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From Resolution to Action

The Resolution Foundation’s Stagnation Nation report of December 2023 runs to nearly 300pp. It may help guide Government policy ahead. Little has changed in terms of the national economic outlook since it was released 6 months ago.

Transport has an important role to play in supporting national economic development on which the report concentrates. This paper looks in broad terms at what an economically-directed policy for transport may look like.

The economy

Here we select key points from the Stagnation Nation report, those that we believe would have a significant bearing in how plans for transport might need to develop, as follows:

  1. The UK is the 2nd biggest exporter of services in the world
  2. Good quality jobs should be an explicit policy objective
  3. Economic growth does matter: the effect of the last 15 years’ period of zero growth equates to average income/person being £10.7k per annum lower than if the nation had kept pace with prior expectations
  4. Manufacturing in higher value areas (chemicals, electronics) are expected to fall, while lower value sectors ((food production) will rise
  5. Manufacturing strengths exist, including in aerospace and beverages…
  6. To resolve the negative impacts of Brexit, we need a NI-style UK protocol
  7. London accounts for 63% of the UK surplus in services trade
  8. Britain is very urbanised (63% of UK population live in cities – Italy’s equivalent stat, for example, is only 40%)
  9. Manchester and Birmingham with populations of 2.8m each are ‘too big to fail’ and this is where investment should be focused first
  10. The 65+ age group is 20% of the population and growing, but there even larger proportions of the elderly in other countries such as Germany
  11. Services are not just financial (which took a Brexit hit) but also in design, ICT, creative/culture/arts, media, higher education, etc.. And 63% of service sector exports are not with the EU.
  12. There has been substantial growth in creative industry jobs in Manchester, Glasgow, Cardiff, Bristol…
  13. While Lyon is 21% less productive than Paris, Manchester is 31% behind London (as measured by GVA added per worker).

This suggests a primary focus for transport in supporting the diverse pattern of strength in service sector employment, while acknowledging specific strengths in manufacturing that could also be supported and expanded. (The report is clear that a return to across-the-board manufacturing is dream-land).

Climate change

Stagnation Nation covers the need to invest to meet the 2050 Net Zero target, understandably with a focus on electric vehicles, renewables-based electrical power and domestic heating and insulation.

But it misses the DfT’s Decarbonisation Plan to encourage modal shift and its omertà which is an implied 30% reduction in road vehicle use. It also presumes that HGV drivers will continue as now but using non-fossil fuel vehicles without recognising that battery- or hydrogen-powered HGVs will have limited range and diminished pay-loads. For longer hauls (say over 75 miles) a substantial switch to railfreight is going to be needed.

The required transport policy response

There are six primary areas where we suggest transport has a key supporting role to get the UK out of its ‘Stagnation Nation’ state, given the Resolution Foundation’s report’s useful analysis.

  • City regions

For the largest regional cities, the report shows that UK city centres are too small (i.e. similar sized cities in Europe have bigger city centre employment levels) and that their employment catchments within a reasonable commute time (say 45 minutes) are also too small, because city region public transport systems are relatively weak.

The UK’s major cities should expand by re-using and re-purposing their historic building stock and though pioneer building recycling. A key part of the service sector aspect is culture/arts/media which flourishes given character and vernacular settings.

A planning /infrastructure policy focus should embrace an expansion of city region public transport network capability specifically designed to overcome economic weaknesses and aligned to an expansion of city centre work-places.

This in turn implies a need for housing expansion around suburban public transport nodes. A new town style development corporation vehicle could be used to accelerate and fund such a programme. The transport component in the National Infrastructure Commission’s approach to its city region ££bn funding programme should be expanded.

With city region catchments overlapping, for rail in particular some joined-up thinking will be needed. The Trans-Pennine Route Upgrade should provide that integrating function in the north of England.

Growth means a need for more transport capacity. With a growing population, it is simply not possible to continue with the belief that the national highway can cope though modest junction schemes developed for each incremental land use development. To avoid growing network congestion that would undermine economic growth ambitions, it is to rail that policy should turn.

