Charter 284 Transport: Spending vital for construction and the UK

What best defines modern Britain? Sunday afternoons spent playing cricket on a sun-dappled village green – or spent sitting in a motorway tailback for three hours? An enduring sense of fair play, or a willingness to pay more than £100 for a two-hour train ride, without even the guarantee of a seat? And how do our European neighbours spot us on our city breaks? Marvelling at the contents of galleries – or gawping at the extraordinary punctuality of their trams, buses and trains?

Why do we put up with this?

A well-functioning transport network is essential for any country, yet Britain’s creaks from decades of underinvestment, short-term planning and poor management. This is affecting not only our quality of life, but our productivity, and more seriously, our attractiveness to foreign businesses and investors. And when people wishing merely to travel a few hundred miles are forced on to the roads or into the air by the inadequacy of our rail network, it’s little wonder that domestic transport now accounts for 21% of our CO2 emissions.

That’s why Building’s Charter 284 campaign is demanding that the government, whichever party is leading it, does not let spending on transport fall by more than 10% from its 2009/10 level, which is £8bn. That may sound like a big commitment in an era of cuts, but according to the Construction Products Association (CPA), it’s the bare minimum required to keep the transport network at its current standard – and we certainly can’t afford to let it get any worse.

“Anything less and the transport system will begin to deteriorate,” says Simon Storer, external affairs director at the CPA. “If the capital budget is cut too severely and too quickly, it will damage economic recovery. The danger is that by not having the ability to service economic growth, you stop growth happening.”

Some parts of our transport network have enjoyed increased spending in recent years – rail, for example – but this money has been largely spent on catching up on decades of neglect. “There’s a commonly held view that over the past 20 years, the UK has really just spent what it needed to maintain its network,” says Steve Waltho, head of infrastructure and industry at Davis Langdon. “Really, it’s been catching up on a backlog of poor maintenance.”

Here, we spell out the three main reasons why we can’t afford to stop catching up now …

Economic benefits

Of the many industries clamouring for a share of the Treasury’s meagre coffers in future years, few can make a better business case than construction. Transport is one that can. The LEK report commissioned by the UK Contracting Group, which forms the basis of Building’s Charter 284 campaign, found that every £1 invested in construction projects generated £2.84 of economic benefit in the short term, and up to £5.04 in the long term (building.co.uk/charter284 has an explanation of the economic case). Construction has the third highest multiplier of any industry, the highest is railway transport, which generates 16p more per £1.

“The argument for transport is stronger than for many areas of public sector spending,” says Arith Liyange, managing director of Carillion Rail. “There may be a social or political aspect to spending in other areas, but I can’t think of anything that has as strong a financial business case as transport, both immediately and in the long term. You can get more people to their places of work, goods and services are transported more efficiently, you can grow industry, grow businesses, and improve the UK’s carbon footprint.”

Sir Rod Eddington found much evidence to back this up in his 2006 government-commissioned report on the links between the UK’s transport network and its productivity. He found that a 5% reduction in travel time for all business and freight on the roads could generate about £2.5bn of cost savings, or 0.2% of GDP. With up to 52% of road freight journeys currently delayed, mainly because of congestion, new infrastructure schemes offer extroardinarily high returns for the economy as a whole – in the region of £5-10 for each £1 invested.

He also spelled out the dire consequences of not spending on transport, given that we can expect a 31% increase in road traffic by 2025. “If left unchecked, the rising cost of congestion will waste an extra £22bn worth of time in England alone by 2025. By then 13% of traffic will be subject to stop–start travel conditions.”

Eddington found that generally, if you stand back and squint, Britain’s transport network provides the right links to the right places to support economic performance. A greater proportion of our population is connected to strategic road and rail networks than elsewhere in Europe. But then, we’re a small island that got started early. When he took a closer look, he found that our elderly network is now bursting at the seams. Many roads and key rail routes are overcrowded at peak times, and flights out of Heathrow and Gatwick suffer some of the highest levels of delay in the EU.

