The politics of transport tend to revolve around big projects. Cities have lobbied for trams, counties lobby for new big roads or local by-passes, and there are also new ports and airports.

These absorb a lot of money, and all the lobbying that goes on tends to be focused on getting more big schemes built.

In this sense, transport is the last really big area in the UK of pork-barrel politics – councillors and MPs see their reputations and sometimes their seats as being dependent on lobbying government to pay for their pet scheme.

Ministers have been doing their best to curb these pressures. Transport secretary Alistair Darling has rejected every tram project submitted to him, using cost escalation to turn down schemes. He has tried to divert councils towards buses instead, but – as councillors have pointed out – they have little control over deregulated bus networks (and, though they won’t say this, bus lanes are not as glossy and voter-friendly as trams).

Ministers have also set indicative budgets for the English regions and asked the regional assemblies to advise them on priorities for spending. This came as a rude shock to several assemblies used to submitting long unprioritised wish-lists of (mostly road) schemes as a means of shifting blame to the government.

The result has been very mixed, at worst with cosy deals over priorities cooked up in horsetrading sessions out of public gaze or accountability. In some cases, roads included as high priorities by the assemblies have no plans or planning permission, so cannot be built quickly anyway. In other cases the schemes prioritised face significant opposition from neighbouring councils or environmental agencies, but this was not considered. How much ministers will second-guess these proposals is unclear.

Underneath all this noise, the Department for Transport’s budget is being eaten up by project cost escalation. The public focus on costs has been on rail – the railways cost around £5bn a year at present and are absorbing any spare cash going. Although much of this is about making up for past underspending, the unit costs seem to be higher than on other railways.

But cost escalation is also happening on roads projects, as a series of parliamentary questions tabled by opposition MPs has revealed. One project rose from £11m to £27m, a 250 per cent increase. And cost increases (mainly in insurance and fuel) are also affecting bus services, leading to service cuts and fares increases and increasing political pressure for stronger regulation of buses.

With all this going on, what should the government be spending its transport money on? Ministers should bear three points in mind.

First, the case for the big projects is not always as strong as the promoters and lobbyists pretend. The claimed economic benefits of roads have not been substantiated in most economic studies – indeed, in some cases they may make things worse by opening up an area to outside competition and enabling jobs and businesses to migrate.

Second, there are background social and environmental problems which transport spending needs to address. Transport is a large and growing source of greenhouse gas emissions and is also responsible for some severe local air quality and noise problems.

Building more big roads and runways is likely to worsen these problems. Social exclusion has also been linked to transport problems – spending more on local bus services and less on transport schemes that increase car dependence would help here.

Third, there’s increasing evidence that the real solutions to many transport problems lie in smaller schemes or measures that influence travel behaviour, rather than big new infrastructure projects. The Department for Transport’s own studies show that ‘smart choice’ measures – such as travel plans at workplaces which encourage car-sharing, cycling or commuting by public transport – can be very effective. A study of 20 workplace travel plans found that they had reduced car commuting by an average of 18 per cent. Even giving people better information about public transport and cycling can lead to significant change.

The good news from these measures is that it is possible to change enough people’s travel behaviour to make a real difference to transport problems. This is important in the bigger picture: as crude oil prices stick solidly at $60 a barrel, as the security of oil supplies looks increasingly difficult, and above all as the scientific advice on climate change gets more urgent and alarming, funding measures that unhook people from car dependence could be the best investment the Department for Transport could make.