blog: Autumn Budget | Taxing Times for Sustainable Transport in the UK
Thursday 31st October 2024
One of the more eagerly awaited Government Budgets of recent times was delivered on Wednesday 30th October, and by the UK Government's first woman Chancellor of the Exchequer no less - a milestone that would be unremarkable, but for the fact it has taken until 2024 to occur.
An investment focus on UK public services and a conscious effort to improve living standards aligns with the new Government's election manifesto. For sustainable transport planners, like myself, it is hard not to feel - once again - transport spending being treated like something of a balancing item (both financially, and politically) when it comes to the UK's public spending agenda.
Carry on Motoring?
Some headlines this morning focus on the perceived financial positive of a maintained freeze on fuel duty - minimising the price of petrol and diesel at forecourt pumps. Whilst that helps improve affordability for people on lower incomes who rely on cars and other forms of private motorised transport to make their everyday journeys, it sits at odds with the 50% increase in the nationally imposed single fare cap on bus services (introduced in 2023 to encourage uptake in bus services post-pandemic), which will rise from £2 to £3 from 1st January 2025 until the end of next year.
Combined with a 4.6% increase in rail fares (nudging a peak hour return for the 90-minute journey to London from Derby towards £250 from 1st April 2025), the message to the electorate appears to prioritise economic growth (and a perception that low motoring costs support this) over environmental considerations and the country's Net Zero Carbon aims (given higher motoring costs exert positive pressure on individual’s everyday trip-making choices). On that topic, the CCC’s report to Parliament earlier this year suggests we are set to miss current targets, with High Court rulings impelling Government to update the national carbon reduction strategy to add detail on how the carbon reduction trajectory will be achieved.
Rationalising rising bus fares
I tapped out the start of this blog on my phone during a 50-minute bus journey into my nearest city. This trip cost me just £2, and I was joined by two other passengers for most of the trip, rising to eight as we neared the city centre - yielding the operator a princely £16 in revenue for the ‘run’ (unlikely covering the driver’s hourly wage).
With that in mind, I find it possible to rationalise the higher bus fare cap more than the other day-to-day spending measures. The £2 cap appears to have been reasonably successful in at least maintaining, if not increasing, bus patronage but it has also depressed non-single bus fares in a way that makes it increasingly challenging for operators in some parts of the country to generate sustainable profits as their operating costs have risen - resulting in continued cuts to local bus services like the one I relied upon whilst drafting this post.
Raising the cap feels like a logical and prudent step in isolation, but one that sits uncomfortably alongside a continued commitment to limiting increases in motoring costs at a time when reducing UK transport emissions remains a considerable challenge. It is also hard for those living outside of larger Metropolitan areas to understand how bus fares can be so much higher locally than in London (£1.75 for up to an hour’s travel, with a daily cap of £5.25) and Manchester (£2 for a single journey and a daily cap of £5). The answer lies in the shorter journeys, lower operating cost bases, and higher levels of patronage bus services tend to enjoy in more densely populated urban areas.
Investing in the future of travel?
There were some ‘big ticket’ investment announcements for sustainable transport planners to celebrate, within the modestly uprated £30bn budget for DfT in 2025-26 (+£1.2bn year-on-year, but a 2.5% real terms reduction from 2023/24).
A significant (thought to be ~£1bn) commitment to funding HS2 tunnelling into Euston should ensure the London to Birmingham leg of the route is delivered as originally envisaged. However, there was silence within the Budget on any funding for Euston station’s redevelopment (paused since March 2023 to save costs) - implying a reliance on private sector investment to deliver the station as part of a wider property and urban regeneration effort akin to that realised along Euston Road around Kings Cross. While this hints at a progressive transit-oriented approach to development in the Euston area, the scale of investment needed will likely be subject to further conversation and negotiation between Government and property developers – particularly if the UK’s forecast economic growth picture should change over coming years.
The commitment to HS2 was matched by similar funding confirmations for continued delivery of the ongoing Trans-Pennine Route Upgrade and East-West Rail, and an additional £200m for Combined Authority Mayors through their City Region Sustainable Transport Settlements. Taken together with £650m of funding for all other local authorities (through ongoing Local Transport Settlements), £1bn for bus services, £500m for repairing potholes, and £100m for local walking and cycling infrastructure; the budget allocates ~£3.6bn out of £30bn of potential capital spending in 2025/26 towards local transport measures. A further ~£320m of funding is also allocated for a much-needed acceleration of EV charge point infrastructure and to support the purchase of electric vans through an expanded Plug-In Vehicle Grant Scheme - the effects of which will be felt at a local level.
Spent wisely, that amounts to a reasonably significant sum of funding to improve local bus priority, deliver light rail network extensions, re-think road-space allocations, improve the quality and availability of local EV charging networks, and enhance active travel networks in urban areas that are likely to benefit the greatest number of people on a daily basis. Divvied-up among the 38 Local Transport Authorities in England you quickly realise this amount spreads quite thinly across the many settlements which are the focus for our every-day activity and movement. Quality of interventions – rather than quantity – will therefore continue to be critical to delivering the meaningful changes in travel behaviour needed to support climate change and Public Health objectives.
Treasury shaping national transport strategy?
Arriving at the end of my bus journey, and this canter through the latest Government Budget, it is hard not to question whether the DfT ‘Horse’ is driving the Treasury ‘Cart’, or vice versa, when it comes to transport strategy and policy.
I remain hopeful that a new national transport strategy will be published to accompany the Treasury-led funding announcements of this week at some point over coming months. Critically, given £500m of new funding was allocated for the Affordable Homes Programme, and the determined policy emphasis the Government is placing on addressing housing supply issues, any future transport strategy (and accompanying funding decisions) ideally needs to holistically link land use and transport planning actions together with desired public health and environmental outcomes.
Until that emerges it will continue to fall to local transport and planning authorities to work together to make this happen.
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