I have been churning through some of the Greater Manchester TIF submission document. Being a (slightly manic) Beancounter, I delved into the cost areas.

 

There are two flaws I would like to concentrate on.

 

Adding extra tram lines decreases peak time passengers

 

The adding of tram lines East Disdbury, Rochdale (via Oldham) and to Ashton-under-Lyne lines, will mean 1200 less passengers at peak time of 8 to 9am crossing the Inner Charging Ring using the metrolink per hour than if it they were not added. So the GMPTA own models are saying that adding the extra lines will lead less people to travel on the whole tram system. Please go to pages 241 & 242 of part 7.  

I replicate the figures below (except my spreadsheet sums -1700, 1400 and 4000 to 3700, whereas their expensive transport model makes it 3600)

 

Figure 71 – Reference case:Difference in peple Cossing the inner ring (2005 to 2016) p.241
	Highway	Bus	Rail	Metrolink	Total Pt
Entering Regional centre	2,300	-1,300	1,300	4,000	4,000
Crossing Inner Charging Ring	8,400	-1,700	1,400	4,000	3,700
Figure 72 – TIF Package:Difference in peple Cossing the inner ring (2005 to 2016) p.242
	Highway	Bus	Rail	Metrolink	Total Pt
Entering reginal centre	-3,300	5,800	2,100	2,400	10,300
Crossing Inner Charging Ring	-6,400	7,200	2,300	2,800	12,300

 

 

The Conjestion Charge is too low.

 

TIF does a good job of shifting the balance of costs for those who run  a older budget car. At the moment, it is slightly cheaper to run such a car than leave it at home for both 8km journey and a 5km journey

 

 

 

  

Reference Case – No rise in fares
	8km journey		5km journey
Car Costs
Petrol at £1.25 litre and 37mpg	£0.76		£0.48
Other marginal car costs 10p mile =	£0.50		£0.31
Toll Charge	£0.00		£0.00
Total Car Costs	£1.26		£0.79
Bus Costs
Fare (tenth of weekly ticket)	£1.60		£1.60
Total Bus Costs	£1.60		£1.60
Savings	-£0.34		-£0.81
Extra time for bus	15 minutes		15 minutes
Time Cost Per hour	-£1.36		-£2.44
Car Comfort Premium p/w	-£3.40		-£8.13
Car Comfort Premium per annum	-£156.40	46 weeks	-£373.75
Time savings for car hours per annum	115	hrs	115

 

 

For the longer journey you save £156 per year and 115 hours. For the shorter journey the cost saving is greater, as there is a fixed cost of a weekly bus ticket.

 

 

With TIF – No rise in Fares
	8km journey		5km journey
Car Costs (budget)
Petrol at £1.25 litre and 40mpg	£0.71		£0.44
Other marginal car costs @ 10p mile =	£0.50		£0.31
Toll Charge	£1.00		£1.00
Total Car Costs	£2.21		£1.75
Bus Costs
Fare (tenth of weekly ticket)	£1.60		£1.60
Total Bus Costs	£1.60		£1.60
Net Savings	£0.61		£0.15
Extra time	28 minutes		20 minutes
Time Cost Per hour saved	£1.30		£0.46
Car Comfort Premium p/w	£6.05		£1.53
Car Comfort Premium per annum	£278.30	46 weeks	£70.44
Time savings for car hours per annum	215	hrs	153

 

 

 

With the TIF you have the conjestion charge. So the using the budget car now becomes a cost. The net change is £435 for the 8km journey and £444 for the 5km journey. The changes are from the conjestion charge, less slightly better fuel economy through travelling faster. However the time advantage over the bus is increased. The reason is simple. With less cars projected on the roads, average vehicle speeds have increased. It is not assumed that folks walk any faster to the bus stop, nor will their wait time be much changed.

 

Will folks afford the extra expense to travel quicker? If they pay the full charge, it will be £1200 per year. Can people afford this?

