The track and external costs of road transport

1.1.1 The purpose of this study is to review:

i) Developments in methodology and data regarding issues such as vehicle delay, accidents, overloading and valuation of environmental effects.

ii) The likely effect of harmonisation of taxes within the European Community.

iii) Future prospects regarding the level of spending on roads.

iv) Alternative methods of dealing with social costs, including lorry routing, regulation and subsidy.

v) Experience elsewhere in Western Europe and in North America.

1.1.2 We review the theory behind the allocation of road infrastructure costs, finding a number of items on which the current British approach can be criticised, in particular the treatment of capital costs on a pay-as-you-go basis. Comparisons with other countries suggest that the British system is relatively sophisticated, but this and other evidence suggests that the proportion of capital costs of new roads allocated to heavy vehicles is too low.

1.1.3 A spreadsheet model of the current British track costs allocation system is constructed, and the effects tested of proposed increases in road spending, of overloading, of the allocation those items of cost currently allocated on a vehicle km basis in accordance with pcu km and of the allocation of the external costs of accidents. It is found that, even without adjusting the treatment of capital costs, an increase in taxes on the heaviest lorries of some 30 % is justified, and on buses 60%. Evidence on the values of vehicle delay and environmental costs is examined but it is considered that these factors are not yet sufficiently well quantified to test the adequacy of the current 30% margin to allow for them. More work in this area is recommended.

1.1.4 The possibilities for harmonisation of vehicle taxation within the European Community are considered. Since Britain has a far higher level of taxation than most other European countries, any move towards harmonising tax levels would reduce taxes in Britain at a time when they should be increasing. Such moves should be resisted, but if they come then there would be a case for compensating action to relieve competing modes of part of their infrastructure costs.