Property Values and Crossrail

A few years ago Crossrail Ltd commissioned a study into the regeneration benefits of the scheme. Consultants estimated that Crossrail could add £5.5 billion in value to residential and commercial real estate between 2012 and 2021. In May 2013 Andrew Oxlade (writing for the Daily Telegraph) reported that property prices within a ten minute walk of Crossrail Stations had already increased by 30%, and could rise by 40% over 5 years. Farringdon and Tottenham Court Road stations were singled out as particular hotspots.

ApartmentsThe interest stimulated by Crossrail has coincided with a period of unprecedented investment in the London market by international property speculators. Many commentators see the escalation in property prices as unsustainable, and anticipate a crash in the near future. However, the Daily Telegraph analysis shows that there is a significant differential between property and land prices/values near to Crossrail stations when compared with areas of London that are not served by the scheme.

Transport experts have criticised Crossrail’s funding structure. They claim that taxpayers will benefit from only a fraction of the increased value of property along the route. Some experts say that more should have been done to ensure more of the commercial benefits for landowners would be passed onto taxpayers. Transport Network columnist Christian Wolmar said the ‘crude’ structure of the London levy system, which contributes to meeting Crossrail’s costs, should have been supplemented by additional council rates on properties near the line.

“In the UK we’ve never developed a sophisticated way of capturing that added value. If you’d charged an extra pound or two per square foot in rates from the outset you’d not have deterred any takers’” he told the Financial Times.

The Deputy Mayor for Transport, Isabel Dedring, has conceded that only a ‘fraction’ of the rise in property values created by Crossrail will be captured. She added that lessons had been learnt, and future transport projects will be designed in a ‘smarter way’.

These reports serve to remind transport planners and economists (and, indeed, their critics) that attributing the costs and benefits of transport investments is a highly complex business. This is particularly the case where the investment decisions precede long periods of detailed design and construction which may span economic cycles.

Posted in Transport Economics, Transport Planning, Uncategorized, World Cities | Leave a comment

Robert Reich and Transport

I have been reading Robert Reich’s excellent book “Beyond Outrage” which explains how the how the economy of the United States has developed since the early 1980’s when Ronald Reagan was President. So, you might ask “how is this relevant to transport planning ?”. Well, there are many themes covered by the book which have direct implications on the transport scene here. Policy in the US is often copied by UK governments at a later date. However, we seldom pick-up on the aspects of policy which proved less successful in the long term. Therefore, Reich’s analysis is instructive.

images[8]Reich’s first point is that, in the US, almost all of the gains from economic growth since 1980 have gone to people living at the top end of the income distribution. Does this sound familiar ?

“In the 1960s and 1970s, the wealthiest 1 percent of Americans got 9-10 % of our total income. By 2007, just before the Great Recession, that share had more than doubled to 23.5%. Over the same period the wealthiest 0.1% tripled its share.”

Reich also claims that, since 2001 the median wage in the US has actually dropped in realm terms. The use of mean income or GDP statistics can be misleading when the distribution becomes increasingly skewed in this way.

Reich argues that the US will not bounce back until inequality is reversed. In his words

“No economy can run on the spending of very wealthy.”

Reich cites the example of Henry Ford who, in 1914, gave his workers three times the average wage of a typical factory employee at the time. The workers were enabled to buy the cars that they built, increasing profitability.

Reich also explains how the tax system in the US has been altered to benefit wealthy individuals and top management in large corporations (regardless of their performance).

State investment in transport has lost out in this period.

“Excellent schools, roads, parks, playgrounds, and transit systems were meant to knit the new industrial society together, create better citizens and generate widespread prosperity.”

UK governments have generally followed the US example. The public may sometimes find privatisation policies unpalatable and kick-back (e.g. on health), but in general we emulate the US.

As transport planners perhaps we should be looking even more carefully at who wins and who loses with each policy, strategy or scheme that we examine (i.e. by income group). Also, we should have the confidence to speak-up for the widespread benefits that some types of transport investment can bring to society when compared with other types of government spending. The Chinese commitment to investment in transport in the UK, which was reported in the papers yesterday (21 July 2014), shows that they understand these issues very well.

Reich’s analysis is refreshing in its clarity. Those on the right wing of the political spectrum will say that he is in favour of “big government” that we cannot afford any more. However, the North European and Scandinavian countries show what can be achieved in a more equitable society.