 

I believe they can, as most people already afford much more in paying for a mid-range car, rather than an older small budget car.

 

Consider some typical figures for car ownership over three years. I have assumed that they travel the average 7000 miles per year of a city dweller.

 

 

Compare a 5 year old Budget Car to a new Mondeo or a sporty small hatch.
	Picanto	Mondeo	Clio sport
Purchase Cost	£3,000	£18,000	£13,000
Trade-in after 3 years	-£1,000	-£8,000	-£7,000
Cost of Borrowing, with £3000 deposit		£2,250	£1,500
Net Cost	£2,000	£12,250	£7,500
Costs over 3 years
Insurance	£750	£1,800	£1,800
Fuel – 7000 miles per annum
Petrol at 45mpg, £1.25 per litre	£3,000
Diesel at 35mpg, £1.35 per litre		£3,700
Petrol at 35mpg, £1.25 per litre			£3,400
Servicing / MOT	£1,000	£500	£1,000
Tax	£360	£495	£495
Full cost of ownership	£7,110	£18,745	£14,195
Savings on bus fares	-£2,208	-£2,208	-£2,208
Net Cost of Ownership	£4,902	£16,537	£11,987
Premium Per mile		£0.55	£0.34
Premium Per Annum		£3,878	£2,362

 

 

My estimates are very subjective. Some car magazines give better estimates (though on higher annual mileages). But all will say it is the depreciation on a new car that is the biggest cost of a new car.

So put it bluntly, when you are shelling out £2000 to £4000 per year to keep you nice middle-class car on the road, will you shell out another £400 to £1200 per year to travel cocooned in the the car, are save the money to walk through the rain, and stand in the wind, wasting 2 to 4 hours a week in the process? My reckoning is that people will initially flood the new buses in droves. Then they will realise how much time they are wasting, and envy the cars speeding past. After a couple of times waiting twenty or thirty minutes in the cold and wet for that bus every five minutes, they will bin the bus ticket and jump back into the cars. The cost they will absorb by keeping their cars for a couple more years. Then the traffic will be even slower than before the conjestion charge, as there will be more bus lanes.

 

The only way out of this impass is to push the conjestion charge to a point where, for many people it is greater than the difference between there current car and the cheapest old car that they can tolerate. For many, that may around the £10-£25 mark. But, as there have been commitments on the charges, then there have to other ways to drive folks onto public transport.

1. One way to help keep the numbers down might be to get Jeremy Clarkson to hold a competition to highlight the scruffiest cars on Manchester’s roads, to embaress folks onto buses.
2. Reduce the entry points to the zone, so people drive further.
3. Build unecessary bus lanes, cycle lanes and chicanes to further slow the traffic down.
4. Make it difficult to buy the permits, so people regularly pay the fines.

 

The Conjestion Charge is not extensive enough.

 

The claim is made that “Fewer than 20% of Greater Manchester’s weekday peak-time drivers would pay a charge. The average daily charge is estimated to be less than £3 (at 2007 prices).” Come on chaps, if traffic speeds are to increase by 33%, whilst reducing the road space available then you must shift significant volumes of vehicles off the road. But if only 20% (or 10% as according to Lord Peter Smith claims) of drivers that will incur the charge, then a large percentage of those who pay the would pay the charge must be shifted from the roads to pay for this. Above I claim that most those crossing the boundaries would end up swallowing the charge, and they can well afford to do so. If only 10% to 20% will pay, then for every person paying there must be at least one switching.

 

 

 

 

 

The proposed investment of £2.8bn in Manchester, includes a conjestion charge. This has the dual purposes of.

 

1)                Providing a “stick” incentive of getting people to use public transport instead of cars.

2)                Raising sufficient revenue to pay off £1.2bn of loans.

 

The projected costs are £318m capital investment, with expected annual revenues of £174m and operating costs of £31m

 

 

I have attempted to put this into a calculation.

