Latest Public Sector News

19.03.12

Road ‘privatisation’ plan floated

Prime Minister David Cameron is set to announce plans that could hand regional road networks over to private companies in much the same way as happened with water supplies, by leasing out trunk roads and motorways to sovereign wealth funds. This would increase investment and reduce congestion, he will argue.

The Treasury and the DfT could carry out a feasibility study looking at how private sector funds could improve and maintain the road network. The companies would be set a series of targets and would receive a proportion of vehicle excise duty, under one proposal, giving them a steady stream of income while cutting the deficit.

There would be no tolls on existing roads, but if road companies create new capacity, through building extra lanes or entirely new roads, then they would be entitled to charge for their use. A regulator for the roads would be established, similar to Ofwat, which oversees water and sewerage providers. Some have already dubbed the proposed body ‘Ofroad’.

Cameron will say: “We need to look at innovative approaches to the funding of our national roads – to increase investment to reduce congestion. Road tolling is one option, but we are only considering this for new, not existing, capacity. For example, we’re looking at how improvements to the A14 could be part-funded through tolling.

“But we now need to be more ambitious. Why is it that other infrastructure – for example water – is funded by private-sector capital through privately owned, independently regulated utilities, but roads inBritaincall on the public finances for funding?

“We need to look urgently at the options for getting large-scale private investment into the national roads network – from sovereign wealth funds, pension funds, and other investors. That’s why I have asked the Department for Transport and the Treasury to carry out a feasibility study of new ownership and financing models for the national roads system and to report progress to me in the autumn.”

But the shadow transport secretary, Maria Eagle, said: “Motorists already suffering from record fuel prices now face a road charging free-for-all, adding to the cost of living crisis facing households up and down the country.”

Image c. Highways Agency

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