Posted in Transport Economics, Transport Planning, Uncategorized | Leave a comment

Ray Bradbury – Visionary

Yesterday I bought a copy of “Fahrenheit 451” from Foyles at St Pancras Station. On reading the Introduction to this 2008 paperback edition (written by Bradbury in 2003) I was struck by his observations on modern life. It reminded me of studying “The Golden Apples of The Sun” at school in the 1970’s and being entranced by Bradbury’s beautiful prose and dark sense of humour.

Fahrenheit 451

Bradbury recalls:

“I had been accosted by the police one night while I walked on a Los Angeles street with a friend. The police wanted to know what we were doing, when walking was our aim and talking occupied us.

 I was so irritated by being stopped and asked about walking that I went home and wrote the (short) story ‘The Pedestrian’, concerning a future where pedestrians were arrested for walking on sidewalks.”

“The Pedestrian” conveys its powerful message quite bluntly using nightmare imagery. I suspect that this story (written in 1949) and the similar themes visited in “Fahrenheit 451” have had a greater influence on planners, over the years, than the author could ever have intended or anticipated. Thanks Ray !!

Posted in Pedestrian Planning, Transport Planning | Leave a comment

Lessons From Crossrail

The official statistics for Crossrail are certainly impressive:

  • a total ‘funding envelope’ of £14.8 billion;
  • 100km route from Maidenhead and Heathrow to Shenfield and Abbey Wood (via Paddington, Tottenham Court Road, Liverpool Street and Canary Wharf);
  • Europe’s largest construction project;
  • 35 million working hours already completed  by summer 2013; and
  • 200 million passengers per annum expected on opening in 2018.

Funding

The funding framework was put in place in October 2007. Following the Comprehensive Spending Review in October 2010, a funding envelope was agreed to deliver the Crossrail scheme. The key elements of the funding package were as follows:

  • The Mayor of London (through TfL and the GLA) to contribute £7.1bn. This includes a direct contribution from TfL of £1.9bn and contributions raised through the Crossrail Business Rate Supplement (BRS), Section 106 and the Community Infrastructure Levy (CIL).
  • Crossrail farepayers will contribute towards the debt raised during construction by TfL.
  • Government will contribute through a DfT grant of £4.7 billion during construction.
  • London businesses will contribute £4.1bn through a variety of mechanisms, including the BRS.

Network Rail will undertake works (worth up to £2.3bn) to the existing national rail network raised through projected operating surpluses from the use of Crossrail services.

There were also to be considerable additional financial contributions from some key beneficiaries of Crossrail:

  • construction is part funded by the City of London Corporation, which has agreed to make a direct contribution of £200m and in addition will seek contributions from businesses of £150m, and has guaranteed £50m of these contributions.
  • BAA has agreed to a £230 million funding package.
  • Canary Wharf Group has agreed to contribute £150m towards the costs of the new Canary Wharf Crossrail station at Canary Wharf.  Canary Wharf Group is also designing and building the new station.
  • Berkeley Homes has agreed to construct a station box for a station at Woolwich.

The £14.8 billion funding envelope for the project is a fully inclusive cost, allowing for both contingency and expected inflation.

MC900056535 EngineersLabour Shortages

On Monday 29 July 2013 The Independent ran an article by Mark Leftly entitled “Mega-projects Crossrail and HS2 facing cost hike on skills gap”. The article reported that recruitment consultants were warning that during, peak periods of construction, Crossrail and the proposed High Speed Two (HS2) mega-projects could be “thousands” of engineers short. Keith Lewis, managing director at Matchtech, told The Independent that with so many projects going on over the next 10-15 years, HS2 and Crossrail would be “hundreds or thousands rather than dozens” down on the engineers it needs. This is likely to increase labour costs.  Lewis was quoted as saying

“There’s not enough work done on making engineering a career of choice. There is a difference between perception and reality – people still see engineering as being an oily rag and blue overcoat.”

The Independent also notes that the image has also put off women from entering an industry that suffers from a desperate gender imbalance. Only one-in-10 engineers are women. It has been estimated that the UK will need to train nearly 100,000 new engineers and scientists over the next three years simply to replace those who will have retired. The picture is further complicated because engineering skills are now readily transferred between sectors and countries. British engineers can switch from the UK rail sector to the automotive sector or work on a well-paid overseas project such as the Dubai Metro.

