IoD Big Picture Spring 2012

Transcription

1 ID Big Picture Spring 212

2 Transprt investment what d business leaders think? SNAPSHOT ID members believe that imprvements t existing urban and lcal rads and mtrways are far mre imprtant than new rad cnstructin. Investment t imprve existing intercity and cmmuter rail services is als seen as mre imprtant than a new high-speed rail line. This is true f all regins. Transprt investment what d business leaders think? Crin Taylr, Senir Ecnmic Adviser at the ID, sets ut the findings f recent research int the pririties f ID members fr investment in the UK s ageing transprt infrastructure. Members in all regins are mre enthusiastic abut increases in aviatin capacity than HS2. Agd transprt system is vital t business cmpetitiveness and ecnmic grwth, and never mre s than at present. We have seen a vigrus debate in recent mnths abut hw t imprve the UK s ageing infrastructure with limited public funds: Three-quarters think that the planning system has had a negative impact n the cmpletin f infrastructure prjects in recent years. A big mdal shift frm rad t rail will nt happen, while even if all dmestic flying was eliminated, nly 2% f CO 2 emissins frm transprt wuld be saved. In the Autumn Statement, the Chancellr set ut an infrastructure plan with a list f 5 prjects tgether with measures t attract needed investment frm pensin and svereign wealth funds. In Nvember, the ID hsted an event with the Mayr f Lndn, where the Mayr argued that lack f aviatin capacity was harming the UK s ability t cmpete and called fr a new hub airprt east f the capital. In the Autumn Statement the Chancellr annunced that all ptins fr maintaining the UK s aviatin hub status, with the exceptin f a third runway at Heathrw, wuld be explred. The Gvernment has decided t g ahead with a high-speed rail link frm Lndn t Birmingham and beynd, althugh cst wrries have acted as a cunterbalance t the mre ptimistic view f the prject s transfrmative nature. A key risk f HS2 is that a number f imprtant imprvements t existing rail lines wuld nt g ahead after 217 because sme rail spending wuld be diverted t HS2. The vast majrity f jurneys are still made by rad, with 85% f passenger kilmetres by car, van r taxi, and 91% by rad verall, as Chart 1 illustrates. Imprving the rad netwrk and reducing cngestin is therefre vital. Against this backdrp, the ID recently plled 1,245 members t ascertain their views n the existing state f the UK s transprt infrastructure and their pririties fr new investment. The results are described n the fllwing pages.

3 ID Big Picture Spring 212 CHART 1 Passenger transprt by mde, Billin passenger kilmetres Ttal Cars, vans and taxis Rail Buses and caches Dmestic air Mtrcycles Pedal cycles Surce: Department fr Transprt, Transprt Statistics Great Britain, Nvember 21, Table 1.1 (Passenger transprt by mde, ). NB: rail figure includes urban metr and tram; ttal figure des nt include travel by water. THE EXISTING STATE OF THE UK S TRANSPORT INFRASTRUCTURE ID members generally have negative perceptins f the existing state f the UK s verall transprt infrastructure: Tw-thirds (66%) believe it represents pr value fr mney, cmpared with just 7% wh think it represents gd value fr mney. A large majrity (58%) thinks it is prly integrated, cmpared with 14% wh think it is well integrated the gal f an integrated transprt system is as elusive as ever. The three biggest impacts that the UK s transprt system has n ID members businesses are increased csts (cited by 7%), staff arriving stressed as a result f transprt prblems (61%) and staff arriving late t wrk (47%): Increased csts are a particular prblem in the West Midlands (85%). ID members generally have negative perceptins f the existing state f the UK s verall transprt infrastructure. Staff arriving stressed (75%) and late (63%) have the greatest impact n Lndn members. Member views n the rad netwrk are generally negative: Overall, 82% f ID members think the rads scre prly n cngestin, cmpared with just 2% wh think they scre well. Unsurprisingly, there are n ID members wrking in the transprtatin sectr wh think that the rads scre well n cngestin.

