UK pricing scheme
The Reg has an article on Ruth Kelly’s plans for motorways. I like the idea of toll lanes. I don’t like the idea of more M40-style speed management, mainly because it makes driving more tedious than traffic jams do. I’m really not sure how concerned I should be about electronic tagging of vehicles.
This is a follow-on from my posting on the government’s pricing scheme.
I am against state roads (and in favour of private roads) because:
- I am against state ownership in general
- I don’t think they are very good
What’s wrong with them?
- Jams, Potholes, Pettifogging rules
So, how would private roads solve jams?
- Partly by charging. In the UK we already see this with our one toll motorway, the M6 toll. As I understand it, the M6 toll is free flowing all day long while the original M6, which runs parallel to it and is free is jammed for most of the day.
Partly by building more.
Well, if charging is the solution maybe state roads should charge.
- An idea that is currently up for discussion. The problem is that the state is incompetent. If it is incompetent when building and running roads there is no particular reason to think it would be any better at charging for them.
But if all roads were private wouldn’t you end up with the chaos of having to pay a toll at every road?
- First of all, not all roads will charge. Some road owners and I am particularly thinking of the owners of roads with shopping malls and other attractions at the end of them will want people to drive down them and so won’t charge.
- I think a lot will depend on how roads are privatised. Ideally, local roads would be assigned to local councils and then the councils would be privatised, hence creating ready-made super-landlords.
But how will people get to work?
- Ah, well this is where pricing really helps. Pricing will lead to fewer vehicles and faster roads. At this point buses and coaches will enter the market although you’d probably need private buses for this to work properly. Given that buses can move far more people than cars can there is every reason to think that with private roads more people rather than less will use them.
But I don’t want to travel on some smelly bus.
- Buses can be very nice these days. Who’s to say that in a free market suppliers won’t leap in to provide luxury bus services?
But should we be encouraging roads what with global warming and all?
- The assumption being that roads means vehicles, vehicles means CO2 and other pollution. Pollution meaning global warming. That may well be true. In which case the solution is to charge the polluters. There are ways of doing this.
But if someone owns the road outside your house he could, in theory deny you access.
- A good reason to make sure that you have at least some kind of interest in whatever body owns your road. Again, I think most urban roads will end up being owned by some form of super-landlord.
But how would private roads get built? you are against compulsory purchase after all.
- I think there are ways of doing this.
Ugh. Why can't they both lose?
Last week, the Adam Smith Institute blogged about the national road pricing proposals. In the midst of his post, Eamonn Butler makes this interesting aside:
All that of course strongly suggests that the roads should be taken out of the politicians’ hands and put into local trusts who could ensure that the money raised was ring-fenced and spent on transport and roads, instead of leaching away into other pet political projects.
In essence, this looks like a suggestion to return to the system that existed in Britain for over two centuries, from the seventeenth century until Victorian times, in which up to a fifth of Britain’s roads were managed by Turnpike Trusts. In his article, “The Rise and Fall of Non-Government Roads in the United Kingdom”, Bruce Benson describes how the Turnpike Trusts worked:
A long series of Acts were passed beginning in 1663 that enabled the establishment of local ad hoc bodies known as “Turnpike Trusts.” It must be emphasized that these turnpike trusts were not government innovations, however. The initiative was at the local level. Members of local parishes who were burdened by the high costs of road maintenance under the parish system began to petition parliament for the right to charge a tax on heavy loads. Indeed, the earliest Trusts were run by local JPs, although later Trusts had independent bodies of trustees.
After about 1700 the process became increasingly standardized. A group of local landowners and/or merchants would accumulate the money necessary to fund a Turnpike Act in parliament and to carry the cost of the trust through its start-up period. Most Turnpike Acts gave legal standing to a Turnpike Trust made up of a number of local landowners, and/or other important parishioners. The Trustees were, by law, unpaid and forbidden to make personal profit from the trust. They were responsible for erecting gates to collect tolls, and for appointing collectors, a surveyor to supervise repairs, and a Clerk and Treasurer to administer the affairs of the trust. The funds collected could only be applied to the road named in the Act. These roads were usually existing highways, although new roads were also built, particularly after 1740, and the extent of roads that were “usable” for heavy traffic expanded significantly once the trusts began to innovate and improve the roads they controlled, as noted below. The Trusts were granted a monopoly power over the road (generally for a period of 21 years), so that the customary right of passage was fundamentally altered: the roads were no longer common pool resources. Most trusts used the money collected to repair and improve roads, but if the tolls were insufficient to cover the up-front costs, the trusts were allowed to borrow money at a rate of interest fixed by the Act.
