Policy Tensions
Trade Offs Between Economy, Inequalities, Climate and Financial Priorities
As set out in Scotland’s National Transport Strategy (NTS2), transport investment is a crucial aspect of meeting our goals of inclusive economic growth, reducing inequalities, and working toward our climate targets. There are, of course, interventions that can deliver on all aspects of the strategy, while remaining affordable in a tight fiscal environment. Moving ahead with these projects are relatively easy decisions for policy makers to take. More often than not, limited budgets will support projects that only deliver on some of these goals. Further projects still may involve direct trade-offs between these goals. For the benefits of transport investment to be maximised, significant consideration must be given to each area, which can be difficult to achieve without an unlimited budget to operate within. Thought must also be given to leveraging and stimulating private investment (as was discussed in the context of decarbonisation) on transport in order to increase funding and help achieve desired outcomes.
The transport network facilitates economic activity and growth through improving connectivity between businesses and consumers. Improvements in the network can help reduce travel times and providing a new service can reap significant benefits through higher productivity, increasing access to employment opportunities and improving market access. However, if focusing on economic benefits alone without consideration of the environmental and social effects of a policy, these issues can be intensified.
It is crucial to consider user affordability and accessibility to achieve the broader outcomes set out in NTS2. This includes concessionary fares for lower income groups who may not have private car access, designing services that everyone can use, investing in active travel infrastructure such as pathways and cycling infrastructure, supporting people to both choose and use active travel options, and investing in ferries for island communities to address the additional transport costs they face.
Furthermore, considering environmental factors is essential for adaptation to current climate change impacts, and to minimise emission generation in the future.
Prioritisation is not simple in this context. Often, prioritising one type of benefit or pursuit, such as economic growth may come at the expense of other outcomes, such as equalities or climate. Pursuing these shared goals within a tight fiscal environment can be even more challenging, with the scope to invest being lower.
Illustrating these trade-offs: Car Travel
One obvious example to help illustrate these trade-offs is that of car travel. Car travel remains essential to employment and productivity in many industries. However, as we saw in the equalities case study, access to car travel is highly unequal. Furthermore, car travel is responsible for a very significant proportion of total Scottish emissions. And any interventions to reduce trends in car use tend to be extremely expensive, and create further financial pressure – for example, the costs associated with improving alternatives to car travel (especially in a non-urban contexts). As such, these trade-offs sit at the heart of many of the decisions Transport Scotland has to make that relate to Scotland’s car travel.
Internationally, there is a substantial literature suggesting that travel demand and economic growth have gone hand-in-hand – or are ‘coupled’. Generally speaking as the demand for travel has risen within a developed economy (as typically measured by vehicle miles travelled), the economy has also grown. There is a substantial academic literature on this area, including much discussion of the direction of causality – whether growth in travel demand increases economic growth or vice versa. Different studies have suggested a complex relationship and causality running in both directions. There has also been some discussion as to whether travel demand and economic growth have ‘decoupled’ over more recent years. A good overview of this discussion can be found in Millard-Bell and Schipper (2010).
A key point here is that regardless on the view of the direction and strength of causality in this relationship, there are clearly trade-offs when considering travel demand, economic growth, and climate goals together. Transport Scotland is unaware of a developed country that has ever simultaneously sustained a growth in the economy and a decline in vehicle traffic. Scotland could make huge progress toward climate goals by simply limiting transport demand (most obviously distance travelled by car) in a blunt manner but doing so would likely come with profound and serious negative economic consequences, especially given the essential role of the road network in helping address some of the geographic challenges that this paper has highlighted. Attempts to manage travel demand (i.e. reduce traffic) must therefore try and minimise the economic harm this could inflict.
This informs the sustainable travel and transport investment hierarchies discussed in Section 2 (figure 1.2) and their use to manage travel demand, remove unnecessary travel demand, and shift demand to active travel. These measures can only achieve so much in terms of emissions reductions. The next stage is to decarbonise the transport sector with investment in getting the whole vehicle fleet to be either ZEVs or using sustainable net-zero fuels, which will require substantial investment and must be done quickly in order to address current climate goals (especially given the length of time involved in terms of the turnover of the vehicle fleet). There is also a lack of market-ready ZEV and sustainable net-zero fuels for vehicle markets other than cars, vans, rail and some short-hop larger vehicles. Beyond simply shifting existing journeys to low emission transport modes or investing in zero emission technologies, Transport Scotland recognises the need for emissions reductions through wider changes to how the system is planned. It is essential for transport to be seen as part of a wider system of access to employment, goods, services, leisure, etc. As set out in the route map for a reduction in car kilometres (Transport Scotland, 2022), “Non-transport digital and place-based interventions are important to support people to reduce their need to travel and to enable them to choose more local destinations for work, shopping and leisure which are the three largest reasons for trips.” This is now known as Triple Access Planning where it is recognised that access is not only achieved by motorised mobility; but also by spatial proximity enabling travel by walking and cycling and epitomised in the concept of 20-minute neighbourhoods; and digital connectivity for those opportunities that can be accessed over the internet. This is just one example of a series of competing priorities that requires a clear and strategic response from Government.
