Everybody is in favour of more infrastructure spending now – it seems to be one of the most motherhood-and-apple-pie issues around at the moment. I’m certainly in favour of it. It’s my belief that the UK has under-invested in infrastructure for years, and where it has invested, has done so in such a way as to reinforce the reliance of the economy on one engine, London. I say belief, however, because there isn’t as much evidence as one might wish. The comparisons with other countries are complicated by the differing reliance on public and private investment, as well as assets crossing the public-private boundary at different times. There’s decent macro evidence that economic growth and infrastructure investment are correlated but delineating the causal relationship is much harder, for obvious econometric reasons. Above all, the methods for appraising infrastructure schemes are inadequate. The workhorse tool, cost-benefit analysis, is a methodology for looking at incremental changes, not at big projects that might change behaviour significantly, or involve non-linear effects (such as network effects in a transport or communications network).
In addition, it is hard to take into account externalities and the methods for doing so seem inadequate too. The Department of Transport’s top schemes always seem to be road schemes and I find it hard to believe the pollution externalities are fully accounted for. But the Department’s cost-benefit case for HS2, the new high speed west coast line, has been greatly criticised for delivering the politically-mandated rather than economically sensible answer. I’m an advocate for HS2, as I think it will bring about substantial behaviour change, to the benefit of Manchester as the second (potential) engine of the UK economy, and might also have system-wide benefits if we ever get HS3. But again, this is hard to demonstrate.
Into this foggy context of appraisal comes the latest book in our Perspectives series, David Metz’s [amazon_link id=”1907994599″ target=”_blank” ]Travel Fast or Smart? A Manifesto for an Intelligent Transport Policy[/amazon_link]. David starts, mildly provocatively, “Conventional transport economics has reached a dead end.” He homes in on the appraisal question, saying the normal method looks at benefits such as time saved by individual travellers, whereas it ought to be assessing the prospective contribution to economic development as transport connections change land use. Far less spending on roads, much more on commuter rail and digital management of transport are his recommendations. I don’t agree with everything David says, but think his fundamental argument about the methods is spot on. A must-read for all interested in transport policy – alongside our previous Perspectives title, [amazon_link id=”1907994564″ target=”_blank” ]Are Trams Socialist? Why Britain Has No Transport Policy[/amazon_link] by Christian Wolmar.
[amazon_image id=”1907994599″ link=”true” target=”_blank” size=”medium” ]Travel Fast or Smart? A Manifesto for an Intelligent Transport Policy (Perspectives)[/amazon_image] [amazon_image id=”B01EYRKJFK” link=”true” target=”_blank” size=”medium” ]Are Trams Socialist?: Why Britain Has No Transport Policy (Perspectives)[/amazon_image]