Delivering ‘the biggest overhaul to transport in a generation’ won’t be easy without extra funding. Some creative thinking is required
Transport secretary Louise Haigh and her team will have a financial and policy envelope within which they can operate with freedom. But will it be big enough to allow the really radical changes in transport?
The new Labour government has made an impressive and well planned start, with announcements across the spectrum of departments. Keir Starmer’s poll ratings have rocketed in just two weeks.
They have also been rolling out the no doubt the pre-planned message that everything they have inherited is a right mess which will limit their room for manoeuvre, especially financially. This line has the benefit of being largely true.
For a change, the Department for Transport has scored well when it comes to legislative slots in the forthcoming parliamentary session, with five Bills:
Passenger Railway Services
(Public Ownership) Bill;
Better Buses Bill;
Railways Bill;
High Speed Rail (Crewe to Manchester) Bill;
Sustainable Aviation Fuel (Revenue Support Mechanism) Bill.
I confess to being jealous. In my three and a half years at the DfT from 2010, we were not allocated time for even one Bill, and had to creatively do what we could in other ways
I confess to being jealous. In my three and a half years at the DfT from 2010, we were not allocated time for even one Bill, and had to creatively do what we could in other ways.
I wish Louise Haigh and her team well. It is particularly pleasing to see Lilian Greenwood in the department. She was a good chair of the Transport Select Committee as well as being a likeable MP.
So what I say below aims to be helpful, rather than critical.
The first three of these Bills place trains and buses firmly back in the public sector but that in itself will not deliver the improvements in service that our new passenger-in-chief wants to see. Where, for example, are we with the long overdue radical changes to fares and ticketing? The shadow GBR team seems to have taken a very long time to make very little progress.
I was also alarmed to read a pre-election report in The Times suggesting Labour intends to cut the number of train services to stop last-minute cancellations. I agree this is a problem that needs attention but turning last minute cancellations into permanent ones does not seem to me to be a very helpful way forward.
Incidentally, it is right that the government is taking action to try to end the long-running ASLEF strikes on the railways, but I did raise my eyebrows when I learnt that the reconvened talks are to be between ministers and the union, with the Rail Delivery Group of private sector operators, who had been handling the negotiations, cut out entirely. A small sign of the shape of things to come.
It will be interesting to see if the final outcome, and I think we will get one soon, deals solely with pay, or whether there will any amendments at all to terms and conditions, some of which are pretty outdated and unjustifiable, to be honest.
The fourth Bill, on the HS2 route, needs very careful thought. Here the Labour party has indeed inherited a dog’s breakfast and this week’s National Audit Office report is rightly scathing. As I warned before the election, the cancellation of Phase 2 north of Birmingham by train-hating Rishi Sunak will add enormously to the already overcrowded West Coast Main Line, with potentially fewer seats overall than at present because of the nature of the rolling stock. As things stand, the public is in danger of paying a whopping bill of some £66bn to get a worse service.
I hope the government will take a courageous decision and reverse the cancellation of this section. I do not doubt that Louise Haigh and Peter Hendy would love to reinstate Phase 2 – it makes so much sense to do so. But that, alas, will not be a matter for them to decide, but for Rachel Reeves in the Treasury.
And what the Treasury thinks and does will run through transport policy like the word Brighton through a stick of rock, just as it always does. The transport secretary and her team will have a financial and policy envelope within which they can operate with freedom. But I fear that envelope will not be big enough to allow the really radical changes in transport that we need to see.
The calls that require more cash will be very difficult to get past the Treasury unless the DfT team can clearly demonstrate how this will help grow the economy
The calls that require more cash will be very difficult to get past the Treasury unless the DfT team can clearly demonstrate how this will help grow the economy. The reinstatement of Phase 2 of HS2 comes into this category.
Yet there are other steps they could take that would pay for themselves, or even generate a profit, and that would help meet the government’s wider objectives.
Take aviation, the subject of the fifth proposed transport Bill. It is not entirely clear, to me at least, what this will do, but I imagine it will set a quota for the use of sustainable fuel, in a similar way to the quotas set for road fuels now, E10 and so on. If so, that essentially continues the previous government’s policy of relying on advances in fuel technology to clean up the industry. Indeed, this is most likely a Bill that the new government has inherited from the last.