The Role of NTS2 in Addressing These Tensions
NTS2 is the key strategic framework used by Transport Scotland to address some of these tensions and to help inform trade-offs that need to be made. It is important to note that there are no weightings applied to the Four Priorities, with none more important than the rest. They reflect both the increasing importance of addressing climate change and the growing agenda of progressive policies to reduce inequalities in Scotland. Furthermore, progress in one area often spurs progress in another: reducing inequalities is crucial for delivering inclusive economic growth, and improving overall health and wellbeing, through promotion of active travel for example, helps us tackle climate action. As such, there will be many cases where there is not an obvious tension and the priorities are complementary as opposed to competing.
Despite the synergies inherent in NTS2, it is clear from the discussion above that this will not always be the case. There will often arise tensions or trade-offs between achieving the different NTS2 priorities, especially within a tight fiscal environment where it is not possible to fund every attractive investment opportunity. In these instances, a clear strategy is all the more important.
The NTS2 helps address these tensions in two obvious ways.
In the first instance, NTS2 is used as a broad and overarching framework for decision making at a strategic level. The Investment and Sustainable Travel Hierarchies (see figure 1.2 - i and ii) guide overall decision making – both at a strategic and project level. NTS2 is a substantial strategic document that is backed by significant resources in terms of ensuring that it continues to inform decision making. This includes a monitoring and evaluation framework, under which regular monitoring and evaluation reports (For example the most recent is a baselining report, 2022) are published to ensure progress against strategic goals are regularly and transparently assessed, with annual delivery plans setting out which policies are being delivered under which of the NTS2 priorities. At a strategic level, this ensures alignment and gives the strategy the weight it needs to influence decisions and help achieve the right balance in terms of what outcomes our package of transport interventions deliver as a whole.
In the second instance, there is a substantial framework put in place to ensure that NTS2 priorities are reflected in decisions made on a project-by-project basis – including detailed appraisal for all ‘major’ projects. A major project is defined in Transport Scotland as “Projects with an estimated total cost in excess of £50m and projects involving novel, contentious or otherwise politically sensitive proposals, regardless of their estimated cost”. Every major project in Transport Scotland requires a series of business cases to be produced in line with Scottish Transport Appraisal Guidance (STAG), the Scottish Public Finance Manual (SPFM) and wider HMT Guidance. These business cases will then be subject to approval by the Investment Decision Makers (IDM) board at specific points as the project progresses. This is described in Table 6.1 (below).
| Business Case Presented to IDM | Discussion Type | Decision made |
|---|---|---|
| Strategic Business Case | Strategic | Whether to develop further |
| Outline Business Case | Procurement | Whether to go to procurement |
| Final Business Case | Contract | Whether to sign contract |
At the Strategic discussion level, projects are considered against the NTS2 investment and sustainable travel hierarchies – with the aim of filtering out projects or ideas that do not align with these frameworks at the earliest stage.
At every stage of appraisal and decision making, an analysis is made of how projects deliver against the 5 STAG Criteria of ‘Environment’, ‘Climate Change’, ‘Health, Safety and Wellbeing’, ‘Economy’ and ‘Equality and Accessibility’.
STAG guidance acts a key way for Transport Scotland to ensure that NTS2 priorities are reflected in appraisals and therefore decision making. The STAG Managers Guide was updated in 2022 in part to ensure consistency with NTS2 priorities and help ensure STAG appraisals would deliver against the ambitions set out in NTS2.
All of this means that while STAG supports the development of a Green Book style cost benefit analysis and a benefit cost ratio (BCR) or net present value (NPV) calculation, it also emphasises the need to clearly articulate benefits and costs that can’t easily be quantified and monetised, and for project sponsors and decision makers to clearly analyse and articulate how projects deliver on the NTS2 priorities.
This hopefully clearly illustrates how NTS2, introduced at the start of this document, is embedded in the decision-making process to ensure that both the strategic direction and the path that specific projects take will align with the priorities that are set out in NTS2 as part of a rigorous decision making framework.