Written evidence submitted by Midland Expressway Limited (EVP0071)

Executive summary

• Midland Expressway Limited (MEL), the operator of the M6 toll, is particularly well-placed to make a valuable contribution to this inquiry in light of: a) the success of the M6 toll since it opened in 2003, b) the network benefits that the road already delivers to the Strategic Road Network (SRN) and c) the further benefits, data and insight that will arise from the programme of digital transformation being rolled out on the M6 toll from this year.

• The impact of the M6 toll since it opened in 2003 shows the benefits road pricing can deliver. Carrying approximately 18 million journeys a year prior to COVID-19, the M6 toll captures up to 85% of all cars and 55% of all Heavy Goods Vehicles (HGVs) making long-distance journeys through the M6 corridor with journey time savings of up to 41% at peak times when compared to using the equivalent stretch of the M6. As such, drivers and fleet operators value the tolled road as delivering a free-flowing, reliable alternative to the M6 and other local routes, and it consistently captures the majority of traffic travelling through the West Midlands.[1]

• Digital transformation (based on technologies such as ANPR, GPS and 5G) is enabling the development of enhanced forms of road pricing that would offer the following benefits to road users, the economy and the Exchequer:

1. More advanced market segmentation and the introduction of pricing solutions to improve the efficiency with which traffic is moved around the road network, reducing congestion and boosting connectivity to support economic growth.

2. Direct traffic away from congested urban routes which experience high levels of air and noise pollution by using more targeted pricing incentives.

3. Raise revenue for government to compensate for a lower tax receipt from fuel duty and Vehicle Excise Duty (VED) as the number of electric vehicles increases.

4. Deliver a positive social impact through the ability to vary pricing by frequency of use, vehicle class, for journeys taken at different times of day or even by journey type (e.g. commuter, leisure or business), as well as offering the potential of a fairer system for lower intensity road users.

• The digital transformation of the M6 toll alongside the development of deeper partnerships with local highways authorities open the way for the benefits of road user pricing to be developed with a wider group of motorists in the shorter-term, particularly in relation to tackling congestion hotspots. Insight and data gathered from these partnerships can also help inform the structure of any future national road pricing model.

• Road user pricing can provide a holistic response to a number of interconnected long-term challenges which might be termed the UK roads trilemma; three critically related and potentially competing challenges which must be addressed together if the UK’s roads are to support sustainable growth in line with the UK’s climate commitments. The three challenges are:

1. reducing emissions to decarbonise the network;

2. improving connectivity to support economic growth; and,

3. maintaining current levels of vehicle-related tax revenue.

Attempting to tackle each of these issues separately risks setting back progress in another area (e.g. increasing roll-out of electric vehicles reducing revenues from current motoring taxes). Therefore, a holistic response is required to balance the trilemma – such as the use of road user pricing.

MEL’s scope to contribute to this inquiry

MEL is the operator of the M6 toll, the UK’s only tolled motorway. Since opening in 2003, the M6 toll has been an important addition to the UK’s Strategic Road Network, providing a free-flowing alternative to the M6 and other adjacent roads.

MEL are particularly well-placed to make a meaningful contribution to this inquiry and ongoing debates around the future of road pricing in the UK for the following reasons:

1. The success of the M6 toll – the UK’s only tolled motorway

The M6 toll does what it was designed to do – provide a free-flowing and reliable alternative to the M6 for long-distance traffic travelling through the busy and strategically important West Midlands corridor. With approximately 18 million journeys a year prior to COVID-19 (70% of which were long-distance trips), the M6 toll captures up to 85% of cars and 55% of Heavy Goods Vehicles (HGVs) making long-distance journeys through the M6 corridor with journey time savings of up to 41% at peak times, compared to using the equivalent stretch of the M6.

In addition to the benefits the road delivers for its users and the wider West Midlands region, the M6 toll also plays a key role within the wider Strategic Road Network, including supporting the efficient movement of freight across the country and to and from a number of major ports.