The system did not last, however. From 1864 onwards, the trusts were shut down, with the last road passing into public hands in 1895. At Transport Blog, we like to think that goods and services, including transport, are produced in better quality and lower cost when in private hands motivated by profit and free from political interference. If a private road system is superior to a public one, then why did the Victorians nationalise it? What went wrong? In a lengthy discussion, Benson proposes a number of reasons:
[T]he structure and characteristics of the trusts created significant principal-agent problems. The Trustees were not allowed to earn a profit. Therefore, even though the trustees had sufficient incentives to invest in the formation of a trust, they generally were not interested in the day to day operation of the road. The toll gates were farmed out, and while trustees were suppose to monitor the gate-keepers and surveyors, their incentives to do so were very weak. After all, their primary income generating activities were elsewhere (their farms or businesses) and these enterprises commanded most of their attention…
[T]he political limitations on trusts also led to significant complaints by shippers and travelers. ... A serious complaint about the turnpike system as it evolved was that there were too many toll booths, requiring too many stops, thereby slowing transportation services unnecessarily. Gregory (1932: 193) suggests, in fact, that this was the most important complaint against the turnpikes: “Road users declared that they would rather pay twice the amount if they could be saved the annoyance of the delay."This problem resulted from the fact that most of the turnpike trusts controlled only short sections of roadway within a parish, so travelers had to pay new tolls each time they left one trust’s road and entered another. While consolidation of small trusts was desirable in order to avoid the problems with excessive stopping and delays (as well as in order to capture various scale economies in management and maintenance), the trusts operated at the prerogative of parliament, and any formal consolidation required parliamentary approval. Political resistance to consolidation (e.g., by local trustees who did not want to lose control of their roads, and probably by competitive modes that did not want competition from more efficient turnpikes, as explained below) was strong, so even though efforts were made to obtain parliamentary approval to combine small trusts into larger organizations ..., parliament did not respond with necessary enabling legislation that might have led to widespread consolidation…
[T]here was significant political opposition to the trusts themselves. Opposition came from those involved in competitive transportation modes such as the river and canal barges and railroads ..., from the trade centers that already had effective transportation connections and feared competition from other centers if their road connections were improved, from some landowners and farmers who feared that better roads would make it easier for their low-wage laborers to be attracted away, from farmers who supplied local markets and feared that improved roads would bring in competition from distant suppliers, from heavy road users who did not want to pay tolls for access even though they wanted the roads to be maintained, and so on. Therefore, in order to gain sufficient support for passage, Turnpike Acts always had to reflect significant political compromise, including long lists of toll-exemptions for some of the powerful individuals and groups who opposed each Act.
So, although we think that applying free-market principles would result in a better road network, the experience of the Turnpike Trusts (not to mention Railtrack) makes me wonder whether it really is possible to remove political interference, at least while governments continue to exist.
Benson’s article also includes some discussion of the economics of roads as well as a history of the provision of roads in Britain from medieval times onwards. It’s worth reading the whole thing.
(By the way, this was written and posted from the 16:16 GNER service from Leuchars to Kings Cross, which has Wi-Fi onboard. The delights of modern travel, eh?)
Apparently someone set up an e-petition on the Downing Street website against the government’s proposed road pricing scheme and, so far, a million people have signed it.
As this is a fairly big transport issue I suppose I ought to say something about it. However, as it’s a big issue one blog posting isn’t going to be enough. So, what I think I’ll do is start off with a post outlining my conclusions and then fill in the details with subsequent postings. Eventually, I hope to be able to put all this up on InstaPatrick and become the definitive answer to anything road-pricey should it come up in the future (safe bet, I suspect, judging by today’s paper). So, in the full expectation that some if not all of my views will change as we go along: here goes.
- I like freedom and free markets.
- Private ownership is an integral part of free markets so I am in favour of private ownership
- So, I am favourable to the idea of privately-owned roads.
- So, a government-implemented road-pricing scheme is very much a second-best option.
- Pricing mechanisms are a frequent, though not universal, feature of free markets. So I am in favour of pricing. I am certainly against price controls.
- The fact that roads can be priced does not necessarily mean that they should be priced.
- The market is the best mechanism for determining when roads should and shouldn’t be priced.
- Therefore, the best we can hope for is that the government scheme mimics whatever the market would otherwise come up with.
- My guess, and I wouldn’t put it any more highly than that, is that major highways should be priced, that congested urban roads should probably be priced and everywhere else definitely shouldn’t be priced.
