The case for raising speed limits
9 May 2013
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8 May 2013
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If major roads were privately owned and freed of government regulation, the setting of speed limits would be a commercial decision. Entrepreneurs would seek to attract customers to their routes in order to maximise toll revenues, and one way of doing so would be to offer fast journey times by allowing high speeds.
But road owners would also face a series of trade-offs when setting speed limits. Under busy conditions, high speeds can reduce capacity, which in turn would reduce toll revenues. And in some locations, high speeds could increase the risk of accidents, potentially damaging the reputation of operators and reducing revenues through delays and higher insurance costs.
To a large extent, trade-offs between speed and other considerations would be time and place specific, depending on the nature of the infrastructure and its usage patterns. Moreover, since the decisions would be commercial, they would be beyond the scope of politics and the undue influence of special interest groups.
In this context, it is inconceivable that private road operators would set speed limits that not only increased journey times and lowered productivity but also worsened congestion and raised significantly the risk of serious accidents. Yet such controls are imposed by the government with its centralised approach to speed on state-owned roads.
Perhaps the most egregious example is the national 40mph limit imposed on heavy goods vehicles on single carriageway routes. This imposes substantial delays and productivity losses on the road haulage sector. And since roads carry around 70 per cent of freight within the UK, this has a significant impact on the wider economy. Worse still, slow-moving trucks create long tailbacks of other road users, for whom the national limit on such roads is 60mph. Delayed and frustrated, car drivers and motorists frequently engage in dangerous overtaking manoeuvres – the cause of a high proportion of fatalities and serious injuries on the network.
The government is currently considering raising the lorry limit on single carriageways to either 45mph or 50mph, but the move is opposed by various special interests. If roads are to remain outside the market economy for the foreseeable future, then transport policymakers should at least adopt a more commercial approach to managing the network. This means raising speed limits where it benefits users and basing policy on a rational consideration of the economic trade-offs rather than the demands of lobby groups.
But road owners would also face a series of trade-offs when setting speed limits. Under busy conditions, high speeds can reduce capacity, which in turn would reduce toll revenues. And in some locations, high speeds could increase the risk of accidents, potentially damaging the reputation of operators and reducing revenues through delays and higher insurance costs.
To a large extent, trade-offs between speed and other considerations would be time and place specific, depending on the nature of the infrastructure and its usage patterns. Moreover, since the decisions would be commercial, they would be beyond the scope of politics and the undue influence of special interest groups.
In this context, it is inconceivable that private road operators would set speed limits that not only increased journey times and lowered productivity but also worsened congestion and raised significantly the risk of serious accidents. Yet such controls are imposed by the government with its centralised approach to speed on state-owned roads.
Perhaps the most egregious example is the national 40mph limit imposed on heavy goods vehicles on single carriageway routes. This imposes substantial delays and productivity losses on the road haulage sector. And since roads carry around 70 per cent of freight within the UK, this has a significant impact on the wider economy. Worse still, slow-moving trucks create long tailbacks of other road users, for whom the national limit on such roads is 60mph. Delayed and frustrated, car drivers and motorists frequently engage in dangerous overtaking manoeuvres – the cause of a high proportion of fatalities and serious injuries on the network.
The government is currently considering raising the lorry limit on single carriageways to either 45mph or 50mph, but the move is opposed by various special interests. If roads are to remain outside the market economy for the foreseeable future, then transport policymakers should at least adopt a more commercial approach to managing the network. This means raising speed limits where it benefits users and basing policy on a rational consideration of the economic trade-offs rather than the demands of lobby groups.
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A few points:
1) There will always be drivers who will dangerously overtake any HGV on narrow roads. Raising the speed limit for HGVs to 50mph or even 60mph (parity with cars) will not make a difference to these, the most dangerous, drivers who suffer from “Must Get In Front” mentality.
2) If roads were freed from government regulation and policing then they would basically become “might is right” at all times. Vulnerable road users would be offered little or no protection. It would not be in private business’ interest in looking after vulnerable road users or indeed any other road users in terms of enforcing rules of the road
3) People calling for increased speed limits for HGVs are a special interest group too. Please get your phraseology correct.
4) In most cases for inter-city travel there are very few alternatives but to take main roads. If these roads were privatised then who enforces access rights and at what cost? Any provider can choose to deny certain people access (either through price discrimination or effectively by force). Do users have to go to courts to get access? That cost is incredibly high and stacked in the favour of the provider and not the consumer. Fundamentally, we are not like France where alternatives to toll roads exist that are almost as direct (if not as fast) as the toll roads themselves.
5) If the railways are anything to go by then privatisation of major roads would be a colossal mistake, bringing in the worst bits of capitalism (rent seeking behaviour) because there is no effective competition.
To Parimal Kumar:
I will not comment on all your points, which i feel could be used with the same amount of success to the free-market production of anything, but instead only on point 2.
You claim that roads without interference from government would cause a situation where “might is right”. This is a misconception of what the free-market is. The free-market benefits those who servers the consumers. Its ruling paradigm is not “might is right”, but “the consumers is right”. And the market accounts for the fact that the consumers have different preferences. Thus there will be incentives for entrepreneurs to make sure that as many people as possible get the service they demand.
That is the market, a place where the consumers dominate. What is then the government?
Government and the state is nothing else than the application of brute force. It is a institution built on violence. And a society where violence is constant present benefits ofcourse the might. So it is the government where “might is right”, not the market.
