Perverse Incentives for Transport Providers have Made Transport Performance Worse

The latest national statistics published by Transport Scotland in September 2017 confirm that the government continues to spend on transport at record levels, backed up with the most extensive and detailed legislation that the transport sector has ever seen, but the statistics on travel demand do not move in direction sought by policy. What needs to change?

There are five concurrent consultations on how to make transport better, covering the creation of low emissions zones, changes to the regulation of bus services, concessionary travel, roadworks, and smart ticketing. With bus patronage falling sharply it is notable that all five of these consultations directly or indirectly relate to buses, but the proposals affect all transport covering: vehicle emissions, reducing the time roads are closed due to roadworks, and the way that government partners with public transport operators so that paying for and using public transport is more convenient, better value and higher quality.

In each case the consultation documents explain the need to make better practice easier. That could work if complexity in delivery has been a barrier to progress. However, the evidence on that is mixed. The documents explain that there are many misconceptions about what can already be delivered under existing legislation. For example, local authorities can already run bus companies, and partnerships with bus operators can already include multiple operators to enable better integration. Is current delivery unsuccessful because the legislation is wrong or because of something else?

Many in the transport industry are already saying they will oppose the raft of new processes and requirements as excessively cumbersome. For many people and organisations working in transport ‘business as usual’ is attractive. Success and failure are not always measured against government goals. More revenue from trains and planes delivers company growth and perhaps higher profits. Growth of car travel helps car dealers and fuel suppliers. A continued decline in bus travel and active travel strengthens the case for public spending which is the most important revenue stream for people working in these sectors. The goals of the agents in delivering transport are not currently aligned with policy, so there are only weak links between what policy says and what funding and legislative programmes deliver.

Audits using statistics can be used to create powerful incentives, but the national statistics report overall trends rather than providing the detailed management information needed to deliver improvements. CILT’s benchmarking services help operators, particularly in the road haulage sector, to compare their performance with their competitors using the shared statistics to identify weak areas of delivery and to constantly seek improvements in performance. Management approaches like this could just as easily be used by local authorities and transport operators to guide their partnership working. For example, compliance monitoring for all registered bus services could be posted online so that the travelling public, managers and local transport authorities can understand problems and react to them promptly.

Unlike the very costly data collection approaches currently used, such as the Scottish Household Survey, cheap and simple performance information could be used to manage incentives. Although most businesses track all of their vehicles to optimise service performance, public transport has been slow adopt these approaches. Individuals in Scotland often share their real-time position and expected time of arrival with friends using a range of freely available popular apps. Do-it-yourself monitoring of public transport and the effect of roadworks is now more accurate than the data used by the operators and authorities.

The absence of incentives organised around day to day performance, rather than the absence of regulation or funding appears to be the most important gap in transport policy delivery. In the government’s low emission zone consultation, the use of charging is proposed only as a penalty, not as an incentive.  Yet across the transport sector, pay as you go insurance policies are growing rapidly. Perhaps, insurance companies might seize the opportunity to seek support from government for expanding social insurance markets to create the required financial incentives for transport operators and users. Different taxation rates for different types of vehicle have proved to be a highly effective way to deliver better performance and are widely accepted and understood.

In the absence of focused new incentives to deliver better transport, the self-selecting consultation responses to the current five consultations must be viewed in the context of the vested interests of each respondent. The responses could end up being a minor calibration of entrenched positions.

Adding the opportunity for focused local management of incentive structures could offer a way to make transport policy delivery more effective. The five current consultations are worryingly weak on incentives, yet quite detailed on potential regulation. Setting lowest common denominators backed up with penalties is much less efficient than incentives for practice more consistent with policy aims. If national policy continues to duck the use of incentives, financial or otherwise, then nobody should be surprised if in another 10 years the statistics show continued decline against government policy goals.


Written by Derek Halden on behalf of the Chartered Insitute of Logistics and Transport for the Scotsman Newspaper

19th October 2017

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