Hitting drivers where it hurts

POLEMIC Altruism won't stop pollution; high taxes might, says David Sawers
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The Independent Online
Brian Mawhinney, the Secretary of State for Transport, yesterday enhanced his credibility as a politician. In announcing his initiative to clean up pollution from vehicle emissions, he admitted that a substantial transfer of freight or passengers to rail would only be achieved by painful restrictions on road use. In other words, for all Dr Mawhinney's fines and spot checks, the main plank of current government policy - to increase tax on fuel by 5 per cent a year - is not good enough.

Dr Mawhinney also repeated the elementary truth that you cannot reduce road travel or fuel consumption by subsidising public transport; the only effective method is to make such travel more expensive.

In fact, the Government has in principle already accepted this argument. Its own paper on a sustainable development strategy for the UK of January 1994 states that "users should pay the full social and environmental costs of their transport decisions". But to implement that policy will involve large increases in the cost of road transport, especially freight transport, and probably of air travel as well.

It is therefore understandable that Dr Mawhinney shrank from reasserting this policy aim yesterday. Instead, he opted for trying to promote compromise between environmental protection and maintaining ease of travel for industry and individuals. And he ended up with the limp suggestion that changes in attitudes were needed to make travellers more aware of the environmental consequences of their behaviour.

It would be nave to imagine that individuals can be persuaded to make large changes in their lifestyles simply by educating them about the harmful effects of vehicle emissions; or indeed that businesses might reduce their use of road transport to chime with more enlightened public opinion.

Individuals and businesses can be touched by altruism, but the harsh reality of financial penalties is what will persuade them to make changes that are going to make the lives of individuals less comfortable or increase the costs of businesses. And it is the responsibility of government to set prices that encourage socially responsible behaviour, even if these prices may be unwelcome to some.

What price regime might start to make a difference? The minimum might be that implied by the Royal Commission on Environmental Pollution last autumn: doubling the tax on lorries, and more than doubling the tax on petrol and diesel fuel over the next decade. There is compelling evidence that lorries are not paying the costs which they impose on the community. And this order of price increase will be needed to meet international CO2 emissions targets.

One reason for the Government's reluctance to take effective action to reduce (or even stabilise) vehicle emissions is the obvious unpopularity it would incur with both motorists and industrialists. Economic growth is associated with increasing ownership and use of cars, or more transporting of goods. So measures to check emissions have to work against a rising trend, making the targets seem particularly severe.

It is also unclear how great the effect of increased fuel prices might be. While experience shows that raising the price of petrol has in the past greatly affected fuel consumption over the long term, this does not allow us to make precise forecasts of future effects. So any pricing policy would need to be flexible.

If this sounds painful, it will be. But there are ways of making increases in fuel taxes more palatable, for instance by offsetting reductions in other taxes, such as VAT. The objective should be to reduce the proportion of consumers' and business expenditure going on transport, not to reduce their spending overall.

The writer is a former government economist.