By helping motorists and ignoring public transport users, the chancellor continued a long tradition in his Spring Statement
Chancellor Rishi Sunak was feeling so generous towards motorists that he even had himself photographed filling up the Kia car of a Sainsbury’s employee
The highlight of the recent Spring Statement was the 5p cut in fuel duty. At least it was the highlight in the chancellor’s view. He ensured it was widely anticipated in the press in the days preceding the statement.
This tactic, incidentally, was in flagrant breach of the instructions of the Commons speaker, Sir Lindsay Hoyle, who had torn a strip off Rishi Sunak for leaking the last budget to the press before telling the Commons. This is now something of a game: the government tells the press before parliament, the speaker loses their rag, the relevant minister promises not to do it again, and then the cycle begins afresh.
The chancellor clearly thought the cut in fuel duty was good news. Some of us beg to differ. In the event, it pleased nobody. The ungrateful petrolheads complained it was too little, too late, and the average motorist will barely have noticed the difference. Especially as a survey afterwards confirmed what many of us had predicted, namely that a cut in fuel duty is not the same as a cut in the price at the pumps. The trumpeted 5p cut turned out to be a 2.7p cut, with the greedy oil companies pocketing the rest. Far from serving them with a windfall tax, the chancellor handed them a windfall bonanza.
Nor will the Treasury’s civil servants have been happy. With the public finances under severe strain due to Covid, the invasion of Ukraine, and, yes, Brexit, the last thing they wanted to see was a pointless but expensive give-away.
The chancellor suggested that this was a temporary cut for 12 months. Does anyone seriously think that he will reverse this in the run-up to the next election?
Meanwhile, what help was there in the Spring Statement for bus and rail users? A big fat zero. Contrast that with Germany, where the government, responding to cost of living pressures, has just introduced a flat fare public transport ticket for a period of 90 days. For just nine euros a month, or about £7.50, Germans will be able to use all forms of public transport. That’s less than £2 a week.
In New Zealand, public transport fares have been halved from April 1, also for three months. In Luxembourg, all public transport has been free since February 2020. And across the world, there are at least 98 cities where public transport is free.
Depressingly, in a recent survey of 36 European cities, the three from the UK came 34th, 35th, and 36th in terms of public transport affordability – Birmingham, Manchester and London respectively. London, of course, has just seen an above inflation increase in fares forced upon the mayor as part of the latest short-term deal with central government.
Residents in the three English cities spend between 8 and 10% of their household budget on travel costs. The equivalent figure in Oslo is just 2%.
So while car drivers get a cut in fuel duty, public transport users are at best ignored, at worst punished. I suppose to be fair to the government, I should record that this is not a new development. Over the last 30 or more years, the cost of travelling by bus and rail has risen sharply ahead of inflation, while the cost of motoring has lagged behind, and therefore become by comparison a more attractive financial option for travellers.
Between 1987 and 2020, bus fares rose by 416%, rail fares by 332%, but motoring by just 152%. Over the last 10 years, bus fares have risen by close to an eye-watering 60%, around twice the increase for rail or car. The bus is the mode of transport disproportionately used by those on low incomes. So much for levelling up.
There is a mindset problem here that needs to be shifted. It seems to have become accepted wisdom in this country that we should in the interests of efficiency be seeking to reduce as far as possible public subsidy of bus and rail. Subsidy. Or is it actually investment? Investment in a public good that underpins the economy and helps bind society.
Other countries that “subsidise” their public transport more are not inefficient. They have taken a calculated decision that it is good policy with wider societal benefits to offer cheap and affordable public transport
Other countries that “subsidise” their public transport more are not inefficient. They have taken a calculated decision that it is good policy with wider societal benefits to offer cheap and affordable public transport.
In this country, too many politicians want to ring-fence public transport in their minds, and see only the subsidy figures, not the wider benefits that can accrue.
Why, they say, should non-users subsidise others to use the bus and train? Andy Bagnall, chief executive of the Rail Delivery Group, has a neat riposte to this: one out of ten use rail, but ten out of ten benefit. The same logic can be applied to the bus, the tube, the tram.
Creating a modal shift to private road transport may thus have happened to a degree by default: those who see a two-dimensional equation where public transport requires public money, whereas private road transport generates an income stream for the government.
Yet such a modal shift is not in the interests of the country. It increases carbon emissions, worsens air quality, leads to more congestion, and disadvantages the third of the population that have no access to a car.
The coalition government in which I served adopted nudge theory, a philosophy much loved by former MP Oliver Letwin. This held that public behaviour could be moved in ways beneficial to society, and indeed to the individual, by sometimes subtle signals. Thus the desired outcome could be achieved without the need to resort to bans or regulations.
The most potent nudge is the use of price. Either because money is tight or through a desire to get good value for money, people unquestionably respond to price signals. Given the trend over the last 30 or more years, it is hardly surprising that there has been a growth in car ownership and car usage.
