Transport Investment, Road Pricing and the Future of Transport

Iain Stewart MP, Chair of the Transport Select Committee, provides a look at what the Parliamentary Committee have been exploring over the past few months.

Recent announcements from the Government on Transport have been a mixed bag. While the November Autumn Statement confirmed the DfT’s budgets for the current spending review, inflationary pressures in the sector will have to be met from within that budget. While we eagerly await full details from the Secretary of State as to how spending will be apportioned between the different transport modes, and the prioritisation of spending within each, we have had the announcement of delays to parts of HS2 and the programme of road infrastructure projects, referred to as Road Investment Strategies (RIS), which run for five years a piece.

The decision came at an uncanny time for us on the Transport Committee, as we are midway through our inquiry into the RISs. This strand of work was prompted by a highly critical NAO report, which pointed to shortcomings by National Highways and the Department for Transport. Mandarins at the two bodies were charged with failing to grasp how inflationary pressures – rising costs of raw materials, energy and labour – would cause projects in RIS2 (from 2020-25) to collectively go billions over budget, and face being delayed. Eleven out of the original 69 RIS2 projects have been scrapped altogether. and Construction Pipeline, plus new initiatives to support infrastructure investment via the UK Infrastructure Bank and leveraging greater contributions from institutional investment funds. We await further details of these, and what they may mean for road and rail investment projects, with interest.

It is now likely that various projects from RIS1 and 2 will be shunted into RIS3 (2025-30), with some possibly being rolled into RIS4 (2030-35).

What is likely to determine each project’s fate is deliverability, meaning complex megaprojects are less likely to be embarked upon. There will be debate about whether it may be most beneficial for the economies of affected regions to instead focus resources on simply maintaining the Strategic Road Network – England’s 4,300 miles of motorways and A roads.

I’m also keen to see what the impact will be of proposals to extend the powers and funding of for some Mayoral Combined Authorities, and what this will mean for transport projects in those areas.

As is usually the case, my Committee has heard a range of opinions on road investment during our current inquiry. Consequently the reactions of stakeholders to the Budget will be mixed. Every spring Budget has its winners and losers.

The Budget contained some good news for maintenance of local roads, with an additional £200 million allocated, and for motorists with the extension of the Fuel Duty cut.

The Budget, meanwhile, contained some good news for maintenance of local roads, with an additional £200 million allocated, and for motorists with the extension of the Fuel Duty cut. Also noteworthy was the commitment to publish an updated National Infrastructure

As inflation and other rising costs curtail the amount of cash in DfT’s coffers, my colleagues and I are reminded of the Committee’s Road Pricing report, published in February last year, in which we cautioned the Government it must reform our system of motoring taxation.

We argued that as electric vehicles become more prevalent – which must be encouraged to cut emissions –the tens of billions of tax revenue generated by Fuel Duty will evaporate year on year. Meanwhile, the Office for Budget Responsibility forecasts that levying Vehicle Excise Duty on EVs from 2025, a measure announced last autumn, could only raise £1.6 billion a year by 2027/28.

The Treasury should heed our warnings and assess options for a new form of taxation, applicable to all motor vehicles, to plug this hole in the public finances. So it was disappointing when the Chancellor responded to us with a short letter saying, discourteously, that he “does not currently have plans” to get on the front foot and do so. In challenging times for the economy it is even more important to get this right, not least because revenue from motoring taxes actually funds hospitals, schools, police and everything else. Only £7 billion of the £35 billion collected in 2020/21 was used to maintain the country’s roads. Another strand of the Committee’s work that is giving me reason for optimism is Our Future Transport, a crowdsourcing exercise that has seen 227 academics, charities, firms and think tanks flood our inbox with their ideas on what our next in-depth inquiry should look into.

We were hoping people would tell us about technological innovations that look set to transform the way we do transport in the years or even decades to come, so that we can look at them from a public policy perspective. DfT is said to be working on legislation to keep up with the advent of self-driving vehicles, which 10 years ago would have seemed like pie in the sky to many. So what could the next big outside-of-the-box idea coming down the tracks be? Very soon we’ll be holding a Dragon’s Denstyle public meeting to hear pitches from those who sent some of the best submissions. It promises to be a fascinating session and I look forward to the debates I’ll no doubt have with colleagues over which to adopt as our next inquiries.