2. Existing network benefits delivered by the M6 toll

MEL’s practical experience of successfully attracting new customers in both light and heavy vehicles is demonstrable evidence of the application of road user pricing to deliver benefit to adjacent components of the Strategic Road Network by alleviating congestion and delivering reliable journey times.

For example, heavy goods vehicles using M6 toll have increased at a significantly faster rate than the wider network over recent years. And recently, the development of new products with strong customer appeal are attracting shorter car journeys on to the road. Looking forward, these developments form the backbone of the digital transformation and growth strategy currently underway at M6 toll.

3. MEL’s plans for the digital transformation of the M6 toll

Future road pricing schemes will rely on technology such as GPS, ANPR and 5G, to enable the delivery of broad-based pricing solutions to be offered to users and, in turn, more efficient distribution of traffic around road networks.

MEL are set to deliver a programme of digital transformation on the M6 toll from 2021, increasing the benefits that the road offers and generating data and insights that can inform the development of future road pricing schemes. These developments also mean the M6 toll will be well-placed to act as a test-bed for future trials of new tolling approaches. Independent research undertaken in 2019 established the customer profile of traffic using the M6 toll closely mirrors that seen on the wider UK road network, meaning MEL is well-placed to support this work.

MEL has provided responses to a number of the matters below. Those that we have chosen not to respond to are marked ‘N/A’.

Response to matters in the call for evidence

Road pricing

• The case for introducing some form of road pricing and the economic, fiscal, environmental and social impacts of doing so

As the UK’s only tolled motorway, the performance of the M6 toll since it opened in 2003 will be important in assessing the impact that the use of road pricing is likely to have if introduced on other parts of the UK road network. A study – commissioned by MEL and undertaken by Vivid Economics – examines the performance of the M6 toll prior to the COVID-19 pandemic and finds that the road delivered significant benefits for the national economy, regional economy and for users of the road.[2]

• National economic benefit – the M6 toll is a national asset within the UK’s Strategic Transport Network. With its position to the west of the M1-M6-M42 logistics ‘Golden Triangle’, the M6 toll plays a key role in ensuring the western, M42 side of that triangle remains free-flowing, in turn delivering benefits across the wider Strategic Road Network. This is particularly important given the number of north-south and east-west long-distance journeys that flow through that part of the Midlands, and the Golden Triangle’s location at the heart of a web of distribution centres and key rail and air hubs upon which manufacturing, retail and service industries rely. The M6 toll also supports the logistics sector by providing a reliable, free-flowing alternative to vehicles travelling through central Birmingham.

The importance of the M6 toll to the national economy is demonstrated by recent analysis of mobile phone data which identified where journeys which use the M6 toll start and finish. The analysis shows that, whilst just under half of journeys start and finish in the West Midlands, a very large proportion start and finish much further afield, including many in the North West, London and the South East, and the East of England. These key economic regions account for almost 80% of the traffic on the M6 toll that originates and/or terminates outside the West Midlands region.

The M6 toll’s role in the road network also supports improved access to the UK’s ports, particularly through providing a free-flowing, reliable route for the transport of freight.

• Regional economic impact – by moving up to 85% of long-distance car journeys off the M6, the M6 toll has freed up significant capacity on the M6. In addition, M6 toll attracts an increasing number of shorter journeys that use only part, rather than the full length, of the road. As a result, local A roads (particularly the A5, A38 and A452) will also have felt the benefit, with lower congestion and additional capacity. The boost in capacity and connectivity delivered by the M6 toll has added over £400 million to the West Midlands economy since it opened in 2003. The road has boosted wages by 1.4% – the equivalent to approximately £280 million in additional total wages per year for the region. It has also been the catalyst for local development and has led to an increase of around 1,200 firms operating in the region. The M6 toll has also led to the creation of 5,000 additional new jobs since it opened.

