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At the beginning of 00 the amount of cars recorded in the United Kingdom totalled twenty five million, this is an increase of twenty two million over the last fifty years. As a result road congestion is increasing rapidly and will continue to worsen as car prices fall. Other methods of transport are also a problem. Rail roads and bus services are old and unsafe and are in need of refurbishment. This has resulted in higher fares to cover work costs. According to Ananova (00) it is predicted that over the next few years train fares could increase by as much as twenty five percent. Due to this less people use public transport and opt for their cars which makes the congestion situation worse. The following essay shows whether an effective transport policy will be able to correct these problems and aid the success for domestic firms. This is done through analysis of current government objectives and research from a wide range of sources.

When Labour came to power they promised to reduce the extent of the transport problems through their transport policy. The policy objectives for doing this were to reduce road congestion by 6% and increase the amount of rail passengers by 50%. However according to an article by BBC's Panorama (00), transport Secretary Alistair Darling recently admitted that, far from being reduced by 6%, congestion will probably increase by up to 0% the end of the decade. Rail refurbishment is also going slow, showing no real signs of improvement. In order to rectify this situation the government have proposed some preliminary resolutions.

Firstly, build and improve more roads. £7.0 billion has been pledged for a road building programme over the next 10 years. This programme includes the widening of the M1 and M5 and the improving of the M11, M18, M4 and M6. However it is believed that all this is impossible on such a budget.

Secondly, also as part of this road programme, they are also looking at the possibility of road pricing, this is a separate charge for every mile a person travels via their car on top of tax and petrol charges. According to Dipesh Gadher (00) the Government is already drawing up a map of congestion hotspots across Britain which could serve as a blue print for the introduction for the pricing scheme. Also linked to this is the idea of congestion charging, currently in place in London. Drivers have to pay £5 before ten o' clock on the day they travel, or £10 before midnight in order to use the roads in the 'congestion zones'. According to an article by the BBC news (00) the schemes first day saw a 5% reduction in traffic in central London, and is likely to make £10m from the charge, including £0m for improving bus services and £4m for creating safe walking routes to schools.

Finally the government has put fourth a £67.5 billion package to build a national rail academy to train staff, improve services in London and the South East and to improve 1,000 stations. This should encourage people to use the trains and help rail businesses making losses.

An effective transport policy is very important to domestic firms. If roads are grid locked then deliveries can not be made on time. This refers to either the delivery of finished goods to the market or the delivery of components to the company itself. As a result of this businesses are likely to lose money. For example If a factory does not get its parts delivered in order to create its products then it will be sitting idle, which costs the firm. Also as the factory can not finish its items it can also not transport them to the market for retail, so not only do they lose money for this but so does the retailer. This can have very negative effects on those businesses who practice methods of just in time (JIT).

Another large cost to firms is lateness from staff members. Traffic and also unreliability of public transport, for example if trains are not running on time, results in employees being late. This means that the business is not running as efficiently as

possible since staff are not doing as much work. This will really affect sales companies. This type of company relies on travelling the country meeting prospective clients in order to show them the company's products and ideas. If the sales person is stuck in traffic and does not make the meeting then they will not get business from that client, this will obviously effect the company's profits. Traffic is also very stressful for the worker, which will affect their performance during the day. Stressful workers are not efficient ones.

Obviously the problem of lateness of staff and deliveries can be quite easily corrected by reducing congestion. However Congestion also brings larger problems for domestic firms in the form of social costs . A firm's truck is polluting the atmosphere via noise, air, water and visual pollution. However the extent to which it pollutes is greatened if it is caught in congestion since the truck stays on the road longer then it needs to. There is also increased vehicle accidents and more vibration damage to buildings for the same reason. Rail is also harmful to the environment, however, according to Jack Short (15) rail transport is less harmful to the environment than truck transport. For example, pollution rates of truck transport are four times higher.

From this it can be seen that in order to rectify the above problems there needs to be better public transport and congestion needs to be reduced, in other words there needs to be more investment in to infrastructure via government transport policy. This can be achieved via the Governments proposed plans. However there will also be some negative effects to a business if the government does plan to improve road or rail services.

If the government does put into action its plans of road pricing or more congestion charging, like that of London, then less people will use the roads. Obviously this tackles the problem of congestion, which is generally good for the firms. However it also means less consumers will come into towns and cities via their cars. This benefits select companies like the bus company Arriva, as more people use public transport. For example since the introduction of the congestion charge, in London, Arriva's profits have increased 18 percent. However a considerable amount of consumers will decide not to travel at all, or in the case of congestion charging, go elsewhere where they wont have to pay. This poses a problem, domestic firms rely on consumers to travel to shops to buy their goods and as a result firms in areas where congestion charging is in place will suffer due to a decrease in consumer expenditure. Also if consumers are having to pay more money to travel, whether it be road pricing or increased rail fares, then they will have less disposable income to spend as well.

A second disadvantage is that the firms will also have higher costs as they too will have to pay congestion charges, road pricing or the increased prices of using rail for transportation. Also the staff members will have to pay the new charges and as a result the company may have to increase wages.

Another point is that the proposed policy will not combat social costs for domestic firms. Reduced congestion will decrease the time trucks spend on the roads but will not stop pollution altogether. According to Ian Worthington and Chris Britton (00) the only way to persuade businesses to consider the impact of their activities is for governments to impose pollution regulations such as the 'polluter payer', where companies are penalised for socially bad actions.

It can be seen that an effective transport policy will not only solve some problems for domestic firms but cause new ones. An improved transport system, like the

government has proposed, will tackle the problem of lateness and transportation problems but may in fact ruin firms due to increased costs and less consumer expenditure. It will only truly benefit already successful firms with the money to cover

increased costs or firms such as supermarkets, who sell necessary items, and are therefore not affected by any impact on disposable income. As a result an effective transport policy may be important but is not essential for the success of domestic firms. This conclusion is also supported by the fact that there are successful domestic firms in today's markets, but the current transport policy is not an effective one.

Word count 1456

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