@Parimal Kumar – On point 1) you are correct but there will also be a proportion of drivers who would overtake a lorry travelling at 40mph but wouldn’t bother at 50mph since the time savings would be much smaller. We discuss the issues raised in point 4) in our recent monograph on road privatisation: http://www.iea.org.uk/publications/research/which-road-ahead-government-or-market. Point 5) is examined in this blog post, which argues that rail privatisation in many ways increased the degree of state control: http://www.iea.org.uk/blog/regulation-not-privatisation-to-blame-for-inefficient-railways
To dTracy: The theory & practice of free markets for provision of consumer goods where there are relatively low barriers to entry and little or no regulation (beyond basic contract enforcement) works very well. This is simply because people are making choices and are free to make that choice between alternative providers. I will not argue against free markets in that situation. However, in this specific case, we are not talking about consumer goods where a consumer can easily switch to another producer. Please do not conflate the two issues. For example, there is only one M4, there is no alternative *motorway* that connects London to Bristol. If I am denied entry onto this motorway, simply because the provider doesn’t like me or doesn’t like my car then where do I go to get access? The courts? The cost of enforcement is stacked against me. The roads at present, which have no such barriers, physical or commercial, are open to anyone (again, min. power requirements for motorway). My assertion is that roads, being of public ownership and common use, provide access to all users and that the laws that apply to it are universally accepted. A person can get to where they like using whatever mode of transport they like (barring motorways, which don’t allow non-motorised traffic). I am all for things like dynamic speed limits and so on for traffic management. My concerns relate to lack of effective competition leading to rent seeking behaviour, protection of vulnerable road users, increased cost of contract enforcement by consumers (which is virtually nil since roads are public). Unfortunately, no-one has answered those yet; your entire response seems to implicitly assume that a consumer has a real choice in this specific case and I am asserting that they don’t.
What does Richard Wellings mean by “major roads”?
What if there is no alternative, especially for vulnerable road users? Would we just allow them t be intimidated off the roads (even more than they currently are)? Should we really allow private monopolies to operate on the basis solely of what is in their commercial interests? If not, there would have to be regulation, which would defeat many of the supposed advantages.
To Richard Wellings 1) What is that proportion from dangerous drivers? I’d argue that the actually dangerous drivers would overtake any person travelling below their speed, which is almost certainly above the legal speed limit *and* of prevailing conditions.
3) I see you have ignored my statement that people calling for increased HGV speed limits are a special interest group too. It’s not a good thing for an academic to refer to one side of debate as special interest and the other not. Smacks me of bias.
4) and 5) I shall have a read and give them my consideration.
Similar with the 20mph limits that are increasing being spread about by local authorities. All very well in front of schools, but Islington Council has now deemed all of its roads to be 20mph, including “A” roads that are wide and carry arterial traffic. Similar is TfL’s demoting of some of its major highways with speed limits that bear little resemblance to the road geography – the A40 goes from 70 to 50 to 40 mph all with it being a 6 lane grade separated highway. The only reason for such limits is to avoid nose to tails at busy times, but ramp metering and variable speed limits would do that.
I do, sometimes, wonder if there isn’t a secondary strategy at TfL of reducing the speed and attractiveness of roads as part of a wider philosophy opposed to the car and road transport that involves internal combustion engines and less than 6 people.
The problem with the report that Richard Wellings cites (his own report) is that it is severely flawed as it neither mentions nor discusses the interests of non-motorised road users.
We know, from studies and experience in the Netherlands, Denmark, etc. that better provision for cyclists and pedestrians lowers congestion for all road users (quite apart from environmental and other advantages), yet he doesn’t even consider how they would be provided for under his proposals.
@Parimal Kumar – Regarding point 3), not everyone involved in the debate should be classed as a special interest. One of the arguments in the article is that under private ownership, special interest influence would be fundamentally weakened. In the absence of markets, policymakers should focus primarily on the economic arguments rather than the views of pressure groups.
@HJ – Non-motorised users are mentioned in the monograph, but there wasn’t space to discuss them in any detail. They represent a very small fraction of passenger miles. Cycling, for example, accounts for roughly 1%.
@Richard Wellings Let’s see, the people calling for increased HGV speed limit is the Road Haulage association, which doesn’t represent car drivers, motorcyclists, horse riders, cyclists, pedestrians and anyone else who uses roads other than the hauliers. By any reasonable definition that is a special interest group. Policy makers should focus on economic arguments but not use flawed economic models/logic that patently fail to internalise negative externalities. Policy makers should also be mindful of tyranny of majority.
@Richard Wellings – Non-motorised users represent a very small fraction of journeys because planning has completely prioritised motorised vehicle usage, thus making the roads dangerous and unpleasant for non-motorised users – they are literally intimidated off the roads. This is as a result of centralised planning policies, which you claim to want to get away from, yet you see to accept the status quo created by such policies. What we know from experience in other countries and in cities such as Cambridge is that where cycling is perceived to be safe (i.e. where there is suitable provision) that the majority of people use bicycles for some journeys and, overall, 25-30% of journeys are by bicycle. Take out long distance journeys and the percentage of journeys undertaken by bike is even higher. We also know that this has a very significant effect on lowering traffic congestion (which is almost entirely caused by motorised vehicles). You really do need to learn to look below the surface ‘facts’ if you are to provide any insight to inform your analysis. To practically ignore non-motorised traffic in your report, without even discussing whether this is a reasonable omission, makes your report flawed at best and, arguably, without value.