• Benefits for users of the M6 toll – 70% of traffic on the M6 toll is through traffic and at peak times the M6 toll captures up to 85% of all cars and up to 55% of all Heavy Goods Vehicles (HGVs) making long-distance journeys through the M6 corridor. By reducing congestion, the M6 toll saved almost 3 million hours of travel in 2018 – with the value of travel time savings since the road opened estimated at £280 million. Highways England data shows that during 2019 the M6 toll offered an average journey time saving of up to 41% during peak times, compared to using the equivalent stretch of the M6. The M6 toll halved the journey time for over 20% of journeys made during peak times compared to the equivalent stretch of the M6. In addition, Highways England data shows users of the M6 toll also benefit from more predictable journey times, compared to travelling on the equivalent section of the M6.

Digital transformation is enabling the delivery of more ‘dynamic’ or demand-based forms of road user pricing. This will form the basis of changes to be developed on the M6 toll over the years ahead and can also form the basis for new road pricing schemes introduced either elsewhere in the UK or, in due course, on a national basis.

Road user pricing can deliver a number of positive economic, fiscal, environmental and social impacts:

• Economic impact – road user pricing, enabled by technologies such as ANPR, GPS and 5G, will allow pricing options to be offered to different segments of the users travelling on the road network at a given time. For example, using the technologies listed above, operators of a road (or road network) which uses road user pricing could use journey data and trip patterns to design pricing interventions which achieve finely targeted public policy objectives, such as reducing congestion on a particular road. One application of this could be to ameliorate congestion on a part of the road network (for example, during rush hour), with the overall impact being the more efficient management of capacity on the road network as a whole.

As noted above, MEL’s practical experience of attracting new customers in both light and heavy vehicles to use the M6 toll is demonstrable evidence of the application of road user pricing to deliver benefits to adjacent components of the Strategic Road Network by alleviating congestion. For example, heavy goods vehicles using the M6 toll have increased at a significantly faster rate than the wider network over recent years. More recently, the development of new products with strong customer appeal are attracting more short journeys from light vehicles on to the road. These developments form the backbone of the digital transformation and growth strategy currently underway at M6 toll.

In addition to benefiting individual road users, this more efficient management of capacity on the road network will also deliver economic benefits. Through reducing the impact of congestion and improving connectivity, road user pricing could lead to enhanced productivity and in turn support higher levels of economic growth.

• Fiscal impact – an extension of road user pricing would provide an alternative revenue stream for government in the context of fuel duty and VED revenues (which revised a combined total of £34.4bn for the Exchequer in 2019/20) declining as the proportion of overall road traffic accounted for by electric vehicles continues to rise.

Furthermore, depending upon the application of any road user pricing scheme, there may be an opportunity to improve fiscal fairness relative to the current system through charging associated with impact upon the broader network, i.e. by lessening the impact upon more remote or rural communities or equating charging to broader impact on the road network such as travelling at peak times.

• Environmental impact – ‘demand-based’ road user pricing can deliver environmental benefits whilst simultaneously enhancing the role the road network plays in supporting economic growth, for example by effectively incentivising road users to avoid urban routes at certain times of day (i.e. when those routes are most at risk of congestion), in turn leading to improvements in air quality in those areas, or to reduce journeys on some routes overall, or by type of journey, or by time of day.

• Social impact – there are indications that a ‘pay per mile’ road pricing scheme could be considered as fairer by the public than current motoring taxation. RAC research shows around four-in-ten drivers believe some form of ‘pay-per mile’ system would be fairer than the current system of fuel duty, while half (49%) agree the more someone drives the more they should pay in tax.[3] Road pricing can also be a fairer system of motoring taxation for lower income road users compared to the status quo, for example given the opportunity this provides to vary pricing by frequency of use, vehicle class, for journeys taken at different times of day or even necessity of journey (i.e. those that couldn’t be taken by other modes of transport).

• Supporting a more integrated and efficient transport network – road user pricing can also act to promote a more integrated transport network through paving the way for partnerships between priced and non-priced parts of the road network (and potentially in due course between different priced parts of the network) to better manage road capacity across the network, as outlined in more detail above.