It will be at the rail network nodes in the city centres that the biggest challenges will arise. Indeed, creating dependable rail capacity in regional city centres is the biggest challenge ahead for rail, nationally. In London/South East these problems have ben tackled with expansion and major re-modelling at London Bridge, St Pancras and Reading. These successful projects show us what’s needed.

The much heralded regeneration around St. Pancras/Kings Cross in London provides a regeneration template, a refreshed focus for regional cities too, and for wider visions such as Northern Powerhouse.

  • Air connectivity: improved airport access

Service sector exports are substantial and exist across a diverse set of activity areas, but are currently heavily centred on London. Most services exports are not to nearby locations (as noted, 63% are not to the EU). So air connectivity is important and the question is how to support regionally-based service economic growth. (London has six airports to choose from already).

Expanding business flight connections from the larger regional airports especially over longer haul routes is needed. To make this proposition viable to airline service providers, airport catchments need to be expanded.

At Manchester International Airport, this can be readily achieved by providing the long-protected western rail link (which will provide direct access from Chester/North Wales/Sheffield and Liverpool, while also relieving the pressure on the rail network in central Manchester as a valuable by-product). What’s not to like?

At Birmingham International Airport, HS2 Phase 1 will expand the airport’s catchment. HS2 will also offer better rail access to Heathrow Airport terminals by a single interchange at Old Oak Common.

Glasgow Airport should be provided with a transit/rail connection to Paisley/central Glasgow.

At Heathrow itself, the western connection scheme is ready but held up for lack of funds at Network Rail. It can be used to support direct rail access from key south eastern growth poles including not just Slough and Reading, but also Basingstoke, Southampton, Oxford, Milton Keynes…

Heathrow Airport’s owners should be obligated to prioritise zero-carbon access (not in their current thinking) in order to retain support for a third runway.

Elsewhere, improved airport facilities designed to focus on the needs of business travellers should be supported.

  • Uplifting rail’s ‘cross country network’

While there has been a useful focus on better east-west rail connectivity  in both Northern Powerhouse Rail and Midlands Rail Engine, these concepts in reality would overcome only part of a weakness in national rail network connectivity. It is overall accessibility that counts when it comes to the big choices that businesses make when settling on where to locate, on which city best meets their ambitions.

London has a killer advantage over every UK regional city in terms of domestic (as well as international) accessibility. It has good direct intercity rail services to every other city in the country.

Neglected because it spans regional as well as city region boundaries is the national transport ‘Cinderella’ –  the long distance cross-country rail network, once seen as a key part of ‘InterCity’.

This needs to be re-discovered  and re-focused on meeting city to city needs, speeded up by leaving intermediate locations to be served by expanded city region services and challenged to provide a service focused on business as well as leisure traveller needs.

Businesses contemplating regional-city as opposed to London business locations can then do so knowing that they have good connectivity across the UK, just as London has already.

  • Railfreight expansion

Government adopted a 75% railfreight growth target by 2050 in December 2023. This was cut from +100% because the cancellation of HS2 Phase 2a leaves (indeed exacerbates) a bottleneck on the nation’s busiest north-south which was judged to make +100% unachievable. The growth target should be set at +100% and investment directed to accommodate the increase in (electrified) freight train paths. Phase 2a (or an equivalent) needs to proceed.

  • European supply chain logistics

A post-Brexit problem has been the loss of exemptions that had allowed UK manufacturers to engage in efficient EU-wide supply chains. The Stagnation Nation reports calls for a Northern Ireland style protocol for the whole of the UK to address this. A gauge-cleared railfreight route to/from the Channel Tunnel should be created (Network Rail has a plan but the investment needed, while modest, is as yet unfunded). The nation needs a way around the M20 HGV stacks.

  •  Road user charging

Stagnation Nation proposes a per mile electric vehicle charge, sensibly to make good the loss of fuel duty tax incomes. In practice, absent any other measures, this charge will have to be subject to an annual re-set, because it will become the only means by which road traffic levels can be regulated, mitigating the worst effects of congestion, that damages economic efficiency. Lower tariffs should apply across rural areas, where effective public transport alternatives are hard to provide (or non-existent).

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