I’ve no problem with privately funded roads, but if the whole mess is going to be untangled from government control then the last 80 years of pro-car road building needs to be rectified to create a fair market for all forms of transport to compete so that consumers can choose the most efficient form for their needs.
Due to cycling and walking being seen as at best uncomfortable and at worst downright dangerous in our cities people often feel they have to choose a less efficient mode of transport just to feel safe. If people could make choices purely on efficiency many more would cycle, but that requires them to feel safe. If the current situation was handed over to the private sector as it is the the current self-fulfilling arms race to bigger cars would continue because decades of government backing and subsidising of motorcars has created a totally distorted market in which other modes cannot compete fairly.
@HJ – Entrepreneurial discovery is a major theme of the private roads monograph. Freed of state control, road entrepreneurs would discover new and innovative ways of serving consumers. In this context, one cannot know in advance what patterns of usage would develop in an unhampered transport market.
Another theme is the importance of liberating land-use planning if the full benefits of deregulating transport are to be enjoyed. In this context, examples such as Cambridge, where state intervention in transport and planning is all pervasive, are of little relevance to the argument.
If you we’re looking to maximise profit from a franchised road, you would want to first block out those customers whould cost money. HGVs meet this criterion, as they so much damage to road surfaces your OPEX would be too high.
That generally leaves cars, where two questions become important. First, is demand elastic? Second: do you have spare capacity at peak times? elastic demand means you can charge what you want and demand won’t decrease, so you charge as much as you can within any limits set by any regulator that is trying to interfere with a free market.
If you have run out of carrying capacity, “build more roads” may be presented as be answe;, certainly it is touted as a reason for privatised roads. However, the train franchise world and the dash for gas shows that major CAPEX investments don’t make sense when you need to show short term profits rather than long term debts. That leaves: increasing carrying capacity at peak times, presumably by reducing vehicle speed and turbulence in the system, or diverting excess capacity to your road outside the peak period. The obvious solution here for a commercial road owner is variable road pricing; charge more at peak hours to displace flexible demand while maximising revenue from the inelastic traveller.
Finally speed. RTCs cause road closures which dramatically hurt revenue, even if the costs of handling an RTC aren’t billed to the franchisee. It’s only in your interest to increase vehicle speed if the cost of closures overcomes any increase in profit. You still need that increase in profit, which can only come from elastic demand, such as picking up traffic from alternate roads or transport options (train, bus, bike, other roads). You need to have enough free capacity in your road to add these new customers to it, and so avoid capacity-related slowdowns. Nobody will pay for a faster road unless it is used.
If you notice, most of the options and actions are pretty much what the railway system has done since privatisation. Revenue maximisation during peak hours rather than capital investments that would take decades to pay off, diversion of low margin traffic off peak hours ourniff your network entirely. Train speed is less of an issue except in the case where it can be used to justify the (now premium) pricing over roads.
@Richard Wellings – I find many of your assertions in your report about how entrepreneurial activity will solve problems flimsy, to say the least. You also admit that your proposals would require public rights of way to be removed for many local roads so that private owners can control access – how do you propose compensating those whose rights would be lost? You also say that road owners could simply ban some forms of transport (including slower ones). So let’s get this clear – under your proposals it is entirely possible that a young person or a poorer person or anyone who can’t drive or who couldn’t afford a car may find it literally impossible to get across town by foot or cycle to get to school or work or to buy essential items including food. Not exactly a protector of the rights of individuals, are you? You really do need to think again and come back with some more sensible proposals.
@HJ – In the monograph it is suggested that rights of way might only be removed in those roads that exclusively provide access to adjoining properties, such as cul-de-sacs and so on. The only people using such rights of way are those using them to reach those properties. It is envisaged that longstanding rights of way for pedestrians and cyclists on through roads would be kept and this is explicitly stated in the text. Thus there is no possibility of people finding it impossible to get to work or buy essential items, as the necessary access rights are maintained. Moreover, there are strong market incentives for private road owners to facilitate widespread access, as is the case in privately owned shopping centres and so on.
Regarding entrepreneurship, the analysis is well grounded in economic theory, for example the work of Kirzner. However, as we explain, the pervasive nature of state intervention in the transport sector makes the use of empirical evidence problematic.
@ Richard Wellings. That’s not correct. You talked, in your monograph, about “adjoining roads” and did not include any qualifier about “exclusively providing access to adjoining properties”. I’m not at all sure that rights of way currently exist where there is no way through (such as in a cul-de-sac) or that anyone currently expects such rights of way (for reasons of practicality, part from anything). So why do you say that there would need to be any change in rights of way? What would be the purpose?
@Richard Wellings Richard, as an economist with an interest in transport I’m sure you must have considered many of the economic effects of various forms of transport. Have you quantified the total costs, including all externalities, of motor vehicles, if so what do you think it is as I have seen estimates from £50-100bn?