Other snippets of data are

1. “Fewer than 20% of Greater Manchester’s weekday peak-time drivers would pay a charge. The average daily charge is estimated to be less than £3 (at 2007 prices).

“

2. The average cost in 2013 would be £3.60 (£3 at 2006 prices)

 

From this I have put together the following estimate.

Manchester Congestion Charge
Manic Beancounter’s Estimate based on £174m revenue
				Data	Basis	Comment on Calculation
		Revenue From Tolls
C1		Average Charge per day		£3.60		This is £3 per day at 2006 prices
C2		Average per annum per person		£680.40
		Based on No of days Commuting		189		Allows for 15 days sick or on business elsewhere, and 20% “foul weather” drivers using car 50% of the time
C3		Number of commuting drivers		810,000		(equivalent to 54.5% of Gtr Manchester’s Working Age population)
C4		Drivers paying charge		153,900	19.00%	% of total commuting drivers paying Toll
C5		Annual Toll Revenue in £m		£104.7
		Revenue From fines
C6		Non-payers per day		6926	4.50%	Equivalent % of total paying drivers (based on London)
C7		Annual Fine Revenue		£69.3	£40	Average fine (compared to £80 in London)
C8		Total Revenue (Tolls & Fines)		£174.0		C5 + C7
C9		Operating Costs		-£31.0
C11		Capital Costs		-£37.9		Repayment of borrowings of £318m out of £1200m
C10		Annual Surplus		£105.1	887	Equivalent amount of borrowings in £m

 

Further assumptions made are

 

C2. I have looked at the average driver, to allow for actual days travelled. That is some taking bank holidays and 25 days leave. With 260 weekdays in the year, that leaves around 225 working days. Then some people mix between commuting by car and other means (public transport, car share, cycle, walking). I have ignored the other road users for this calculation. Therefore 189 days at £3.60 give £680.40 average charge per annum

C3. The number of weekday peak-time drivers per day I calculate to be 810,000, or 54.5% or the working age population. The working age population I assume to be 60% of the population of Greater Manchester of 2,480,000. It is a rough and ready calculation, but

C4. As less than 20% will pay the charge, I take 19%, or 153,900

C5. The total revenue is 153,900 x £680.40 = £104.7m

C6. There will be some non-payers. I assume that the percentage will be the same as in London, that is equivalent to 4.5% of the payers. That is 6926 per day.

C7. The average fine, I estimate to be £40, compared with £80 in London. This seems a bit steep at 27 times the average charge, compared with 10 times in London. If it was actually that level, I am sure the non-payers would be less. However, if I don’t set it at this level, I will not get back to the £174m total revenue.

C11. The capital cost is a charge that I have included. It is interesting to note that the term of the loan is 10 to 12 years. I am sure that the life expectancy of the system will be only five to seven years. Therefore the capital cost should be around £70m. This would only leave the surplus to pay for other borrowings at £300m over 5 years, and not £887m over 10 to 12 years.

C12. We thus have an annual surplus of £105.1m, sufficient to pay off £887m of borrowings.

 

Issues.

 

1.The estimates made here are speculative. Although the proposals will be based on better data, I believe that the figures should be independently reviewed. There is a considerable risk that the revenues are over-estimated, and the operating costs under-estimated.

2. The life expectancy of the system should be stated. If electronic tagging of cars is to be introduced before 10 years of operation are complete, then the quantity of other investment will reduce dramtically. The general taxpayer will end up paying.

3. The numbers are after 15% to 20% reduction in drivers switch to public transport. That means the estimates project around one million weekday drivers when the charge is implemented. Is this based on a considerable growth from present day levels.

3. Finally, I would like to see the study that claims “JUST ten per cent of weekday motorists would pay a Greater Manchester congestion charge”, as reported in the Evening News on 11th August. I have had to stretch things a bit to get 19%.

