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The new transport network: pay commuters to transport coworkers

A new document released by think tank Policy Exchange reveals how the sharing economy and paid commuter car sharing could form a new revolutionised global transport network. Some of the report has been published below. See the full report here.

The role for Government

Our own analysis of commuting patterns in the UK’s major cities shows how transport demands in every area are very different: dependence on public and private transport is driven by a range of factors – property prices, quality of public transport links, the cost of travel and the location of jobs. Moreover, our research shows that helping people to commute just 20 minutes further each way could open them up to thousands more job opportunities. Across the eight city regions outside the South East of England, commuting an extra 20 minutes on public transport would put people in touch with an average of two major employment sites – equivalent to 10,000 additional jobs.

- The car is the ultimate enabler of mobility. You can go wherever, whenever
you want and at a low marginal cost. On average, a car will put you in touch
of nine large employment centres, compared to just three by public transport.
People who own a car are more likely to be in employment, or else more
willing to drive until they find work compared with someone who doesn’t.
However owning and maintaining a car can be expensive – almost half of
people on low-incomes do not own a car at all. Congestion is also a big
issue but building new roads does little to alleviate it: vehicle miles travelled
increase almost one-for-one with the number of new miles on the road.

- Compared to the car, the bus falls well short in terms of cost and efficiency
outside of London. The bus is the most commonly used form of transport for
people who don’t own a car but it is not as effective as it could be: timetables
do not always fit with the workers who use them and fares can be very
expensive. City centre day tickets can cost over £4 – almost two-thirds the
hourly minimum wage. In many cities, local factors mean the bus will always
struggle to compete with the car, with poorer services for those who use it
to get to work.

- Commuting by train is both expensive and inflexible. The structure of rail
fares has not changed since privatisation and is heavily biased against people
on low-incomes. Lower paid workers and employees of small businesses are
now paying up to 30% more for their journey to work than people in higher
paid professional occupations because they cannot pay for an annual season
ticket. Moreover, outside of central London, no suitable rail tickets exist for
part-time workers, potentially stopping people like young parents returning
to work. The flexible worker is confronted with expensive walk-on fares or
buying a travel card that they don’t fully use.

There are a number of things the Government could do to make transport more efficient and affordable.

Technology, the sharing economy and taxi-like public transport
Two of the biggest downsides to the car – affordability for people on low incomes and congestion – are being moderated by advancements in technology and the sharing economy. Car-sharing, mediated by an app, is lowering the cost of travel for consumers, giving people on low-incomes access to car travel and reducing congestion on the roads. Taken together, there is a strong case for the Government to incentivise its growth through commuter tax benefits. Already
the Government helps workers with the costs of getting to work through the Childcare Vouchers Scheme, and incentivises asset-sharing through other schemes like the Rent a Room allowance. The Government should explore the possibility of introducing analogous commuter tax benefit schemes that incentivise car-sharing for trips to work. This might be of particular benefit to
cities like Birmingham, Leeds, Hull and Blackpool who have a higher than average  number of commuters who ride share. Two options, in particular, deserve further consideration:

- Examine the case for allowing employers to give employees travel vouchers or credits for ride-sharing services through a salary sacrifice scheme. These ridesharing credits would have a fixed value and be paid before Income Tax and National Insurance is taken. An individual would elect to participate in the scheme, nominating a portion of their pre-tax income to cover the costs of ride-sharing trips to work. The employer would then provide a pre-paid credit card or top up an online ride-sharing account equivalent to this amount which can be used to pay for ride-sharing trips to work, potentially saving people hundreds of pounds a year.

- Examine the case for allowing drivers who rideshare to keep a portion of their earnings tax free, provided that taking passengers is not the primary reason for their journey. 

Read the full report here.