Also, are you aware of the results of the City of Copenhagen cost benefit analysis showing a benefit to society of 13.8p/km cycled vs a cost to society of 7.8p/km driven, a net gain of 21.6p for every km we can switch from car to bicycle.
https://subsite.kk.dk/sitecore/content/Subsites/CityOfCopenhagen/SubsiteFrontpage/LivingInCopenhagen/CityAndTraffic/CityOfCyclists/CycleStatistics/socioeconomicbenefits.aspx
And if as you say, roads are to remain outside the market economy for the foreseeable future, how should we go about securing this enormous benefit that we are currently missing out on because the government refuses to invest seriously in cycling infrastructure?
@HJ To quote from p. 76 of the monograph, ‘many residential roads do not constitute long-standing rights of way. Their purpose is merely to provide access to the adjoining properties.’ In some locations there could be significant benefits from transferring ownership to residents and allowing them to restrict access to such roads. For example, in inner cities they could be gated off to reduce crime and anti-social behaviour. Parking is another problem that could be addressed by giving residents control over such roads (in some areas they might wish to restrict parking, in others to expand it).
@Richard Wellings – To quote from page 112: “Local residents, individually where appropriate, but more
typically in voluntary associations, should be given the ‘right to own’ the residential roads adjoining their properties. A simple transfer process should be introduced, similar to the UK’s ‘right-to-buy’ programme for social housing. This may involve reforming the law on rights of way so that private owners can control access to their roads. ” No qualifier about only where the roads are only there to provide access to adjoining properties. I repeat my question – if you meant only roads with no through routes, why did you say there may be a need to change the law on rights of way?
Richard – If you now accept that all through routes in most areas (and I include country roads in this) must have rights of way respected by the (now private) owners, then you’ll agree that those owners must provide suitable (i.e. safe) access facilities or such rights will effectively have been infringed. Therefore, they would be obligated to provide suitable (i.e. safe) facilities for cyclists and pedestrians. Do you agree?
@LoveloBicycles – The external costs of road transport are largely the result of state intervention rather than road-use per se. Take congestion, which is by far the largest ‘externality’ associated with road transport. It is clearly a symptom of a) the absence of market pricing; b) the related failure of state-supply of roads to respond to consumer demand; and c) strict state planning controls that hamper the adaptation of settlements to road transport. Cost-benefit analyses of cycling schemes are clearly contingent on the above distortions and also often rely on dubious scientific evidence on matters such as the effect of air pollution on health, the social costs of climate change and so on.
@HJ – Residential roads might be defined as those whose purpose is to provide access to adjoining properties, as opposed to ‘mixed-use’ or ‘intermediate’ roads that also provide through routes and are much more problematic to transfer out of state control. Clearly it is a matter of degree, and we do not prescribe the exact boundaries in the monograph. This area would benefit from further research work and theorising. Nonetheless, we do set out a process by which ‘intermediate’ roads could gradually move out of state control through a process of private planning. New private urban developments would include private roads and such districts would gradually displace state districts over time. This does of course assume the liberalisation of the planning system. In my view there should be no obligation for property owners to provide suitable access facilities for rights of way crossing their properties, since this would effectively be a taking under threat of force. In the case of footpaths, they generally remain accessible as long as they are used regularly.
@Richard Wellings: “In my view there should be no obligation for property owners to provide suitable access facilities for rights of way crossing their properties, since this would effectively be a taking under threat of force.”
You seem to be confused about what you believe. You said above that ” It is envisaged that longstanding rights of way for pedestrians and cyclists on through roads would be kept and this is explicitly stated in the text. Thus there is no possibility of people finding it impossible to get to work or buy essential items, as the necessary access rights are maintained.” In other words, you are now contradicting yourself. How can rights of way be maintained if there is no obligation on the owners to provide suitable safe access?
What is it that you believe, Richard? Can I suggest that you spend a bit more time thinking things through?
@Richard Wellings
I would disagree that externalities are a result of state intervention, on congestion you might have a point, but the costs of accidents, fatalities, policing, courts, prisons, noise, reduction in the quality of life, asset value of the roads are all costs that need taking into account no matter who runs the roads. If even a transport economist can’t quantify them how can they be taken into account to ensure the market for road transport is not distorted?
@RichardWellings Congratulations on calling well evidenced and documented benefits of mass cycling as dubious. I notice that you have failed to call Road Haulage Association a special interest group, even after it has been demonstrated to you that it is a special interest group. More evidence towards your bias. You also missed the original point by @LoveloBicycles that our roads are a distorted market in terms of mode of transport and that privatisation of our roads as is will continue to further distort it. You still haven’t answered the cost of enforcement and regulation of the privatised road network, with all its associated issues (capture of regulators by providers, etc). If local roads were to be handed over to local groups, how would revenue generation be created? Would we have thousands of different bills? Would each road have toll booths at each end point? Do you propose a GPS/tracker based road pricing system instead? Do you have examples of privatised road networks in urban/suburban areas (gated communities and single tracks down Swedish countryside for access don’t count)? In the end, you’ve failed to demonstrate how the benefits from privatising our roads would outweigh the costs, especially given all the access/intermediate roads/actual revenue calculation/generation issues. No effective competition means a distorted market where providers demonstrate rent seeking behaviour or other worse aspect of markets.