The surprise, if there is one, is that rail usage also rose markedly over that period. The same, alas, cannot be said for the bus, which has been in slow decline for decades.
But the nudge from the government has been to push people to use a car, and abandon the bus and train.
You could understand if the government had a policy objective of securing modal shift to the car. That would of course be the wrong policy for the reasons given, but at least the price signals sent by the chancellor would be consistent with such a policy
You could understand if the government had a policy objective of securing modal shift to the car. That would of course be the wrong policy for the reasons given, but at least the price signals sent by the chancellor would be consistent with such a policy.
The irony is that official government policy is almost the opposite of that. We actually have a set of ambitious, even radical policies. These include:
A National Bus Strategy for England promising cheaper fares, universal contactless payments, more bus priority on our roads, and investment in zero emission buses.
An unparalleled multi-billion rail investment programme, and a far-reaching white paper promising to put the passenger, sorry customer, centre stage.
A commitment to achieve net zero by 2050.
It is ultimately the job of the prime minister to deal with conflicting signals coming out of different departments and rationalise these into a common direction. This prime minister is lamentably failing to do this, so departments are allowed to plough their own furrow, the Department for Transport pushing for growth in public transport while the Treasury in particular pulls the rug from under them through the price signals it sends.
But if the price is not right, there must be a danger of a future where roads are filled with zero emission buses, and tracks carry spanking new trains, but all with barely any passengers on board.
The next looming price challenge comes from the rate of inflation, which is roaring away and predicted to get as high as 10% by the summer. But it is the inflation rate at that point which is used to determine the increase in rail fares that take effect the following January. Worse, the government insists on using the RPI index, which generally will deliver a higher increase than the more common and appropriate CPI measure.
It goes without saying that an increase of 10% in rail fares, following this year’s 3.8%, would be disastrous for the railway, but also for society in general. If the government is serious about promoting public transport, serious about tackling climate change, serious about levelling up, it should commit itself now to ending the use of this formula.
Meanwhile, official figures published by the DfT reveal that bus miles between 2012 and 2019 dropped by 10%. But between 2019 and 2021, they fell by a further 18%. This is the bus in freefall.
At the same time, rail passenger numbers remain stubbornly below pre-Covid levels, in contrast to road traffic volumes which are roughly back to where they were.
Does the government think the answer to this is to ratchet up bus and train fares further while cutting the costs of motoring? Presumably not. But if not, what are they going to do about it? How will they stop the price juggernaut?
ABOUT THE AUTHOR: Norman Baker served as transport minister from May 2010 until October 2013. He was Lib Dem MP for Lewes between 1997 and 2015.
This story appears inside the latest issue of Passenger Transport.
Another nudge in the wrong direction
by Passenger Transport on Apr 7, 2022 • 12:26 pm No CommentsBy helping motorists and ignoring public transport users, the chancellor continued a long tradition in his Spring Statement
The highlight of the recent Spring Statement was the 5p cut in fuel duty. At least it was the highlight in the chancellor’s view. He ensured it was widely anticipated in the press in the days preceding the statement.
This tactic, incidentally, was in flagrant breach of the instructions of the Commons speaker, Sir Lindsay Hoyle, who had torn a strip off Rishi Sunak for leaking the last budget to the press before telling the Commons. This is now something of a game: the government tells the press before parliament, the speaker loses their rag, the relevant minister promises not to do it again, and then the cycle begins afresh.
The chancellor clearly thought the cut in fuel duty was good news. Some of us beg to differ. In the event, it pleased nobody. The ungrateful petrolheads complained it was too little, too late, and the average motorist will barely have noticed the difference. Especially as a survey afterwards confirmed what many of us had predicted, namely that a cut in fuel duty is not the same as a cut in the price at the pumps. The trumpeted 5p cut turned out to be a 2.7p cut, with the greedy oil companies pocketing the rest. Far from serving them with a windfall tax, the chancellor handed them a windfall bonanza.
Nor will the Treasury’s civil servants have been happy. With the public finances under severe strain due to Covid, the invasion of Ukraine, and, yes, Brexit, the last thing they wanted to see was a pointless but expensive give-away.
The chancellor suggested that this was a temporary cut for 12 months. Does anyone seriously think that he will reverse this in the run-up to the next election?
Meanwhile, what help was there in the Spring Statement for bus and rail users? A big fat zero. Contrast that with Germany, where the government, responding to cost of living pressures, has just introduced a flat fare public transport ticket for a period of 90 days. For just nine euros a month, or about £7.50, Germans will be able to use all forms of public transport. That’s less than £2 a week.
In New Zealand, public transport fares have been halved from April 1, also for three months. In Luxembourg, all public transport has been free since February 2020. And across the world, there are at least 98 cities where public transport is free.
