Is our transport regulation serving us well - and supporting this era of innovation?

AN INTERESTING DIMENSION to the new Government’s recent International Investment Summit was the Prime Minister’s readiness to put the question of regulation relaxation firmly on the table. As part of his vow to “do everything in my power to galvanise growth”, he made a pledge to “get rid of regulation that needlessly holds back investment”. Sir Kier Starmer principally name-checked areas like AI, life sciences, data centres, clean energy and carbon capture for where he wanted those with money to spend to bring it to the UK, but not unexpectedly, infrastructure, and specifically transport infrastructure, were in his sights too.

Was the PM onto something? Are the current levels and types of regulation excessive? And how should we determine what the ‘right’ level of regulation in transport might be?

Though the DfT is the main arm of government for transport matters, at least four other departments also have significant influence in areas of its responsibility.

In general, transport in the UK has been regarded as a well-regulated sector. It is not surprising, given the obvious potential for public harm, and the high profile of any errant behaviour or system failures: vehicles, drivers, infrastructure, and the service provision by operators are all subject to safety and customer protection regimes. But technology and business practice move on, generating new issues to be addressed. Generally, this happens on a rather piecemeal basis when new modes, technologies, or commercial models emerge, but not always then.

In 2020 the Department for Transport initiated a regulatory review. But the interested parties in the DfT’s territory include a number of arms-length agencies, as shown here (right).

Accordingly, under the Boris Johnson government, the Department for Transport launched its Future of Transport Regulatory Review in 2020 in the form of a call for evidence, initially focused on three areas: micromobilty; flexible bus services; and Mobility as a Service (Ref 1). Other topics that have been considered under this broad initiative included the future of flight, and modernising road vehicle standards. There has also been a look at ‘regulatory sandboxes’ as a means to introduce temporary or specific place-based regulatory flexibilities to support innovation (Refs 2-4). Yet addressing such topics ad hoc seems to have so far yielded little in the way of useful regulatory advance in any of these fields, let alone others of concern such as secure digital payment systems, customer data protection, and standards of information provision, for example.

One area that has been subject to full consideration is the regulation of automated road vehicles (AVs), a topic where both the last government and this one seem to believe there to be a major new industrial development and employment opportunity. Having previously looked inconclusively at changes to the taxi and private hire legislation, the Law Commission was asked to recommend a regime to govern responsibilities when vehicles are operating in driverless mode, whether as ‘robotaxis’ or individually owned vehicles. The outcome, also shaped by the Government’s Centre for Connected and Autonomous Vehicles, a joint creation of the DfT and the Department for Business and Trade, was the Automated Vehicles Act 2024, which had broad political support (Ref 5). There is now in place a comprehensive legal framework that developers, operators and insurers of AVs might see as helpful in making clear their legal responsibilities, which, however, might be seen as quite onerous compared with arrangements in countries where the main development of the technology is taking place, the US and China in particular. UK developers of AVs are limited in number and their commercial prospects are unclear. This is an area of rather intense topical debate, as addressed in the Editorial Opinion of Peter Stonham on TAPAS on 16 October 2024.

Two distinct units within Government related to transport technology are under shared custody between the DfT and another department. These are the Centre for Connected and Autonomous Vehicles and the Office for Zero Emission Vehicles

To be sure, the regulatory regime being put in place for AVs is forward looking and intended to encourage innovation. But the implications for the wider transport system and the management of the road network as a whole, particularly in urban areas, are consequential matters that also need careful consideration, a topic recently reviewed by the International Transport Forum (Ref 6) and currently under consideration by the National Infrastructure Commission at the request of the last government (Ref 7).

Another fast-moving technological development area is aviation. Here a comprehensive sectoral regime operated by the Civil Aviation Authority is well established to oversee safety, security, the efficient use of airspace for maximum public benefit, and to protect the consumer interest. The CAA has set up an ‘innovation hub’, the purpose of which is to create an environment where innovation in aviation can develop in line with the CAA principles (Ref 8). These include ‘pilotless’ planes and drones. A recent review endorsed the view that CAA is a world class regulator that is fit for purpose, delivering high quality services to the aviation and aerospace industry and the consumer (Ref 9). As reported elsewhere in this issue, the CAA and DfT are consulting on the creation of a new UK Airspace Design Service that would act as a single guiding mind for modernising the design of UK airspace, exemplifying the CAA’s proactive approach to innovation.

A further sector-wide regulator is the Office of Rail and Road, which originally was solely charged with regulatory oversight of railways, including holding Network Rail to account for stewardship of its network, its funding, as well as protecting the consumer interest in respect of services provided by the train operating companies. The ORR carried out a consultation in 2015-16 on its approach to innovation, following a prompt from the government (Ref 10). The ORR has taken the view that innovation is led by the rail industry and where appropriate it would be supported by the overall regulatory framework, including the duty to promote improvements in railway service performance and promote efficiency and economy on the part of providers of railway services. So, compared with the CAA, the ORR’s approach is relatively passive.

