Environmentalism, public choice and the railways

Richard Wellings

Originally published in The Railways, the Market and the Government (IEA, 2006).


Although accounting for under one tenth of passenger and freight mileage, the railways will receive over one third of the expenditure earmarked in the government’s revised Ten Year Transport Plan (DETR, 2000; DfT, 2004; ORR, 2006, 32-35). It can be argued that rail’s prominent role to a significant extent results from the belief among policy-makers that it is a more environmentally acceptable mode of transport than the private motor vehicle. The aim of this chapter is therefore to examine the part played by environmentalism in shaping the government’s railway strategy.

It is contended that during the 1990s environmental interests managed to exert significant influence on the transport policy of the UK government. Accordingly, the fuel duty escalator was introduced, the road construction programme was cut dramatically and a new emphasis was placed on supporting public transport. Congestion problems would no longer be solved by expanding the road network. Instead, a combination of incentives and subsidies would be deployed in order to encourage individuals to use public transport rather than private cars.

The change in emphasis began under the Conservative administration in the first half of the 1990s. However, apart from an increase in rail subsidies to facilitate the privatisation process, spending on public transport was not raised significantly in response to the large cuts in the road programme (Department of Transport, 1997).

The election of a Labour government in 1997 hastened the shift to a “greener” policy. The Department of Transport was merged with the Department of the Environment in order to ensure that environmental concerns played a more important role in policy development. An integrated transport system was promised in the 1998 White Paper, A New Deal for Transport: Better for Everyone, and environmentalism was a key rationale for the measures advocated.

“The effect of noise and pollution is damaging people’s health and the quality of life in towns and cities. The countryside is being eroded and we are damaging the wider environment, even changing our planet’s climate. A consensus for radical change in transport policy has emerged…We cannot go on as we were, trying to build more and more new roads to cope with growing levels of traffic.”

(Department of the Environment, Transport and the Regions, 1998, 1)

Although many of the radical measures suggested in the 1998 white paper were not implemented, in part because of opposition such as the fuel protests of September 2000, environmental objectives have provided part of the justification for recent policy decisions. The government’s Ten Year Transport Plan promised to provide a transport system that makes less impact on the environment by 2010 (Department of the Environment, Transport and the Regions, 2000, 9), while the 2004 White Paper, The Future of Transport, placed particular emphasis on reducing emissions from the transport sector in order to reduce their impact on climate change (Department for Transport, 2004).

Clearly an understanding of the growth of environmentalism in transport policy is essential to any analysis of Britain’s railways and their prominence in the government’s long term plans. This paper deploys public choice theory in the examination of the political processes that contributed to the substantial changes in transport policy over the last 15 years. Following a brief introduction to the main theoretical themes, an account is given of the strategic activities of those special interests heavily involved in the transport field and the extent to which they have been successful in influencing the development of government policy.

Public choice theory

Public choice theory provides insights into the process of policy change by focusing on the incentives facing individual political actors. It is suggested that policy is largely driven by special interests rather than the preferences of the wider general population. This tendency is the result of the logic of collective action. Members of very large ‘latent’ groups, such as motorists or taxpayers, have little incentive to get involved in political lobbying since the probability of their individual activities making any difference are so tiny (Olson, 1965). It is in their interest to ‘free-ride’ and let someone else do the work for them, since they will still receive the benefits of successful lobbying for their point of view, whether or not they actually get involved themselves. Thus motorists as a whole benefited from the freeze in fuel duty obtained by the farmers and hauliers engaging in fuel protests, even though they played no significant part in the direct action.

There are three separate factors that keep large dispersed groups from furthering their own interests. The larger the group the smaller is the fraction of the benefit accruing to the whole group that is received by any individual person who joins the action. Second, the larger the group, the lower is the likelihood that any small subset of the group or any individual will gain enough from obtaining the benefit to make it worthwhile bearing even a small amount of the burden of trying to obtain the benefit. Third, the larger the group the greater the organisation costs, and thus the higher the hurdle that must be jumped before any gains at all can be obtained (ibid.).

The logic of collective action suggests that, because of the different incentive structures facing individual members, there is a strong tendency for small concentrated interests to be able to exploit large dispersed interests in the extraction of ‘rent’ from government. Collective action problems make it extremely difficult for large dispersed interests to organise themselves into an effective lobbying organisation. Accordingly, the pattern of special interest action in any field is profoundly influenced by the logic of collective action.

One important tendency is emphasised by Stigler (1971). He suggests that, as a rule, the policy process is acquired by the industry concerned and is designed and operated primarily for its benefit at the expense of the wider public. This tendency reflects the logic of collective action described above. The industry concerned often consists of only a small number of firms whereas the public is representative of a large dispersed ‘latent’ interest for which the coordination of profitable lobbying activity is virtually impossible.

Industry interests engage in what is termed ‘rent-seeking’ behaviour, lobbying politicians and bureaucrats to introduce policies that favour their members through contracts, regulations or subsidies. According to Tullock, “investment in influencing government action appears to have high payoffs” (Tullock, 1989, 4). It might be more profitable for a company to invest a relatively small amount of money in lobbying for policies that suppress competition or increase subsidies rather than investing large capital sums in building new capacity (ibid). However, there are large variations from industry to industry in the extent to which company profits are reliant on government policy. These variations create differences in the incentive structures facing companies when they consider the funding of lobbying activities. Accordingly, it would be expected that firms whose profits are heavily dependent on government contracts, subsidies or regulations, would exhibit a much higher degree of involvement in lobbying activities than less dependent firms.

While bureaucrats may be one focus of lobbying by companies, they also constitute a special interest in themselves. They have been characterised as self-interested, deploying strategies to achieve a complex set of goals including power, income, prestige and job security (Downs, 1967). If these goals are dependent to a significant extent on the size of the bureaucracy’s budget then it will be rational for senior officials to try and maximise the financial resources under their control through a budget-maximisation strategy (Niskanen, 1971). Thus, there can be strong pressure from within government departments to increase expenditure levels. However, if the welfare of high-ranking civil servants is largely divorced from spending levels, it can be rational for them to lobby for the size of their department or agency to be reduced by “hiving-off” low-status responsibilities to other agencies, leaving small, elite, high-status institutions, primarily concerned with policy development (Dunleavy, 1991).