• Which particular road pricing or pay-as-you-drive schemes would be most appropriate for the UK context and the practicalities of implementing such schemes

There are several existing and emerging technologies – including ANPR, Bluetooth, GPS and 5G – which can deliver enhanced vehicle to infrastructure connectedness and support a number of different road pricing models. Deployment of these technologies could work as a replacement for having physical toll barriers on individual roads and at junctions upon exit.

Whilst the roll-out of any comprehensive national road pricing scheme would inevitably take a number of years, there are a number of early steps that government could take to deliver the benefits of road pricing – particularly relating to tackling congestion hotspots – to larger parts of the road network; an approach which would also inform the model adopted for any national pricing scheme.

MEL is well-placed to support this work, not least because of the fact, as noted above, that research undertaken by Vivid Economics on behalf of MEL established that the customer profile of the traffic using the M6 toll closely mirrors that seen on the wider UK road network. Specifically, this big data study revealed little difference between the Acorn classification of car drivers using the M6 toll compared to drivers using the untolled alternatives with users reflecting the typical profile of car drivers in general using the UK road network.[4]

Specifically, government could draw on the work that MEL will be undertaking during 2021 to roll-out the digital transformation of the M6 toll. This will include technological solutions which will enable the remote tracking of vehicles and distanced-based pricing, with variations to manage demand based on local network pressures and tailored pricing for individual journeys. Measures will include:

• ANPR-based vehicle identification
• The increased use of dynamic or demand-based pricing options to attract new trips from new users, and additional journeys from existing drivers
• Enhanced customer service across both registered and non-registered users, based around an enhanced digital / online capability
• Creating a platform for further development as new technologies emerge, such as 5G, GPS and Connected Autonomous Vehicles

The digital transformation of the M6 toll in 2021 and beyond means the road is ideally placed to act as a test bed for future tolling trials, prior to them being extended or rolled out on other parts of the road network (in partnership with Highways England, for example).

One practical consideration of any new road pricing scheme is the way in which non-payment will be enforced, to avoid significant levels of non-payment denying resources to public spending priorities. This may require government to review current regulatory arrangements to ensure that they are fit for purpose in an environment where road pricing models are more widely used.

Any scheme would also need to ensure any elements of the road network remaining ‘free to use’ do not themselves become congested as users seek to avoid the chargeable network. This can be overcome through careful design, noting M6 toll’s own experience and success in operating highly reliable infrastructure offering significant journey savings adjacent to easily accessible ‘free to use’ alternatives.

• The level of public support for road pricing and how the views of the public need to be considered in the development of any road pricing scheme

There is opinion polling which suggests some significant degree of public support for the roll-out of road pricing:

• YouGov polling featured in the Institution of Civil Engineers report State of the Nation 2018: Infrastructure Investment found that, by 47% of adults in Great Britain would support the introduction of a ‘pay as you go’ system if it replaced both fuel duty and Vehicle Excise Duty[5]

• As cited above, RAC research shows around four-in-ten drivers believe that some form of ‘pay-per mile’ system would be fairer than the current system of fuel duty, while half (49%) agree that the more someone drives the more they should pay in tax

Support for road tolling can also be seen through the behaviour of motorists when a tolled journey option is available. Specifically, data on the use of the M6 toll shows that, prior to COVID-19, the road captured up to 85% of all cars and 55% of all Heavy Goods Vehicles making long-distance journeys through the M6 corridor. Overall, 70% of traffic on the road is long-distance traffic. With c. 18 million journeys a year made on the road prior to COVID-19, this accounts for around c. 12.6 million long-distance journeys made on the M6 toll before the pandemic; a significant vote of the confidence in the benefits the road delivers (particularly on journey time savings and reliability) and a clear indication that users feel that the price of the toll represents good value.[6]

Looking ahead, the features of more dynamic forms of road user pricing open up other ways in which public acceptance of this approach can be built and sustained:

• Greater market segmentation

Dynamic forms of road pricing can deliver more advanced, more granular market segmentation than current models. This will act to increase levels of public support for road pricing through the introduction of more bespoke pricing solutions better tailored to the journey patterns of individual road users, helping more road users to see the value in using priced parts of the road network.

