Depending on dodgy figures

Tweet

I’m not an expert on predicting traffic flows, and I won’t pretend for a moment to understand the detail of the modelling which has been used by the civil servants in Whitehall to arrive at its estimates of the likely increase in traffic over the Severn Bridges after the abolition of tolls.  So, it’s not expertise which makes me sceptical about their conclusions, it is, rather, the application of a simple test to the outcome of the calculations – ‘does this result look reasonable?’.  It’s an approach which mathematicians often use, and if the result does not look ‘reasonable’ then it’s often a sign that there’s something wrong – either with the initial data, or with the methodology applied to it.  Treating the model as an unchallengeable ‘black box’ isn’t enough; the fact that ‘the computer says’ something doesn’t make it right.

As I understand the numbers set out here, the conclusion is that in 2022, 24 million vehicles would use the bridges every year without tolls, but only 18 million with tolls, or, put another way, without tolls, traffic will increase by 42% but if tolls only slightly lower than today are retained, it will increase by only 4%.  One corollary of that is that 6 million journeys each year – or 1 in 4 of all potential journeys – will simply not take place at all if they cost a few pounds more than they might otherwise cost.  Now of course it is true that according to classical economics an increase in price results in a decrease in demand, and I don’t doubt that some people or businesses will be deterred from using any stretch of road by a toll.  But it just doesn’t feel at all reasonable to me that such a small (in relative terms) toll makes such a huge difference – I just don’t believe the figures and suspect the validity of the model being applied.  A marginal variation in cost ought to lead only to a marginal variation in traffic flows; and the assumption that cost is what drives the volume of traffic flows is itself somewhat dubious.

There’s another corollary as well.  If tolls of a few pounds are really so effective at deterring people from making journeys, then there is perhaps an easier solution to the problem of the Brynglas tunnels than building another motorway – we can deter a quarter of the potential journeys by imposing an extra toll.  In reality, that doesn’t feel reasonable to me either – I don’t believe that it would have that effect in practice.

Llanelli AM, Lee Waters sees these figures as a way in which the UK Government is trying to dictate transport policy in Wales, by forcing the Welsh Government to build extra capacity – the new M4 link – in order to cope with all the extra traffic.  I’m not sure that they are quite that devious, but I have a lot of sympathy with the underlying assumption that the government’s figures are produced in a way which supports its policy objectives – by which I mean that the assumptions built into the modelling are those likely to produce the preferred outcome.  I disagree with Lee’s suggestion, however, that the solution is to retain tolls, albeit at a lower level, in order to obviate the necessity for the new M4 link.  Not believing that the removal of tolls will directly lead to a given increase means that, logically, I also don’t believe that retaining them would prevent that level of increase.

If the problem is that dodgy figures are being used to justify a particular policy, the solution is not to use those same dodgy figures to justify an unpalatable alternative – it is to challenge the dodgy figures themselves and the basis on which they have been prepared.

Tolling for a purpose

Tweet

The willingness of the Welsh Government to consider the proposal made yesterday by Gerry Holtham that the new M4 link should become a toll road was disappointing.  It’s not that I’m opposed in principal to road tolls.  They’ll always be unpopular, of course, but as a means of seeking to deter private transport, encourage the use of public transport and re-localise important aspects of the economy, I can see a potential role for a properly thought-through system of road tolls.  My problem is that that isn’t what was being proposed here.

Professor Holtham asked “Why should the taxpayer finance the construction when road-users, who benefit, can do so?”.  I have two objections to that line of argument.  The first is related to the idea that shared infrastructure costs should be paid for only by those who use them.  What if we apply the same argument to a new hospital for instance?  Why should the taxpayer finance the construction, when the sick people who benefit could do so?  And the second point is that it isn’t only the users of a road who benefit from it, as we can see if we turn the question around and ask who really pays the tolls for the businesses using any new road.  The answer is, ultimately, the customers, of course.  Although charges and taxes appear to be levied on businesses, the costs of those businesses always and inevitably get passed on to the customer.  And insofar as there is any selectivity as to which customers pay, it’s the ones at the ‘far end’ of the tolled road.

And that brings me to my main objection to selective road tolling rather than tolling as a part of a package of measures with clear social and environmental benefits in mind.  Just as the Severn Bridge tolls have been a disincentive for some businesses to establish themselves on the ‘wrong’ side, preferring to be on the side where they have the greatest number of customers, so tolling any road in isolation creates a disincentive for businesses to find themselves at the ‘wrong’ end of that road.  No sooner do we get rid of one set of disincentivising tolls than we are faced with the possibility of another.

There is a difference between the two cases, of course.  The alternative to using the Severn Bridge is a long diversion, whilst the alternative to using the proposed new M4 link is to continue using the old untolled road - or as Prof Holtham put it, those unwilling or unable to pay the tolls could “prefer to sit in a jam”.  It sounds like a nice empty free-flowing road for those with spare cash, and a second-class route for the rest.  In a roundabout way, the provision of a better, more exclusive, road only for those who can afford it is a justification, of sorts, for the idea that those using it should pay for it.  I’m not sure, though, that a road built for the use of a minority actually answers the supposed need for the construction in the first place.