- The market would also have every incentive to invest in new, better and more efficient roads.
- So, on that basis I am already not particularly well-disposed to the government’s scheme.
- There are other problems.
- The scheme is not scheduled to start for many years. This is an unnecessary delay.
- The scheme will either be delayed, over-budget or buggy. Probably all three.
- While it may lead to new and better roads, there’s is every chance that it won’t.
- One of the objections to the scheme is that it will increase the over all cost of motoring. This is almost certainly true.
- Another objection to the scheme is that it will help pave the way to the Big Brother state. I think this is a red herring.
- There’s a chance that it might cut congestion. But it might not.
- So, I am probably against it.
- The best reason to be in favour of it, is that the grassroots rebellion it inspires could see us leaving the EU.
Update 15/10/07. See also ”Against state roads”
The lead item on BBC Breakfast this morning (for the second time in little over a week) was transport. An “official” (hmm, thinks: “I’ll have to add that to my list of banned words sometime") report calls for road tolling.
This I am in favour of. Sorta kinda. Ideally, I’d have private roads some of which would be tolls and some wouldn’t.
It’s just that I don’t go a bundle on the particular scheme that the government has in mind.
But then the item really started to go haywire. Where would all the people priced off the roads go?, the reporter asked - neatly avoiding the possibility that road pricing might actually increase the number of people using roads.
But assuming he’s right one would have thought the answer was more roads but somehow that possibility didn’t come up either - so the suggestion was a new high-speed railway. Again, he didn’t consider the possibility that people might like to stay at home, far less the possibility that a new high-speed line might be a very bad idea indeed.
Lead item on BBC Breakfast the other morning was on the West Coast Main Line (WCML). Apparently it’s running out of capacity so either they’ll have to put up the fares or introduce a fancy “computer-controlled” signalling system or the government will have to build a new, high-speed line.
(Is the comma in the right place in that last sentence? It should mean a new line that is high-speed and not a new high-speed line to go with all the other ones. Oh well, never mind).
The reporter also added that because the government was going to introduce toll charges on the motorways that would push lots of people onto the railways - again putting pressure on capacity. He went on to suggest that what this showed was that the government needed to plan more and it would, therefore, be a good thing when the 30-year plan turned up.
A little later they interviewed Ian Coucher, a high-up at Network Rail. He thought that all the problems could be solved with a few extra carriages and, anyway, the whole kerfuffle only served to underline that the whole thing was a “success story”.
Oh God. Where does one start?
Well, let’s try the low-hanging fruit.
“Computer-controlled" signalling. I am far from an expert on the subject but I am pretty sure that the signallers have already managed to get the odd ZX80 into their control centres over the last 30 years or so. What the reporter was probably referring to was “moving block” signalling which is an incredibly snazzy way of putting more trains through the same amount of track. Snazzy, that is, in all respects apart from actually working. It was tried on the Jubilee Line Extension. It didn’t work. It was thought about for the WCML. The bosses thought it was spiffing. The boffins took one look at it and realised it was a non-starter. The company (Railtrack) went bust.
“Success story”. The upgrade to the WCML (WCRM as it was known) cost, according to the report, £8.6bn (a sum that looks suspiciously low but I won’t bother arguing about on this occasion). The tax payer will be lucky if he ever sees more than a few pennies of that. So, it’s made a loss. Losses are bad.
Now for the hard bit. First of all, what’s wrong with it:
- The assumption that higher road prices will mean fewer people using the roads. It could easily mean more.
- The assumption that if people do flee the roads they will end up on the railways. They could equally easily end up at home. Or on marble-smooth super-highways built by road entrepreneurs.
- The assumption that the state is any good at planning.
- The assumption that if the ultimate answer is a new railway that the state should fund the construction. It shouldn’t.
And here’s how things should work:
- The roads should be privately owned. So should the railways.
- Polluters should compensate their victims. Railways just as much as roads.
- If there is enough of a market then road builders will build more. Ditto railways.
- In the resulting market roads may still dominate but or it may be that railways become viable (though I doubt this) or neither. Staying at home could well prove the best option.
But how would these new roads or railways be built?
- Well, you’d have to abolish planning laws. Not that that would be any big deal. The lack of compulsory purchase might be an obstacle but I don’t think so.
Why do you doubt that rail would become viable?
- I just don’t think that pollution charges for global warming would ever be that high. And even if they were high, rail would be punished along with everyone else. While on a per passenger per mile basis, trains may produce less greenhouse gases, a lot of energy will have gone into the creation of the infrastructure.
It was a good excuse to link, yet again, to link to this.