I am pretty sceptical that there will be enough genuinely sustainable fuel to be had, but even if there is, that will not help much if the number of flights is increasing, as is happening. The Guardian reported in April that emissions from aviation are projected to reach a record high this year. This breaks the Jet Zero commitment that emissions would not be allowed to pass their pre-Covid 2019 levels.
In Scotland, the government has been planning to use taxation to hike up the cost of domestic flights and so nudge people onto trains. In England, however, the last government actually cut the rate of Air Passenger Duty, the only tax or charge of any sort that is levied on flights. There is no tax on kerosene, the aviation fuel. That immediately gives polluting aviation a cutting edge against cleaner rail.
Scotland’s plan will help cut carbon emissions while potentially increasing revenue for the government. It is a policy Rachel Reeves ought to adopt but will she? And will Louise Haigh push for it? At the very least, the cuts to APD should be reversed.
But the signs are not good. The aviation industry has seductively presented itself to the Treasury as an engine for growth, or a lot of engines perhaps. Tell them what they want to hear is the tactic, and it seems to be working. The new Labour government has even said it is “open-minded” about a possible expansion of Heathrow airport, as long as it meets various tests including on the climate. Spoiler alert: it won’t.
Let me suggest this idea of mine to Rachel Reeves, one which the Lib Dems have in fact adopted. Why not increase tenfold the amount of Air Passenger Duty payable by private jets? They are hugely wasteful in carbon terms, and their passengers can afford it.
Here is an easy income stream for the Treasury that can also help the environment if some people opt instead for scheduled flights.
On rail, will the Treasury take steps to protect and indeed further encourage transit of goods by rail? Just after the election, Royal Mail announced it was ending the use of trains to carry mail, instead switching all deliveries to road. This is despite their earlier commitments to boost the use of rail, and the opening last year of the country’s largest parcel facility at Daventry freight terminal. I know the new ministers have a lot to absorb, but can Peter Hendy get on this case quickly please? Perhaps he could have a word with the chair of postal services, Keith Williams, he of the Williams review that recommended more freight on rail.
But it is on roads where a smarter Treasury approach could make a real difference to Treasury income, traveller behaviour and the potential for modal shift to public transport. The last government dug itself into a hole over fuel duty with the result that the level applied has not been increased since 2011, and has actually been cut. As a result of this freeze, a freeze like a rabbit in the headlights, the Treasury has thrown away billions that would have rolled in if even an inflationary increase had been added each year.
And of course this freeze has taken place while rail fares have risen year on year, thereby encouraging reverse modal shift, from clean to dirty. Perhaps the Treasury can also be made to see that clogging streets with vehicles is hardly the way to generate economic growth.
Everyone knows in their heart of hearts, especially Treasury officials, that we need to move to a pay-as-you-drive alternative to fuel duty
Yet the situation is even starker. The inexorable replacement of diesel and petrol vehicles with electric ones is going to pull the fuel duty rug from under the Treasury entirely, taking away the £35bn a year from motoring taxes that they have not yet given away. Everyone knows in their heart of hearts, especially Treasury officials, that we need to move to a pay-as-you-drive alternative to fuel duty before that £35bn disappears slowly down the plughole.
The problem is that no politician seems to have the courage to take this forward, for fear of an explosion from motorists and their champions in the right-wing press. Yet the longer that passes before the medicine is taken, the worse the symptoms get.
I understand Labour, warned off by what happened when Sadiq Khan stuck his toe in the water, have now ruled out doing anything this parliament. That may be good politics, but it is terrible policy.
Pay-as-you-drive can be sold, as the detailed and ground-breaking work from the Campaign for Better Transport showed about 18 months ago. The government should convene a meeting of all the political parties and try to get some cross-party consensus on the issue.
In the meantime, if DfT ministers find it hard to persuade the Treasury of the need to take action to help deliver modal shift, they need to find allies elsewhere in government. I suggest they start with Ed Miliband at energy.
ABOUT THE AUTHOR: Norman Baker served as transport minister from May 2010 until October 2013. He was Lib Dem MP for Lewes between 1997 and 2015.
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