@HJ – I am not contradicting myself. There is a clear distinction between having a right of way and forcing the property owner to provide particular facilities along that right of way, or indeed forcing the owner to maintain that right of way in its existing condition. Moreover, in the scenario suggested it is envisaged that while motorways, some trunk roads and many residential roads could quite quickly be transferred into non-state ownership, for the time being ‘intermediate’ roads would tend to remain under, say, local authority control. By a gradual process, if planning liberalisation took place, privately planned and owned settlements would gradually displace state districts in a similar way that some urban areas grow (e.g. Las Vegas) and others decline (e.g. Detroit). Access arrangements for private districts could be set out in contract and subject to the entrepreneurial discovery process. As stated above, there would be strong incentives to provide widespread access to employment and retail operations within private districts. Why on earth would employers move to a district their workers couldn’t reach or retailers to an area which banned shoppers?
@LoveloBicycles – The cost of accidents is already covered by the insurance paid by road users. And in the UK the NHS recovers the cost of treating accident victims from the insurance companies. Urban air pollution and noise externalities are already to some extent ‘internalised’ by land markets, e.g. home buyers pay less if they buy properties close to a busy road, though this process would work far more effectively under a freed land market and private planning. Indeed, current planning policies push developers into building on brownfield sites next to transport corridors with high levels of noise and air pollution. Market pricing is capable of dealing with these issues, with the exception, in theory at least, of larger scale phenomena such as anthropogenic climate change. The question of externalities from road use is discussed in detail in my recent paper, Time to Excise Fuel Duty? http://www.iea.org.uk/publications/research/time-to-excise-fuel-duty
@Parimal Kumar – I don’t mention the RHA in my article, or have I missed something?
@Richard Wellings – Now you are being absurd. The law clearly requires landowners to keep public rights of way both open AND USEABLE. Neither can they place dangers on or near that right of way that could endanger users – for example, in the case of a farm, a bull. I’d suggest that on local roads this would include fast-moving vehicles unless separate safe provision was made available for cycles and pedestrians. Therefore, they would be obliged to maintain safe access for non-motorised users, unless you are specifically advocating doing away with individual rights – which hardly sits easily with the ethos of the IEA and is inconsistent with your earlier statement about preserving the freedom of people to get across town to school, shops, work, etc.. The law does generally, however, require local authorities to share the costs of such provision. So the maintenance of public rights of way and proper provision for non-motorised users is not inconsistent with private ownership but it must restrict the freedom of private owners to do as they please, contrary to what you advocate.
TRUNK roads generally are public rights of way, incidentally, so you are left with motorways.
@Richard Wellings – You didn’t explicitly mention RHA but let’s not be coy, it’s the RHA who have instigated the government into conducting this consultation. RHA’s members clearly have the greatest to gain with an increase in speed limits for HGVs, as you have rightly identified. But leaving aside a special interest group’s want to meddle in speed limits, the case for privatising roads is very thin indeed.
@Richard Wellings – Without enforced regulation (the kind you’re opposing) privately owned roads will just turn into (even more) potholed ruts, especially if they most or enough of main roads are bought out by same company/group. There is absolutely no incentive for a provider to keep roads in condition if consumers don’t have an alternative. I’d argue that the optimum profitable point for a private operator for local roads is a state where it’s just about driveable (think cobbles or worse) so that they’re still collecting revenue but not are spending any money on upkeep of the roads. This is fundamentally the biggest problem with road privatisation without effective regulation. And for regulation to be effective, it has to be enforced, which is expensive and I am not sure necessarily more efficient for all users.
@HJ – There are clearly a number of problems with the existing law on rights of way, which is why a change in that law is suggested as a possibility in the monograph. (Although it should be pointed out that current law is not an insurmountable obstacle to road privatisation). The obligation to keep public rights of way useable clearly constitutes a forcible taking from the property owner. Moreover, there is another objection on grounds of efficiency – i.e. that resources must be expended to keep routes useable even if they are hardly ever used.
Are all the costs to the NHS recouped or just a proportion of them? Is the same true of the police and fire service attending accidents?
Some of the costs of noise etc. may be internalised in lower property values, but that doesn’t account for changing use, eg if traffic increases, roads widened or new roads built after the property was purchased.
Following on from that It’s interesting that you say a public right of way is forcibly taking property from the owner, because most rights of way are centuries old and so the costs to the property owner would have been internalised in the purchase of the land. You need to make your mind up if ongoing costs are internalised in property values or should be compensated for by the beneficiary.
Going back to my original point, all this talk is just about trying to fix one fraction of a larger market, you are trying to fix motor transport without allowing the market to decide if it even wants to use motor transport. Over the last 100 years hundreds of billions of pounds of subsidy has built roads designed around moving motor vehicles, the market had little say in this, the government decided that cars were the future and they made it so. We have travelled so far down this path that it is now almost impossible for many people to even consider an alternative, many people who might just want to go to the shops a mile or two away have to take a costly and inefficient car because the more efficient modes are made unattractive by a century of car-centric road building. We only have to look across the channel to our geographically and culturally close neighbours in the Netherlands to see that if walking and cycling is given the opportunity to flourish people will choose it. This also has the benefit of reducing congestion on the roads for the people who still need to drive.
@Richard Wellings: “The obligation to keep public rights of way useable clearly constitutes a forcible taking from the property owner.” So are you saying that you are against such obligations? It certainly sounds as though you are (even though they are generally pre-existing rights and you haven’t explained why property rights should have precedence). And how do you square this with your earlier statement that access rights would be maintained so that people can get across town (or wherever) to get to work, shops, school, etc.?