Project Phasing

Crossrail2  (formerly known as the Chelsea-Hackney Line) could start construction in 2019. This assumes that Crossrail1 would be completed in 2018, as programmed. It is intended that HS2 will proceed with construction in 2017.  It is conceivable that major expansion of airport capacity could be happening at the same time in South East England. This would seem to create the perfect conditions for cost escalation on these major transport projects.

Once again, this illustrates the importance of medium and long-term planning for transport. The unintended consequences of political indecision can be extremely costly for us all.

Posted in Consultancy Business, Transport Economics, Transport Planning, Uncategorized, World Cities | Leave a comment

Changes on the No. 24 London Bus

The 24 London bus serves a 7 mile route between Hampstead Heath and Pimlico (via Camden, Warren Street, Leicester Square, Trafalgar Square, Westminster and Victoria). The 24 is operated by Metroline a wholly-owned subsidiary of Singapore based ComfortDelGro, one of the largest passenger land transport companies in the world.

101_1167The 24 route dates back to 1910, when it ran between Hampstead Heath and Victoria. The route was extended to Pimlico in 1912. It has continued in that form until the present day, the oldest unchanged bus route in London. Buses on the 24 route are reported to carry 28,000 journeys each day.

The route was crew operated until 1986. It was the first route in London to use front-entrance double-decker buses. In 1988, it was the first central London route to be awarded to a private company under the tendering process. Continuing in these traditions, the 24 has just become the first in the Capital to operate entirely with New Bus for London (NBfL)vehicles. During peak hours, 27 of the new buses will be in passenger service.

The NBfL is a diesel-electric hybrid double decker bus. A prototype bus, had been in passenger service for eight months and driven more than 15,000 miles. It is reported that the new bus was found to emit a quarter of the NOx and PM of a fleet average hybrid bus and 20 per cent less carbon dioxide.

The NBfL was designed by Heatherwick Studio based at Kings Cross, London. Thomas Heatherwick is an English designer and the founder of the design practice. Since the late 1990s Heatherwick has emerged as one of Britain’s most gifted designers. Heatherwick has been associated with projects that are supposed to give a sense of national or local identity. These include B of the Bang sculpture unveiled outside the City of Manchester Stadium in 2005, the Rolling Bridge at Paddington Basin, East Beach Cafe at Littlehampton (RIBA National Award winner in 2008) and the London 2012 Olympic Cauldron. The Heatherwick Studio, founded in 1994, is home to 80 architects and designers.

In 2010 Boris Johnson announced that Heatherwick Studio would be designing the NBfL. It was the first time in more than 50 years that public authorities had commissioned and overseen the development of a bus built specifically for the capital. The main features of the bus are as follows:

  • a long asymmetric front window providing the driver with clear kerbside views;
  • a wrapped glazing panel which reflects passenger circulation – bringing more daylight into the bus and offering views out over London;
  • an open platform at the rear, reinstating one of the much-loved features of the 1950s Routemaster with its a ‘hop-on hop-off’ service; and
  • three doors and two staircases, designed to make it quicker and easier for passengers to board.

The buses are manufactured by Wrightbus in Northern Ireland. The BBC report that each vehicle costs about £354,500 and has an estimated lifespan of 14 years. Existing hybrid diesel-electric buses are reported to cost £305,000. TfL claims that the fixed price (per bus) for the entire order equates to £326,000 at today’s prices, once inflation and leasing costs are factored in. Conductors will cost about £62,000 for each bus. It is planned that 600 New Bus for London vehicles will be in service by 2016.

The NBfL has a comparable capacity to existing Hybrid models. The rear platform will only be open when a “conductor” is aboard in the daytime. However, the conductors will not take money or swipe Oyster cards.  It seems that there is some risk of fare evasion which was a problem on the bendy-bus routes. The conductors’ main duty will be to supervise passenger security – but they will not be on duty after about 7pm, when perhaps the need for security is greatest.

According to critics, the NBfL is an expensive vanity project and likely to be abandoned by the next major. The design is also said to be unattractive for other international cities. The third entrance and second staircase may make it difficult to sell to customers outside London. Authorities in other parts of the UK may decide that the higher fares that stem from employing a bus conductor are unsustainable. London bus operators, who purchase new vehicles, usually aim to recoup some of the capital outlay when they renew their fleet and sell their old buses to provincial bus companies. If the operators anticipate difficulty in selling the NBfL on, they may not want to buy them. Commentators have also estimated that the “conductors” on each of the 600 new buses will cost around £37m extra a year.