4 Transprt investment what d business leaders think? Clse t tw-thirds (62%) think that the rads are in a pr state f repair, cmpared with 15% wh think they are in a gd state f repair. On the mre psitive side, 56% think that the rad netwrk has gd cverage, cmpared with 16% wh think it has pr cverage. The survey respndents generally believe that rail fares ffer pr value fr mney fr business travel: Mre than three-fifths (61%) think that intercity rail fares ffer pr value fr mney, and 57% think that cmmuter rail fares are pr value. Tube, metr and tram fares are seen as ffering better value fr mney, with 31% f ID members believing they are gd value, cmpared with 25% wh believe they are pr value. ID members are equally critical f the planning system: Over three-quarters (76%) think that the planning system has had a negative r very negative impact n the speed and ease f mving t cmpletin f infrastructure prjects ver the past decade. Just 4% think it has had a psitive impact. ID MEMBERS PRIORITIES FOR INVESTMENT Nt surprisingly, ID members think that investment in mst frms f transprt infrastructure is imprtant t their business. Mre revealing are the pririties chsen. Rads Imprvements t existing urban and lcal rads and mtrways are seen as far mre imprtant than new rad cnstructin, while privately-financed tll rad cnstructin generally gets the thumbs-up: ID members verwhelmingly think that investment in cngested urban rads (86%), rad links between urban centres (84%), imprvements t existing mtrways (83%) and imprvements t existing lcal rads (82%), are imprtant r very imprtant t their business. CHART 2 Frm the perspective f yur primary rganisatin, hw wuld yu rate the UK s rad netwrks fr cngestin? % Very gd Gd Neither gd nr pr Pr Very pr Surce: ID Plicy Vice transprt survey, 211.

5 ID Big Picture Spring 212 CHART 3 Thinking f yur primary rganisatin, please rate the imprtance f the fllwing investments in wrk n the UK s rad netwrk. % Cngested urban rads Rad links between urban centres Imprvements t existing mtrways Rad links t internatinal gateways Imprvements t existing lcal rads New mtrway cnstructin New lcal rads Very imprtant Imprtant Surce: ID Plicy Vice transprt survey, 211. By cmparisn, 49% think that new mtrways are imprtant t their business, with just 37% thinking the same f new lcal rads. Arund tw-thirds (65%) think that investment in rad links t internatinal gateways is imprtant. There is strng ID member supprt fr privately-financed rad cnstructin t relieve cngestin in specific areas, even if accmpanied by tlls. Almst three-fifths (59%) wuld supprt this, while arund a fifth (19%) wuld bject. Rail Similar t rad investment, ID members believe that investment t imprve existing intercity and cmmuter rail services is mre imprtant than a new high-speed rail line: The highest rail pririty fr ID members is wrk n the existing netwrk f intercity services, with 79% saying this is imprtant r very imprtant t their business. Cmmuter rail imprvements are als seen as imprtant r very imprtant by 75% f respndents. The lwest rail pririty is investment in new high-speed rail links. Imprvements t existing intercity services are mre imprtant. The lwest rail pririty is investment in new high-speed rail links, cited by 54% f ID members as imprtant r very imprtant t their business. In every ID regin, members think that imprvements t existing intercity services are mre imprtant than HS2. Charts 4 and 5 illustrate. Directrs views are mixed n whether HS2 wuld be gd value fr mney, with a higher prprtin thinking it wuld be pr value: Overall, 3% f ID members think that the public spending required t build HS2 wuld represent gd value fr mney, cmpared with 38% wh think it wuld represent pr value and 18% wh believe it wuld represent neither gd nr pr value.

6 Transprt investment what d business leaders think? CHART 4 Thinking f yur primary rganisatin, please rate the imprtance f the fllwing types f wrk n the UK s rail netwrk. % Existing intercity Cmmuter rail Tube/metr/tram New high-speed rail Very imprtant Imprtant Surce: ID Plicy Vice transprt survey, 211. CHART 5 Reginal cmparisn f the imprtance t ID members f wrk t existing intercity and new high-speed rail netwrks Percentage imprtant r very imprtant Ttal Sctland N. Ireland Existing intercity Wales Lndn Suth Suth West Nrth West East Midlands East f England Yrkshire West Midlands Nrth East New high-speed rail Surce: as abve. Due t small sample sizes, results fr Nrthern Ireland, Wales and the Nrth East are nly indicative. CHART 6 D yu believe that the public spending required t build HS2 wuld represent: % Very gd value fr mney Gd value fr mney Neither gd nr pr value fr mney Pr value fr mney Very pr value fr mney Surce: ID Plicy Vice transprt survey, 211.

