Transport infrastructureLife in the slow laneThe government trumpets its ambitions for roads, railways and airports. In fact, infrastructure is getting worseIF YOU want to get rich, goes a Chinese saying, first build a road. George Osborne, Britain’s chancellor, seems to agree. He seldom misses a chance to put on a hard hat and proclaim the virtues of more roads and railways. His idea of a “Northern Powerhouse” would boost the north of England with a big new transport network that better connects the region. Certainly, if people are not stuck in traffic jams or can work in peace on a train they can get more done, leading to higher productivity and increased wages. Yet for all the rhetoric, in recent years British infrastructure has been deteriorating. Roads are more clogged: the percentage of journeys on main routes that are classed as “on time” has fallen by six percentage points since 2010. Trains are getting more crowded, too: a quarter of trains arriving in London in rush hour are overcrowded, up from a fifth in 2010. Commuters are putting up with creaky carriages: in 2005-15 the average age of the rolling stock rose from 15 to 20 years. The number of local buses has fallen by 2.5% since 2010, even though the population has grown by 3%. The World Economic Forum ranks the quality of Britain’s overall infrastructure 24th in the world, down from 19th in 2006, and behind Iceland and America (which is 13th). It is unlikely that things will improve soon. When the coalition government came to power in 2010, Britain was already one of the lowest spenders on infrastructure in Europe. But as Mr Osborne tries to balance the books, public-sector investment is projected to fall from 3.2% of GDP in 2010 to just 1.4% in 2020.
Sometimes there is no option but to build big. On many London Underground lines— The addition of a third runway at Heathrow airport, for example, would cost over ￡20 billion ($28 billion). Transport for the North, the infrastructure arm of the powerhouse idea, envisages building an 18-mile road tunnel, perhaps Europe’s longest, under the Pennine hills, and constructing other expensive new highways. The tunnel alone could cost up to ￡6 billion. Meanwhile, ￡1.5 billion is likely to be spent improving a few miles of road between Cambridge and Huntingdon. Government figures suggest that since 2011 the expected cost of the average public infrastructure project has roughly doubled. As a result less money is available for smaller upgrades. Funding for local roads has been cut by 20% in real terms since 2010. Analysis by the RAC Foundation, an independent think-tank, found that the number of potholes being filled in per year has increased fourfold since 2005, suggesting that costly, long-term repair is being sacrificed in favour of patching up. Government support for local bus services is down by 20% in five years. Not down the tubes Another consequence of tighter budgets is that the state relies more heavily on the private sector to fund infrastructure projects. An extension to the Northern Line of the London Underground is a good example. The Greater London Authority is borrowing ￡1 billion. But that will ultimately be repaid, largely by the scheme’s direct beneficiaries, in the form of an uplift in business rates alongside developer contributions, says Alexander Jan of Arup, a consultancy. Ultimately, the government will pay little towards the project from general taxation. Prosperous cities are most likely to be able to generate big contributions from the private sector and thus better infrastructure, says Mr Jan; poor places may miss out. In recent years, government figures suggest, London has taken up a bigger share of Britain’s overall infrastructure spend. Business gripes that, although it may be expected to shoulder more of the cost, it is not always consulted enough. Kate Willard, an executive at Stobart Group, which runs airports and other big projects, argues that politicians do not take sufficient account of future shopping patterns and retail trends when making their infrastructure plans. Andy Clarke, the head of Asda, a supermarket chain, believes that productivity could be boosted as much by getting high-speed broadband as by building HS2, the ￡50 billion new railway being built between London and the Midlands. Stand up for your rights Fortunately, as well as building shiny new stuff there are also low-cost ways of improving infrastructure. Transport nerds favour ripping seats out of certain carriages in commuter trains, making them look more like Underground trains and thus increasing their capacity (though with little regard for passengers’ comfort). Those willing to stand could pay less. “Smart motorways”, which were first deployed in 2006, use the hard shoulder as an extra lane at busy times. One plan popular with economists is to use “dynamic pricing”—similar to that used by taxi apps—where prices rise at peak times to discourage people from travelling. Thanks to a series of subtle changes, this could soon be a reality across Britain. In 2015 the Highways Agency, which manages motorways, was converted into a free-standing company owned by the state (renamed Highways England), meaning it has secure funding for the foreseeable future. Road tax, which is now largely payable electronically and enforced with cameras that recognise number plates, will be earmarked for Highways England, says Mr Jan. In theory, the stage is set for the government to start charging for using certain roads. Many are hoping that Mr Osborne will make such a change in his budget on March 16th. Dynamic pricing for rail travel seems off the table, though: the government considered a plan for “super-peak” tickets, only to drop it in 2013. If, as seems probable, a big boost of public money does not arrive, Britain will have to take such radical decisions. Creaky infrastructure is already weighing on productivity and wages. Without a change of direction, the load will get ever heavier. |
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