Saturday, 1 October 2011

Dismal Science and speed limits

After a couple of months away from reading news or writing blogs, the Department for Transport's planned increase to the national speed limit seems amusing enough to warrant some words. Having held but not enforced a 70mph speed limit since 1965, the proposal will see a new limit of 80mph not being enforced from 2013.

Most tragic of all has been the speech of Transport Minister, Phillip Hammond, who remarked that motorways should be 'the arteries of a healthy economy'. Hammond continued to demonstrate fearlessness in the face of metaphors, adding that it was 'time to put Britain back in the fast-lane of global economies.' The extra 10mph will apparently equate to 'hundreds of millions' of pounds for us all to share, and solve all of our problems apart from the serious matter of politicians giving cringeworthy speeches. There are currently no proposals aimed at addressing this second concern.

The vague optimism of this economic forecast reminded me of comments made by Mervyn King in February. Explaining what to do about Britain's 5% rate of inflation, King cited keeping our fingers crossed as a key component of monetary policy. This led me to ponder, once again, just how the discipline of economics maintains such a veneer of science, finger-crossing not normally being held as a reliable means of securing an outcome.

Anyway, to give a cursory look at Hammond's 'hundreds of millions' bonanza. A 2003 report by the Department of Transport put the total cost of traffic accidents at £18billion. £13billion of this is owing to personal injury, and £5billion to damage of property and vehicles. The cost to the economy of a fatality is £1,492,910, whilst serious injuries rack-up £174,520 a pop. Research by the European Road Safety Observatory reckons that for every 1km/h increase in speed, there is typically a 3% increase in accidents. With 10mph equating to 16km/h, we can anticipate significant increases in accidents where the new speed limit is applicable, the economic disadvantages of which will hopefully be offset by the social gains of improved population control. Further to the cost of accidents, consideration should be given to the fact that an engine is approximately 10% more efficient at 70mph than at 80mph, and with the cost of oil only likely to move in one direction, this will make engines 10% more expensive in return for those extra ten miles travelled in an hour. Whatever the maxims about time is money, that much time is unlikely to be worth that much money.

The Department for Transport has also offered justification for the increase with the argument that it will align UK speed limits with the rest of Europe. True though this may be, a 75mph speed limit has obviously done little to stop Ireland developing a national debt 96% of its total economic output, whilst Portugal, also at 75mph, has only managed to achieve 93%. Elsewhere in Europe, at 80mph, the Italians have a debt 119% the size of their economy, and the notorious Greeks, also at 80mph, have racked-up a pile of debt 142% the size of their economy, which is shrinking at 5.5% as you read this.

Further north, the Norwegians, with a budget surplus of 12%, inflation down at 1.3%, and one of the world's largest sovereign wealth funds, persist with a 62mph speed limit, and any driver caught speeding above 85mph is faced with an unconditional 18-day prison sentence. Of course the consistently strong German economy dispels any hard-and-fast correlations, Germany having no speed limit on its autobahns.

All of which is only a complicated examination of what anybody with an ounce of sense will have realised instinctively. Speed limits have no bearing on national economic performance, and the problems of the UK economy are more significant than 10mph. We await government directives encouraging people to chew their food less and walk quicker, alongside simultaneous measures prohibiting reading on the toilet, an inefficiency that costs the economy hundreds of millions of hours/pounds in lost output every year.

Anyway, until next time, stay sane... your country needs you.

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