If you were to argue that the property owner should have only to allow (through) access and not to do the maintenance, that is a fair point, but then they would still have to allow decisions to be made about their property by (say) the local council who could then use part of the property to build and maintain safe through passage facilities for non-motorised traffic. If they couldn’t, ‘access rights’ would have no meaning since access is only worthwhile if it is usable.
@Parimal Kumar – It wouldn’t be the case that major roads under private ownership would suffer poor maintenance. In fact, private owners would tend to have much stronger incentives to improve the quality of roads in order to better serve their customers. The monopoly issue is discussed at length in Chapter 2 of Which Road Ahead – Government or Market? Some of the points made include 1) that competition exists from numerous other modes, e.g. rail, air, pipeline, shipping, teleworking etc.; 2) that liberalising planning rules would reduce barriers to entry, creating the threat or reality of competition, and influencing pricing/maintenance behaviour accordingly; and 3) that road owners would also have incentives to provide a good service at a reasonable price for fear of displacing economic activity (and hence toll revenues) to competing transport corridors. For example, entrepreneurs building new distribution centres might choose to avoid routes that were, from their perspective, overpriced or poorly maintained.
@Richard Wellings: I guarantee you that privatised major and local roads will suffer poor condition because there is *no* meaningful competition, see below. For this lack of competition, the state of the roads will deteriorate to the point that they will basically be no better than a banana republic.
1) Competition against roads does not exist in any meaningful way, especially if you step outside London commuter zone. Large swathes of our economy relies on people physically travelling to work (most low/medium skill service sector, manufacturing, most financial services, etc). Remote working is not a serious alternative; those roads are used by the poorest in our society. Leaving aside London for rail; air, shipping are not meaningful alternatives to people getting to work, or school or just going about their daily business. 2) Liberalising planning laws, especially that cater for *more* road building in local areas near or at where people live will almost certainly never go through. In case you hadn’t noticed, we are a country full of NIMBYs.
3) We are such a heavily motor vehicle dependent society that it has led to a distorted market in our choice transport. It’s a feedback loop. Further, we don’t have the geographic scale to exploit for rail transport in any meaningful way (e.g. haulage of goods by train). Privatising our roads will mean that road owners will almost exclusively cater for the most common mode, i.e., the car, at the detriment of all others. It’s a vastly skewed market as is and will be further skewed by privatisation of roads.
@Lovelo Bicycles – Motor insurance covers a high proportion of accident-related NHS costs, but I’m not sure that it’s precisely calibrated, given, for example, the difficulties of determining causation for some long-term health problems. It should also be borne in mind that NHS treatment costs are likely to be far higher than under a deregulated, freed healthcare market.
And as far as I know, police and fire services are paid out of general taxation. It should be borne in mind that road users pay considerable sums in fuel duty and VED (c. £40bn p.a.).
Regarding your next question, under current rules homeowners receive compensation when a new road is built next to their property. There is no compensation, however, for increased traffic on an existing route. Nevertheless, the risk of increased traffic is surely reflected in the purchase price, in the same way that someone buying a house in West London might consider the probability that the number of flights using Heathrow is likely to increase, as it has for the last several decades.
On the issue of efficiency, many shorter journeys are made by car as a result of the time savings achieved. A 2-mile journey to the shops might take 4 minutes by car versus say 12 minutes by bike, and the car also makes bulk shopping possible, offering further savings by reducing the number of shopping trips necessary etc.
@Richard Wellings: “On the issue of efficiency, many shorter journeys are made by car as a result of the time savings achieved. A 2-mile journey to the shops might take 4 minutes by car versus say 12 minutes by bike, and the car also makes bulk shopping possible, offering further savings by reducing the number of shopping trips necessary etc.” The counter-argument is that bikes have lower running costs, don’t cause congestion (and therefore don’t slow other people down) and don’t have the same difficulties parking, so may actually be quicker. For most journeys, people don’t need to transport much baggage. All we can say for sure is that planning in the UK has prioritised car use and intimidated non-motorised traffic off the roads. In similar countries where planning has given equal priority to non-motorised traffic so that people have the choice, cycling and walking are chosen for around 40% of journeys (somewhere around 25% for cycling and 15% for walking) and that this is just as true for people who are also drivers at other times. In the Netherlands, for example which has a very similar population density to England, 39% of all trips under 5km (3 miles) are by cycle – so clearly, given a choice, a high proportion of people don’t agree with your assessment of what is more efficient.
@Richard Wellings – That is an argument for why cars might be more efficient in some circumstances, something I readily admit, it does not however, address how we can give people the opportunity to choose for themselves which is most convenient for them at any particular time and location. You know, that little thing called the market.
City centre apartment living is about as efficient as it’s possible to be, I’ve done it myself, owning a car in a city is an utter waste of time and money, it costs a fortune, takes an eternity to get anywhere and you still have to park 500m from where you want to go. On the other hand cycling is extremely convenient, it just doesn’t feel particularly safe to a lot of people so they often choose inefficient driving or walking just to feel safe.
As for bulk shopping, millions of people either can’t afford to buy in bulk, might not have the space to do so, or don’t own a car. I, for example, have no need for a car, it would hardly be efficient of me to spend several thousand pounds per year in keeping a car just to save £5 off my weekly shopping bill. A parking space alone would cost >£50 per month
So, again, how are you going to give people the opportunity to choose the most efficient/convenient mode of transport? Where is your free market in choice of mode? Government subsidy has spent 80 years distorting the market, how should it be corrected?
