Tag Archives: cuts

It’s not just the infrastructure, stupid!

Making better use of what transport services we have already will provide quicker and cheaper solutions.

Down here in Devon discussions about transport invariably end up talking about improving the resilience of transport infrastructure on the peninsula. Whether it’s dualling the A303 to provide an alternative to the M4/M5 or building another railway between Plymouth and Exeter, there is a real head of diesel fuel behind the campaign to give Cornwall and Devon better physical transport connections to the rest of the country.

The collapsed railway on the Dawlish sea-front in February 2014 has become the icon for what’s wrong with the peninsula’s rail services. The fact that Cross-Country Voyager trains still regularly break down on the sea-front because the waves chuck seawater into their diesel engines is presented as another reason for “doing something about Dawlish”. Commentators generally ignored the quicker and cheaper solution of replacing those trains with ones that can withstand a bit of sea water, such as Great Western Railway’s ageing 125s.

Every so often, a body called the Peninsula Rail Task Force pops up with yet another report aimed at persuading central government to find a lot of money to provide a new railway line across Devon. This body, which is made up of local authorities and the two Local Enterprise Partnerships (aka the Plymouth business lobby), focusses almost entirely on improving resilience through capital expenditure. Leading local politicians and MPs read from the same song book, though since all but one of the MPs are Tories their demands for more public spending are inevitably unconvincing.

So we have a campaigning mindset focussed on infrastructure. That’s not wrong but it’s not the whole story. The problems with our transport network extend well beyond the this. One of the greatest disincentives to using public transport is the lack of good local connections between rail services to or from the rest of the country and those communities without a railway station.

Much of the problem is due to the lack of evening bus services. Someone living in the South Devon town of Kingsbridge who needs to do a day’s work in London will get the first bus to Totnes station, wait over an hour and then a train to Paddington arriving at 11.24am. Several meetings later, the same person just manages to catch the 5.03pm from Paddington arriving at Totnes at 7.55pm. Sadly, the last bus from Totnes to Kingsbridge left at 7.05pm. The well-off will have no problem summoning a taxi, but not everyone is well-off. So our traveller drives from Kingsbridge to Totnes and back again, because there is no public transport option at the end of the day.

These examples are replicated all over the Westcountry, and beyond. What they show is, despite the endless rhetoric of politicians about “integrated” transport, nothing changes. There was a publicly-funded Commission on Integrated Transport which lasted from 1998 until its abolition in 2010, presumably on the grounds that it hadn’t actually integrated anything. When I mentioned the importance of better connections at a meeting where train and bus operators were present, their representatives looked at the ceiling and shook their heads.

In our system of public transport which depends on private sector operators, the needs of passengers regularly come second to the needs of the companies’ owners to make a profit. So if it’s not profitable to run a bus from Totnes to Kingsbridge in the late evening, and Devon County Council has insufficient money to subsidise one, it won’t run.

Is there a solution? There is, and the government already has the statutory powers to achieve it.

The Railways Act 1993, which privatised the railway network, contains the relevant powers. They just haven’t been used to their full potential.

The key point is that the Secretary of State for Transport is under a general duty “to contribute to the development of an integrated system of transport of passengers and goods” (section 4 of the Act). So far so good, but general duties need to be put into practice. Again, the Act provides the power and the rail franchising system provides the mechanism.

Almost all rail passenger services in the Westcountry are provided by Great Western Railway (GWR) under a franchise agreement. This is a legal contract between the government and the company. The revised GWR franchise agreement runs to 581 pages, plus three more substantial documents about levels of services to be provided. There are only two references to bus services in the entire franchise agreement, both relating to the conditions in which bus services may be substituted for rail. Nothing in the agreement compels GWR to coordinate its services with buses.

However the Act empowers the Secretary of State to set conditions in a franchise agreement (section 29(5)) which give effect to the general duty to develop an integrated system and, specifically, which may require the franchisee as a condition of its operating licence to enter into an agreement with other bodies to achieve the requirement to achieve integration (section 9).

So it’s all there. What is now needed is the will to make it happen. As we saw above, part of the integration problem is that the bus operators will not run late evening services on some routes. Using the franchising system places the duty to secure integration on the rail operator rather than the bus company. This is inevitable because bus services are not regulated in the same way railways are.

Before the train operating companies dismiss the idea out of hand, they might reflect on their ownership. GWR is part of First Group which runs bus services in most of Somerset, much of Cornwall, and the Plymouth, Tavistock and South Devon area. Stagecoach buses – part of Stagecoach Group which runs the London–Salisbury–Exeter rail franchise as South West Trains – cover the rest of Devon. Instead of running their bus and rail divisions as if they were on separate planets, they should look for beneficial business opportunities arising from a more integrated approach.