The Government asked the Law Commission in 2022 to look into leglislative changes for the use of automated vehicles, and last year asked the National Infrastructure Commission to review provision for them

Since 2014, the ORR also has some oversight of roads, but this is limited to the engineering performance and efficiency of National Highways in England in respect of its network, not to other roads (Ref 11). The ORR’s remit does not allow it to address the benefits to road users of new road investments – whether the outturn from investment in new road capacity meets expectations – nor whether the strategic road network is being efficiently utilised (unlike the CAA’s concern with the efficient use of airspace). Again, there is a lack of intention to foster technological innovation for the strategic road network, or to analyse and prioritise the optimal use of capacity, and where enhancement is most justified. The ORR did have one go at prompting NH (then Highways England) to look harder at managing congestion and delay in 2019.

The major new CAA initiative mentioned earlier in relation to airspace use takes a more strategic view and exemplifies the opportunity for a pro-active regulator to initiate efficiency enhancements in a complex operational environment. It contrasts favourably with the reactive approach of the Office of Rail and Road in respect of the rail network and its lack of interest in the efficiency of highway operations. It remains to be seen what more might be done with the coming of Great British Railways and adjustments to the ORR responsibilities.

The ORR has had a limited role in influencing the priorities of National Highways. Its major output is an Annual Assessment, though it did prompt studies on managing delays on the network.

For individual road vehicles, there are important examples of regulatory approaches that both drive and support technological innovation. Tackling the harms from tailpipe emissions of petrol and diesel engined vehicles has been effected by regulations within the portfolio of the Department for Transport that have driven down emissions of air pollutants, and by the ZEV Mandate, a legal requirement for a minimum percentage of each manufacturer’s new car and van sales to be zero-emission each year. Another new body, the Office of Zero Emission Vehicles (this one jointly sponsored by DfT and the Department for Energy Security and Net Zero, has been set up to progress chase in this area. Meanwhile, regulations made by local authorities to create urban clean air zones (in London known as the Ultra Low Emission Zone) also help incentivise the switch to electric propulsion, a once-in-a-century transport technology innovation. Interestingly, while the power systems and physical impacts of individual classes of vehicles are a DfT matter, concern for overall emissions and air pollution lie elsewhere – with the Department of Environment, Food and Rural Affairs and DESNZ. The Ministry of Housing, Communities and Local Government also has an interest here.

Embracing new modes

When it comes to ‘New Modes’, the Department for Transport again seems to be following rather than leading, with actions in fits and starts. It established a foresight programme on the future of mobility in January 2019 with the Government Office for Science. This took a wide-ranging synoptic view of the changing make-up of transport modes, including an overview by Sir Patrick Vallance, the Government Chief Scientific Advisor. This was followed by what the last government called its Future of Mobility research programme (cited as part of its Industrial Strategy) with pilot projects in a number of areas, still continuing, and the subject of a Landor LINKS conference in the new year (https://www.futuretransportforum.uk).

Progress has been slow, however. For example in making regulations allowing trials of rental e-scooters to be fast tracked and expanded in response to proposals from local authorities (Ref 12). The intention is to understand usage, safety, and environmental impacts, and to explore changing travel patterns since the coronavirus pandemic and as e-scooters become more embedded in public life. Only e-scooters participating in official rental trials may be used legally on roads. It is expected that a decision will be made in due course about legalisation of e-scooters as a vehicle class, and about the appropriate regulatory regime, which may include a requirement to park rental e-scooters in prescribed bays. E-bikes are already legal and treated as ordinary bicycles if of limited power, but the problem of inappropriately parked dockless rental e-bikes prompts complaints and pressure to regulate.

The Theresa May government was keen on examining the future of the transport system and commissioned work from the Government Office of Science Foresight programme which led to the DfT publishing a Future Mobility Strategy, co-branded as part of its overall Industrial Strategy in 2019

In contrast to the supportive approach to e-scooters, and a permissive approach to e-bikes, as innovative mobility technologies, there has been inaction in several other significant areas. This includes updating the historic taxi and private hire legal regime, with minimal recognition by the authorities of the merits of ride hailing as an innovative means of summoning a taxi, exemplified by Uber’s struggles to get acceptance in London. This involved a number of court cases, which found in favour of Uber, while the company lost some cases concerned with the employment status of drivers, which nevertheless has not seemed to impact on the provision of the service. Uber’s digital request and booking/payment system has proved very popular with users as a better means of getting a taxi compared with licenced black cabs or conventional private hire vehicles, as well as being sufficiently attractive to drivers so as to offer customers an acceptable level of service. But this outcome was no thanks to a taxi regulatory regime having a remit to foster innovation. On the contrary, taxi regulation is historic, not modernised for the digital age, rightly concerned with the protection of customers, less defensibly having the effect of protecting the trade of established black cab drivers. There is a marked contrast between this reluctance to welcome innovative approaches to taxi services and the progressive stance towards automated vehicles, including robotaxis.

