Michael Harrison's Outlook: Eddington and the art of the possible. For once a report that may not end up gathering dust

Had Eddington been advising the Treasury a decade ago, one wonders whether the Channel Tunnel Rail Link would have seen the light of day
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Ask a businessman a straight question and the chances are he will give you a businesslike reply. Sir Rod Eddington's report to government on how the transport system can sustain UK productivity and competitiveness falls firmly into that category. The key is in the question. This is not an analysis of what type of transport system we would like to have, but what kind of system is needed to further the pursuit of wealth creation.

The first thing to say is that the former chief executive of British Airways debunks a number of myths. The biggest of these is that the UK is in some way a second-class citizen compared to the rest of Europe when it comes to transport networks. In fact, the opposite is the case. It may not feel like that when you are stuck in a 10-mile traffic jam, a broken-down Tube train or a fogbound airport. But the fact is that a greater proportion of the population is connected to the core road and rail network here than in any of our European competitor nations, while two-thirds of us are within an hour's drive of an international airport.

The second is that throwing money at the transport system through an ever more ambitious programme of grand projects provides the answer to congestion, delays and loss of competitive edge.

Like a good businessman, Eddington has carried out a detailed cost-benefit analysis of most of the widely touted options and found a good few of them wanting. It is also worth noting that his analysis is more rigorous and better grounded than some of the educated guesses that litter the Stern report on climate change.

The third is the "build it and they will come" argument - the idea that a good transport scheme, however expensive, will generate enough demand to justify its existence. These tend to be solutions looking for problems. But the truth is that the vast majority of journeys are local, and the bulk of those take place within cities, meaning that investment also needs to be targeted and local.

It may seem self-evident and even a little prosaic to observe that cycling, or walking, is likely to produce a greater net economic benefit than a levitating high-speed railway line or another tolled motorway. But nevertheless Eddington feels it worth saying, and he speaks from experience.

Anyone who has travelled on the 267mph Maglev train from Shanghai airport, as Eddington has, can tell you that it is a wondrous piece of civil engineering but also an economic folly, terminating as it does at a provincial commuter station miles outside China's second city.

Had Eddington been advising the Treasury a decade ago, one is sorely tempted to wonder whether the Channel Tunnel Rail Link would ever have seen the light of day. On any sensible analysis, £5.6bn is a lot of money just to shave 35 minutes off the journey time to Paris. It fits ideally his definition of an "icon" project - one that is difficult and unpopular to stop once it has got enough momentum behind it, even when the cost-benefit equation does not remotely stand up.

What does Eddington's report tell us? Well, it shows that doing nothing is not an option. Unchecked, road congestion alone will cost business an extra £10bn a year by 2025, while the shortage of airport capacity could add a further £6bn to the bill.

But it also suggests that a lot of the benefits can be achieved at relatively low cost through quite small-scale projects such as lengthening rail platforms. One new platform at King's Cross, for instance, would go a long way to towards relieving the bottlenecks which have caused GNER so much grief on the East Coast Main Line.

The thornier question is who should pay for all this. As the report was commissioned by Gordon Brown, you will not be surprised to discover that it commits the Government to very little beyond the £21bn that is currently in the transport budget. Public-private partnerships are the zeitgeist, and you can see why Eddington heads down that direction. It is a way of getting new infrastructure without a penny of it appearing as capital expenditure on government books. The alternative is to make the user pay directly.

As far as roads are concerned, Eddington says that charging the poor old motorist by the mile is a no-brainer - not only to ration finite capacity, but to make the cost of car travel reflect the environmental damage it causes. This relies, however, on a very big and untested assumption - that businesses and individuals can easily change their travel habits.

Eddington's tentative conclusion is that a nationwide road pricing scheme could generate economic benefits of £28bn a year - surely more than enough to outweigh the costs involved in administering any such system. But that does not take into account the improvements that would need to be made in public transport to force or tempt drivers away from their cars.

Eddington's most important recommendation, though the one guaranteed to attract least attention, may prove to be his call for a streamlining of the planning system and the creation of an independent Planning Commission to take decisions on major schemes out of the hands of ministers, much as the Chancellor did with monetary policy nine years ago.

As he prepares to stand up in five days' time and deliver his pre-Budget report, why wouldn't Mr Brown endorse a large chunk of what is in Eddington? It is the kiss of death for a major new road-building programme, it kicks fancy new high-speed rail links into the long grass, it makes drivers and not taxpayers bear the true carbon cost of the motor car, and it shifts a load of investment off balance sheet. For once, this may be a report which is not destined to gather dust in some Treasury vault.