Whether or not the lobbying activities of special interests are successful in changing policy depends in part on the decisions of politicians. However, it is debatable to what extent their choices are based on the desire to satisfy the preferences of voters. For example, transport policy is just one issue among many and specific measures can rarely be voted on directly by an electorate. Furthermore, public choice theory suggests that rather than seeking to fulfil the wants of the electorate, both politicians and special interest groups tend to actively attempt to dictate those wants through a process of agenda manipulation (see Riker, 1993). If members of the public desire policy change then, in many instances, the perceived importance or salience of an issue reflects the way in which that issue has been covered in the media. As part of their lobbying activities and rent-seeking behaviour, special interests take advantage of the media’s power to persuade by attempting to influence coverage, creating targeted news stories and even trying to control what language is used.

The manipulation of the political agenda by special interests appears to have played an instrumental role in the growth of environmentalism’s role in transport policy. The next section therefore identifies the major organisations involved and examines the strategies that were deployed by the lobbyists from the late 1980s to the present day in order to promote a substantial shift in the government’s position.

The environmental movement

The shift to a more environmentalist transport policy followed a substantial increase in the salience of green issues in the late 1980s. The membership of both Greenpeace and Friends of the Earth (FoE) more than quadrupled between 1985 and 1989, the year when the Green Party obtained 15% of the vote in the European elections and the combined membership of environmental groups reached 4 million in the UK (Rawcliffe, 1995). Media coverage of the Chernobyl nuclear accident and issues such as acid rain, global warming and ozone depletion had clearly influenced a significant proportion of the population. Indeed, in 1988, Prime Minister Thatcher acknowledged the increasing political importance of environmental concerns, stating, in a well publicised speech, “It’s we Conservatives who are not merely friends of the Earth– we are its guardians and trustees for generations to come. The core of Tory philosophy and for the case for protecting the environment are the same” (Thatcher, 1988).

Thus, by 1990, boosted by increased memberships and closer contact with ministers and senior bureaucrats, the environmental interest groups were in a far more powerful position than they had been five years earlier. The upper echelons of the Conservative government had also undergone great upheaval with a change in leadership and arguably a shift in emphasis away from free-market economic policies. At the same time, the British economy was entering a deep recession and government borrowing was rising at an alarming rate. These particular circumstances provided favourable conditions for special interest groups to intensify their efforts to influence transport policy.

Emissions concerns

The Department of the Environment (DoE) was active in promoting the perception that further government intervention was necessary to reduce the environmental impact of the transport sector. Its 1990 White Paper, This Common Inheritance, produced under Chris Patten, identified road transport as a growing source of carbon dioxide and singled it out as a “sector out of control” (DoE, 1990, 127). The aim of bringing down UK carbon emissions to 1990 levels by 2005 was also stated (ibid.). Meanwhile, the Department of Transport was supervising an acceleration of road construction through the Roads for Prosperity programme. Thus, a conflict of interest between the two bureaucracies appeared to be developing.

Environmentalist interests then made a successful effort to introduce a new dimension to the transport debate: that of urban air pollution. In October 1990 the DoE launched a weather bulletin service which included “warnings of potentially dangerous air pollution” (the Guardian, 25.10.90). Furthermore, when announcing the initiative the DoE spokesman made an implicit link between air pollution and asthma (ibid.). These events received widespread media coverage.

The subject re-emerged in summer 1991 after Greenpeace commissioned a study on the effect of air pollution on asthma. According to the Times, the report “concluded there is a definite link between asthma and air pollution” . DoE officials were reported as considering issuing smog alerts, regulations and guidelines under headlines such as “Pollution takes toll of asthmatics” , adding legitimacy to the Greenpeace claims. Friends of the Earth provided an additional report showing “new medical evidence” on the health effects of exhaust emissions (ibid).

Further coverage came in December 1991 with headlines such as “Health Warning as Smog covers London” and “London endures worst pollution” . The apparent source of the information was once again the DoE: “The environment department, which monitors nitrogen dioxide and sulphur dioxide levels, asked the public to restrict its use of cars to reduce exhaust emissions” (ibid.)

Once ignited the salience of the air pollution issue rose dramatically, helped by targeted newspaper campaigns such as “Pollution and the Health of the Nation” in The Times and a number of pro-environmentalist BBC documentaries including Panorama’s “Battling for Air”. By April 1994 a survey by The Times revealed that nine out of ten people believed that the government must take urgent action to cut exhaust fumes to protect children from asthma. An ICM poll for the Guardian, in August 1995, found a majority of people in favour of banning cars from city centres (Rowell, 1996, 351). Media coverage appeared to have been highly successful at moulding public opinion.

Road protesters

The organised opposition to road construction schemes formed a second strategy in the attempt by environmentalist interests to influence British transport policy. Media interest in the activities of anti-road groups increased significantly following the intervention of the European Community’s Environment Commissioner, Carlo Ripa di Meana, in October 1991. The commissioner wrote to the Secretary of State for Transport, Malcolm Rifkind, warning him to block work on a number of construction projects, the most prominent being the M3 extension at Twyford Down. The UK government was accused of breaching European Community directive 85/337 on Environmental Impact Assessments.

Reports focused on the European dimension until March 1992, when coverage shifted to concentrate on direct action at the Twyford Down construction site by environmental activists. Protesters, said to be members of Friends of the Earth occupied bridges due for demolition and obstructed contractors’ bulldozers. The arrest and jailing of protesters [largely members of radical group Earth First!(UK)] kept the project in the headlines throughout summer 1992.

The manipulation of the transport debate through coverage in the media was clearly a key strategy of the radical environmental groups behind much of the direct action against road schemes. For example, Earth First! (UK) activists staged a number of media ‘events’ in order to publicise their agenda. These included attempts in the courts to classify a tree house in the path of the Hackney-M11 link road as a legal dwelling, the creation of an “independent free area” the Republic of Wanstonia on the same scheme and the unravelling of a life-sized imitation motorway on the roof of the Secretary of State for Transport’s house in North London (Wall, 1999, 76-78). Pictures of these eye-catching events often made the front pages of the newspapers, drawing significant attention to both the protesters and their political message (ibid, 76).

