From the BBC:
The Chancellor believes the Yorkshire and Humber economy will receive a £250 million boost from an increased number of motorists using the Humber Bridge.(1)
Toll charges have been reduced from £3 to £1.50 each way for cars. Motorcycle tolls have now been scrapped.(2) The lower tolls come as a result of the government writing down almost half the £330 million debt still outstanding on the Humber Bridge.(3)
In an interview with BBC Look North, George Osborne said: "The evidence we have is that the cut in the tolls will boost the local economy by £250 million over the next generation.(4) It is really good for jobs, people will be able to find work on the other side of the estuary if they haven't got it now.(5)"
1) Wrong. Transport infrastructure is good for the economy (imagine that there were no roads of railways in the UK), full stop. The boost to the economy is because it is there, regardless of how it's paid for or who pays for it. The toll for the bridge is not a user charge in any real sense, it is rent pure and simple, so if you have a toll charge, all that happens is that the rental values of surrounding land are pushed down ever so slightly (having been pushed up by the bridge).
2) I suppose there are some very, very marginal commuter journeys where the benefit of making the crossing is less than £3 but more than £1.50 which will now be viable which weren't viable before, giving a tiny additional boost, but this is barely measurable. That said, I don't agree with (public) tolls either as a way of raising income because the collection costs (i.e. you wasting a few minutes in the queue) are so high relative to the charge paid, so why not scrap them tolls completely, to maximise this marginal economic boost? (and privately collected tolls is rent-seeking of the highest ordure, of course).
3) Sunk costs, absolutely irrelevant in decision making terms.
4) How long is a 'generation'? I know that politicians spout meaningless crap, but that phrase is more meaningless than most.
5) Wot? All the unemployed north of the estuary will find jobs to the south, and vice versa?
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And if this weren't all stupid enough, let us not forget that three years ago, David Cameron's view on road tolls was quite the opposite:
The road tolls are among a range of new taxes David Cameron is being forced to consider as public borrowing is forecast to rise to more than £1trillion.
The Tory leader promised a “national endeavour” to pull the public finances out of the red as he admitted that he “cannot rule out any tax increases” if he wins the next general election... Proposals to introduce road tolls are likely to prove unpopular with motorists, who already pay one of the highest rates of fuel duty in the world at 54p per litre plus VAT.
Idiocy
31 minutes ago
12 comments:
"(and privately collected tolls is rent-seeking of the highest ordure, of course)."
I still don't quite understand why you consider it rent-seeking to build a road (or a bridge) between two points and collect tolls and not rent-seeking to build a railway line between two points and collect fares.
B, if you build a whole motorway or railway from (say) London to Birmingham, then fair play to you, your income is probably a return on capital invested.
However, if the government uses taxpayer money to build a motorway from Birmingham to one side of a river; and another motorway from the other side of the river to London, and all you have to do is build the bridge joining the two and you charge tolls, that is rent seeking.
We've done the topic before. What drivers are paying for is "access to London" or "access to Birmingham" as appropriate, the value to the driver is vastly in excess of the maintenance costs of a short stretch of bridge, so the balance of entirely unearned profits is rent.
What about if you build your dam or bridge and a track at each end suitable for pedestrians and the odd horse and cart and the tracks get subsumed into the national A-road network and is owned, upgraded and maintained by the government, but the bridge or dam remains yours and you keep charging tolls as you and your predecessors in title have always done?
B, rent is rent is rent.
Any profits above a normal return on capital and recovery of running expenses which cannot be competed away is rent, it is entirely unearned in any practical sense.
Can anybody else build a bridge at the same location which has thousands of users funnelled to it every day? Nope, so the profits cannot be competed away, ergo they are (largely) rent.
If you buy some cheap land in the middle of nowhere and build an identical dam or bridge, which does not have thousands of users funnelled to it by the A roads, what's your income? Nil.
Even if one man builds the entire road network, utilities, buildings and railways, these things only have value once people and businesses move there and it is the presence of people which create the location value. Any super-return which cannot be competed away is rent (as measured by the selling price of land, should this one man choose to sell some land in his town).
For sure, somebody else could build another new town and entice people to leave the first town and move to his, in which case the second guy collects the rent and the first guy loses out (because yes, towns can and do die out, the rental value just goes with the people).
Eynsham toll bridge sold
Yes, but if you build your bridge (and dam) in the middle of nowhere and because of it and only because of it, other people build a port, a town, roads, railways etc etc, as happened at Porthmadoc, isn't any extra income you enjoy due to the port, town etc fairly earned by you?
Who says that the return from a toll bridge cannot be competed away? I can think of several places in the UK where more than one bridge cross the same piece of water in fairly close proximity. If you are the owner of a private bridge you are always vulnerable to the local authority or the government deciding your bridge is a bottleneck and holding up the traffic and building another, larger, free, bridge right next to it.
B; " isn't any extra income you enjoy due to the port, town etc fairly earned by you?"
It's still land rent.
"Who says that the return from a toll bridge cannot be competed away?"
These private toll bridges (see e.g. Phys's links) are usually protected by an Act of Parliament that says no bridge may be built up or downstream for x hundred yards.
I think that one's an exception. Take Battersea Bridge for instance, where a competing toll bridge was built just downstream, Albert Bridge. The Act of Parliament at Eynsham Bridge was an incentive for someone to build a bridge that was otherwise not a good commercial proposition. Obviously, the existing bridge would have to be over-patronised for it to be worthwhile putting the investment in to build another bridge, so, outside major cities, it is unlikely to be a goer, but this isn't due to any state-granted monopoly, it's just a fact of economic geography. Bridge tolls can be competed away, it's just not usually economically viable to do so.
Also, all toll bridges (apart from the Severn Bridges) are in competition with the next bridge up or downstream, which is usually free.
In Oz they have e-tolls [of course the govt dept ruins it through incompetence] but the principle is that you prepay and it takes you on any toll bridge.
B, there are always exceptions and grey areas, but rent is rent and roads are roads.
JH, if road pricing could be done smoothly and efficiently - and given the will and advances in technology, I'm sure that in a few years it will be doable, then great, we can do away with traffic lights and fuel duty.
If there's a traffic jam up ahead it will warn you that the price per mile to drive that stretch of road has gone up from 5p to 10, or from 10p to 15p, and the price keeps ticking up until congestion is reduced to some sort of optimal revenue raising/traffic flow through/speed of travel compromise.
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