One of the emerging new mobility systems is electric scooters for which there is yet to be a clear regulatory framework, though approval has been given for use in pilot areas. Source: Wikimedia Commons

In terms of road usage, beyond the urban areas where e-scooters and ride hailing taxis operate, regulation of the inter-urban system roads is confined to vehicle and driving licence holding, vehicle type approval and performance - handled by a number of specific agencies like DVLA and DSA - with speed limits and other rules of the road embodied in the Highway Code – an historic regime that has not generally recognised advances in innovative technologies.

Digital navigation

One technological innovation that has been widely adopted is digital navigation, applicable to all travel modes to replace conventional maps. In the road context, this is generally known as satnav and is offered by a number of providers including Google Maps and Waze via free-to-use smartphone apps, and others who provide input to equipment installed by vehicle manufacturers. A key element of many of these offerings is to indicate the fastest route in the light of prevailing traffic conditions. Digital navigation is changing the way drivers use the road network in three main ways: local users are attracted to new capacity on major roads, pre-empting the additional capacity intended for longer distance business users and so weakening the economic case for the investment; longer distance users can divert to local roads that offer faster journeys than on congested major routes, roads that are well suited to active travel; and predictive journey time information allows more efficient use of the network (Ref 13).

At present, provision of digital navigation is a free-for-all, funded by sales of direction-finding to businesses that wish to attract clients to their premises, as for Google Maps; or by the sale of services to vehicle manufacturers that fit navigation as original equipment, as for TomTom. Road authorities generally seem to be paying little if any attention to these developments. Yet there are opportunities being overlooked to make better use of the road network, both urban and inter-urban, including bus services.

Curiously, legislation has long been in place to allow providers of digital navigation to be regulated (Ref 14). This dates back to 1989 and requires what were then termed ‘dynamic route guidance systems’ that take account of traffic conditions to be licensed by the government. The intention was to facilitate the introduction of a pilot route guidance system, known as ‘Autoguide’, that had been developed by the government’s Transport and Road Research Laboratory and required roadside equipment to be installed – a good example of forward-looking regulation to support innovation. The licence could include conditions concerning the roads that should not be included in the route guidance, the provision to road authorities of information on traffic conditions, as well as the right to install roadside equipment. In the event, the Autoguide pilot did not proceed, due, I suspect, to the limited computing power available at that time. Nevertheless, the legislation has remained on the statute book although no licences have been applied for or granted.

The possibility of achieving more efficient use of the road network through provision of better information about traffic conditions to both road users and road authorities was recognised early on by John Wardrop, a traffic analyst at the then Road Research Laboratory, in a seminal paper published in 1952 (Ref 15). He postulated two equilibria. The first states that, under equilibrium conditions, traffic arranges itself in congested networks in such a way that no vehicle can reduce its costs (time and money costs) by switching routes. For this to happen in practice, drivers would need to have perfect knowledge of all feasible routes and travel times. Digital navigation may be seen as improving such knowledge, thus enhancing network efficiency, yet with a number of independent providers that may offer conflicting advice, it is hard to assess to what extent increased efficiency is being achieved.

Digital navigation has quickly become a significant influence on traffic patterns, though seemingly little acknowledged in policy-making. Source: Wikimedia Commons

Wardrop’s first equilibrium assumes that road users make decisions without regard to the impact their choices may have on others – a ‘selfish’ equilibrium. According to his postulated second equilibrium, the average journey time would be at a (lesser) minimum if all users behave cooperatively in choosing their routes to ensure the most efficient use of the whole system. This would be the case if an omnipotent central authority could command them all which routes to take. Traffic flows satisfying Wardrop’s second equilibrium are generally deemed system-optimal, and the loss of efficiency from this to the selfish equilibrium is an example of what is known as ‘the price of anarchy’.

Smarter routeing and charging

Economists argue that a more socially optimal outcome could be achieved if the costs imposed by the marginal road user on others, by adding to congestion, could be internalised by a congestion charge, thus modifying behaviour by reducing demand through higher vehicle operation costs. However, implementing road pricing is difficult in practice, and there are issues of equity, so a question worthy of investigation is to what extent a more socially optimal outcome could be achieved through flexing the routing advice offered by providers of digital navigation – ‘nudging’, not compulsion.