Britain’s superiority complex among fellow nations has long been hard to justify, but it is most ill-founded in transport and urban planning, two areas where we consistently lag behind the rest of Europe on indices of international competitiveness. Given how long it took to complete the UK’s stretch of the high-speed rail link from London to Brussels, it should come as little surprise that it is our railways that let us down most badly.

Stuart Cole is an expert in transport at the University of Glamorgan Business School, and he says the UK is falling far behind other European countries on both upgrading traditional railways and investing in high-speed links. “We do need far higher levels of investment in rail infrastructure than we’ve had,” he says. “The Department of Transport planned for a 1-2% increase in passenger numbers, but the real rate has been 8% in the past 10 years. They made no attempt to realign their investment in line with the numbers. Other European countries are far ahead of us.”

Whereas the UK has only recently completed its solitary 109km stretch of high-speed line from St Pancras to the Channel Tunnel, France opened the TGV in 1981 from Paris to Lyon and it now serves 150 destinations. Germany, Italy, Spain, Belgium and the Netherlands also have high-speed networks that put the faltering progress of High Speed Two, linking London with Birmingham, Manchester and Scotland, to shame. Only last week, the Conservatives refused to back a 200mph London-Birmingham rail route, shattering the political consensus. If they get in at the general election and decide to look again at the route, the project could be delayed by years.

Even where Britain has upgraded its network, its implementation hasn’t necessarily translated to better performance. As Davis Langdon’s Waltho observes: “[European countries] tend to have better segregation, for example, whereas we’ve got many types of train running on the same tracks.

So even though you’re on a high-speed Virgin Pendolino, you’re trundling into London at 15-20mph because you’re behind a tailback of slower trains.”

A better environment

It’s not just the UK’s high-speed rail links that should embarrass us. We are also lagging behind on the electrification of old diesel lines, having completed only 40% of the network, the lowest in western Europe, according to analyst Frost & Sullivan. Wales is the only country in the EU, apart from Albania, to have no electrified track at all. This isn’t only a competitiveness issue. Electrified railways are cheaper to build and maintain, so could save money in future, and they produce up to a third less carbon dioxide than diesel trains.

“If the government is committed to investing in the right type of infrastructure, it would keep UK plc’s carbon footprint low,” says Carillion Rail’s Liyange. “Obviously, spending on rail would have a direct impact on our carbon footprint.”

For a start, a fast, efficient train network for passengers and freight could immediately make a dent in the biggest producer of domestic greenhouse emissions – road travel, which contributes 92% of emissions from transport.

Carillion has just completed an upgrade of Southampton tunnel to allow it to transport modern freight containers from the port to the rest of the country by rail, part of a scheme that aims to remove up to 50,000 containers from the road network a year. According to the Campaign for Better Transport, rail freight produces about 20% of the emissions of trucks, and one train can remove 50 lorries from the roads.

And a better rail network could cut air travel too. Though air accounts for only 2% of transport emissions currently, the Committee on Climate Change has warned that it could increase to 15-20% by 2050 if left unchecked. High-speed links could reduce the necessity for domestic short-haul flights and allow incoming passengers to reach the centre of Birmingham, say, or Manchester much faster.

Investing to remain competitive

Glamorgan university’s Cole points out that with wage levels far higher than newer entrants to the EU, the UK must ensure it remains competitive by ensuring other costs to business, such as transport, are as low as possible. This must be a concern in a globalised world, as companies relocate their operations not only to the Far East but to the eastern edges of Europe. A survey by the CBI found that 70% of senior business figures consider the UK’s infrastructure to be poor, and that 85% would take this into account when making investment decisions.

Stephen Wells, Costain’s business development director, is on the CBI’s South-east committee and he’s concerned that without continuing investment, foreign companies will decide to locate elsewhere in Europe. “Infrastructure is one of the biggest drivers for foreign investors – companies like Microsoft, or Honda or Siemens are looking for good access to facilities for international travel, free movement of goods and services and quality rail and roads so people can get to work efficiently. Infrastructure spending has got to continue – if we fail to invest in and maintain our infrastructure, how do we attract foreign direct investment?”

