London Special - Congestion

The capital has led the way on road pricing with the congestion charge and, despite the doomsayers,

The 1.8 million signatures on the recent road pricing petition is the least of the problems facing supporters of the concept. The plan to introduce a workable pay-as-you-drive scheme is pitted with so many potholes that it is difficult to see how politicians will ever manage to drive it through and implement anything like a comprehensive national system.

And I say "a" rather than "the" system, because there is no model, let alone a detailed scheme for it. That besides, the petition was a thoroughly dishonest exercise and was based on an email campaign which suggested that a very precise plan set a tariff of £1.30 per mile, with the additional cost of the "tag" - the GPS equipment on board that calculates the distance travelled - to be £200.

The ideas for road pricing that have been floated are various, but we are years away from any decision on charging rates or how the tags would be paid for. Given that no scheme exists, the petition was really an exercise in enlisting people who are against paying a supposedly new tax - and a man with more courage than Tony Blair would have said so.

There is no worked-out model because a national system would look very different from the only large-scale scheme currently in operation: London's congestion charge. London is exceptional for many reasons, not least the excellence of its public transport, with 12 Tube lines and 700 bus routes and a low rate of car usage. Since it came into operation in 2003 the initial congestion charge has, indeed, been a success in reducing traffic by 20 per cent, even though, at a cost of £161.7m, it has been expensive to introduce.

The western extension, controversially introduced last month to double the congestion charge's catchment area, has shakier foundations and may prove damaging to perceptions of the scheme's success.

It takes in an area that is largely residential - few people travel to work there - and the decision to allow residents a 90 per cent discount to drive in the whole area gave the affluent residents of Westminster, Kensington and Chelsea leave to enter the original charging area for less than they were paying before. That the good burghers of Kensington held protests at their town hall suggests the relationship between brains and wealth is as tenuous as ever, even in these meritocratic times - a case of turkeys failing to support the abolition of Christmas.

The most telling phrase in Tony Blair's answer to the online petitioners was that "it would be ten years or more before any national scheme was technologically, never mind politically, feasible". 'Twas ever thus. Road pricing has always been ten years off. In 1993 the then transport secretary, John MacGregor, voiced commitment to introduce a scheme within a decade. Labour ministers have been saying the same thing for the past few years, seemingly unaware of the passage of time.

Blair is technologically illiterate and his response is dishonest. The technology to introduce a national scheme is available and already being used in Germany, where all lorries are charged to use the motorways. Nine out of ten pay through a sophisticated tagging system with an on-board unit that uses the US satellite system Toll Collect to calculate distance travelled. Operated by T-Systems, a subsidiary of T-Mobile, Toll Collect is 99 per cent accurate, and has been shown to function properly even in urban areas where there were concerns that tall buildings would cause black spots.

Lorry lobby

In Britain, a similar system was planned to assuage complaints by the road haulage industry that foreign lorries were getting a free ride on our motorways. However, in 2005, Alistair Darling, the then transport secretary, abruptly cancelled the proposed lorry road charging scheme, arguing that it would get in the way of the national scheme being proposed for all motorists - which, of course, he said would be ten years down the line.

This explanation does not hold water. The lorry scheme would have been an incredibly useful trial run for the wider implementation of the system. Instead it revealed political cowardice from a minister who had been sent to the Department for Transport to keep the ministry out of the headlines following the negative coverage that his immediate pre decessor, Stephen Byers, had managed to produce.

Despite making the scheme acceptable to hauliers by promising it would replace existing forms of taxation, and therefore be revenue-neutral, Darling was simply too scared of potential resistance from hauliers, a group that has terrified government ministers since the fuel protests of 2000, which almost brought the country to a standstill. This was a lost opportunity to soften up public opinion and sort out the technology.

This episode demonstrates that the biggest obstacle in implementing a national road pri-cing scheme is political, not technical. And it leads to the crucial question: What would be the purpose of a national road charging scheme? For a while ministers, ever fearful of the Jeremy Clarkson brigade, seemed to imply that it would be revenue-neutral, simply replacing fuel tax and vehicle excise duty.

That did not make sense at the time and makes even less now. The enormous costs and the political capital needed to introduce a national road pricing scheme would be disproportionate if its aim were simply to reduce congestion a tad on a few overcrowded roads. The sole rationale for imposing such an expensive and far-reaching measure would be to reduce the environmental damage caused by cars and induce a shift to other, greener, forms of transport.

Lack of political will

Here, however, there appears to be further trouble ahead as the incoherence of wider government transport policy is horribly exposed. At present, rail fares are being allowed to rise by 1 per cent above inflation. For the buses, too, fare increases above inflation in the deregulated and privatised sector are the norm. But Britain has in the past invested far less of its GDP in transport infrastructure than other comparable European economies - with the result that people induced out of their cars by the stick of heavy taxation have few carrots of nice, shiny trains or fleets of state-of-the-art buses with which to console themselves.

Aware of this, ministers tried to offload the political risk of implementing the scheme on to local authorities, offering generous bribes in the form of a Transport Infrastructure Fund that comes in two parts: the first to fund feasibility studies and the second for the implementation of schemes. Local authorities in large conurbations such as Manchester and Birmingham came back saying: "Give us lots of money to pay for better public transport, and then we will im plement road pricing." Even those areas which have been allocated money for feasibility studies, such as Norfolk, are worried about actually spending the money because of fears of a hostile local response.

Given such a reaction on the ground, and the ease with which motorists' fear of extra taxation can be roused by public campaigns, road pricing in Britain is likely to be mired in endless discussion, documents and feasibility studies for far longer than a decade.

A national scheme would require great courage and conviction, and there are few signs of either from the Department for Transport. Without that, and, more importantly, without strong political leadership, a scheme that could reduce congestion and reduce carbon emissions will forever remain "ten years away".

Christian Wolmar's book on the history of the railways, "Fire and Steam", will be published by Atlantic Books in September (priced £19.99)

Road pricing facts and figures

1.8 million people signed e-petition against road pricing
33 million cars currently on UK roads
25% increase in congestion predicted by 2015
£22bn value of time wasted in England due to congestion by 2025
£62bn set-up cost of road pricing scheme
£8bn to administer scheme every year
£1.50 per mile toll planned for busiest roads during rush hour
21% of UK carbon emissions come from road traffic
£140bn investment on public transport by 2015
£28bn annual benefit to the UK economy
Research by Mosarrof Hussain

Christian Wolmar is an award winning writer and broadcaster specialising in transport. He was shortlisted as a Labour mayoral candidate in the 2016 London election, and stood as Labour's candidate in the Richmond Park by-election in December 2016. 

This article first appeared in the 05 March 2007 issue of the New Statesman, The great generational robbery

Jeremy Corbyn. Photo: Getty
Show Hide image

Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.

 

 

This article first appeared in the 05 March 2007 issue of the New Statesman, The great generational robbery