101_1166A further difference from existing buses is that the NBfL has no opening windows. So it was interesting to read, in the Daily Mail (5 July 2013), that faulty air conditioning has caused on board temperatures to soar on summer days. TfL admitted that the NBfL had ‘teething problems’. London Buses, told the Evening Standard: “We are aware of some technical issues with the ventilation and air chill system on some of the New Bus for London vehicles on Route 24. Our suppliers are working to fix the issue as soon as possible.

Having travelled on the 24 bus once or twice in the evening, it was not clear whether the air conditioning was functioning effectively. The transport community will certainly await further news of the technical and financial performance of the NBfL with considerable interest.

Posted in Transport Planning, Uncategorized, World Cities | Leave a comment

Petrol Prices Again !

101_0941_Petrol PriceI’m fascinated to see fuel prices attracting headlines again. Its almost exactly a year since I wrote about about the impact of ‘paper markets’ on fuel prices. At last the European Commission (EC) has decided that the evidence on fuel price manipulation is worthy of more serious investigation.

The front page headline in the ‘Daily Mail’ on 17 May 2013 summed up the mood – “Petrol Sharks Pile On Agony For Drivers”.

However, the casual reader might be confused as to where the real problem lies. The finger of suspicion is pointed at the oil companies, but mention is also made of traders such as Glencore, Cargill, Gunvor and Trafigura. There are accusations of stockpiling and market manipulation. Apparently investigators from the EC have recently ‘raided’ the London offices of BP, Shell and Statoil.

Setting aside all of this speculation and the usual ‘blame game’ so beloved of our media, the market is clearly not operating effectively. The main losers seem to be consumers, both businesses and households. The impact of over-priced fuel on our struggling economy must be huge, and this should be a high priority for the government. Of course, the implications of artifically high petrol and diesel prices for transport operators and planners are highly significant.

It is encouraging to see that, on 16 May, Terry Macalister of The Guardian reported that the Serious Fraud Office was considering a criminal inquiry into price fixing at various oil companies. However, I strongly suspect that the problem is a wider one.

Posted in Transport Economics | Leave a comment

Trends in UK and US Car Ownership and Use

According to Robert Wright, (Financial Times, 23 December 2012), US car manufacturers are worried about the general decline in car use, and in particular the recent reduction in the number of teenagers obtaining driving licences. Alternatives to car use are becoming more attractive. Public transport in many US towns and cities has improved markedly in the last 30 years. For example, the authorities in Portland, Oregon, have successfully encouraged greater bike use. In response to these trends, Ford are supplying vehicles to the college campus sites of Zipcar, the car-sharing service. They reason that students who grow familiar with their cars, will eventually buy a Ford for themselves. US car-makers, have also sought to improve integration with mobile devices (e.g. phones) that have assumed the central role in many young adults’ lives which cars once held.

In a January 2010 article in the Canadian Globe and Mail Martin Mittelstaedt reported that

“Americans’ infatuation with their cars has endured through booms and busts, but last year (2009) something rare happened in the United States: The number of automobiles actually fell.

The size of the US car fleet dropped four million vehicles to 246 million. This is the only large decline that has occurred since records began  in 1960. The author notes that the decline in sales came despite the “cash-for-clunkers program”, in which the US government gave citizens up to $4,500 to trade-in older cars for new, more fuel-efficient vehicles.

Mittelstaedt notes the sheer size of the US car fleet relative to the number of drivers. Currently, there are 117 motor vehicles for every 100 people with licences. The article points out that car ownership levels in Canada and the US are markedly different. At the time of the article there were about 75 cars on the road in Canada for every 100 people of driving age (including both those with and without licences). In the US, the comparable figure is 100 cars for 100 people of driving age.

Licence Holding and Vehicle Ownership

Some observers in the US argue that driving licence applications are just being deferred. The generation involved has suffered disproportionately from:

  • poor economic conditions in recent years;
  • higher insurance costs; and
  • tougher driving test requirements than those experience by their predecessors.