If the UK does fail to invest in its transport network, it is putting not only its competitiveness, it would also be missing a key opportunity to equip a population with rising levels of unemployment with valuable and exportable skills for the future.

With this in mind, Davis Langdon’s Waltho says consistency of investment is even more important than the actual numbers. “A return to boom and bust spending on infrastructure would be really damaging to construction. The UK is as well placed as any other country now, but the danger is that if you go back to a stop-start approach, you will lose all the skills that we’ve developed. You lose skilled workers, the capacity of the industry disappears and the opportunities to train people disappear. The UK has adopted a short-term, piecemeal approach to transport, but any investment has to be with a long-term 25-year strategy in mind.”

And if a cast-iron business case, the prospect of falling behind the rest of Europe and the preservation of the environment fail to move politicians, let’s not overlook the quality of life argument. As Rosemary Beales, director of the Civil Engineering Contractors Association (see left), points out: “The more you invest in transport, the better quality of life people experience. One of the biggest bugbears people have is the time they waste in traffic or on overcrowded railway carriages, and how long it takes to get to work in the morning or how much time they spend getting home in the evening when they could be with their families.”

It’s a persuasive point – and hopefully it will have even more power when made by an ill-served British public to politicians canvassing for votes on their doorsteps.

The industry shows its support

Nick Pollard, Chief Executive, Bovis Lend Lease UK

The country’s transport infrastructure is crying out for investment – not just to maintain standards but to increase capacity and reliability. This is an essential part of building an efficient UK that bounces back from recession. Nonetheless, money is short and capital budgets will need to be reduced. Therefore there is a clear responsibility on our industry – clients, designers, contractors, operators – to make sure that every penny is spent more wisely, and more efficiently than in the past. Our industry contains inherent inefficiency in the way we procure, design and build – and even in the choice of asset developed. All this must rapidly change to get the best from the age of austerity that lies ahead. This is about much more than the size of the pot.

Richard Hebditch, campaign director, Campaign for Better Transport

Everyone knows that it’s easier for a government to cut transport than health or education spending, because it doesn’t concern their direct employees.

It’s someone else’s staff so you can do things like push work back or shelve projects. But if you look at our rail infrastructure, for example, we’re playing catch-up with the rest of Europe. We’ve moved away from that boom and bust stuff and we need to make sure that we maintain investment in modern railways.

Rosemary Beales, director, Civil Engineering Contractors Association

Civil engineering is in the grip of a crisis in workload. We know from the latest CECA Workload Trends Survey that we have experienced seven successive quarters of negative growth and there is only a slender chance of recovery in 2010.

The immediate future we face is one in which the government must substantially reduce public debt to protect our chances of sustaining economic growth in the long term. All public spending will be judged by the value it delivers back to the country.

The Charter 284 campaign delivers a strong argument that adds to the civils’ sector’s wider message to government and the opposition in this general election year. However, the economic multiplier argument is part of a bigger picture. The value of what we construct, especially in the infrastructure sector, goes far beyond a return of £2.84 for every £1 invested. Infrastructure provides the means for the economy to grow, through the provision of transport networks, energy generation and distribution networks, public health and community infrastructure such as flood defences. Efficient, effective infrastructure that keeps pace with demand is the basis of our national productivity and competitiveness, but as well as the role it plays in sustaining economic growth, it plays a major part in creating and sustaining quality of life.

Investment in the built environment is one of the means though which our economy can return to growth. All sectors of the construction industry have a role in promoting that message and Charter 284 provides an important piece of the policy jigsaw.

Aims

1. Complete the renewal of the school estate

2. Don’t let spending on transport infrastructure fall more than 10% below current levels

3. Reduce the regulatory burden on the housing sector to encourage more development

4. Give householders incentives to green existing homes

5. Prioritise the development of renewable and nuclear energy through incentives for private sector investment