• Local bus fares £358 million
•
Non-local bus fares £116 million
•
Rail fares (within Scotland) £93 million
•
Glasgow underground fares £11 million -
•
Calmac foot passenger fares £15 million
TOTAL £593 million
Additional costs (estimates)
Cost of public ownership
Calmac, the Glasgow Underground and Lothian
Buses are already in the public sector, though they would need to be re-organised.
The
three major targets for public ownership would be First Bus, Stagecoach and
First Scotrail. This would bring the main transport providers into social
ownership.
A big chunk of the transport infrastructure is already publicly-owned
and funded, including bus stations, bus shelters, railway stations and the
rail
track.
However, the buses run by First and Stagecoach would have to be purchased
and the workforce transferred to Scotland's local authorities.
As a rough
gauge, the publicly-owned Scottish bus industry was sold in the mid-1990s
for just over £200 million (the Scottish Bus Group for £96
million and Strathclyde Buses for £110 million).
Taking into account
inflation, investment in buses etc, it would be reasonable to estimate that
the cost of bringing the major bus companies into public
ownership would be around £300 million. (it could be anticipated that
bus reregulation would lead to a fall in the value and profitability of the
private bus companies).
The Scotrail franchise is due for renewal in 2011.
As representatives of the rail unions pointed at the recent Scottish Labour
conference, Scotrail
could be brought back into the public sector at zero cost. The Scottish Executive
already subsidises Scotrail to the tune of £200 million a year, even
although the franchise is now a profitable concern.
Cost of expansion to cope
with increased demand
Although extra services would be required, this would not be a straightforward
equation in line with extra passenger numbers, because many buses and trains
run with spare capacity, especially during off peak hours.
There is also substantial
duplication and inefficiency arising from bus deregulation; a regulated,
planned and integrated transport system would
make more effective use of existing resources.
Nonetheless, in order to move
vast numbers out of their cars and onto buses, trains and ferries, it will
be necessary to accompany a free fares policy
with a sizeable expansion of transport provision, especially in rural areas
and in cities during peak hours.
It is impossible at this stage to quantify
how much that would require, but as a starting point, we would suggest making
available an extra £200
million for capital spending (on top of the costs of establishing a publicly-owned
and integrated transport system).
An increase in staffing of 50 per cent (eg
bus drivers, railworkers etc ) would cost around £250 million a year.
Total
estimated costs (on top of existing public transport budget):
TOTAL CAPITAL
COSTS - £500 million
ANNUAL RUNNING COSTS - £800 million
(The running cost takes into account
savings of over £50 million a
year profit from FirstBus, Stagecoach and FirstScotrail)
Projected Savings
Road accident reduction. The Scottish Executive
estimate the annual costs of road accidents in Scotland at £1.4 billion
(2003). By slashing road traffic, the toll of death, injury and damage could
be reduced substantially,
with financial savings to the NHS, business and insurance companies of hundreds
of millions of pounds a year.
Traffic congestion reduction. The business organisation,
the CBI, estimates that across the UK traffic congestion costs £15 -20 billion a year.
Even allowing for Scotland's less densely concentrated population, it is
likely that free fares would save business up to £1 billion a year.
Road
maintenance savings. In 2007-2008, the Scottish Executive will spend almost £900 million on motorways and trunk roads, including maintenance,
capital projects and depreciation. Local authorities will spend another £300
million on local road maintenance. There is on top of that a backlog of £1.6
billion of local road repairs outstanding. A substantial reduction in road
traffic could save hundreds of millions of pounds annually in road maintenance
and repair.
TOTAL SAVINGS: It is likely that an ambitious free transport policy
backed up by expansion of services could generate savings to the public sector
from
roads maintenance and the NHS of anything between £300 million and £500
million .
By reducing congestion and road accidents, it could also save business
up to £1 billion, based on the CBI’s own figures. That means a total
saving to the Scottish economy of between of up to £1.5 billion annually.
It could also generate further income from extra tourism, and from the economic
boost that would be achieved by increasing the spending power of millions
of workers.
While substantial sources of funding would be required to establish
and run an expanded, integrated, free public transport system it would, in
overall
terms, be to the advantage rather than to the detriment of the Scottish economy.
Sources of funding
Under independence
Within an independent Scotland, the funding of a free transport initiative
would be straightforward.
There would be a range of options available, including oil revenues (the
SSP supports extra taxation on oil profits and, ultimately, public ownership
of the oil industry).
Hundreds of millions could also be generated through
higher corporate taxation and/or a rise in the top rate of income tax.
And,
by reducing per capita Scottish defence spending to around the level of the
Republic of Ireland, an additional £2 billion would be available
for public services and wealth redistribution (Scotland's share of the bloated
UK defence budget is around £3 billion; the Republic of Ireland, which
has population of four million, spends just £700 million on defence).
Under
devolution
Even within the constraints imposed by devolution, there are various
ways of funding a free public transport system.
Capital costs can be raised
by cancelling, scaling down or postponing at least some of the highly expensive
transport projects promoted by the Scottish
Executive, including the M74 extension (£500 million), the Edinburgh
Airport rail link, and the high speed rail link between Glasgow and Edinburgh
(
The Scottish Executive and Scottish Parliament can also transfer funding
from the roads budget to the public transport budget.
Holyrood also has powers over the basic rate of income tax of up to three
pence in the pound.
Because most of a new public transport system would come under the control
of local authorities (and groups of local authorities), any funding for public
transport would be designated a supplementary local tax, and therefore would
fall within the powers devolved to Holyrood. This provides Holyrood with
a range of fund-raising options.
Possible funding options
•
Under an income-based local tax, such as the SSP's proposed Scottish Service
Tax, bands could be adjusted accordingly to raise the extra money in a progressive
fashion with the rich paying more and the poor paying less.
• The parliament has tax-varying power of up to 3 pence on basic rate
income tax. A one per cent increase in income tax would generate at least £300
million a year. By imposing a supplementary local transport tax of three
pence for those earning over £30,000 a year, an additional £300
million would be raised. A further £300 million could be raised by
increasing the uniform business rate.
• An alternative and straightforward
way of financing free public transport would be to levy a 'transport payroll
tax' on all businesses with
more than 10 employees. Such a tax is used widely in France to fund public
transport. The Paris Metro, rail and bus system, for example is largely funded
through a payroll tax of 2.2 per cent, which generates well over two billion
euros a year.
•
The tax is set as a percentage of the total wage bill; and is paid by the
employer. To raise around £800 million, Scotland would need to set
the tax at around 2.5 per cent, applicable to all companies in the private
sector with ten employees or more.
• This transport payroll tax could be offset against Corporation Tax, which
is paid to the UK exchequer, effectively transferring up to 30 per cent
of the costs to Westminter (ie 200-240 million).
• Revenue could also
be raised by imposing a special tax on HGV lorries towards the costs of
road repairs and maintenance. The average juggernaut
inflicts 50,000 times the road damage caused by a car. This HGV mileage tax
would be based on annual mileage as registered on tacographs and would offset
the roads budget, allowing tens of millions to be reallocated towards the
cost of an expanded free public transport system.
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