Similar tactics were employed by the larger, more established environmental interest groups such as Friends of the Earth, although their activities tended to be more shortlived given the threat of legal action by the Department of Transport. According to Earth First! (UK) activist Rebecca Lush, Friends of the Earth “set up this bizarre ‘we are the middle-class, we are representative of middle England’ and extremely media-obsessed camp…they used symbolism very powerfully, they used the media skilfully and stopped the works with their own tactics” (quoted in Wall, 1999, 68). In fact, because Friends of the Earth played a limited part in direct, physical attempts to prevent construction at Twyford Down (see Bryant, 1996; Wall, 1999), for example, by sabotaging equipment or creating obstacles for machinery, it might be said that their protest activities were almost entirely aimed at producing media coverage and thereby influencing the transport policy agenda.

The rail lobby

One of the most significant changes to the incentive structures facing transport interests in the last twenty years derived from the gradual commercialisation, then privatisation, of the railways. The private railway industry had been immensely influential prior to World War II. Its strength provides one explanation for Britain’s failure to build a road network comparable with its major economic competitors during the 1920s and 1930s, another explanation being the relatively strict controls on private motoring (see Plowden, 1971).

The 1990s were a time of great upheaval for the railways. The gradual privatisation of British Rail, began in 1994. Before that a long period of gradual commercialisation took place. In 1982, an organisational review divided BR into five sectors: Parcels, Freight, InterCity, Network SouthEast and Regional Railways. Management tasks were reorganised and managers became responsible for specific movements of rail traffic. Accountability of costs and revenue generated by each sector subsequently improved (Nash, 1990, 2). The 1983 Serpell Report found that only 1,630 route miles of the network (about 10%) were profitable (DTp, 1983), although it has been argued that the report took inadequate account of the contributory revenue of supposedly loss-making routes (Henshaw, 1991). Worried about costs, the government gave greater emphasis to the concept of ‘a business-led railway’. Under the ‘Organisation for Quality’ initiative all employees became responsible to a director, who in turn had control over costs and revenue (Hass-Klau, 1998, 7). By the late 1980s the railway had become a largely commercial organisation and InterCity was able to operate without a direct government subsidy (ibid.). The government began to talk openly about the prospects for privatisation. In 1992 the White Paper New Opportunities for the Railways was published (DTp, 1992), which outlined plans for franchising services and creating a company responsible for the track and station infrastructure. At this stage a number of private companies began to plan their bids for franchises. Privatisation finally began in April 1994, though it took a further three years to let all the 25 passenger franchises.

After decades of being a heavily loss making state industry the railways gradually rediscovered the profit motive. However, this profit was largely artificial in the sense that it was dependent on government subsidy under the Public Service Obligation (PSO). At the same time the viability of the railways was influenced by controls on private road transport. Expensive road fuel prices, inflated by government duty, alter the economics of travel choices in rail’s favour . Furthermore, slow and congested roads, as well as strict planning regulations that limit the geographical dispersal of housing and commercial activities, may provide further incentives for using the railways. Thus it would appear logical for a newly commercialised railway to invest in lobbying for policies which would both continue a system of rail subsidies while increasing costs for road users.

Without government intervention it was likely that many rail passenger services, particularly the heavily supported ‘Regional Railways’ operations would have had to be withdrawn and many busy commuter routes would have had to charge higher fares. One major caveat is that the railways have long suffered from high levels of bureaucratic inefficiency and expensive safety regulations that bear no rational relation to the relative safety of different transport modes. Thus the network potentially may have been far more viable than it appeared to be. There is also the contested issue of social costs, although high-speed passenger rail may produce externalities equal to or greater than road transport (for example, higher overall carbon dioxide emissions per passenger mile).

While many groups associated with railway interests contributed little to the efforts to persuade the government to introduce a more environmentalist policy, Transport 2000 (T2000), a specialist pro-public transport campaigning group founded in 1972, played an instrumental role. From its inception T2000 has had close links to railway industry. It was formed as the result of a meeting between environmental organisations and railway interests in the context of the leaking of a rail policy review which threatened a massive reduction in the network from 11,600 to 7000 miles in the interest of commercial viability (Smith, 1995, 98). From the start T2000’s most important source of finance was the British Railways Board. Offices and other services were provided by the National Union of Railwaymen (NUR) (ibid.). In the privatisation era corporate subscribers comprised firms with major stakes in public transport such as National Express, Railtrack, Stagecoach and Virgin Group. Other affiliates include a number of Trade Unions (including the RMT and ASLEF) and several local authorities. However, describing T2000 as the ‘rail lobby’ would be rather unfair given the importance of the group’s relationships with environmentalist organisations such as Friends of the Earth and bureaucratic interests within government.

Indeed, T2000 staff played an important role in the setting up of ALARM UK, the organisation coordinating the anti-roads protests, and liaised closely with its leaders from more fringe groups (Dudley & Richardson, 2001, 164). T2000 also set up the Transport Round Table, which allowed establishment bodies such as the National Trust, the Countryside Commission, and even senior elements of the Department of the Environment, to liaise informally with more radical protester groups like ALARM UK and Road Alert (ibid.). For example, at a round table meeting on December 17th 1993, discussion ensued on whether any national organisations would be able to help in the training of volunteers for non-violent direct action (ibid.). Thus it could be argued that the radical road protest movement enjoyed significant strategic and logistical support from a number of special interests, including the rail industry (albeit indirectly), established environmental lobby groups and government bureaucrats.

The anti-roads, pro-public transport coalition that had been formed also enjoyed support from within government. For example, Transport 2000 had by the early 1990s fostered close relationships with both the Department of the Environment and the Treasury. The links with the DoE developed after the departure of the economically liberal Nicholas Ridley as Secretary of State, when, in part as a result of the 1990 White Paper on Sustainable Development and the appointment of the less liberal Chris Patten, the DoE began to take a deeper interest in the environmental implications of transport policy. Transport 2000 was able to help them in relation to their statutory role of commenting on transport schemes.

Elements within the DoE also used anti-roads groups to pass information about Department of Transport (DTp) activities to the press. For example, in 1991, the DTp was planning to abolish grants for rail freight, on the basis of their perception that there were not really any significant environmental costs from road freight. One group heard of the proposal through the DoE and then informed the newspapers. The resulting media criticism resulted in the DTp not only backing away from the abolition proposal but actually expanding the rail freight grant scheme massively. The anti-roads groups also began to brief the DoE about particular road scheme proposals and the department then started to use their statutory powers to prevent certain projects being built, such as the Hereford bypass .