PS, £40bn – two points, firstly it is non-hypothecated. Secondly how can you even begin to talk about how much money motoring contributes to revenues when you have basically admitted you have no idea of the true costs (externalities) of motoring?
@Richard Wellings (cc: @Lovelo Bicycles): Car insurance does not cover all costs of motoring related collisions, as you correctly point out. However, neither does VED or fuel duty. It’s those pesky externalities again. There are recent reports by IPPR and a German university on the matter, which I have no doubts that you are familiar with. There is correlation between high rates of car dependence and higher rates of population overweight/obesity. No doubt, you’ll call your fellow academics’ research unscientific or dubious.
Do you have any data on the number of new roads built in the UK, excluding those that go with new housing? As far as I am aware, hardly any new roads have been built in the UK in the last 5-10 years, but I may be wrong about this.
The Dutch, Danish, Seville in Spain, many cities of Germany, all have excellent cycling infrastructure for short journeys, such as going to school or local shops. This promotes cycling for short journeys, unsurprisingly. Our skewed car centric culture has meant that so many of our shops have moved out of the High Street and into out of town shopping areas, further exacerbating car dependence. It’s also well documented that cyclists, pedestrians, public transport users tend to spend more overall than car users as they tend to make more journeys to shops than car users do, even though that on average they may spend less than car users per trip. Other studies, from US, have shown that installing dedicated cycling infrastructure has boosted local shops and economies. Of course, there are a whole load of other costs of being a car centric society, mostly health and time lost in everyone being stuck in traffic jams during peak times and when collisions happen.
Ultimately, the amount of latent demand for transport means that you could tarmac over most of the country and it still wouldn’t be enough. Privatising roads, liberalising planning permission for building more roads, removing regulation about roads (minimum standards, right of access, etc). will only ever mean one thing: more roads and more cars. You have failed to consider the proper cost of all the externalities of roads; the actual externalities that motor vehicle users can and do impose on other road users; and utter lack of meaningful competition to roads in UK.
@HJ – I accept your points about bikes being preferable for some travellers. Transport patterns and modal choices under a free-market system based on voluntary exchanges are difficult to predict in advance, particularly if one also assumes the liberalisation of the planning system. It’s possible that such liberalisation would lead to more dispersed settlements, which would tend, ceteris paribus, to favour motorised transport over cycling, but cyclists would also be free to develop their own districts.
@LoveloBicycles – Since the mid-90s, urban planning policies have deliberately made life difficult for motorists, with parking rationed at new developments and often located inconveniently. Similar policies were instigated in East Germany in order to encourage residents to use public transport. Under a market system, urban planning would be market driven rather than determined by the environmentalist agenda of the bureaucratic elite. It should also be pointed out that the costs of motoring have been enormously inflated by tax and regulation, putting it out of reach for poorer households.
@Richard Wellings: Once again you miss the point. I don’t know if it’s deliberate or otherwise. The cost of motoring has not been priced by you and will not be priced by the market. The pollution (air, noise, visual) caused by motor traffic, cost of roads, parking spaces, population health implications, etc., will never be priced in by the market in the fashion that you’re purporting it. Until unless those proper costs are determined and society/people are compensated for it, road privatisation will just lead to an even bigger free-rider problem than we already have. You’re basically asking for an even more illiberal situation than present. If you want to rip up all roads, railways, airports, paths, shipping lanes, all transport manufacturers (basically anything that enables transport and take society back by 200 years) and then start again, then perhaps you might be on to something. Of course, that will never happen. Your comment about “cyclists would also be free to develop their own districts” is very telling indeed about your personal bias. Cyclists are also motorists (~83-87% own/have access to a personal car/van in UK), they are not different people. Same with pedestrians and horse riders. The “costs of motoring” is another telling comment and a privatised road network will further increase that cost to poorer households. You want to see market driven planning and motoring centric society, try living and driving in Moscow. Lots & lots of people sitting in cars not getting anywhere, but with no alternative as cycling (and sometimes even walking) is too dangerous. And do you really think that UK government will scrap or significantly reduce any motoring taxes if it privatised the roads?
Codswallop, boohoo, parking is inconvenient, hardly comparable to the inconvenience of a constant state of fear experienced when riding a bicycle. besides which as Parimal Kumar points out, since the mid-90s hardly any roads have been built, what about the hundreds of billions spent on car-centric roads for all those decades prior to the nineties when most of our roads were built, with no thought for cyclists or pedestrians. The market had no say in this.
Have a market system, absolutely fine, no need to bring the spectre of East Germany into the argument, I’m certainly no socialist, cycling is a quintessentially libertarian pursuit. But you can’t begin to have a market when one competitor is handicapped. It’s like putting Amir Khan and Mike Tyson in a ring and asking everyone who they want to bet on. Nobody is going to pick Khan, not because he isn’t good but because the game is rigged against him by the sheer size and menace of the opponent.
You might say, well if the market wants bicycles private enterprise will supply the infrastructure, however if a company A owns one road and the surrounding roads owned by company B remain lethal, company A’s investment will be pointless and the failure to increase rates of cycling will look like lack of demand, this is the problem with much of the infrastructure implemented by local councils. The only way to un-distort the market is to invest in safe continuous cycling infrastructure prior to privatisation.
