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CBI calls for privatisation of major roads network

8 Oct 12 A report from the Confederation for British Industry calls for the government to adopt a new approach to funding the road network that sounds a lot like privatisation.

Dartford toll booths
Dartford toll booths

The private sector would manage the asset with a regulator - Ofroad, perhaps - controlling funding, expenditure and charges.

Launching Bold Thinking: A model to fund our future roads, CBI director-general John Cridland said a regulatory asset base (RAB) model was required to overcome the funding gaps.

A regulated model for the strategic road network would address the problem of long-term funding and one year cycles by taking the road network out of the government’s budget, he said.  Users would have a proportion of their motoring taxes converted to a user charge – controlled by the regulator – to access the strategic road network.  This charge would provide a funding stream for private operators – licenced by the regulator – who would operate regional sections of the network.

The CBI avoids using the word privatisation but its proposed reform is broadly the same as that introduced to the water industry in the 1980s. The water industry alone has generated £98bn of private investment since its privatisation, with capped charges on customers.

In the long term, the CBI says, private road operators would have to finance larger projects through long-term borrowing, which could require additional revenue streams, such as tolling, above a standard charge.  The regulator would continue to cap charges and manage the overall cost burden on drivers.

Mr Cridland said: “Every day, people up and down the UK lose time and money because of our clogged-up roads – whether you’re a business waiting for an urgent delivery, or a commuter stuck in the morning rush-hour. Gridlock is an all too familiar tale of life in the UK, and one that is already costing us £8 billion a year.

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“With public spending checked, the case for new funding solutions is even more compelling, and the government recognises this. Infrastructure matters to business, and delivering upgrades to our networks is one of the highest priorities for the CBI to get the economy moving again.

“It’s clear we need a gear change in how we manage and pay for our road network in the 21st century. A lack of investment means we are really struggling to increase road capacity, let alone adequately maintain what we already have.”

The CBI’s call was backed by Alain Bourguignon, CEO of Aggregate Industries, who said: “We understand that government tries to make the most of its limited cash – but unfortunately the most cost-effective course of action is rarely followed. A ‘best value’ approach is not always taken in repair and maintenance programmes.

“By transferring the management and maintenance of the road infrastructure to long term investment vehicles, we will see better planning, procurement and design of the assets, leading to better results for all.”

In possibly unrelated news, Dartford Crossing tolls, which - under Trafalgar House's original BOOT (build, own, operator, transfer) contract - were meant to have been scrapped years ago when the new bridge had paid for itself, have today gone up 25% for cars to £2.

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