Department of Transport

Sir George Young welcomes new findings on transport infrastructure, business costs and business location
_______________________________________________________________

date 25 April 1996
source Department of Transport
type Press release

note 131

Transport costs are falling for many firms and many are benefitting
from improvements in transport infrastructure, according to new
research published today.

The study, carried out by Ernst & Young, analysed the impact of
transport infrastructure on business costs and business location. It
is released to coincide with the publication of the Governments Green
Paper Transport: The Way Forward.

The research was jointly funded by the Departments of Trade and
Industry and Transport. It surveyed 250 large companies and reviewed
previous studies. The research shows that over the last five years:

- many businesses have seen congestion and journey unreliability as
problems which can affect efficiency, although they have been
effective in responding through more efficient use of infrastructure,
and other measures such as better vehicles and driving techniques;

- businesses which have contracted out distribution to specialist
haulage and distribution companies have experienced constant or
falling road transport costs. Firms running their own fleets,
companies who distribute mainly in urban areas, and service sector
companies are more likely to have experienced increases in costs;

- The degree to which new transport infrastructure has affected
firms costs is difficult to evaluate. However, 62 per cent of
companies interviewed said they had benefited from particular
transport infrastructure improvements completed within the last five
years;

- rail freight has become significantly less competitive;

- proximity to the transport infrastructure was important for
getting a location on the short list of possibilities, but other
factors such as labour and property costs were more important in
choosing between locations;

Commenting on the findings, Transport Secretary Sir George Young,
said:

The Government has attached a high priority to improving our
understanding of the extent to which transport affects
competitiveness. This study has helped clarify several of the issues
which were central to the Transport Debate.

Good transport infrastructure affects businesses operating costs and
the location decisions of companies. I am confident that our rail
privatisation programme will considerably improve the competitiveness
of rail freight.

The Government recognises the importance of effective use of
transport infrastructure rather than the provision of additional
infrastructure.

Sir George also confirmed that additional research will further
improve the understanding of the links between traffic growth,
transport infrastructure and economic growth.

NOTES TO EDITORS

1. The study is further discussed in the Green Paper
Transport: The Way Forward (CM 3234), which was also published
today.

2. In the second Competitiveness White Paper (CM 2867), 1995,
the Government made a commitment to undertake research based on
case studies of the impact of the transport infrastructure system
on business costs and business location decisions.

3. The Ernst & Young study sought answers to three specific
questions; namely what businesses saw as their transport costs
and how important they were to total business costs; how firms
think that these costs have changed over the last five years and
how much of any change is due to infrastructure changes; and how
have firms responded to changes in transport costs.

4. It is intended that the Standing Advisory Committee on Trunk
Road Assessment (SACTRA) should undertake a further study into
the links between traffic growth, transport investment and
economic growth.

5. The report Transport Infrastructure, Business Costs and
Business Location was prepared jointly for the Department of
Trade and Industry and the Department of Transport by Ernst &
Young. Copies of the study are available from Melanie Kill at
Ernst & Young, Becket House, 1 Lambeth Palace Road, London SE1
7EU (Tel. 0171-931-5072). The main report is priced at #25.




# = pounds sterling

Railhub Archive ::: 1996-04-25 DoT-002