T2000’s relationship with the Treasury during the early 1990s was still closer than that with the DoE. The Treasury, facing a large budget deficit, liaised with T2000’s Transport Taxation Group. Accordingly, T2000 were deeply involved in the reigning back of the tax refund on company cars in the 1993 budget. The group was also consulted on the introduction of the steep fuel duty rises in the same year. Perhaps most importantly, T2000 was able to help Treasury officials justify making cuts in the road programme. Thus the group provided the Treasury with many of the arguments deployed in subsequent public spending round negotiations. Treasury consultations with T2000 on this matter began in 1993, while the major road spending cuts didn’t come to fruition until the financial year 1995/96 (the actual decision would have been finalised in late 1994).

Thus by 1994 a powerful coalition had been assembled that sought to bring about change in transport policy. Although the motives for the involvement of the Treasury may have been entirely driven by the need to make spending cuts, environmentalist arguments, implanted in the public’s consciousness by a concerted media campaign, provided a useful rationale for a decrease in road expenditure and rises in fuel duty .

The road lobby

The road lobby was in a weak position to resist the shift in policy. The main umbrella organisation for pro-roads bodies, the British Road Federation (BRF), suffered from losses in its membership during the early 1990s and pressure on its budget. In part the decline reflected the depth of the recession, which hit the construction industry (a major component of BRF membership) particularly hard. The organisation also suffered from a form of the ‘free rider’ problem identified by Olson (1965). A debate started as to whether individual companies should be members or whether their trade association should be. Many companies, particularly in the construction/material supplies sectors, decided to revert to the pre-1960s situation whereby only the trade association would be a BRF member .

The difficulty for the BRF came when these trade associations found themselves in financial difficulty. For example, the British Cement Association scaled back significantly and the Federation of Construction Engineering Companies (FCEC) was dissolved. In a sense, because of the important part the construction industry played in its funding, it can be said that the BRF was somewhat dependent on the road programme for its own financial health. The road programme fed into the profits of the construction industry, which then provided money for the lobby group.

The road lobby also suffered from a weakening of its position within the Department of Transport during the first half of the 1990s. The BRF had for several decades enjoyed a close relationship with the highway engineers of the department (Hamer, 1987). However, with the formation of the Highways Agency (HA) in April 1994, as part of the Civil Service’s Next Steps reform programme, the influence of those promoting road building declined within government. The HA, detached from the main department, was unable to defend its budget in public spending round negotiations with the Treasury and had lost one third of its employees by 1997 (weakening the influence of the highway engineers further still). Meanwhile, senior bureaucrats within the core Department of Transport were able to insulate themselves from cuts in the road programme by re-organising and taking advantage of the opportunities for career development presented by both rail privatisation and environmental measures.

A further important element in the decline of the road lobby has been the absence of a powerful motorists’ organisation. The AA (Automobile Association) and RAC (Royal Automobile Club) long ago became predominantly commercial organisations providing roadside assistance and politically weak, while newer and more radical organisations such as the Association of British Drivers were still in their infancy and did not enjoy much influence within the government or the media.

The lack of a significant motorists’ lobby, despite policy changes which have been widely regarded as ‘anti-car’, appears to be consistent with public choice theories of collective action. In contrast to the rail industry, motorists are a dispersed interest, some 30 million in number. They receive no direct payments from government but are affected by government policy. Their interests are fragmented. For example, urban motorists may hardly feel the effects of fuel duty increases if they generally use their vehicle for short journeys. Other motorists might use public transport to commute to work every day and thus be split as to where their policy interests lie. Motorists are also consumers of public services and taxpayers and thus could take a more general view of high motoring taxes (what they lose in fuel duty they might gain in income tax cuts). Because motorists are a dispersed group, the expected benefit to an individual from political lobbying (such as reduced motoring costs or less congested roads) will tend to outweigh the costs of lobbying. Any costs will be borne by the individual yet the benefits spread widely amongst a group. This gives ride to the “free rider” problem and makes effective lobbying much less likely.

Furthermore, the great majority of motorists have faced severe disincentives to engagement in direct action such as that undertaken by the radical environmentalists. In order to run a car, the motorist must have an adequate income or adequate savings. His/her prolonged involvement in direct action could have a deleterious impact on his employment. He or she is likely to face high fines and personal assets are at risk from civil action. The motorist is unlikely to qualify for legal aid and may face large legal bills.

But the lack of significant collective action by motorists does not mean this group is without political influence. The sheer number of motorists and the concomitant potential democratic power should transport become a decisive election issue (even in some marginal constituencies) arguably places significant limits on the degree to which environmentalist demands can be met through policy change .

New Labour and transport policy

The shift to a more environmentalist transport policy continued after Labour displaced the Conservatives as the party of government in May 1997. The new administration immediately imposed a moratorium on road building. The White Paper on integrated transport of August 1998, prepared by the newly merged Department of the Environment, Transport and the Regions (DETR), advocated greater integration between different transport modes, increased use of private finance for public transport and the introduction local congestion charges with the raised being spent on public transport schemes.

Although the policy proposals in part reflected the underlying egalitarian ideology shared by socialism and environmentalism (see Wildavsky, 1986), a pronounced increase in the political influence of both the environmental and public transport lobbies was discernable following the change in government. For example, T2000’s access to policy makers had improved significantly. Indeed, T2000 can be said to have been a major influence on the subsequent Roads Review, which saw almost the entire road programme halted. Accordingly, Deputy Prime Minister John Prescott’s major speech on the subject was based on documents prepared by the lobby group . The organisation was also able to float new policy ideas such as the workplace parking levy and allowing local authorities to tax non-workplace commercial parking, which were then adopted by the DETR. Accordingly, a T2000 insider wrote,

Transport 2000 is now a central player in preparing this policy and the review of the roads programme associated with it. It is co-organising two private seminars with Ministers to help policy formation on managing demand and reducing car dependence…and Stephen Joseph [Director of T2000] has been appointed to a nine-person expert panel. Assistant director Lynn Sloman has been asked to join a working group on future road safety targets.

On the railways, the government satisfied the preferences of many environmental groups with a pledge to create a Strategic Rail Authority (SRA), designed to bring about a “railway renaissance”, which the government argued had been hindered by the fragmentation of the network caused by privatisation (DETR, 1998). The formation of the SRA went some way towards fulfilling the Labour Party manifesto commitment to increase public control over the industry.