Depressingly, in a recent survey of 36 European cities, the three from the UK came 34th, 35th, and 36th in terms of public transport affordability – Birmingham, Manchester and London respectively. London, of course, has just seen an above inflation increase in fares forced upon the mayor as part of the latest short-term deal with central government.
Residents in the three English cities spend between 8 and 10% of their household budget on travel costs. The equivalent figure in Oslo is just 2%.
So while car drivers get a cut in fuel duty, public transport users are at best ignored, at worst punished. I suppose to be fair to the government, I should record that this is not a new development. Over the last 30 or more years, the cost of travelling by bus and rail has risen sharply ahead of inflation, while the cost of motoring has lagged behind, and therefore become by comparison a more attractive financial option for travellers.
Between 1987 and 2020, bus fares rose by 416%, rail fares by 332%, but motoring by just 152%. Over the last 10 years, bus fares have risen by close to an eye-watering 60%, around twice the increase for rail or car. The bus is the mode of transport disproportionately used by those on low incomes. So much for levelling up.
There is a mindset problem here that needs to be shifted. It seems to have become accepted wisdom in this country that we should in the interests of efficiency be seeking to reduce as far as possible public subsidy of bus and rail. Subsidy. Or is it actually investment? Investment in a public good that underpins the economy and helps bind society.
Other countries that “subsidise” their public transport more are not inefficient. They have taken a calculated decision that it is good policy with wider societal benefits to offer cheap and affordable public transport.
In this country, too many politicians want to ring-fence public transport in their minds, and see only the subsidy figures, not the wider benefits that can accrue.
Why, they say, should non-users subsidise others to use the bus and train? Andy Bagnall, chief executive of the Rail Delivery Group, has a neat riposte to this: one out of ten use rail, but ten out of ten benefit. The same logic can be applied to the bus, the tube, the tram.
Creating a modal shift to private road transport may thus have happened to a degree by default: those who see a two-dimensional equation where public transport requires public money, whereas private road transport generates an income stream for the government.
Yet such a modal shift is not in the interests of the country. It increases carbon emissions, worsens air quality, leads to more congestion, and disadvantages the third of the population that have no access to a car.
The coalition government in which I served adopted nudge theory, a philosophy much loved by former MP Oliver Letwin. This held that public behaviour could be moved in ways beneficial to society, and indeed to the individual, by sometimes subtle signals. Thus the desired outcome could be achieved without the need to resort to bans or regulations.
The most potent nudge is the use of price. Either because money is tight or through a desire to get good value for money, people unquestionably respond to price signals. Given the trend over the last 30 or more years, it is hardly surprising that there has been a growth in car ownership and car usage.
The surprise, if there is one, is that rail usage also rose markedly over that period. The same, alas, cannot be said for the bus, which has been in slow decline for decades.
But the nudge from the government has been to push people to use a car, and abandon the bus and train.
You could understand if the government had a policy objective of securing modal shift to the car. That would of course be the wrong policy for the reasons given, but at least the price signals sent by the chancellor would be consistent with such a policy.
The irony is that official government policy is almost the opposite of that. We actually have a set of ambitious, even radical policies. These include:
It is ultimately the job of the prime minister to deal with conflicting signals coming out of different departments and rationalise these into a common direction. This prime minister is lamentably failing to do this, so departments are allowed to plough their own furrow, the Department for Transport pushing for growth in public transport while the Treasury in particular pulls the rug from under them through the price signals it sends.
But if the price is not right, there must be a danger of a future where roads are filled with zero emission buses, and tracks carry spanking new trains, but all with barely any passengers on board.
The next looming price challenge comes from the rate of inflation, which is roaring away and predicted to get as high as 10% by the summer. But it is the inflation rate at that point which is used to determine the increase in rail fares that take effect the following January. Worse, the government insists on using the RPI index, which generally will deliver a higher increase than the more common and appropriate CPI measure.
It goes without saying that an increase of 10% in rail fares, following this year’s 3.8%, would be disastrous for the railway, but also for society in general. If the government is serious about promoting public transport, serious about tackling climate change, serious about levelling up, it should commit itself now to ending the use of this formula.
Meanwhile, official figures published by the DfT reveal that bus miles between 2012 and 2019 dropped by 10%. But between 2019 and 2021, they fell by a further 18%. This is the bus in freefall.
At the same time, rail passenger numbers remain stubbornly below pre-Covid levels, in contrast to road traffic volumes which are roughly back to where they were.
Does the government think the answer to this is to ratchet up bus and train fares further while cutting the costs of motoring? Presumably not. But if not, what are they going to do about it? How will they stop the price juggernaut?
ABOUT THE AUTHOR: Norman Baker served as transport minister from May 2010 until October 2013. He was Lib Dem MP for Lewes between 1997 and 2015.
This story appears inside the latest issue of Passenger Transport.
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