport has plans to ramp up capital expenditure from £6 billion a year to £12 billion a year in the next 4 years, if we want to get the most benefit from our money, an updated method investment appraisal is crucial. The challenge for transport economists is to rethink modelling and forecasting to include both changes in land use and the changes in behaviour that are taking place as we have transitioned from the twentieth century to the twenty first. Updating investment analysis to acknowledge these trends is paramount to achieving an intelligent transport policy for Britain.
Download a copy of the slides from the event here.
Listen to a recording of the event here:
Building on from the success of Chalk + Talk, the SMF Ask the Expert series brings the best policy output from the world of academia into the heart of Westminster.
This series of events is aligned with current government consultations and parliamentary inquiries, giving policymakers the opportunity to engage with experts in those policy areas.
To suggest a subject for a future Ask The Expert event, please contact the SMF’s events officer Hannah Murphy via email@example.com.