More challenging is engaging the other Westcountry bus operators which are not owned by train and bus conglomerates. They may see market opportunities in providing services to connect with trains, and then publicising them – something the bus industry as a whole is lamentably poor at. The train operating companies make good profits from their rail businesses. Putting a little back into supporting connecting bus services could improve their public image as well as encouraging people to make better use of their own services.

Yet at the end of the day the experience of voluntary integration in this country outside the metropolitan areas has been poor. Big companies like First Group and Stagecoach are, at bottom, about making profits for their shareholders and will not provide commercially unviable services. Local authority funding for subsidising such services has been severely cut. Central government has the tools to put this right, and should be prepared to do so.

Why can’t we talk about income tax?

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We need to reframe our view of income tax as a source of community benefit, not as a raid on individual pockets.

Of all the elephants in the political arena, the idea of increasing income tax rates is one of the most immovable. The present government is driven by the idea that taxes are fundamentally bad, and that people and businesses should pay as little tax as possible. Labour is less dogmatic, but remains very nervous about any move that would increase the tax take from anyone other than the rich and institutional tax evaders.

The defenders of a low-tax regime say that people should be able to make their own decisions about how they spend their earnings. Or that high taxes will drive businesses, top-flight managers and entrepreneurs away from the UK. Or that the public sector squanders public funds on ineffective projects.

There is some truth in all of these points: if there wasn’t no one would believe them. As it is they’ve become mantras, unquestioned in too many influential circles. We have been conditioned into believing that taxation is inherently bad. So what is almost never discussed in public, let alone in Parliament, is the case for raising income tax rates.

The Government is making it clear that, if re-elected, its austerity policies will continue. In its commentary on the Chancellor’s Autumn Statement in December 2014 the statutorily independent Office of Budget Responsibility observed that the government was in the fifth year of 10-year programme of reducing public expenditure. It stated: Around 40 per cent of these cuts would have been delivered during this Parliament, with around 60 per cent to come during the next. The implied squeeze on local authority spending is similarly severe [1]. The Chancellor appears sanguine about this.

Cutting the state is a political choice. It sounds good to both social and economic liberals, but its consequences are frequently underestimated. The state, particularly at local level, is a collective enterprise in which we all have a stake. We pay in, and in return, a range of essential services is provided. From schools to street-cleaning, from parks to social care, from child protection to bus services [2], from waste disposal to highway maintenance, local government provides the glue that keeps society together. It provides these services at cost. In other words there are no shareholders wanting a dividend.

As a society we have become used to having public services provided for us. We really don’t want to pick up the litter ourselves, take all our waste to the central depot, fill in the potholes in our road. We can’t all afford to send the children to fee-paying schools, so the availability of a state-run service is essential.

What we’re less good is understanding that these services have to be paid for. The low-tax brigade would argue that all these services can and should be provided by the private sector, with the result that we’ll pay on an item of service basis. Of course then we’ll pay more, because these services are fragmented and need to be run at a profit for the shareholders (not to mention high executive salaries). The contention that handing over public services to private companies leads to competition which will drive down prices can no longer be taken seriously, as one glance at the energy and rail transport sectors will show.

This is not an assault on private businesses. They are essential for providing occupation and innovation and will always, I hope, be with us. The criticism is of the privatisation of services that are best run in the public or social enterprise sector. What is lost through privatisation is the key idea that public services are in effect a community insurance scheme: we don’t need all the services all of the time but they are there when we do need them. And because they are universal services, there are economies of scale – and so reduced costs – in providing them.

It’s through this prism that we should view income tax rates. Not as a tax, but as a payment for communal services that we all need at some time or other. Those services cannot be provided at no cost.

All the main political parties in England (except the Greens) believe we must continue cutting public services to reduce the annual deficit. In December the Chancellor insisted that the UK will have a surplus of £23bn by the end of the decade provided public spending is cut in line with government plans. The trouble is, as the OBR and others have pointed out, the squeeze implied by those plans will be so severe that many public services will cease to exist in any recognisable form before then.

The Institute of Fiscal Studies has developed a tool to enable each of us to play at being Chancellor: its guideline is that 1p on all rates of income tax would generate about £5.5bn in a year [3]. Adding that 1p would more than compensate for the cut of £3bn in the government’s revenue support grant to local authorities in England in 2015/16 and subsequent years. It’s not going to wipe out the deficit – expected to be over £70bn in 2015/16 – but it would lessen the severity of the short-term expenditure cuts.

No one will like an increase in income tax. But it is a progressive tax in the sense that it is directly linked to ability to pay, and so unlike VAT which hits everyone irrespective of means. The question for us all is whether we want to see filthy streets, transport subsidies cut, care homes closed, youth services decimated and the rest of it, rather than stump up a 1p tax rise.

