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Cost and benefi ts in the proposed approach from reducing car use

There are two basic savings to be made from reducing car use:

1. Cost to the individual or business user

2. Costs which are outside the user costs – external costs. These include environment, accidents, carbon emissions, noise and congestion.

These are well documented and in addition, DfT produces tables of marginal external costs (MECs) of car use per kilometre for different types of road in the WebTAG Databook (Table 5.4.1). This also provides averages across road types and for different regions (Table 5.4.4).

In the approach recommended in this report changes in user costs are not included. This is because the ongoing costs of the schemes are met in future years by income and thus benefi ts exceed costs. However, the calculation of how much benefi t users get through not using or not owning a car would be complex and is not included in this report.

In a conventional cost benefi t analysis such changes in user cost would be included and when they fall would cause a reduction in Government revenue through loss of fuel duty or VAT. For this reason, tax changes are included as negative for Government and positive for users. Thus the WebTAG Databook tables set MECs against the value of indirect tax.

However, these are not included here because this is essentially a transfer payment – the Government’s loss is the individual’s gain but the gains are not in the spreadsheet. This approach is still in line with current scheme appraisal where essentially they balance each other out.

A further issue is that MECs vary from place to place and road type to road type. On rural roads or motorways with little congestion MECs are low, but it is hard to say exactly where car club members will be driving and in what conditions. For this reason the average across all roads is used. Again this is simple and could be elaborated upon if more data becomes available. It must however remain the case that the aim of proportionality must be followed and this argues for the use of average fi gures.

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