Congestion in the UK is a serious problem. see: Economics of congestion
The fundamental problem is that demand for road use has increased faster than than the supply.

Demand has been increasing for various reasons:

• Increased economic growth - more demand for transport
• Increased car ownership - demand for cars is income elastic. (as income rises, there is a bigger % increased in demand for cars)
• Rising population.
• Increased cost of traveling by bus and train.

Congestion is costing the UK economy billions of pounds in lost output and wasted costs. Yet, the government is struggling to deal with the problem, because often the solutions are politically undesirable.

Policies to Overcome Congestion on Motorways

1. Electronic Road pricing - a new tax to make people pay the true social cost. Efficient from an economic point of view, but, politically unpopular. See: electronic road pricing
   
2. Build More Roads - Expensive, but does tackle problem of shortage of supply. However, in some areas there is not space to build new roads. There is also a significant external cost of damage to the environment. Critics also argue that building more roads just encourages more traffic and merely delays the problem
3. Use Hard Shoulder. - In a pilot scheme the Highway's Agency has experimented with using the hard shoulder on the M42 during peak hours. This is a relatively cheap way of increasing road capacity, but there are concerns it compromises road safety because it is more difficult for emergency vehicles to access accidents.
4. Invest in Alternatives - To get people off the motorways there needs to be an alternative to traveling by car. In recent years, subsidies to train companies have fallen. The cost of train travel has increased faster than car use. Arguably the government should invest in increasing the capacity of long distance rail travel and subsidise tickets to reduce their cost.
5. Permits to drive - A radical solution would be to limit the number of cars per household, or even to limit the number of motorway journeys. These policies are not being taken seriously at the moment.
   

Related

• Hard shoulder driving to reduce congestion at the Times

Labels: transport

Should government Run Public Transport or Leave it to the Private Sector?

Public transport such as trains creates positive externalities. When people take the train rather than driving we get a reduction in pollution and congestion which benefits society. Therefore, the social benefit of taking the train is greater than the private benefit. However, in a free market individual consumers ignore the external benefits so there is underconsumption.


The free market equilibrium is at Q1. But, Social efficiency occurs SMC = SMB. Therefore the government should intervene to either subsidise trains or provide them directly.


Government provision will also help to increase equality. It makes transport affordable for those on low incomes. Government can also offer discounts for low income groups like pensioners.

However, it can be argued that the private sector have a profit incentive. Therefore, they have a motivation to provide better quality service with more efficiency. Often, government run public services become inefficient and squander taxpayers money.

In Oxford public transport is left to the private sector and there is a comprehensive bus network. Government subsidies may reduce the price, but, demand is likely to be inelastic. Therefore, it is an expensive way of increasing use of public transport.

A government monopoly faces no competition. If private firms compete for custom, there is likely to be an added incentive to improve service. However, it is difficult to increase competition for trains, the infrastructure is a natural monopoly, therefore these is little scope for competition.

Private sector have helped provide a better quality service. There is adequate provision. However, with the problem of congestion increasing, there are quite high positive externalities of public transport and therefore, the government should subsidise some aspects such as investment in the infrastructure and improving safety. it is mistake to leave it all to the private sector

Labels: transport

Why I support the use of speed cameras in the UK

Benefits of Speed Cameras

1. Speed Costs Lives

Road traffic accidents cost the lives of over 3,100 people in the UK alone.
It is the biggest cause of death for those under 30 years of age.

• Being hit by a car at 40mph 9/10 people die:
• Being hit by a car at 30mph 5/10 people die:

If speed camera's are used and placed in the best locations, then cutting speed, can and will save lives.

In 2002, 3431 people lost their lives on our roads. 33% of these deaths were due to excessive speed. 179 of those killed were children. The Association of Chief Police Officers says that speed is the most important factor in road crashes, more so than even drink or drug driving. [1]

2. Economic Benefit.

The economic benefit is not from the small amount of revenue raised. The economic benefit is from the reduction in accidents and deaths. The economic cost of a road death is estimated at £1 million. This includes costs of police, hospitals, lost earnings e.t.c. Saving lives, especially that of young people definitely has an economic benefit. Of course, it is difficult, if not impossible, to place a value on a human life, but there is a definite measurable economic cost which does justify reducing deaths through speeding.

3. Speed Camera's are a tax on the rich and stupid.

Speed camera's are not really a tax because there is no obligation to pay it. If you drive safely and stick to the speed limits you will never have to pay it. People who either don't care about paying a fine or drive carelessly, will however pay it. This means money is raised to be spent on various improvements. When other people pay fines for speeding, it means other real taxes can be lower. The rich and reckless, are just subsidising those who drive responsibly.

4. Good for environment

Lower speed is more efficient leading to lower fuel consumption. This will help reduce carbon emission and global warming.

5. High Speed is bad for communities and other types of exercise.

Many villagers ask to have speed cameras because they know quality of life improves when speed limits are introduced. Studies have shown that excessive speed supreses cycling and walking

Criticisms of speed cameras

1. They cause accidents because people brake from 40 to 30mph.

• People shouldn't be driving at 40mph
• Government should use average speed cameras

2. Speed is not the main cause of death.

Here people misquote DFI statistics. Speed definitely is a cause of death on the roads.

3. Countries without speed cameras have lower death rates.

It is not possible to compare countries because factors vary significantly. What is important is the effect speed cameras have on reducing death and accidents on that particular road.

References

[1] Speed and Road Safety

Police call for hidden speed cameras

Mobile speed cameras

Labels: transport

1. Raises Revenue for the Government. If the governments gets more tax revenue it can mean either:

• a. other taxes can fall,
• b. the government can spend more on public transport
• c. or the budget deficit can reduce.

Nobody likes new taxes, but whether money is collected from new or old taxes makes no difference to the disposable income of the tax payer.

2. Increase social efficiency. In a free market the consumption of cars are overconsumed. When driving people ignore the negative externalities of congestion and pollution. The social cost is much greater than the private cost. Therefore it makes sense for the government to charge a much higher price of driving in congested areas.

3. Congestion is Inefficient Congestion costs the UK economy over £20 billion a year in lost output and wasted time. This should be tackled.

4. Reduce pollution and global warming. Pollution from cars is a significant contributor to CO2 emissions in the UK. Road charging should encourage people to look for other forms of transport which don’t pollute as much.

5. Save Journey Time - If you earn £15 an hour, why would you not like the idea of paying £7 to get home an hour earlier? Who enjoys sitting in a traffic jam?


Arguments against Road Pricing that are no good.

1. It is an intrusion on liberty. To drive you need countless documents. When you use electricity the electric companies measure exactly how much electricity you use. When you make a telephone call the telecom company know exactly whom you ring and charge accordingly. Why should driving be any different.

2. Govt is just using it to raise money. Is that not a purpose of income tax, VAT and every other type of tax? Raising money from a new tax enables other taxes to be lowered or spending to be increased.

3. Economic output is more important than Global warming. We shouldn’t worry about the future, the most important thing is keeping taxes low for the current motorist. Read the Stern Report.

4. Increases Inequality. This is true to an extent. A road pricing charge is a higher % of tax for those on low incomes. But so is the cost of buying a car and petrol. If concern about equality of distribution is an issue the govt can alter other taxes and benefits. A tax which increases efficiency need not be stopped on equality grounds. It is always possible to compensate the effects to others.

See also:

• Economics of Negative Externalities
• Diagram of Tax on Negative Externality
• Congestion
• Electronic Road Pricing in Singapore
• Road Pricing For and Against
  

Labels: economics, Road pricing, transport