During my Geography lessons when aged 13, we were introduced to metaphor of getting a donkey to move. These stubborn beasts are traditionally encouraged by dangling a carrot in front of its nose, and the use of a stick to beat it’s rear. The transport proposals for Manchester include a number of carrots (incentives) and sticks (disincentives or penalties) to get the subtantial behavioural change in transport use.

 

The Carrots.

1. A trebling of the tram network, along with increased trams on existing lines.
2. “We will have buses every 10 or 15 minutes on every estate in Greater Manchester. They will not be big buses but, perhaps, minibuses which would operate a feeder service to the main roads.”  Or, alternatively, more services, more frequently, on better buses.
3. More bus lanes, to speed up traffic flows.
4. More cycle ways, with bicycle friendly interchanges.
5. Bus interchanges
6. Yellow School Buses
7. More Trains.
8. Discounts for weekly and monthly tickets, and ease of purchase.

 

The Sticks

1. The Congestion Charge itself, of £1 to cross the outer ring anf £2 to cross the inner ring. This is only inbound in the morning peak times and outbound in the evening peak time.
2. The fines for none-payment of the charge. In London average £80. I would guess in Manchester it would be £30 for non-payment of a £1 toll and £60 for non-payment of the £2 toll. This would average £40 (as more outer-ring crossings). I further assume than the rate of non-payment will be the same as in London – equivalent to 4.5% of those paying.
3. The inconveinance of purchase. There is no mention how easy the pay the fee. Are you able to block pay a month in advance, or will it be just daily? Will the fee be refundable or transferable if not used? Will it be payable online, or just a limited number of outlets? Will there be an extra fee for paying by credit card? More generally, will the objective be to make payment as easy as possible or difficult?
4. Reducing access points to the charge areas. According to the Association of British Drivers, there will be just 14 access points (or corridors). In South Manchester, this is just A56 Chester Road, A5103 Princess Parkway and the A6. In the Wilbraham Road area, will such roads as Withington Road, Lloyd Street South, Yew Tree Road and most importantly A6010 Wilmslow Road, be blocked? I know that plans are not finalised at present, but it would be nice to know if this corridor system is part of the plans. One check, is to ask how many access points were included on the inner and outer rings in the estimated £313m cost to install the system.

Finding: The costs to society as a whole, are estimated at over 3 times the benefits.

 

The current proposals are just a list of proposals with no attempt to say if this is of net benefit to society as a whole. Using my costing experience, I have tried to detail these, with assumptions made. Some estimates will be wide of the mark, whilst other elements will be absent entirely. However,

 

1. This is the only publicly available attempt to evaluate if the initiative is of net benefit to society as a whole.
2. It provides a framework to compare and contrast various elements of the intiative.
3. When better estimates are available, then the estimates can be updated.

 

 

 

The Costs and Benefits

 

When I did my degree in Economics it was Cost-Benefit analysis. Furthermore, I spend more of my salaried beancounting time on costs rather than benefits. So the costs come first, despite current coventions.

 

Costs and benefits of the Transport initiative in Manchester for Society as a whole.
	All Costs in £m, unless otherwise stated
	Costs
	Note		£m
	A	Investment cost	296
	B	Lost time – switchers	125
	C	Lost time – car users	56
	D	Subsidy Costs	350
	E	Congestion Charge	174
	F	Existing public transport users	80
	G	Switching to non-CO2 emitters	20
	H	Buying Hydro-electric	13
		TOTAL COSTS	1,114
	Benefits
	Note		£m
	M	Existing public transport users	135
	N	Reduced pollution health benefits	50
	P	More Exercise health benefits	10
	Q	Reduced CO2 impact	10
	R	Conjestion Charge Net Revenue	143
		TOTAL BENEFITS	348
TOTAL COSTS OVER BENEFITS			766

