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Roads to Nowhere

Railtrack for the roads?

Sian Berry's picture

16 August 2012: Our new report highlights problems with the different ways ministers are thinking about privatising the road network.

M6 Toll  plaza - from amandabhslater on flickr Ever since last year’s Autumn Statement, attracting private money into road building and widening has been a constant topic of ministerial (and prime ministerial) speeches.

Toll roads was the first proposal mooted, but with pension funds now going cold on the idea - aware of the risks of putting their members’ savings into greenfield new-builds of any kind - those tasked with finding off-balance-sheet ways of kickstarting a new roads programme have been casting around for other ways of doing this.

Ideas discussed have ranged from old-style PFI deals to hypothecating all the money raised from Vehicle Excise Duty (VED) into the trunk road network - a major turnaround in Treasury policy if it happened, and effectively a return of the old Road Fund Licence which was abolished more than 75 years ago.

Our report published today, Problems with private roads summarises recent work from Campaign for Better Transport and others, and shows up the fact that none of these proposals can provide simultaneous value for private investors and the taxpayer. Either the investors bear the considerable construction and revenue risks that go with roads, or the public purse is forced to take this on, removing the point of attracting private finance in the first place. Similarly, as has been seen with any kind of public-private partnership or PFI, in these deals it's always public money that ends up subsidising private profits.

The much hyped toll road proposals are perhaps the least realistic of the lot. The 8-year-old M6 Toll is proving as unpopular as ever. Latest financial reports show that investors lost more than £40 million last year thanks to falling patronage, with UK drivers and HGV operators shunning the idea of pay-to-drive even more firmly now than before austerity struck.

Hypothecation of VED to fund an independent Highways Agency is perhaps the biggest departure from current practice in the list of private funding options. It’s a potential 'Railtrack for the roads', and we’ve highlighted the many political risks of this proposal including conflict with drivers who don’t make use of trunk roads and would resent paying directly to fund it, and an increase in existing antagonisms between different groups of road users. Making this a flat-rate charge would also remove an important incentive in the VED system for people to choose lower emission cars.

So what do we want done instead? For private investors, we’re pointing to the many alternative low-risk, long-term public transport investments that would perfectly meet the needs of pension funds, primarily focused on railway lines, developments around railway stations and light rail in cities.

Public money for roads, instead of being frittered away on huge PFI new builds, should go on repair and maintenance projects, which show excellent credentials in terms of value for money, and towards dealing with genuine causes of traffic delay without increasing capacity, such as the removal of level crossings. Another public spending hole that needs filling can be found in council budgets for the upkeep of local roads, which were slashed in the spending review and are now under increasing strain from severe weather events.

As our Chief Executive Stephen Joseph has said: "It's clear that ministers are now casting around for anything that might produce growth without thinking of the long-term consequences or value for money for taxpayers. The proposals risk becoming real mess – a Railtrack for the roads – that will prove just as big a waste of public funds."

With party conference season approaching and members of the Government starting to prepare their speeches, we’re hoping that we’ve heard the last of the idea that the answer to all our problems is a lot of privatised and subsidised road-building.

Download the full report here (pdf)