7 ID Big Picture Spring 212 ID members tend t feel that the Gvernment s ppsitin t new runways at Heathrw, Gatwick and Stansted is mistaken. In the three regins mst affected by the first stage f HS2, views are rughly balanced. Tw-fifths (4%) f West Midlands members think that the public spending required t build HS2 wuld represent gd value fr mney, cmpared with 41% wh think it wuld represent pr value. In Lndn, 32% think it wuld be gd value, cmpared with 35% wh think it wuld be pr value. In the Nrth West, 34% think it wuld represent gd value fr mney, with 31% thinking it wuld represent pr value. Mst ID members dn t think that the first stage f HS2 the link between Lndn and Birmingham will have any impact n their prductivity, althugh members in the three regins mst affected are mre enthusiastic abut the impact f high-speed rail: Overall, almst a quarter (23%) thinks that a new high-speed rail line between Lndn and Birmingham wuld have a psitive impact n the prductivity f their business, cmpared with 5% wh think it wuld have a negative impact. The vast majrity (7%) think it wuldn t have any impact n their prductivity. In the West Midlands, 43% f members think it wuld have a psitive impact n their prductivity (cmpared with 9% thinking it wuld have a negative impact). In Lndn the crrespnding figure is 32% (4% negative) and in the Nrth West 3% (1% negative). Air ID members are generally mre enthusiastic abut increases in aviatin capacity than high-speed rail: Tw-fifths (4%) f directrs think that an increase in airprt capacity in Lndn and the Suth East, either by building new runways r thrugh mixed-mde runway use, wuld have a psitive impact n the prductivity f their business, cmpared with 4% thinking it wuld have a negative impact. CHART 7 Perceived impact n the prductivity f ID members businesses % Very psitive Psitive Neither psitive nr negative Negative Very negative Increased airprt capacity utside Lndn and Suth East Increased airprt capacity in Lndn and Suth East High-speed rail between Birmingham and Lndn Surce: ID Plicy Vice transprt survey, 211.

8 Transprt investment what d business leaders think? CHART 8 Perceived psitive impact n prductivity reginal cmparisn 7 Percentage psitive r very psitive Ttal Lndn Nrth West West Midlands Air capacity in Lndn and SE Air capacity utside Lndn and SE HS2 Surce: ID Plicy Vice transprt survey, 211. Outside f the Suth East, members are, if anything, even mre enthusiastic. Almst half (48%) f members think that an increase in airprt capacity utside Lndn and the Suth East, allwing a greater range f destinatins t be served and a higher frequency f flights, wuld have a psitive impact n the prductivity f their business, cmpared with just 2% thinking it wuld have a negative impact. As Chart 8 shws, in the three regins mst affected by the first phase f HS2, members think that the relevant air capacity imprvements wuld have a mre psitive impact n their prductivity than HS2. ID members tend t feel that the Gvernment s ppsitin t new runways at Heathrw, Gatwick and Stansted is mistaken: Over a quarter (28%) thinks that the Gvernment s decisin t prevent new capacity being created at Heathrw, Gatwick and Stansted airprts will have a negative impact n the prductivity f their business, cmpared with 8% wh think it will have a psitive impact. Nt surprisingly, feeling is strngest in the regins mst affected, with 41% f ID members in Lndn and 38% f ID members in the Suth believing that it will negatively impact n their prductivity. HS2 AND THE ENVIRONMENT The prpsed high-speed rail link frm Lndn t Birmingham, and then t Manchester and Leeds, has generated cnsiderable cntrversy. The Gvernment has decided t press ahead with the Y-shaped plan fr HS2, althugh there are a number f legislative stages t be cmpleted befre cnstructin starts. Much has been made f the argument that a new high-speed rail netwrk culd allw a mdal shift frm rad and dmestic air travel t rail, generating cnsiderable emissins savings. This sectin examines whether that claim is plausible. 1 1 N.B. This sectin des nt examine the Gvernment s detailed frecasts and their underlying assumptins, but rather lks at the general big picture claim.

