Road Vs Rail - Is Government on the money? 19 Jun 2009

Ignoring value for money evidence and promoting rail over road schemes puts the Government at risk of failing to meet all-important Treasury targets.

That's according to the Royal Automobile Club Foundation, which is today (19th June) publishing 'Rates of Return on Public Spending on Transport'.

The Treasury requires the Government to prioritise transport spending so as to get the highest rates of return for every £1 of public money spent, an objective detailed in the Department for Transport's public service agreement. The Foundation wants to know why this clear procedure is being ignored by ministers.

92% of all passenger travel in Great Britain takes place on the roads. Just 7% is by rail (and 1% by air). Yet despite the vast differences in use, over £5 billion was invested in rail in 2006/07 compared to just £4.8 billion in roads.

Recent announcements indicate this investment split will continue, with £15 billion of public funds earmarked for the rail industry over the next five years, as against £6 billion to improve the strategic road network in England over the same period.

And this week the Association of Train Operating Companies (ATOC) called for yet more money to be ploughed into rail schemes, yet by their own analysis the vast majority of those schemes would deliver poor value for taxpayers.

Even after accounting for environmental impacts, highways schemes generally give better value for money than public transport and railway projects, making the prioritisation of rail over road seriously flawed and against Government's own advice.

The 2006 Eddington Transport Study, independent research commissioned by the then chancellor Gordon Brown, shows the average benefit cost ratios for transport schemes as follows (with anything below one officially classified as poor, and above two as high):

  • Highways Agency Roads - 4.66
  • Local roads - 4.23
  • Heavy rail schemes - 2.83
  • Light rail schemes - 2.14
  • Local public transport schemes - 1.71

Analysis for 'Rates of Return on Public Spending on Transport', based on the best data, available mirrors these numbers.

Professor Stephen Glaister, Director of the RAC Foundation, said: "The RAC Foundation is not against rail travel, yet the figures are clear. Most people use the roads to get about and road schemes tend to offer the best value for money. The road network is the true provider of public transport."

"Earlier this week the Association of Train Operating Companies published a report calling for an expansion of rail services. Yet even by their own analysis, out of the 35 schemes they considered only two have a BCR above 2, so meeting the Government's definition of 'high' value for money."

"When Government's funds are in such short supply, surely ministers are duty bound to abide by the Treasury's own rules and extract the maximum value for money from every £1 they collect from hard-pressed taxpayers?"

"Treasury targets require that benefit cost ratios and value for money calculations form the basis of spending decisions. Despite this, good value road schemes are being sidelined for the lesser benefits secured from many rail and public transport schemes. And this after environmental, economic and safety benefits are taken into account."

"This is not a sensible approach. Interpreting cost benefit ratios is not an exact science, but overall there is little doubt highway schemes provide better value for taxpayer money than railway schemes. So why are ministers at the DfT ignoring this? Prejudice against road schemes needs to be put to the side."

ENDS

 

Notes:

 

  • One of the four indicators against which progress in the transport sector is measured, is the average Benefit Cost Ratio (BCR) over the Comprehensive Spending Review 07 period. (The other three indicators relate to: journey times on main roads into urban areas; journey time reliability on the strategic road network; and the level of capacity and crowding on the rail network.)
  • According to the Treasury this indicator will, "help demonstrate how government is implementing recommendations from the Eddington Study to ensure spending is focused on the projects with the highest returns" (HM Treasury, 2007, PSA Delivery Agreement 5: Deliver Reliable and Efficient Transport Networks that Support Economic Growth. www.hmtreasury.gov.uk/d/pbr_csro7_psa5.pdf pp.5-6).
  • The DfT Value for Money guidance (2005) says a project will generally be regarded as 'poor' if the BCR is less than one. 'Low' if it is between 1 and 1.5. 'Medium' if the BCR is between 1.5 and 2. And 'high' if it is above 2.
  • The number of passenger miles travelled comes from DfT (2008) Transport Statistics Great Britain Table 1.1 Passenger transport: by mode: 1952-2007, p.17 http://www.dft.gov.uk/pgr/statistics/datatablespublications/tsgb/2008edition/sectiononemodalcomparisons.pdf
  • The investment figures for road and rail schemes, comes from DfT (2008) Transport Statistics Great Britain 2008. Table 1.14: Investment in Transport: 1996/97 - 2006/07, p.24.
  • Future investment figures for the railway come from HM Treasury Budget 2009: Building Britain's future. Section 4.26, p. 78.
  • Future investment figures for the roads come from DfT (2009) Britain's Transport Infrastructure: Motorways and Major Trunk Roads.
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