• Fairness

As outlined above, road user pricing also offers the prospect of being a fairer system of motoring taxation, in particular for lower intensity road users, something which would also act to increase public support for new road pricing schemes.

• Network benefits

The market segmentation effects associated with road user pricing schemes can deliver benefits to wider local road networks, including parts which are non-priced. This can be particularly beneficial in mitigating the impact of congestion hotspots through pricing interventions which more efficiently move travel around the local road network.

• Economic benefits

Reduced congestion and more free-flowing road networks, particularly through major travel corridors, can support increased productivity which generate significant economic benefits for nearby areas, in terms of job creation, higher wages and new business formation (as M6 toll has delivered in the West Midlands since 2003).

• The lessons to be learned from other countries who are seeking to decarbonise road transport and/or utilise forms of road pricing.

N/A

Accelerating the shift to zero emission vehicles

• The feasibility, opportunities, and challenges presented by the acceleration of the ban of the sale of new petrol and diesel vehicles to 2030

There are several challenges and opportunities arising from the acceleration of the ban on the sale of new petrol and diesel vehicles to 2030.

The challenges arise from the relationship between the decarbonisation of the road network enabled by increased use of electric vehicles and other related, long-term challenges facing the network. Along with decarbonisation, the need to increase connectivity and tackle congestion to support economic growth as well as address the fall in tax revenue (for example, from fuel duty) which will arise from greater use of electric vehicles potentially forms a policy ‘trilemma.’ Critically, pursuing a solution to only one part of this ‘roads trilemma’ can set back achievement of another of its aspects (for example, through lower fuel duty revenues arising from greater use of electric vehicles leading to less tax revenue to fund improvements to the road network, as well as for spending elsewhere).[7] Accordingly, a holistic solution to the trilemma is required if each of its component challenges is to be met.

The opportunity provided by the 2030 target – and the way in which it could help tackle the ‘roads trilemma’ – is through it prompting a wider re-assessment of roads policy and how the long-term challenges which form the ‘roads trilemma’ can be effectively addressed. Specifically, the new forms of road pricing described above can help improve connectivity and reduce congestion through using price to create incentives for different road users to use a particular route for their journey, in a way which in the aggregate better balances capacity across the network as a whole at a given time. This would also provide an alternative revenue stream to replace lost revenues from fuel duty and Vehicle Excise Duty.

In relation to decarbonisation of the road network, road user pricing can enable delivery of this aspect of the trilemma (without undermining the need to boost connectivity, support the economic recovery from COVID-19 and maintain current revenues from motoring taxes) through using more targeted forms of demand-based pricing to improve air quality and levels of other types of pollution (e.g. noise pollution) in urban areas. One example of how this could work is through reducing in real time the relative cost of a less urban route for a given journey at a time when the alternative urban route is becoming congested.

In short, road user pricing avoids having to choose which of i) increasing traffic volumes and connectivity to support economic growth, ii) decarbonisation of the road network and iii) maintaining revenue levels from motoring taxes should be prioritised and in what order. The Government can instead make progress on all three objectives simultaneously, solving the ‘roads trilemma’.

• The actions required by Government and private operators to encourage greater uptake of electric vehicles and the infrastructure required to support them

Alongside the action the Government is already taking to support greater uptake of electric vehicles, for example through the Rapid Charging Fund announced at Budget 2020, an additional measure the Government could take is increasing – potentially through the tax system – the incentives for companies to swap their car fleets for electric vehicles.

• The particular challenges around decarbonising buses and how these should be addressed

N/A

• The Government’s ambition to phase out the sale of new diesel heavy goods vehicles, including the scope to use hydrogen as an alternative fuel

N/A             

February 2021

Endnotes