Notes on Costs 1 of 2 A Investment cost Total Expenditure 2800           Less congestion Scheme -313           Net Expenditure   2487                       Loan   1200                       Annual repayment on loan   143             (Congestion charge income £174m less £31m operating costs)                       Therefore, annual cost of                   total capital expenditure   296                     B Lost time – switchers from cars to public transport This is assuming that people moving from cars to         public transport will spend more time on their total journeys.                     Average time per day of 15 minutes (normal service)         No of people switching assumed to be 200,000, travelling 200 days per year     (some 50,000 of whom are car passengers)           Extra time travelling – normal 10 million hours       Extra time travelling – unexpected 5 million hours       Time unpredicatability 5 million hours       Loss of convenience 5 million hours equivalent     (enduring the elements, antisocial behaviour, crowding etc.)       Cost at £5 per hour 125 £m                       Lost time for increased unpredicatability of public transport       People will leave earlier due to the time inconsistancy of time, especially of buses.   Also due to crowding at peak time of trams                                     C Lost time – car users Hours p.a.   800,000 road users for 189 days, adding 3 minutes per day.   7,560,000   150,000 car users spending 2 minutes a day to pay congestion charge 945,000   Payment of fines is time consuming. 1.73m per year         30 minutes of lost time and 60 minutes for stress     2,595,000                     Total Hours per annum 11,100,000       Total Cost £m @ £5 per hr 56

Notes on Costs 2 of 2 D  Subsidy Costs – additional School Buses 30 600 at £50k per annum   Buses new routes 100         Buses – Higher Spec 50         Buses – more buses 50         Tram system 50         Maint & Security 20         Ticketing Systems and PR 20         Trains – extra subsidy 30                     TOTAL     350 F Existing public transport users – Costs Increased costs for switching from Train to Tram       – 50,000 people a day for 200 days per year. Extra £1 day 10     Increased costs for switching from Bus to Tram 10     Increased costs for buses     50     Increased costs of trains     10         TOTAL 80 H Extra cost for Hydro over cheapest Additional cost per kWh 0.03 £/kWh       Additional cost per MWh 30 £/MWh       Average load 50 MW       Cost per year £13.15 £m

 

 

 

Notes on Benefits M Existing public transport users – Benefits Time saved on journeys     Total Hours p.a. 25,000,000       Reduced time for unexpected delays   Total Hours p.a. 2,000,000             Total Cost @ £5 £135                       N Reduced pollution health benefits A guess           P More Exercise health benefits A guess           Q Environmental Benefit A guess                               Clearly there will be some health benefits from reducing pollution by getting         dirty buses off the road, from people walking further, and a lower net CO2         emissions.                  Inituitively the health benefits of more exercise have to be offset against         the consquences catching colds & flu through being in crowded places and         enduring the worst of Manchester’s cool, damp climate.                             R Conjestion Charge Net Revenue Total Revenue   £174             Operating Costs   -£31                               Net Revenue   £143

Introduction

 

The Government through a new body called the Tif (Transport Innovation Fund), propose to spend £2.8bn on transport in Manchester.

There appear to be a lot of good ideas within it to reduce conjestion by encouraging travellers to move from their cars to public transport.

Since the luanch of the proposals in June, there has been a lot of debate in the press about the pros and cons of the scheme. However, there has been no independant assessment of the scheme in its entirety. Rather it is, mostly interested individuals who either cannot bear to have any disruption to their lives, or who have a dislike of people using their cars.

 

I endeavour to answer the question

 

‘Will the investment, partly paid for by a congestion charge, be of net benefit to society?’

 

My short answer is

       

‘No – not by a country mile’

 

The longer answer is that

–                           Motorists will not only suffer the conjestion charge, but through increased conjestion caused by bus lanes and blocking of roads at the charge boundaries.

–                           Those switching from cars to public transport will spend longer travelling on average, and may cost more.

–                           The time savings for public transport users will be small.

–                           The environmental impact will be small.

 

 

However, I need to make many estimates, based on limited knowledge and my own biases. This is why I state my assumptions. As more information is released, then I will update these projections.