The likelihood that improved operational efficiency could be achieved through digital navigation is suggested by the wide use of such routing and navigation systems by the competitive road freight sector- an almost entirely private sector activity and very lightly regulated, certainly as far as market entry is concerned. Everyday experience of online shopping indicates the use made by logistics businesses of digital technologies to manage, track and predict flows of goods, often offering delivery time slots of two hours or less, all done algorithmically. This points to techniques to achieve operational efficiency on congested road networks that might be extended to the generality of traffic in a way that could be far more cost effective and less carbon generating than civil engineering technologies.

The competing providers of digital navigation services are generally uncommunicative about their operations, while highway authorities appear to show no interest in the impact of this technology on the functioning of the road networks for which they are responsible - not surprising, given that no framework exists for them to address this issue. One kind of opportunity for mutual benefit would be when the network is under stress, for instance on the occasion of major incidents, peak holiday flows, bad weather and the like. It is probable, and certainly worth further investigation, that coordination between highway authorities and digital navigation providers could make better use of available capacity. There is also the possibility of improving operations at normal times, including avoiding routing through traffic via unsuitable minor roads. There is therefore likely to be scope for coordination that would improve outcomes for road users. This might be through the parties acting voluntarily for mutual benefit, or through the updating and implementation of the 1989 regulatory regime.

Could the new Government’s idea of a Regulatory Innovation Office help simplify the framework for transport system evolution?

Gaps left within the complexity

Although, by and large, the transport sector is functionally regulated to avoid calamity, there are obvious gaps that could usefully be filled to the benefit of users and to give innovators a sound basis upon which to progress their new ideas – or at least try them out with appropriate dispensation. This is particularly the situation in respect of the operation of the road network. As well as concern for safety and customer protection, all regulators should have a remit to encourage innovation that offers user benefits and facilitates new technology, since making effective use of existing infrastructure is preferable to creating new capacity, given the need to achieve the Net Zero climate change objective.

Meanwhile, the territorial divisions and detailed responsibilities of the different regulatory bodies seem opaque, to say the least. To improve matters the new Labour government has set up a Regulatory Innovation Office, with the aims of supporting regulators to update regulation, speeding up approvals, ensuring different regulatory bodies work together smoothly, informing the government of regulatory barriers to innovation, and setting priorities for regulators which align with the government’s broader ambitions (Ref 16). This is an ambitious and potentially extensive agenda. Yet it will be disappointing if the emphasis is solely on novel and exciting new technologies, a possibility suggested by one initial topic, the role of drones as a form of connected and autonomous vehicle technology - surely a rather niche market. In contrast, there is much scope for encouraging innovative approaches in the mainstream emerging transport technologies, where the new Office could hopefully play an influential role.

References and Links

1. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/936129/future-of-transport-regulatory-review-call-for-evidence-document.pdf

2. https://assets.publishing.service.gov.uk/media/64f9b46c9ee0f2000fb7c04a/future-of-transport-regulatory-review-zero-future-of-flight-government-response.pdf
   

3. https://www.gov.uk/government/consultations/future-of-transport-regulatory-review-modernising-vehicle-standards/future-of-transport-regulatory-review-modernising-vehicle-standards
   

4. https://assets.publishing.service.gov.uk/media/65687d2f5936bb000d3167a7/fot-regulatory-review-regulatory-sandboxes-government-response.pdf
   

5. https://www.legislation.gov.uk/ukpga/2024/10/contents
   

6. https://www.itf-oecd.org/sites/default/files/docs/preparing-infrastructure-automated-vehicles.pdf
   

7. https://nic.org.uk/app/uploads/NIC-CAM-Study-Call-for-Evidence-Final-24-April.pdf
   

8. https://www.caa.co.uk/our-work/innovation/about-the-innovation-hub/
   

9. https://www.gov.uk/government/publications/civil-aviation-authority-public-body-review-terms-of-reference/civil-aviation-authority-review-report
   

10. https://www.orr.gov.uk/search-consultations/our-approach-innovation
    

11. https://www.orr.gov.uk/sites/default/files/2024-07/annual-assessment-of-national-highways-performance-2024-web.pdf

12. https://www.gov.uk/government/publications/e-scooter-trials-guidance-for-local-areas-and-rental-operators/e-scooter-trials-guidance-for-local-areas-and-rental-operators
    

13. https://ucl.scienceopen.com/document?vid=90c5ef8f-0afe-4a3a-989d-7f9f5f3c3f86
    

14. https://www.legislation.gov.uk/ukpga/1989/22/contents
    

15. https://www.icevirtuallibrary.com/doi/10.1680/ipeds.1952.11259
    

16. https://www.gov.uk/government/news/game-changing-tech-to-reach-the-public-faster-as-dedicated-new-unit-launched-to-curb-red-tape
    

Additional References

• https://www.gov.uk/government/publications/future-of-mobility

• https://assets.publishing.service.gov.uk/media/5dcd8417ed915d071ca239e9/future-of-mobility-strategy.pdf