What transport policies could improve the UK’s productivity?

Towns and cities with effective transport within and between them host more productive businesses, which can pay higher wages. But with too few of such places, the UK suffers from low productivity. Making the transport investments we need locally instead of according to national plans would help.

Manchester and Sheffield are the largest neighbouring pair of cities in Europe without a motorway connecting them. Leeds is the largest city in Europe or North America with neither a tram nor a metro.

What about Europe’s largest city with no electric trains? Tirana, the capital of Albania. Sheffield is second.

Investment in transport within and between England’s big cities has been too low for too long. And because construction costs in the UK are so high, the money invested has not gone far enough.

Transport options in the UK are dominated by cars stuck in traffic and small slow buses that need too much subsidy to run. In Lille, an autonomous metro and a tram system means that the public transport system carries 30% more passengers than in Leeds with half the number of drivers and vehicles.

National policy has been poor beyond low investment. The 1985 Transport Act removed local control of buses from Great Britain’s large cities. Basic innovations such as two doors on buses and universal smartcard ticketing across modes have since failed to arrive. Patronage has halved.

Productivity in the UK transport sector is very low. And in Birmingham, by tracking every bus, we have shown that poor transport leads to smaller labour markets and thus lower productivity across the whole economy. UK cities with a population of over a million people are some of the least productive in Europe.

There is one exception.

London is the only large UK city with a world-leading economy. The capital also uniquely enjoys a world-leading and high productivity transport system. HS1 – the Channel tunnel rail link – connects London to Europe. The Elizabeth Line and Thameslink are among the most advanced digital railways in the world.

What’s more, the benefits of local control of transport are obvious – innovations such as smartcards, daily fare capping and congestion charging have led to the use of buses doubling.

Figure 1: Journeys by bus in London and English metropolitan areas since 1976

Source: Department for Transport

After decades of pressure, the UK government overturned the worst of the Transport Act in 2017. As a result, Greater Manchester will regulate its buses again by 2025. Other cities are following.

This progress will not fix decades of underinvestment. Indeed, recent cancellations of major investments, such as most of HS2 and Northern Powerhouse Rail, will deepen existing patterns. But England’s large cities can at least now steer their own course.

What next?

Much policy thinking in the UK focuses on the national and the pioneering. We imagine an independent commission making strategic plans and freeing us from short-termist governments. We suggest the national expansion of Oyster cards or the extension of national free bus passes to everyone. Both would create the largest such systems in the world.

These pioneering suggestions show that we are learning the wrong lessons from our recent past.

Most of the UK is well behind the productivity frontier. We don’t need to be pioneering. We can focus on what has worked here and in the rest of the world. What works are local projects, funded by local governments, chosen by local democracy, focused on cities.

London developed the Oyster card outside both the UK’s national smartcard system and its bus deregulation laws. Other cities should emulate it. The UK as a whole should not.

New investment in trams, metros and bus lanes happens in French cities because they can raise local taxes to fund investment instead of relying on national government. We should do the same.

Stepping back from national schemes and strategies will be hard for the UK. Ending national free bus passes would be controversial. But it should be the choice of cities themselves whether they subsidise buses and give out free travel passes, or whether they choose to do other things with that money. Cities as different as London and Dunkerque make such choices and keep free travel for many people.

Most national institutions will oppose, in action if not in words, a reduced role for national policy in the UK’s transport system. If we are to break out of our productivity problem, we must do it anyway.