However, the publication of the 1998 DETR White Paper perhaps represented a peak in the apparent influence of environmental interests over transport policy. The Deputy Prime Minister, responsible for the DETR, was unable to obtain parliamentary time for the “integrated transport” bills to become law in the 1998/99 session. This suggests that a more environmentalist transport policy was not a key priority at the highest levels in government. Furthermore, strong pressure against some of the more radical proposals in the White Paper had been exerted on ministers by powerful corporate interests, such as the major supermarket chains , who were clearly heavily dependent on private road transport. Another factor in the failure to implement many of the DETR’s recommendations may have been a decline in the media coverage of environmental issues compared with the late 1980s and early 1990s.

By the following summer the government appeared to be retreating from the radical policy position set out in the White Paper. It was announced that £59bn was to be spent on roads over the next decade. Although no major new routes were to be completed, apart from the privately funded Birmingham Northern Relief Road, more than 100 bypasses were to be built and 360 miles of motorway widened. Furthermore, the road planning process was to be cut from an average of ten years to six (DETR, 2000). The 2000 budget also ended the fuel duty escalator and reduced vehicle excise duty for owners of small cars. The fuel protests of road hauliers and farmers in September 2000 perhaps made it still more difficult for the government to fulfill its original aim of using an array of disincentives for motorists in order to encourage more of them to use public transport. Accordingly, the relationship between environmental interest groups and the government deteriorated in the transport field as policy began to depart significantly from environmentalist objectives.

At the same time safety became the overriding priority on the railways, following the Ladbroke Grove crash of October 1999 and the Hatfield crash of October 2000. These incidents produced a very high level of media coverage, most of it highly critical of privatisation, although the number of victims was relatively small compared with the 3,500 fatalities on Britain’s roads every year. The Hatfield crash in particular, and the chaos that followed as Railtrack attempted to renew track on large sections of the network, provided an important rationale for the subsequent de facto nationalisation of the infrastructure with the creation of Network Rail in October 2001. Clearly, the short term aims of improving safety and punctuality now dominated the policy debate rather than any “rail renaissance” driven by environmental concerns. The government also began to focus on containing growing levels of public expenditure on the railways. Thus by the time the 2004 White Paper, The Future of Rail, had been published, the ambitious targets of the Strategic Rail Authority, to increase passenger traffic by 50% and freight by 80%, by 2010, had effectively been abandoned. Thus there is little chance that the railways will make even a tiny dent in road transport’s market share, or, indeed, in the UK’s Carbon Dioxide emissions. It is therefore unsurprising that environmental issues were barely mentioned in The Future of Rail.

The importance of environmentalism in British transport therefore appears to have declined for the time being. However, the concerted media based campaigns of the last twenty years have conditioned the public such that problems such as air pollution provide an easy rationale for future government intervention. Meanwhile, the environmentalist inspired expansion of the railways under Labour has created powerful commercial incentives for rent-seeking behaviour on the part of the numerous firms now reliant on substantial government subsidies for their profits from the industry. These corporate interests now include a number of multinationals including some of the largest banks (for example, through ownership of the rolling stock leasing companies). It is yet to be seen to what extent the rail lobby, reinvigorated by privatisation and high expenditure, will succeed in capturing policy, now that the influence of the environmentalists appears to have waned.


The recent history of British transport policy demonstrates that special interests can have a significant influence over government decision-makers. In the 1990s environmentalist interests were able to take advantage of favorable conditions, such as the high level of government debt and a weakened road lobby, to forge a coalition with bureaucrats from the Department of the Environment and the Treasury, with the aim of undermining the Department of Transport’s road programme. A concerted media campaign was launched to influence the policy agenda and persuade the general public of the negative environmental impact of private road transport. The result was a political consensus that further large scale road building was an unacceptable solution for congestion problems and that the public should be given incentives to use public transport more frequently.

After the election of a Labour government in 1997, the railways were to play an important role in the new strategy. Since road capacity effectively had been capped, railways would have to absorb many of the extra journeys resulting from economic growth in congested areas like the South-East. However, despite the ambitions of the Strategic Rail Authority, it soon became apparent that increasing capacity on the railways would be extremely expensive for the Treasury (for example, the cost of the West Coast Main Line modernisation has been estimated at £7.6 billion (Hudson, 2004)). Thus, it could be argued that concerns over expenditure levels, as well as safety, have gradually replaced environmental imperatives as the key drivers of government decision-making.

Although the extent of their influence has varied over time, the significant role of special interests in the development of transport policy provides a powerful argument against the continued high level of government involvement in the transport sector. The preferences of dispersed consumers and taxpayers may be less important to policy-makers than those of pressure groups, large companies and bureaucrats. Accordingly, it is perhaps unsurprising that there is widespread public dissatisfaction with the quality and cost of Britain’s transport infrastructure. Unfortunately, the perceived failure of rail privatisation means that the level of political control over the transport sector is likely to continue to increase in the near future, providing still greater opportunities for special interests to affect policy.


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1972-1992. Unpublished PhD thesis available at University of Cambridge library.

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A Brief History of British Roads Policy

Richard Wellings

First published in 2004

The first government road policies pre-date the invention of motor vehicles. In 1663 the first Parliamentary Act was passed granting authority to collect tolls for a section of the Great North Road, the first turnpike. The formation of the turnpike trusts transferred control of road maintenance and investment away from the local parishes, reducing the burden on local ratepayers. The trustees could erect gates, collect tolls, buy land, mortgage the toll yield, widen and divert the course of the road, and indeed there is considerable evidence that considerable attention was paid to surfacing, improved drainage, widening, easing gradients and other improvements. By 1770, as the industrial revolution began to take off, Britain boasted an extensive and integrated 20,000-mile network of toll roads (Albert, 1983, 44).

During the second half of the 19th century the turnpike trusts drifted into insolvency and the roads into disrepair and local council control as more and more long-distance transport went by railway. The rail network had expanded with astonishing rapidity since the opening of the Stockton and Darlington line in 1825. While it took five years for the second line, the Liverpool and Manchester Railway, to be completed, the network had passed 2000 miles by 1842 (Henshaw, 1991, 17). Although each new route required an Act of Parliament, the sheer rapidity of construction suggests that there were as yet relatively few governmental constraints on the early Victorian railway entrepreneurs.

