How the UK’s dependency on cars slows down the economy

The UK government makes a lot of money from cars. It taxes car ownership, it taxes the fuel, and it is about to charge drivers of electric vehicles by the distance they travel.

But Britons’ reliance on their 34 million cars also comes at great expense to the economy. Heavy traffic and congestion costs £7.5 billion a year in wasted time. An estimated £17 billion is needed to fix the worn out road network.

In the last 30 years, as the UK population has grown by 19%, the number of cars has exploded by 56%. Outside of London, 81% of British households own at least one car.

Fitting all of these vehicles into a fairly small country means that driving has clear priority over other forms of transport. In Germany, 90% of people living in large cities have access to a tramway or underground train system. In France, it’s 80%.

In the UK, the figure is less than 20%, a similar level to the US.

But the US has vast amounts of space, where brand new roads are regularly built to ease congestion. And so the UK has to deal with a population density comparable to the Netherlands (at least for England) and the urban transport choices of Texas.

This lack of decent public transport is expensive to sustain for all sorts of reasons – like the councils forking out £2.3 billion a year transporting 470,000 children to school, mostly in taxis. Or the cost of subsidising 800,000 motability vehicles, which accounted for one in every five new cars sold in 2024.

While the government should absolutely support the travel needs of people with disabilities and help children get to school, in a strange case of state-provided individualism, the UK has become a country where only cars can deliver these vital public services.

Designated drivers

Yet urban design is ultimately a choice. While the UK has a system which allows for 560 cars per 1,000 people, other places have taken a different route.

In Singapore, there are 146 cars per 1,000 people. This came about after the government implemented a quota system to release a limited number of (expensive) car-ownership licenses to limit congestion and finance public transport.

A ten-year “certificate of entitlement” to own a car in Singapore now costs more than US$100,000 (£76,000) on top of an additional congestion tax.

The result? Singapore’s public transport is cheap, fast, reliable and efficient.

People without cars are fine, because the number of overall cars is so small that buses and taxis don’t get stuck in traffic. People with cars subsidise the buses and trains, while enjoying smooth traffic.

The Netherlands used a different strategy. In the 1970s, Dutch streets were dominated by cars and had become dangerous for pedestrians and cyclists. Protests led to a reorganisation of cities to become far less car friendly.

My research with a fellow economist demonstrated that if you decrease the space given to cars, they go slower, public transit goes faster, and walking and cycling become safer.

Then, as more people turn to public transport, the higher uptake makes it a faster and more reliable form of transit. It gets to a point where people who would never have taken public transport end up using it and getting to their destination much more quickly than when the car was dominant.

So for the UK to be more like Singapore, the government needs to make motorists pay much more for their car use. To be more like the Netherlands, it must take away their space.

The UK, and especially England, which invented the railway and used to be full of electric tramways, has the population density to make a dramatic switch away from cars actually work. In fact, it’s hard to think of a country better suited to public transport, or where it is more needed. It just hasn’t been built.

Or at least, it has not been built outside of London, the only place in the UK where most households don’t own a car.

So London is rich, well connected and people don’t need cars. Elsewhere, people park on pavements in derelict high streets and drive to supermarkets and places of work.

With stretched public finances, doing nothing about this state of affairs is a risky option. The UK has been described by the Local Government Association as a “country in a jam”, where productivity is held back by car traffic, with no hope for improvement. Lost time on roads is set to increase by 27% in the coming decades.

Moving to a situation where cars are not considered the fastest and most convenient mode of transportation will take ambition and imagination. But the alternative is a very expensive dependency, which clogs up the UK economy.