Again you talk about the costs of motoring, utterly pointless until you quantify the externalities, maybe motorists are being charged too much, maybe not enough, how do you know if you haven’t done the sums?
@Parimal Kumar – The market would be far more effective at pricing the ‘external’ costs and benefits of motoring than the current political/bureaucratic mechanisms. Take congestion, for example, which is typically cited as by far the largest external cost of road transport. In the market economy, scarce road space could be priced in order to minimise delays and maximise revenues. Pricing would also act as a signal for investors such that shortages of road space could be addressed. This would be in marked contrast to the current system, in which new capacity tends to be built for political reasons (e.g. regeneration schemes) rather than where it is most needed. As explained in a previous response, local environmental problems can be addressed through the liberalisation of the planning system. All this is explained at length in Which Road Ahead: Government or Market? with additional discussion of externalities in Time to Excise Fuel Duty? and The Railways, the Market and the Government. What makes you think the government and officials will do a better job at pricing externalities?
@Richard Wellings – Oh please, are you really that naive to think that the market would be better at pricing externalities when it has absolutely no need to internalise any of those costs? As an analogy if a factory owner can dump waste straight into a river without paying any costs then they would (and indeed do, e.g. in PRC). Free markets are incredibly efficient at exploiting externalities and not internalising them. The only thing that forces such internalisation is enforced regulation from state (which has its own cost to tax payers in general), which is precisely what you’re opposing. It’d be not too dissimilar to the government handing over rail franchises to private operators but not having any real regulation in terms of quality, punctuality or fares (peak or otherwise). I’d say that the cost to our society due to the motor centrism such as health & environment far outweigh those caused by congestion. Why? The cost of congestion can be priced in relatively easily compared to the damage being done to our population and environment by having more motor vehicles and more roads. As you say, pricing would indeed indicate the shortage of road space and as I said earlier, given the latent demand for transport, the markets could tarmac over most of the country and it still wouldn’t be enough. Where is capacity most needed? Greater London would be a good example. In Greater London a significant number of households have 1 or more cars. Will the markets mean that we go about tarmacing all our Royal Parks so that that more roads and parking space could be built? Environmental concerns have never been solved by liberalised planning or indeed markets in general, simply because land is a (very) finite resources and polluting is not internalised voluntarily (in any meaningful way) by any markets based system. Please present examples of where environmental concerns have been properly alleviated thanks to the free markets where tight regulation/legislation was not involved. With public ownership at the very least, the rights of minority of users are at least protected (if not often enforced) and motoring taxes are used to fund maintenance of roads, supporting infrastructure (police, ambulances, monitoring of roads, etc.) healthcare, environmental research, education (and other things, taxes not being hypothecated I can’t give you a breakdown). Bottom line is, you (and IEA by extension) have failed to understand that without meaningful competition free markets don’t work (rent seeking behaviour). In addition, privatised roads are a lot like utilities, in the sense that they are natural monopolies. Again, these require good regulation to work (i.e., counter rent seeking behaviour). No effective competition means no effective markets without effective regulation. You’re arguing for the absolute worst situation of all methods. Now, had you suggested genuine road pricing (GPS & weight based), and/or scrapping VED and putting it on fuel instead (as a proxy to pollution), then you might be getting somewhere.
@LoveloBicycles – You are correct that any privatisation process will inevitably be affected by the legacy of decades of state ownership of the road network, but you cannot know precisely what modal split etc. would have evolved in the absence of state intervention. It may be the case that cycling would be an even smaller share than it is currently because a liberal planning environment without green belts and compact city polices would have enabled a much greater spatial dispersal of economic activities.
Freed transport and land-use markets would allow entrepreneurs to experiment with different options, for example, by building districts with excellent cycling facilities. These experiments would then be tested in the market according to levels of consumer demand. Importantly, freed markets allow different preferences on transport and land-use to co-exist, in contrast to the one-size-fits-all controls imposed by state regulation. Freed markets also take account of externalities in a way that reflects individual preferences for environmental goods rather than the top-down preferences of political and bureaucratic elites.
Indeed, we cant know what would have happened, and I mispoke before when I said “The only way to un-distort the market is to invest in safe continuous cycling infrastructure prior to privatisation”,there may be other ways, but to give people the opportunity to cycle, to rediscover the benefits of the most efficient form of locomotion know to land based creature, to give cycling the opportunity to flourish, and to address the decades of sidelining, some money needs spending on cycling, fortunately it is relatively cheap to build cycle paths compared to roads. I do disagree though with any hypothesis that thinks that starting from a clean slate that cycling would be even lower than it is now. The Netherlands provides ample evidence that there is great unmet demand. With less restrictive planning we may see more smaller communities further apart but within the community demand for cycling would likely be quite high. A funny little example might be Centre Parcs.
Also…
1. I can’t wait to see residents of Westminster told to start paying market rates for their on street parking. Residents permit is £115, pay & display for a year is £17,500. Roughly equal supply of each, make it all P&D and even with price elasticity it’s going to level out somewhere close to £10k.
2. In your market how would you charge cyclists? Any method I can think of would ironically require libertarians to introduce regulation of cyclists.
Are you sure its 40?! I think you are wrong, I think it is 56mph on a single carriageway road (same as the electronic limiter.)
anon – the speed limit for HGVs on single carriageway roads in the UK is definitely 40mph.
Some lorries now clearly have this stated on the back of the lorry, to inform other drivers.