The last turnpike trust folded in 1895, the year the roads lobby was born in the Self-Propelled Traffic Association, and just one year before the Conservative government introduced a Bill in the House of Lords to make possible the use of “light locomotives” on public roads, overturning the Highways and Locomotives Act of 1878 which famously required motor vehicles to be preceded by a man waving a red flag (Barker and Gerhold, 1993, 76). Transport policy had now entered a more regulated age, with government seeking to control the effects of new transport technologies. Indeed, government even controlled freight tariffs over the railway network, a policy which arguably led to the over expansion of the network.

Government policy up to World War One can hardly be described as pro-roads. A major concern was the amount of dust thrown up behind motor vehicles engulfing cyclists and pedestrians. According to Plowden (1971) the Road Fund (introduced in the 1909 budget with the support of the AA and RAC), which hypothecated government revenues from petrol tax and vehicle duty to road improvement, was introduced primarily to provide dust-free roads and indeed 90% of the newly established Central Roads Board’s expenditure went on small scale surface improvements. Virtually no new roads were built and the 20 mph limit introduced in 1904 was retained. Furthermore, by March 1915 two thirds of the road fund revenues had not been spent (ibid, 108). Meanwhile, the number of private cars in Britain had risen from 16,000 to 132,000 in the period 1905-1914 (Bagwell, 1996, 20).

During the First World War the private car slowly came to be regarded as a symbol of unpatriotic luxury (Plowden, 1971, 110) and once again roads and roads transport received few favours in government policy. A 33% duty was imposed on imported cars in 1915 and petrol tax was doubled in 1916. The Exchequer borrowed the Road Fund surplus and petrol rationing was introduced in 1918. Furthermore, the ravages of war produced a marked deterioration in the condition of the roads (ibid, 118). But the war had more far-reaching effects on transport policy than these. The problems of transport co-ordination it presented, as well as the expansion of the role of state in general, led to the creation of the Ministry of Transport in 1919 (Bagwell, 1996, 62).

The Ministry’s first task was bringing road traffic law up to date although no significant legislation resulted until 1930, when the widely ignored 20 mph speed limit was abolished and compulsory third party insurance introduced (Plowden, 1971, 261). During the 1920s issues of traffic law and road safety were largely overshadowed by the battle over the future of the road fund, which as car ownership increased rapidly again, began to produce large revenues. Between 1920 and 1925 the Treasury conducted a relentless campaign to gain control over the revenues from motor taxation. The Ministry of Transport responded by asserting that road schemes were vital for the relief of unemployment. Indeed, road investment was enjoying a revival due to increasing road fund revenues and the 1919 grant of £8.5 million from the Exchequer to repair war damage. However, at the same time as public investment in roads was being increased via the road fund the MoT took steps to prohibit private road investment.

In the early 1920s several private consortia proposed a series of new profit-making toll motorways from London to the major cities, usually with the support of local authorities. Maybury, the Minister of Transport, objected on principle to “the placing of very important road traffic arteries in the hands of private capitalist enterprise, to be operated for profit”, although the real reason for the prohibition may have had more to do with the MoT protecting its field of operation (ibid, 193). The contrast in approach was thus very different from that a century earlier when government had allowed the private sector to construct a vast network of railways as soon as the technology became viable. Clearly an enormous shift in the political culture had taken place with a concomitant impact on transport policy. Accordingly the issue of private roads did not greatly concern the motor lobby with the AA and the Society of Motor Manufacturers and Traders (SMMT) preoccupied by their campaign to reform the Horsepower Tax (Vehicle Excise Duty) which was thought to unfairly penalise private road users as well as stunting the manufacture and export of high performance cars.

However, these campaigns diminished in importance upon the election of a Conservative government in 1925 and the introduction of a new set of transport policies. One of the first acts of the new parliament was to restore car import duties to war levels. For the motoring lobby worse was to come. In 1926 Chancellor Winston Churchill ended the hypothecation of the Road Fund. A third of the yield from private vehicles would be regarded as a tax on the ‘luxury’ component of car use and therefore be transferred to the Exchequer, a sum of £7 million in 1926. Further revenue was raised from road users in 1928 via an extra petrol tax of 4d a gallon to finance the government’s interventionist industrial policy. During this period of mass unemployment the car was depicted as an unnecessary luxury. According to Churchill the extra tax fell on “the buoyant pleasure motor vehicles of every class” (Plowden, 1971, 214). Thus the mid-20s saw the beginning of a new government approach to road transport policy, which has arguably continued to the present. Road transport became a convenient source for significant tax revenues, which were easy to collect, relatively inelastic and predictable.

A major underlying rationale for the tax rises may have been to bolster the profitability of the railways. For Plowden this subtext is fundamental to transport policy during the inter-war years (ibid, 195). In 1925, a Mr Hurst of the Treasury minuted that competition between road and rail could be made ‘fair’ only by subsidising railways or by increasing the taxation on roads. Ironically these tax rises probably made governments more and more dependent on the revenues from road transport and therefore less likely to do anything radical to restrict the growth in traffic and protect the railway companies’ market share.

These consequences may have been compounded by a dramatic speed up in the road programme in the five years from 1929. The primary motivation for this policy was the relief of unemployment and large government grants were made available for the building of trunk roads. Indeed in 1930 some £60 million was spent on the roads, a sum 50% larger than the year’s motoring tax receipts, although the figure includes money spent out of the road fund’s substantial surpluses from previous years (ibid, 289).

In 1932 the motor lobby, including the SMMT and the AA set up the British Roads Federation in order to campaign specifically for increased road spending, marking the beginning of a more systematic and organised approach to lobbying on this issue. However, the costs of re-armament combined with falling unemployment meant that by 1935 road expenditure had begun to be reduced. The years of the Great Depression were to be the only period of the 20th century when road expenditure exceeded the revenue from motoring taxes.

The notion of the motorist as an overtaxed net contributor to the government subsequently gained widespread currency in the motor lobby, perhaps by reference to the original hypothecation of the Road Fund. However, as adherents to theories of government failure would point out, the Road Fund did not behave like a private provider of road space might. The amount of revenue raised was under political control and there was no price mechanism to determine an appropriate tax rate to maximise receipts and therefore expenditure. Furthermore, the spatial distribution of road investment was to a large extent determined by political factors, such as the relief of local unemployment, rather than the wants of road users. In particular this meant that roads in and around the main conurbations received a disproportionately small share of overall expenditure (Roth, 1995). In addition, the Road Fund offered motorists little protection from often expensive government regulations, and by the end of the 1930s, despite varying degrees of protest from the motor lobby, both compulsory third party insurance and driving tests had been introduced as a response to the growing number of casualties on the roads.