Like many others, I’m not convinced about the need for the road at all, so if the Welsh Government is serious about being ready to consider the use of tolls on our roads, why not look at how a comprehensive package of policies, including tolling, might reduce the demand for capacity on the roads and obviate the need?  I accept that it wouldn’t be an easy sell, but it would at least be in line with the fine words which the government likes to utter about the environment and future generations, as opposed to building a road which makes those words worthless.

Another year, another toll increase

Tweet This year’s increase in the tolls to cross the Severn bridges is less than it has been in some previous years, but it’s still an increase.  And it remains a deterrent to economic growth in Wales.  There is, as the Lib Dems have been quick to point out, now only one of the four parties in Wales which calls for outright abolition of the tolls; the other three all seem to support retention of the tolls in one form or another.

It wasn’t always that way, of course.  I can remember Plaid conferences in the 1970s and 1980s where members fulminated against the iniquity of the tolls and, whilst I can’t immediately lay my hands on them, I’m pretty certain that strongly worded motions were passed demanding the immediate abolition of the tolls.  I’m not sure how that policy was changed, but I remember when it was changed.  It was November 2010; and the first that I knew of the new policy was when I read about it in the Western Mail. 

As I blogged at the time, it was one of a number of ‘four legs good, two legs better’ moments which occurred during the One Wales period; overnight, the party went from believing that the tolls were an unfair imposition on the Welsh economy to believing that they were a jolly good way of raising money to invest in other infrastructure in Wales.  I’m not sure whether this year’s policy announcement is the same policy or not; there certainly seems to be less emphasis on using the tolls to raise extra money to pay for other things than there was in 2010.

There’s nothing wrong with changing policy per se – as Keynes said, “When my information changes, I alter my conclusions”.  I was just never clear what the changed information was, other than the party becoming part of the Welsh Government.  I have no real confidence that a similar change in circumstances wouldn’t lead to a similar change in policy by the Lib Dems as well – it’s not as if they don’t have form on that…

The real issue though isn’t about point-scoring or the policy gyrations of politicians, it’s about whether we should be paying tolls or not.  And it seems to me that the answer to that should really depend on the nature of the Welsh economy – as it is, and as we want it to be.

If the Welsh economy were a largely self-sufficient and highly localised economy, as I’d like it to be, then there would be a good case for a comprehensive system of tolls across all Welsh trunk roads on environmental grounds.  It wouldn’t be a particularly popular policy, but discouraging long distance road transport, whether of goods or of people, would help to build a more sustainable economy in Wales.

On the other hand, if the Welsh economy is a peripheral economy, at the end of a long distribution chain, then an extra charge to travel the roads at what would be seen as the “far end” is inevitably going to be an economic barrier, which will encourage those businesses which have a choice as to where they site their premises to be on the ‘right’ side of the toll barrier.

It hardly takes a great deal of analysis to decide which of those scenarios is the more accurate in looking at the Welsh economy as it is today; and whilst some politicians might have aspirations to move from one to the other, there is no real plan or route map for doing so; nor any prospect of it actually happening in the foreseeable future.  And without such a plan, continuing to charge tolls on a key pinch point will continue to militate against the economic interests of Wales. 

And another thing about that dam...

Tweet There’s a good reason why all the mockups and impressions of the proposed Severn Barrage show a road across the top.  Although the scheme’s proponents talk about the barrage itself being entirely privately financed, it is unlikely that the barrage would ever be built without the public sector financing that such a road requires.

In theory, it could be a rail link rather than a road link –  a 21^st century alternative to the Severn Tunnel would surely be worth having.  The proposed barrage is really in the wrong place for that though – the alternative (smaller and less environmentally damaging) Shoots Barrage would be much better placed to form part of HS3 – Wales’ link to the European rail network.  So road it would be.

That of course means connecting it to the M4; and I do wonder whether any of the proponents has really looked at a map to consider the implications of a four or six lane highway between Lavernock and the M4.

Assuming that little problem could be overcome, it also raises the question as to how such a road would be funded in practice.  For reasons which escape me, and which seem to defy logic, most, if not all, of our elected politicians seem to be wedded to the idea that road tolls are a very bad idea unless the road crosses a stretch of water, in which case they become a very good idea.  So much so that two parties (Labour and Plaid) are now in favour of using roads-which-cross-water as a source of taxation revenue to fund other projects.

It’s probably reasonable to suppose therefore that any new road crossing would be funded by tolls and that those tolls would have to be set at a higher level than the tolls for the existing crossings – the proposed bridge is, after all, considerably longer than either of the existing crossings and more expensive to build in consequence.

Using the logic applied when the second Severn Crossing was opened, we can’t really have a situation where the crossings are priced differently, since few people would then use the higher-priced crossings.  So I think we can assume that all three crossings would be priced at the new higher level – and that such tolls would continue for the foreseeable future, rather than being reduced (or even abolished) at the end of the current contract period.

So how much of a leap is it really to say that those politicians and others supporting the Hain barrage are, in effect, also supporting not just the retention of Severn tolls but increasing them to a higher level and maintaining them at that level for the indefinite future?