9 ID Big Picture Spring 212 Firstly, is a mdal shift frm rad t rail pssible? While a mdal shift frm rad r dmestic air t rail might be pssible n certain rutes, verall, the answer is n: In 29, which at the time f writing was the latest year fr which data is available, 91% f passenger kilmetres and 65% f freight tnne kilmetres were by rad. Rail accunted fr 8% f passenger kilmetres and 9% f freight tnne kilmetres. 2 If rail dubled its share f passenger and freight kilmetres entirely at the expense f rad, then rad wuld still accunt fr 83% f passenger kilmetres and 56% f freight tnne kilmetres. The last year that rad s share f passenger kilmetres was 83% r less was Interestingly, rail s share f passenger kilmetres has increased frm a lw f 5% in the early 199s t 8% tday, at the same time as rad s share has declined frm 94% t 91%. This suggests that there is scpe fr rail t take a further share f rad transprt, but hwever quickly rail develps, rad will still accunt fr mre than fur-fifths f passenger kilmetres. Fr example, under the implausible scenari f rail passenger kilmetres dubling and n increase in rad r dmestic air passenger kilmetres, rad wuld still take up an 85% share. Freight tells a similar stry. If freight tnne kilmetres dubled by rail, and there were n increase in freight tnne kilmetres n the rads, by water r by pipeline, rad wuld still accunt fr 6% f the ttal. The secnd questin is whether large greenhuse gas emissins reductins are pssible frm a realistic shift t rail transprt. Again, the answer is n: Frm a climate change perspective, it wuld be far mre fruitful t cncentrate n reducing emissins frm rad transprt. At the time f writing, the mst recent year fr which data is available cvering greenhuse gas emissins frm all transprt mdes is 28. Overwhelmingly, emissins cme frm rad transprt (89%), while dmestic aviatin accunts fr just 2%. See Chart 9. Mst UK cities are already within tw and a half hurs f Lndn by train, and many are within tw and a half hurs f each ther, s there is already n time-saving frm flying fr many rutes. A high-speed rail netwrk wuld imprve cnnectivity t Heathrw, thus shifting a number f dmestic cnnecting flights t and frm Heathrw t rail. Fr ther rutes, fr example Suthamptn t Edinburgh, flying will always remain the quickest ptin. HS2 will never replace all dmestic flights. Chart 9 shws, hwever, that even if dmestic flying was t be eliminated altgether, nly 2% f greenhuse gas emissins frm dmestic transprt wuld be saved, r.4% f verall emissins. As explained abve, even with rapid grwth in rail transprt, rad is still likely t accunt fr mre than fur-fifths f passenger kilmetres and three-fifths f freight tnne kilmetres. Rad will therefre still accunt fr the bulk f greenhuse gas emissins frm transprt. Even if rad s share f passenger kilmetres was reduced t 85%, and rad s share f freight tnne kilmetres was reduced t 6%, huge emissins savings wuld nt be frthcming. 2 Department fr Transprt, Transprt Statistics Great Britain, Nvember 21, Table 1.1 (Passenger transprt by mde: ) and Table 4.1 (Dmestic freight transprt by mde: ).

10 Transprt investment what d business leaders think? CHART 9 Greenhuse gas emissins by transprt mde, 28 Millin tnnes f CO 2 equivalent Rad Dmestic shipping Other Rail Dmestic aviatin Surce: Department fr Transprt, Transprt Statistics Great Britain, Nvember 21, Table 3.8 (Greenhuse gas emissins by transprt mde: United Kingdm, ). N.B. By final user measure, which includes apprximate emissins resulting frm the prductin f the fuels/electricity used. HS2 THE REAL DEBATE This brief big picture analysis suggests that, verall, a large mdal shift t rail is unlikely t ccur. If HS2 facilitated a small mdal shift frm rad and dmestic flying t rail, it wuld make little dent in the UK s greenhuse gas emissins frm transprt. Frm a climate change perspective, it wuld be far mre fruitful t cncentrate n reducing emissins frm rad transprt thrugh mre efficient and lwer emissin cars, vans and lrries. The high-speed rail debate, then, shuld be fcused n capacity, speed and cst: Are the capacity and jurney time imprvements that HS2 wuld deliver wrth the cst f cnstructin? On this questin, ID members are unsure. Wuld it be a mre prductive strategy t make incremental capacity and speed enhancements t the existing intercity and cmmuter netwrks, imprve the existing rad netwrk and allw aviatin capacity increases? 3 On this questin, the view f ID members is pretty clear that it wuld be. 3 Sir Rd Eddingtn s 26 Transprt Study remains the blueprint fr transprt imprvements in the UK.