London’s Transportation Investment is not the Problem

There has been a lot of comment in recent months and years about the imbalance of transport investment between London and the rest of the English cities and regions and undoubtedly it is fair comment – investment is hugely imbalanced as the following graphic from the recent IPPR North report Still on the Wrong Track (May 2013) – shows.

transport1

There is a huge divide in spending per head across the country. London, since the establishment of the Mayoral system, has consistently invested in significant public transport infrastructure like the ongoing investment in Crossrail – the East/West link  that is well on its way to being delivered. London has the governance, the political clout and the vision to drive this investment.

It states in this report’s conclusions.

While it is inconceivable that the immediate expenditure on key projects such as Crossrail
and Thameslink should now be halted, such a debate needs to happen befor e further
commitments are made to emerging projects, such as Crossrail 2 or ‘Boris Island’,
irrespective of the proportion of private investment that might be involved in such schemes

 

This call for a rethink in the balance of investment was echoed by a recent Transport Select Committee report. Local Transport Expenditure: Who decides?

Transport3It says that ministers must “ensure that there is a fairer allocation of funding” than at present. The report looking at the new transport arrangements post  2015 – emphasises that

‘ The key test of the new arrangements is whether transport spending is distributed more equitably across England.’

 

To me this misses the point. This is treating transport investment particularly public transport investment as a subsidy rather than something that will bring economic good.

A recent report The Mobility Opportunity by Credo Business Consulting shows that public transport can drive economic growth. It looked at evidence from cities from across the globe and found that ‘ Cities that invest in transport will reduce economic costs and drive economic growth’ It looks at a number of case studies to back this up. For instance in Paris it found the planned investment of $27bn  ‘in 200 km of new metro line will help to drive down its economic cost of transport by roughly one percentage point from 14% to 13% GDP per capita and generate annual economic benefits including wider economic impacts of $2.7bn.’ The investment will pay for itself in 10 years and bring an additional added value over its full life of $55bn.

 

So at a time when the economic recovery is unbalanced both in terms of its macro economic components (too much consumption) and geographically where London is growing much faster than elsewhere shouldn’t we rather than talking about redistribution be talking about increasing the overall amount we invest in public transport – to increase our economic growth across the UK.

A recent Core Cities report Step 4: Strengthened Transport Networks focussed on transport makes the point that the UK has under invested in transport nationally, and particularly outside the South East. It goes on to point out:

The UK ranks only 34th in the world for its infrastructure, 6th in the G8 countries, and only spends 1.5% of GDP on infrastructure compared to 6% in Japan and 3% in France’

So the problem to me is not that London is getting too much investment; rather the rest of the country is getting too little – and whilst London has found ways of accessing public and private sources of funding what needs to happen is that further thought needs to be given to how we outside of London can fund such long term investment and how we can claw back some of the economic value that comes as a result of significant investment to finance it.

There is currently an experiment underway in Birmingham; where it is seeking to expand its tram network by using the city centre Enterprise Zone as a financing mechanism. The City Council is borrowing an extra £29m which combined with public monies will help  extend an existing line. It is hoped that the development sites that the line passes (all of which are in the Enterprise Zone) will be built out over time leading to the uplift in business rates (which go to back the Local Enterprise Partnership under the EZ set up) repaying the loan. Now this is an approach that Core Cities and others have argued for over many years  but it has its draw backs. The main one is it only captures some of the economic benefit of the investments and therefore doesn’t allow that step change in investment that is really needed.  The extension proposed is perhaps only 1 km in length in total.

I did a blog post last year Transportation in Birmingham: the need for a radical rethink about the real shortage of resources that Birmingham faces to put in place its ambitions so won’t go into this further here. But to reiterate a point – Lyon its partner city in France – is investing and has been investing circa £150m per year/ year on year in improving its public transport. Birmingham cannot hope under the current systems to get any where near matching those sums.

At a time when London’s population is set to rise by 1 million people in the next 10 years; it is foolish to argue for capping transport investment. It has real transportation needs and has the worst air quality of any UK city – so has a a strong case for further investment in public transport. So to my mind the answer is not to argue for a cap on London but to unleash Birmingham, Manchester and our other large cities and to find appropriate long term financing mechanisms that can fund this step change and that is how we will start to close the gap.

 

 

 

 

 

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