But the politicians won’t let us answer, or even ask, that question.

Notes

[1] OBR Economic and Fiscal Outlook, December 2014, paragraph 1.7 http://cdn.budgetresponsibility.independent.gov.uk/December_2014_EFO-web513.pdf

[2] Yes, publicly-owned bus companies still exist, see http://en.wikipedia.org/wiki/Municipal_bus_company

[3] http://election2015.ifs.org.uk/how-would-you-balance-the-books

Local austerity – how the environment and the people lose out

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Like other local authorities across England, Devon County Council is having to make cuts to services in the name of the god Austerity. The Council’s Tough Choices consultation invites the public to comment on where the cuts should fall. Does it really?

One consultation in progress is the public transport budget, where Devon says it needs to make savings of £1.76m out of a budget of £5.77m, or nearly one-third of the total [1]. To achieve this, bus services across the county will be reduced, following a withdrawal of subsidies to the bus operators. Councillors decided to go out to consultation on the proposal, even though they recognised the environmental and social downsides set out in the officer report [2]. These are:

reducing the scope of bus services as an alternative mode of travel to the car
a consequent likely increase in traffic
increased vehicle emissions
increased greenhouse gas and other emissions
reduced public transport network resilient to future effects of climate change
reduced sustainability of communities served by council funded bus routes that will have a reduced level of service in the future
reducing the ability of people without a car to travel to work
a negative impact on knowledge and skills, employment levels, and local businesses

It gives more than pause for thought that any public body is prepared to implement policies with these results.

Meanwhile, the Devon highways budget is also under scrutiny. The budget for maintenance alone is currently a hefty £63.8m [3]. The saving the County Council intends to make here is £3.4m, or 5%. The goal is to “find different, more cost-effective ways of doing things and that non-essential work is stopped so that we can maintain a safe and effective highway network while helping to support economic growth”[4]. The proposed reductions put forward for consultation, and which look likely to be implemented are:

Reduction of gritting and snow-clearing flee
Change of criteria for gritting and snow-clearing routes
Stop maintaining grit bins
Closure of picnic sites
Stopping grass cutting (except for visibility areas)
Stopping weed treatment
Remodelling of the parish lengthsmen service
Reduction in Neighbourhood Highway Team staffing

The impact assessment of these cuts acknowledges they are expected to make life worse for some people, particularly in rural areas [5]. However they do not have the long-term environmental impacts envisaged for the public transport cuts.

The extent of Devon County Council’s commitment to social and environmental improvement is revealed in other savings measures. A cheap cut is the proposed £0.1m saving from reducing school crossing patrols, which will lead to increased car use as parents drive their children to school and, in the words of the officer report, “Increases in motorised travel will have the double effect of reducing daily activity levels and increasing collision risks for those children who continue to travel on foot.” [6]. UPDATE 14 February: Devon County Council’s Cabinet decided yesterday not to proceed with the school crossing patrol savings.

Apart from the social and environmental vandalism, what is striking about all these measures is that they are easy to implement. By contrast, the main highways budget is spent through a long-running contract with a private company, South West Highways, recently extended to 2017. As is so often the case, the relationship between the commissioner and the contractor gets very close. In this case, the Council and SWH have set up a “Virtual Joint Venture” [7]. Council and SWH staff are co-located at County Hall and in the local delivery units, which gives SWH easy access to the driving seat. Under the current contract, SWH receives a fee of 2% of turnover.

Dismantling any of this would be considerably more difficult than cutting a subsidy or sacking a few lollipop ladies. And of course reducing highways spending in a roads-dependent county like Devon would have the economic growth lobby up in arms. So should we be surprised that the axe is falling on the easy targets rather than on the substantial contracted highways budget, irrespective of the social and environmental consequences?

It’s unlikely that Devon County Council is the only local authority making the same judgement calls. But that doesn’t mean they are good ones. The real villain, of course, is Austerity.

Notes:

[1] http://www.devon.gov.uk/index/councildemocracy/decision_making/cma/cma_report.htm?cmadoc=report_sc152.html

[2] http://www.devon.gov.uk/index/councildemocracy/decision_making/cma/cma_document.htm?cmadoc=minutes_exc_20150114.html, minute 280

[3] https://new.devon.gov.uk/roadsandtransport/maintaining-roads/

[4] https://new.devon.gov.uk/highwaysbudget/background/background-information

[5] https://new.devon.gov.uk/highwaysbudget/files/2014/10/Highways-budget-impact-assessment-2015-to-16.pdf

[6] http://www.devon.gov.uk/cma_report.htm?cmadoc=report_pte152.html

[7] http://www.devon.gov.uk/index/councildemocracy/decision_making/cma/cma_report.htm?cmadoc=report_hcw141.html