A businesslike approach to fixing transport?

Analysis By Robert Peston BBC business editor

The Eddington Report on how to modernise the UK's transport network is palpably the work of a businessman rather than an economist or a policy wonk.

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Rod Eddington's approach is pretty practical, treating the United Kingdom as if it was a giant business.

This former BA chief executive's methodology is basically to ask what kind of returns, what kind of profits, are generated by different kinds of transport investments.

Now he has absolutely no doubt that investing in transport brings significant returns.

He says, for example, that unless we tackle congestion, it will cost an extra £22bn in wasted time for all of us, especially business, by 2025.

Which is one of the reasons that he is such a powerful advocate of road pricing - or charging us each time we use a busy road.

Benefits

Now, it is probably worth spelling out in more detail what he says about the financial benefits of a national scheme of pricing the use of busy roads.

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In his study, he assumes there would be a maximum charge of 80p per kilometre to travel at the busiest times.

He estimates that such a scheme would reduce congestion by 50% below what it would otherwise have be in 2025 and would therefore reduce the requirement of big new investment in road capacity by 80%.

And from there he deduces there would be benefits of £28bn every year in 2025. These are basically the benefits of being able to get from A to B quicker for those for whom it is most economically important.

And he says that these benefits are so big that they can't be ignored - although he also acknowledges the policy challenge of ensuring that poorer people are not discriminated against as and when it becomes more expensive to get around.

Priorities

He also makes what I would call two very general and sweeping points about where money should be directed.

First he identifies three strategic priorities:

• to invest in congested and growing city areas
• to spend money on improving links between important urban areas
• and to invest in improving gateways, or links between the UK and the countries with which we trade and do vital business.

BA's former chief executive is in favour of expanding Heathrow

Second, he says there are - on the whole - diminishing returns to investing in ever-larger projects. The best returns, he says, come from relatively small investments designed to make our existing transport network and system function better.

Things like increasing capacity on existing railway lines or bus routes.

Almost the biggest possible project in his report which he specifically endorses, for example, is so-called mixed mode at Heathrow - which would allow runways to be used for take off and landing.

Funny that a former BA chief executive should like that.

General principles

I think some people were expecting clearer recommendations from him about specific projects.

In fact, there aren't many of those.

Thus in the main 60-odd page report, I could find no reference to Cross Rail, the new line linking east and west London so favoured by business in general. As it happens, I think he's mildly in favour, but that's not explicit.

Britain's transport networks are "inefficient and disjointed"

And you have to deduce that he's in favour of Heathrow and Gatwick expansion from his saying that a) they are terribly important to the economic success of this country; and b) delays to flights at both of them are the worst in the European Union.

But nowhere is there a detailed grand plan for fixing Heathrow.

Going green

The other really important point about this report is that Eddington is very much a Stern acolyte.

He's totally bought into the Government-commissioned report on how to reverse climate change prepared by Sir Nicholas Stern - who gave him a bit of help with this report, as it happens.

So he says that the costs of damage to the environment, the costs of climate change, must be fully factored in to any assessment of specific transport schemes.

And he says that cars, planes, trains and so on must be charged for their relative emissions of carbon, their relative contributions to climate change.

As such, he's another influential voice endorsing more green taxation of transport or the rationing and trading of carbon emissions from the transport sector.

Which, if implemented of course, would make it more expensive for all of us to get around - the more so if it combined with congestion charging on the roads.