Commercial road transport had also become subject to a much higher level of regulation. The Road and Rail Traffic Act (1933) required vehicles to be kept in a fit and serviceable condition and their drivers were forbidden to drive continuously for more than a specified number of hours. Log books had to be kept and a complex tiered system of licensing adhered to. General hauliers were obliged to satisfy their local Area Traffic Commissioners that ‘suitable transport facilities’ were not already available (Barker & Gerhold, 1993, 87). Thus the 1930s were marked by a pronounced bureaucratisation of road transport.

Furthermore, the UK’s road infrastructure, despite the spending burst during the depression, had begun to lag far behind that of its economic rivals. By 1939 Germany, Italy and the United States all had extensive motorway networks (Charlesworth, 1984, 13). In Germany almost 2,000 miles of autobahn was completed with a further 1,000 miles under construction, a total greater than the UK’s network sixty years later. Only a small fraction of this mileage reflected military imperatives, army leaders favouring railway transport (Freeman, 1987, 116). Indeed, Hitler’s blueprint for the Volkswagen Beetle is evidence that mass motoring was viewed as compatible with extreme Nazi egalitarianism. In Italy, Mussolini’s “third way” between capitalism and communism also promoted mass car ownership and motorway construction.

British transport policy preferences of the inter-war period appear to have reflected a combination of hierarchical and egalitarian biases, the former through the formation and regulation of the Ministry of Transport, and the latter through the depiction of the car as an unnecessary luxury and associated increased taxation, as well as the deployment of road construction as a means to ameliorate mass unemployment. Certainly, individualism lost out. Public choice mechanisms, such as lobbying of the government by the private railway companies, apparently played an instrumental role in filtering out individualist preferences from policy outcomes.

The degree of government intervention in transport increased still further as war loomed once again. The motor manufacturers were co-opted into the government’s ‘shadow factory’ scheme, designed to increase the UK’s engineering capacity. Once again the government’s reliance on what might be termed the ‘road transport economy’ increased. However, this did not prevent immediate restrictions on private motoring after the start of the Second World War. Petrol rationing was almost immediate, followed in October 1940 by the introduction of a 33.5% purchase tax on cars (Plowden, 1971, 301). Civilian car production ceased and in spring 1942 even the basic petrol ration was abolished. Expenditure on the roads was pared down to essential maintenance, although the war years were characterised by an increasing reliance on road freight transport, the number of goods vehicles almost doubling.

In 1947 the Labour government’s Transport Act nationalised the railways and the road haulage industry (private businesses who carried their own goods were excluded) although the latter was largely returned to private ownership by the Conservatives in 1954. The period of ‘austerity motoring’ lasted until May 1950 when petrol rationing was finally ended. However, the new Conservative government’s main imperatives were the raising of revenue and the balance of trade. Accordingly petrol tax and car purchase tax were doubled, while at the same time motor manufacturers were ordered to export 60% of their production. The home market was severely restricted with the motor trade allocating new cars to those in deserving occupations such as doctors and vets. After the abolition of the quota scheme in 1953 car ownership began to rise very rapidly. However, road investment had not been a priority in the years following the war. Indeed, in the period 1948-53 average annual expenditure on major improvements and new construction was in real terms just 21% of the 1936-38 average (Plowden, 1971, 327). The low investment levels reflected both a serious underestimation of future traffic growth by the MoT and Treasury reluctance to engage in large-scale capital spending. In 1952 the Treasury said it was satisfied if the ministry continued its road spending at about 70% of the 1938 figure (Savage, 1966, 199-200).

From the mid to late 1950s the problems of traffic congestion became more and more apparent, especially in London. Furthermore, there was a great deal of concern over the number of road accidents. The Queen’s speech of 1954 linked road safety to road expenditure, beginning the government policy of justifying schemes such as bypasses and motorways on the grounds that the number of accidents would be reduced (ibid, 335). At the same time the government was becoming increasingly aware that the car could no longer be treated as a middle class luxury and began devising strategies to cope with the problems posed by mass motoring. Thus the MoT began pressing local authorities to introduce more parking controls in order to reduce rush hour congestion. Official policy aimed to push more and more traffic through existing street systems via measure like clearways, pink zones and the new 40mph limit.

Commentators began to recognise the environmental impact of road transport. Buchanan’s Mixed Blessing (1958) argued that motors could no longer be comfortably accommodated within a 19th century urban fabric (the structure of cities had been to a significant extent fossilised by the 1947 Town and Country Planning Act). The car was becoming an environmental threat. Thus in 1960 the MoT formed a study group under Buchanan with the task of studying “the long term development of roads and traffic in urban areas and their influence on the urban environment” (Plowden, 1971, 348).

The 1963 Buchanan Report Traffic in Towns was the most far-reaching and influential survey of the environmental impact of road transport to date. Pollution and congestion problems were seen as inextricably linked to urban form and therefore could be best dealt with via planning tools. The report was far from an anti-car tract and a system of local and through roads was envisaged to cope with rising traffic levels. Thus, in accordance with the hierarchist conception of nature, the effects of the car could be contained by careful management by ‘experts’. Correspondingly, at the same time as the enactment of the Beeching Report savaged the railway network, government policy had begun to favour large-scale investment in roads. Between 1961 and 1968 roads expenditure rose by an average 11% per annum, a large proportion being spent on the construction of Britain’s motorway network (Plowden, 1971, 359). However, these increases were more than matched by rises in motoring taxes, which had come to be used as tools in the government’s Keynesian macro-economic management. Furthermore, the apparent generosity of UK road spending is diminished by geographical comparison. By the end of the 1960s, after successive 11% annual increases, UK expenditure on roads was the lowest in the developed world as measured by spending per vehicle and less than half that in Belgium, Italy, Canada, Sweden, West Germany, and Japan (Aird, 1972, 85). At 1.3% of Gross National Product (GNP) road spending was significantly lower than the world average of 2% (ibid), although significantly higher than the spending peak of the early 1990’s. The UK supposedly had the most crowded roads in the world (as measured by the number of vehicles per kilometre of road) with the single exception of Hong Kong (ibid).

