Cars don’t cause gridlock, people do. My journey is essential, yours is discretionary, his is a disaster, causing gridlock and poisoning the planet. That in a nutshell is why transport policy is always dumb.

We crave mobility and expect government to pander to it. Tony Blair, ever the populist, has made private motoring cheaper than it has been for a quarter century. He has given railways four times the subsidy they received under nationalisation and has made air travel the duty-free bargain of the century. Hypermobility is the opium of the people. We are stoned on it and the state is the pusher.

Last week Sir Rod Eddington’s Treasury transport review proposed a mild programme of withdrawal and rehabilitation. There is no killing the car but there is no conceivable way the public demand for unlimited mobility can be met. Rationing is by congestion or it is by price. Choose, the lot of you.

Eddington wisely resists the lobbyists screaming for more subsidised roads, railways and grand projects that only encourage more mobility. He opts for using the price mechanism — or rather the tax mechanism — to curb demand. This is precisely the policy that Blair and Gordon Brown have resisted for 10 years.

Almost every government policy conflicts with Eddington’s message. Some 30 accident and emergency departments, roughly one in every county, are to close under Patricia Hewitt’s chaotic hospital reorganisation. Every closed hospital means longer journeys for ambulances, staff and patients. The government also wants to close small primary schools and “local” secondary schools in favour of academies, with children travelling longer distances.

Whitehall wants fewer post offices, job centres, abattoirs and local government offices. It wants hypermarkets and out-of-town housing and office estates, and thus fewer local shops and less pedestrian-based employment. Every one of these policies means more traffic. Nobody asks what this costs because transport costs are what economists call “externals”. If someone has to travel 50 miles rather than five to visit a relative in hospital, the NHS does not pay. Ultimately the planet pays.

Eddington has a sort of answer. Since any businessman can think of a thousand reasons why road congestion costs him millions, the temptation is to assume that “more roads” are economically vital. But every truck and van must share scarce road space with leisure drivers. Business costs thus subsidise leisure travel. The trick of an efficient transport policy is to reverse that exchange.

Last week ministers gasped at the fact that demand for government museums had doubled — after making them “free”. The same goes for roads. Demand for anything free is infinite, or constrained elsewhere (such as by transport to the museum or the cost of petrol). The transport department has long seen its job as to predict demand for free roads and provide for it. Roads, like the countryside, are a landscape ordained by God over which every citizen has the right to roam.

Road space is not the national heritage, “free to all as of right”. No built structure is free. The only real question is who should pay. Cars are people, and people respond to price and convenience. Traffic volume in central London has fallen because of the congestion charge and parking meters at £5 an hour. Eddington wants to extend this principle. He points out that less congestion need not require more capital spending, just the application of the price system to existing capacity. It is economics versus dumbness.

The road network carries 85% of transport miles and nothing (not even rail) will seriously dent that proportion. But it is inefficient. With some rationing by price the available tarmac can handle more traffic, perhaps even 50% more, without too much pain. Since taxing movement through petrol duty terrifies politicians, Eddington proposes taxing the use of roads directly, through tolls and electronic pricing. This directs demand onto or away from certain stretches of road and certain times of day. It also raises a tax to pay for road improvements. But will it happen?

Central government remains in a dither. Eddington’s proposal is not new but a repeat of a transport department study for Alistair Darling in 2004, itself a repeat of the Smeed report of 1964. Road pricing schemes are popping up round the world (from Sweden to Singapore). Darling, in awe to the motoring lobby, lacked the guts to make a move.

As always, the crucial innovation came from local government, in this case London. Breaking every promise about the congestion charge, Ken Livingstone is turning the levy into a flexible charge that can be aimed at gas-guzzlers and articulated lorries. Whitehall has been forced to admit it has worked. Eddington calculates that some £24 billion in revenue is available from this source, which can only be levied by local government. Here is scope for a revolution in local finance. An idea’s time has come.

The rest of Eddington hardly matters because transport policy is really about roads. Sadly he is unable to shake off his loyalty as former boss of BA. A former transport minister, Chris Mullin, described the airlines lobby as “voracious” and always successful. Eddington has a longstanding axe to grind: a third runway at Heathrow. He could not resist it.

Times Recommends

• Darling won't pay for Brown give-away
• Believe it or not, Big Brother is your friend
• E-mails were quoted out of context