5 million people driven into poverty by transport costs

The figures come from a first-of-its-kind model (see notes) for tracking transport poverty, developed by the Social Market Foundation. The SMF’s metric found that out of a total of 13 million individuals in poverty today, relieving them of their transport costs would lift five million (8% of the British population) above the poverty line.

The SMF defines transport poverty as occurring when households spend so much on private and public transport that it pushes them below the poverty line.

According to the SMF, cars are the most expensive mode of transport, costing the median British household over £5,650 per year in upfront costs, maintenance, fuel, and additional fees. Yet despite over £100 billion spent on cuts and freezes to fuel duty have made little impact on transport poverty, the SMF finds. The total impact of those policies over the past dozen years has been to cut transport poverty by just 0.3 percentage points according to its model. Although driving is expensive, less than a fifth of that expense is caused by government taxes and charges, thus even a drastic cut to fuel duty will not alleviate families’ transport poverty the SMF notes.

Far from persecuting motorists, the SMF suggests that the government has coddled drivers, inadvertently hurting them with policies that end up encouraging car use arguing that the bigger issue is a lack of investment in alternatives to driving, keeping people reliant on costly cars.

For every 10% increase in public transport journey relative to motoring in England, the average household pays over £400 more for transport each year – as they are forced to use the most expensive mode of transport (cars) in order to reach key services.

Unlike ‘fuel poverty’, which is a well-established concept and is used by national and devolved governments to shape their policies, there is no robust equivalent for understanding the causes, locations, and depth of poverty due to transportation costs. Despite the high toll transport takes on household budgets, government has not yet introduced a metric for it, which could be used to help policymakers better target transport policies, the SMF argues.

The findings come against a backdrop of rising costs and over a decade of cuts to public transport. Latest ONS figures show a rise in bus and coach costs by 6.7% over the last year. Also last year, almost 10% of bus networks in the UK were cut, and some towns have lost entire bus access.

The regions that rely most heavily on cars and have suffered the worst public transport tend to have the highest transport poverty rates. Its analysis found that the North West has the most individuals in transport poverty (800,000), though a higher proportion of people in the North East (12.5%) and West Midlands (11.9%) are affected. This compares to just 4% in London. (See notes)

Most recently, the Government has announced that bus services in parts of England will get a one-time £150 million boost by re-routing funds from the scrapped Manchester HS2 leg. It comes with a promise to address transport issues that “matter most to people”, in the Prime Minister’s words. Whilst this funding is welcome, the SMF urges the Government to use its transport poverty metric to ensure funding is directed where it is most needed and can have the greatest positive impact on transport poverty.

In the long term, if the Government is to eliminate transport poverty, the SMF recommends the following measures:

• The Department for Transport should begin tracking transport poverty, using the metric the SMF has delivered, and determine a cost ceiling beyond which households are considered in need of support with transport costs.
• Policymakers should allow fuel duty rates to rise or replace fuel duty with road pricing to provide a stable source of funding (See notes for details of SMF’s preferred road pricing system)
• Direct new funding and devolve decision making at the local level, to deliver on both short-term (bus networks) and long-term (passenger rail) plans of increasing in public transport infrastructure.
• Consider and introduce policies – like direct tax subsidy or social leasing – to increase access for electric vehicles by reducing the upfront costs

Gideon Salutin, Researcher at Social Market Foundation, said:
“Transport is the single greatest household expense for rural homes and the second biggest for urban ones. But we still don’t understand those struggling to pay for it the way we understand other forms of poverty like housing and heating. Understanding and tracking transport poverty is a long overdue endeavour.

Fuel duty gets all the headlines, especially now that so many policymakers have convinced themselves that they have to defend motorists from fictional attacks. Yet it is far from the best tool at their disposal if they really want to help the hard pressed. Our research shows that transport poverty can be rigorously tracked, and therefore can be alleviated – but only by investing in public transport and making alternative private transport like electric vehicles cheaper.”

Silviya Barrett, from national charity Campaign for Better Transport, said:

“We’ve known for a long time that a lack of good, affordable public transport is forcing people into expensive car ownership which puts a huge strain on household budgets, so it’s good to see this research quantifying the problem. We support the report’s conclusion that government investment in public transport is more beneficial to improving people’s life chances, helping households with the cost of living and levelling up the economy than lowering the cost of driving.”

Notes

1. The SMF report, Getting a measure of Transport Poverty, will be published at https://www.smf.co.uk/publications/transport-poverty-hidden-crisis/ on Wednesday 15^th November 2023.
2. The report is sponsored by the European Climate Foundation. The SMF retains full editorial independence.
3. The SMF’s transport poverty metric: This metric captures geographic variation at the local level, and to identify the depth, of transport poverty. We modelled households’ expenditure on cars, buses and trains based on inputs that include region, income, and rural-urban classification. We then subtract this modelled spending from household income for each income decile in each neighbourhood (LSOA) to calculate how many households are below the poverty line as a result of transport costs.
4. SMF preferred road pricing system:
   • A national road pricing regime with a uniform per mile charge and a free mileage allowance per vehicle
   • Complemented by a localised road pricing initiatives, aimed at curbing congestion in relevant parts of the country
   • Reduce the burden on lower-income motorists during the transition period from internal combustion engine (ICE) vehicles to EVs by abolishing or reducing fuel duty at the same time as road pricing is implemented. If fuel duty were to be abolished, an ICE vehicle road pricing surcharge should be introduced to retain incentives to shift to EVs
   • For full details, see SMF report, Miles ahead at: https://www.smf.co.uk/publications/miles-ahead-road-pricing/

Figure: Transport poverty by region (2019)

Source: SMF analysis

Contact

• For media enquiries, please contact press@smf.co.uk