Allocation of funds to public transport investment and operating support

Abstract

This paper reviews the present levels of operating support to, and public investment in, public transport systems in Western Europe. All internal bus, tram and rail services are included, and estimates made for total support in Britain, Sweden, West Germany, the Netherlands and France. To make comparison meaningful, these are shown in relation to GDP and traffic carried. Support levels in Britain are below average, but by no means the lowest as sometimes assumed. Reasons for providing support are considered, including existence of financial burdens arising historically, assistance to particular groups of users, problems in price discrimination and inability of other modes' charges to reflect costs. The extent to which support payments may merely subsidise inefficiency is outlined. A distinction is drawn between “productive” efficiency, i.e. the resources used to provide a specified level of service and fare, and “allocative” efficiency, i.e. the extent to which resources are allocated so as to maximise traffic, etc. The extent for reducing support yet retaining the present general level of service and fare is considered.

Means of raising finance for support are outlined, including relative roles of central and local government. The scope of local taxes being raised to meet local objectives is considered, notably in the French “versement transport”: In conclusion, it is suggested that trunk inter-city services should cover all costs from fares, by a discriminatory pricing policy, but central government provide a basic support level for rural areas. In urban areas, practical limits exist to price discrimination, and the best policy may be “collective purchase” of facilities through a local tax.