The impact of demand management was also keenly felt by the motor manufacturers who among other restrictions, were coerced into locating plants in deprived peripheral areas such as Merseyside and Clydeside. Furthermore, many of the British-owned companies had been amalgamated and nationalised with the Labour governments of 1964-1970 prepared to invest large sums of public money in order to build a large and prosperous motor industry. Thus by the end of the 1960s the UK government had a significant direct stake in the success of the motor industry and hence road-based transport.

The 1960s therefore marked a sea change in cultural biases towards motoring. Car ownership, still seen as an unnecessary luxury in the years after the war, had reached a critical stage. Egalitarians, who had previously believed the car to be a rich man’s toy to be taxed for re-distributive purposes, began to see car ownership as desirable for the working classes. In other words, that the benefits of car ownership should no longer be preserved for the rich. This changed viewpoint, influenced by strong economic growth and rapid technological development, helps explain the apparently contradictory motorway building of Labour governments in the 1960s and 1970s, as well as the desire to build a large and prosperous motor industry to provide economical vehicles for the masses. However, these policy goals were arguably partially undermined by persistent economic crises and poor labour relations.

The trend of increased government involvement in road transport coincided with the development of modern environmentalism during the 1960s. Rachel Carson’s Silent Spring (1962) challenged the modernist technological shibboleths of the post-war years by identifying the potentially disastrous environmental consequences of chemical pollution. Although the book was primarily concerned with the dangers of pesticides, it contributed to a shift in perceptions regarding the external effects of motor vehicles. Concerns about the effects of exhaust emissions were added to more traditional objections such as noise and the despoliation of the countryside.

Accordingly, the environmental movement gathered strength in the 1970s. It gained intellectual support from the publication of The Limits to Growth report in 1972 (Meadows et al, 1972) The study argued that within a time span of less than 100 years modern civilisation would run out of the non-renewable resources that provided its economic base. The result would be a Malthusian cocktail of massive unemployment, decreased food production and a soaring death rate. Furthermore, the report concluded that even if vast new reserves of non-renewable resources were to become available economic collapse would still occur due to the excessive pollution generated by the increased industrialisation permitted by the greater availability of resources. Civilisation could only be saved by the immediate imposition of limits on pollution, population growth and economic growth.

Environmentalists adapted the ideas contained in The Limits to Growth to road transport. Road building and increased car ownership were inextricably linked to increases in fossil fuel consumption and economic growth in general. Furthermore, the notion of finite limits to economic expansion undoubtedly contributed to the subsequent development of the ‘new realist’ perspective on transport policy.

The impact of environmental thinking on both the public and government increased following the oil crisis of 1973. The resulting petrol shortages, combined with price rises, as well as rampant stagflation, added to the plausibility of ideas about finite resources. Through the remainder of the 1970s the environmental movement became more and more organised and road builders at the Department of Transport increasingly faced well prepared opposition during the public inquiries held to discuss proposed schemes (Smith, 1995). Regional and global issues, such as Acid Rain and fossil fuel dependency, were added to the debates and on occasions direct protests were employed. However, both car ownership and road use kept rising despite higher fuel prices.

The election of a comparatively radical Conservative government in 1979, whose ideology has been characterised as “free economy/strong state” (Gamble, 1988, 28), arguably made the environmentalist’s task even more difficult. Although the deep recession of 1980-82 and the resulting spending cuts led to a reduction in road spending and further increases in motoring taxes, perhaps more significant was the new government’s attitude towards public transport. Its medium-term aim became the reduction then removal of central government subsidies to both the buses and railways, resulting eventually in the policies of bus deregulation (1986) and rail privatisation (1994-97).

As the UK economy recovered strongly in the mid-1980s both car ownership and traffic levels began to increase rapidly, aided by rises in motoring taxation which were restrained by historical standards and a dramatic fall in oil prices. These factors undoubtedly played a large part in the formation of what Rawcliffe (1995, 30) describes as “unprecedented congestion levels” in the late 1980s and thus the major problem that the DTp’s Roads for Prosperity sought to address with its expanded roads programme.

Concurrent with record levels of traffic congestion at this time, was a record level of public support for environmentalist causes. Membership of environmental groups rose rapidly in the mid-late 1980s. The biggest recipients of new members were the more radical groups, which had come to be identified with campaigns on the big global environmental issues. The membership of both Greenpeace and Friends of the Earth more than quadrupled between 1985 and 1989 (Rawcliffe, 1995, 20). The combined membership of environmental groups reached 4 million people in 1989 (ibid). Clearly the Government found it difficult to ignore a movement of this size. In 1988 Prime Minister Thatcher declared her own conversion to the environmentalist cause, stating, “We Conservatives…are the natural guardians of the environment” (Royal Society News, 1988, 4). This was not sufficient to prevent 15% of voters supporting the Green Party in the 1989 elections for the European Parliament in a short lived demonstration of the salience of the environment issue. The heightened level of public awareness arguably carried on into the 1990s with devastating consequences for the road programme.


As socialist-egalitarian ideologies grew in strength during the first half of the twentieth century so too did their impact on transport policy. Gradually, the degree of state intervention in transport increased stage by stage, until by the late 1940s, both the railways and long-distance road haulage had been nationalised. Even the ostensibly individualist Thatcher government during the 1980s did little to fundamentally reduce the role of government in transport, with the notable exception of the air industry. Moreover, the Conservative government actively embraced many environmentalist arguments despite their basic incompatibility with economic liberalism.

The activities of bureaucrats and other special interests clearly played an instrumental role in the precise translation of ideological preferences into specific transport policy outcomes. The Ministry of Transport managed to strangle a private motorway system at birth in the 1920s, at a time when the resulting economies of scale and other productivity enhancements could have done much to improve British competitiveness relative to countries such as the United States that did embrace such new technological opportunities. Furthermore, transport users gradually became burdened with more and more regulation from the MoT test (lobbied for by the motor manufacturers) to catalytic converters (favoured by environmentalists).

It can be concluded that an understanding of the roles of both underlying ideological preferences and public choice processes are essential to the analysis of the development of transport policy in Britain. At the same time the importance of exogenous factors should not be underestimated. The negative impact of two world wars on the country’s transport infrastructure took decades to recover from. Similarly, the persistent economic crises that dogged Britain in the 20th century meant that short-term Treasury cuts often took their toll on infrastructure investment. The resulting cocktail of uncertainty and political meddling provides a powerful argument against government involvement in transport.


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