Transcript Sales Channels and Distribution Case Study

Back on track – or off the rails?
A report by Stephen Glaister, Professor of Transport and Infrastructure, Imperial College London
for Development Securities PLC into the failings and future of urban transport in the UK
Report to Development Securities PLC
Stephen Glaister
Imperial College London
With the assistance of
Dan Graham
Imperial College London
Tony Travers
The London School of Economics
John Wakefield
Urban Transport Infrastructure
Railways
Metros
Trams
Buses
Roads
Bridges
Traffic management
Car parking
Problems
Maintenance and repair
Provision of new facilities to cope with demand growth
Cities say their infrastructure is not adequate ……
but they are not empowered to improve it
Imperial College London
3
The overall argument
TWO requirements:
– more borrowing AND
– extra cash each year
Central government has rigid control but has failed on transport
– will not increase public borrowing
– will not find extra national tax cash (health, education, defence…)
So… either do nothing or reinvent UK local government
– Half the problem is already solved: new Prudential Borrowing regime
– The other half requires NEW LOCAL TAXES
– The two together imply much higher standard of local accountability
Imperial College London
4
What cities say they need
London
– historic under-investment
– growth in travel demand as economy grows
– 3 extra Nottinghams population growth in next 12 years
London First estimate: over £60 billion.
Manchester, Birmingham, Newcastle: £10 billion
Imperial College London
5
Central government does not trust
local government
Extreme centralisation:
– Over 75% of LA spending is central government grant
– Capital projects over £5m must be approved by central government
– Central government sets criteria for “value for money”
– Central government sets the procurement rules (PFI/PPP)
Imperial College London
7
The present mis-match of incentives
Local communities
– do not think about what they would be willing to pay for
– just bid for maximum grant from national taxpayer
Treasury spends its life just saying “no”!
Paradoxically
– many communities might be willing to pay for better infrastructure
– but there is no mechanism to allow this (e.g. Crossrail?)
Imperial College London
8
The lack of commitment in central government
Since 1979 there have been
– three Prime Ministers,
– six Chancellors of the Exchequer
– seventeen principal transport ministers.
Average tenure of a principal transport minister is 22 months
DoE, DoT, DETR, DTLR, DfT…….
Imperial College London
9
Government has failed to meet its own
objectives on transport
Imperial College London
10
Government has not found a solution
The needs are
1. More public borrowing
2. More taxes each year to pay for the borrowing
Central government has failed on both counts:
1. Creation of convoluted devices to get round own rules
PFI, PPP, Network Rail, NATS etc
which hide public borrowing and disguise increased tax liabilities
2. The present public spending climate suggests that this
will continue
Imperial College London
11
Paris, New York… other major cities
They do better because the regional authorities
– issue their own debt
– raise local taxes.
Paris:
– local employment tax & a number of other local taxes
New York:
– municipal revenue bond financing
– bridge tolls and local sales taxes
Imperial College London
12
Solution: re-invent proper local government
New powers to borrow
New powers to levy local taxes
New accountability for
– meeting local needs (local value for local money)
– setting and agreeing a fundable capital plan
– prudence in managing the liabilities
Imperial College London
13
One half of the solution : Make Prudential
Borrowing work
– As from April local authorities can borrow without permission
providing their debt stays within the Prudential Rules.
– An important step forward: LA’s must make it work
(no need to reform local government)
– Central government should let go
– maybe allow public borrowing to increase?
– no capping.
Imperial College London
14
The other half: new local taxes
Somebody has to pay!
– If national taxpayer will not then maybe local
communities can.
E.g. London Gross Value Added is about £160 bn pa
– 1% of that would provide at least £16 bn capital up front
How do we capture a small part of our wealth to
solve the problem?
Imperial College London
15
New local taxes
Domestic property tax – probably not
Extended Congestion Charge
– has potential in London
– other cities??
Land value capture
– Tax Increment Financing
– a good idea but will it produce enough money (£2bn to £3bn)?
Reform of the National Business Rate
– dedicated local levy
– increase the total national revenue?
New local taxes
Imperial College London
16
The bottom line
We can solve the urban transport
infrastructure problem
If, but only if
Local government is made more accountable for
1. Prudent capital plans and borrowing to finance them
2. New, local taxation.
Report prepared for Development Securities
Imperial College London
17