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by GK Strategy 23rd November, 2017
3 min read

Budget 2017: Re-thinking transport policy

This week’s Budget speech is likely to be memorable not just for a couple of genuinely funny jokes from the Chancellor (although the throat lozenges may have been too soon), but for the welcome emphasis on transport and infrastructure as drivers of economic growth and increased productivity. We saw lots of positives, from the £1.7bn Transforming Cities Fund to guaranteed continuation of the Plug-In Car Grant.

But budget-watchers know that the real substance of the Budget is in the Red Book, not the Chancellor’s speech, and it’s there that we begin to see missed opportunities. It’s clear that much of Government thinking is still siloed within departments, rather than focused on cross-Governmental objectives. While it was welcome to see transport being considered as an economic driver in this Budget, there were opportunities to integrate further with public health, with skills and work policy and with the life chances agenda.

A flagship policy announcement, trailed by the Conservative Party’s Twitter account in the days before the Budget, was the extension of the 16-25 Railcard to people between 26 and 30 years old. This isn’t something that’s in the Government’s power to do unilaterally, as railcards are administered by the rail industry. In practice, the Government has announced that it will work with industry to introduce this railcard from Spring next year. This policy was at least partly intended to improve the Conservatives’ support with millennials, who disproportionately voted Labour in this year’s election. However, railcards were originally introduced to encourage more off-peak travel and make better use of existing capacity, and the current 16-25 railcard isn’t usable for peak-time travel. The new railcard may make it easier to travel to see friends and family at the weekends, but won’t do anything to make it easier for young people to travel to school and work. If the Government’s goal is to improve the life chances of young people struggling with student debt, high housing costs and insecure work, it feels like the Chancellor has missed a trick by focusing on railcards rather than the extension of concessionary fares.

Air quality is an issue of increasing concern in large cities across the UK, but one that Government again appears to approach in a siloed way, this time within a department. The Budget included a number of announcements aimed at tackling this, including increasing the Company Car Tax diesel supplement and a Vehicle Excise Duty supplement on new diesel cars. Alongside this stick comes the carrot of investing in electric vehicle charging infrastructure and continuation of the Plug-In Car Grant to 2020. While shifting from high-polluting to cleaner cars is important in improving air quality, encouraging everyone to switch from one type of car to another won’t deal with the issue of congestion in several city centres. Yesterday’s Budget could have been an opportunity to specifically support the cleanest, greenest transport modes of all – cycling and walking – but active travel didn’t get a mention. It looks like this could be wrapped up in the new Clean Air Fund, leaving it to local authorities to lead on encouraging people to use active travel for shorter journeys, alongside a number of other important activities to help individuals and businesses adapt to new air quality measures. Given the Government’s commitment to increasing spending on the NHS in the Budget, improving public health outcomes by continuing to support active travel could have been an example of joined-up Government in action.

The only mention of aviation yesterday in the Budget was around Air Passenger Duty, which the Chancellor has frozen at 2018-19 levels for long-haul flights and 2012-13 rates for short-haul. This is likely to come as a disappointment to the aviation sector, who have long been calling for cuts to APD to bring the UK more into line with European and international competitors. A cut in APD could have sent a strong signal that the UK remains open for business post-Brexit, and supported the agendas of the Department of International Trade and Department for Exiting the European Union.

Challenges in coordination between the UK and Scottish Governments appear to have led to delays in the devolution of APD to the Scottish Government, as revealed in the Budget’s small print. With the SNP administration in Holyrood proposing to halve and then scrap APD, this could have spelt trouble for regional airports in the North of England, with traffic moving north of the border, so business in the North may breathe a sigh of relief at this particular instance of lack of coordination between Governments.

So yesterday’s budget in transport terms is a good effort, but more needs to be done to integrate transport with broader Government objectives on housing and planning, public health, environmental protection and improving life chances. There is little sign yet of the integrated strategy for infrastructure that we need to make the most of every pound of Government spending.

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