They speculate that as this group becomes established in full-time employment, they will need to obtain a licence and a car. They anticipate that the long-term trend for married couples to buy cars and live in the suburbs will re-establish itself.

One suspects that similar factors are influencing car ownership in the UK. The Vehicle Licencing Statistics 2012, published by the Department for Transport, show that the total number of vehicles on UK roads continues to grow, although at a much reduced level than before the credit crunch. Since 2008, the annual growth in licensed vehicles has averaged 0.5%, compared to 2.4% between 1996 and 2007.

MC900431538There are some interesting underlying trends in the UK. In April 2013, the AA Website featured an article concerning female car ownership. It was noted that women drivers have pushed their car ownership above 40% for the first time, according to government statistics. Across the UK, 9.8 million women were registered with the DVLA as private car keepers last year, compared with 14.6 million men. Since 1994, the number of private cars with a female registered keeper has increased by 70%. Since the credit crunch, purchasing of new private cars has been more robust amongst women than men. Women’s purchases were down from 387,000 in 2007 to 363,900 in 2012, a fall of 6%. In the same period, new cars registered with male keepers fell from 575,400 to 475,100, down 17%. In 1975/76, only 29% of women held a full driving licence.  By 2011, of the 35 million holders of full driving licences, 16 million were women (46%).

Vehicle Use

On 30 November 2011 Samantha Schaefer (writing for Pacific Swell) noted that car usage in the US is declining. It fell 1.3 percent in the first eight months of the year of 2011 to the lowest point since 2003, according to the US Department of Transportation.

MC900441730It appears that this trend started in 2004 when miles travelled flattened and then began to decline in 2007. The trend is not necessarily tied to petrol prices. Prices have been erratic since the recession began in 2008, but national car mileage had already been steadily decreasing. The suggested causes of reduced vehicle mileages are:

  • the aging baby boomers who, as they retire and get older, are not commuting to work and are less likely to be driving; and
  • generation Y (people born during the 1980s and early 1990s) is drawn to live and work largely in urban areas where there is a sustainable culture that discourages car ownership and use.

Academic Research

In December 2012 Peter Jones and Scott Le Vine of University College London and Imperial College, prepared a report entitled “On the move – making sense of car and train travel trends in Britain” for the RAC Foundation.

In examining trends over the last 15-20 years the researchers note the following underlying trends:

  • a reduction in car mileage per annum by men, but no significant reduction in car ownership/dependence for commuting;
  • the main reduction is in younger age groups (of men) and there has actually been an increase in car use by over-60’s;
  • there has been a decrease in company car ownership and usage by men which explains much of the overall decline in car use by men;
  • for women car use in most age groups (over 20 years) is increasing; and
  • in London car use by men and women had stabilised before the 2008 credit crunch, and more recently there has been some decline in car use, primarily relating to company car ownership and use amongst men.

The researchers note that many young people are living with parents longer than previously. People are marrying later and many people have part-time jobs. Their ability/need to rent or own their own place of residence influences travel behavior.

Amongst the causal factors, leading to a slowing in the growth of car ownership and a  reduction in annual mileage per vehicle, referred to by the RAC report are:

  • increased costs of running a car (insurance, fuel, and parking);
  • income and GDP effects;
  • changes in taxation of company cars and fuel;
  • reductions in traffic speeds;
  • reductions in road capacity (particularly in Central London);
  • public transport improvements;
  • planning policies;
  • government encouragement of Smart Travel; and
  • broadband and mobile communications.

Company Cars

It is interesting to consider the implications of Jones and Le Vine’s analysis. They have highlighted the intricate ways in which the state of the economy and political decision-making influence travel behaviour both directly and indirectly. For example, in the UK government policies have reduced company car usage significantly. The average annual mileage for company cars is considerable higher (two or three times higher) than for privately owned cars. Therefore, a significant change in the company car ownership and use can have a disproportionate impact on road traffic levels.  In 1993/4 there were changes in the tax arrangement for company cars. Subsequently there have been a number of changes relating to business mileage and fuel which appear to have reduced the incentive for employers to provide company cars and for drivers to record high annual mileages. Overall company car ownership and mileage per annum has declined very significantly since the early 1990’s. It is fair to say that these factors are not well-represented within existing transport modelling frameworks.

Posted in Transport Modelling, Transport Planning, Uncategorized | Leave a comment