Planes, Trains and Automobiles: The Economic Impact of Transport Infrastructure

In the run up to the 2015 general election, the main political parties have very mixed views as to what should be done about transport in the UK. Big transport investment proposals - expansion of London's airports and high speed rail - dominate the election landscape. More generally, some parties want to invest more in roads, and railways, build inter-city high speed rail and expand airport capacity. Others present a mixed bag of opposition to some or all of these things. Some want to include transport spending in fiscal targets, while others do not. Many parties say very little about capital investment but implicitly champion further subsidy and public regulation of public transport through fare caps or re-nationalisation. Although the policy aims are not always clearly spelled out, the big aims are presumably to reduce costs to businesses and commuters (either by reducing congestion or fares) and stimulate the UK economy through capital investment in transport infrastructure. The underlying question is whether we are spending enough and on the right things? This policy paper summarises some of the key theories and evidence regarding the impact of transport on the economy. The basic message is that the economic benefits of transport infrastructure spending are not as clear-cut as they might seem on face value.