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Cameron drives road privatisation up the agenda

Prime minister David Cameron this week put the prospect of widespread private funding for the UK’s trunk road and motorway network firmly on the government’s agenda.

At a speech to construction industry bosses at the ICE on Monday he warned that without a radical rethink “there isn’t enough” public money available to tackle the UK’s current congestion problem.

Industry bosses present included ICE President Richard Coackley, Skanska UK chief executive Mike Putnam, Costain chief executive Andrew Wyllie, Arup associate director Alexander Jan, Halcrow technology director Tim Broyd and JCB director and general manager Philip Bouverat.

And while Cameron backed increased use of road tolling to fund future investment in highways, he insisted that this would be limited to new roads and not existing ones.

New business models

Cameron said he wanted to create a new privatised, regulated business model for roads to lever in the vast amounts of private funding needed to tackle congestion on existing roads. This is intended to boost the nation’s efficiency and drive economic growth.

“Road tolling is one option - but we are only considering this for new, not existing, capacity,” he said. “For new roads there is a very good case to be made for tolls,” he explained, highlighting the M6 Toll road as an example of a project where cash from motorists pays for new investment.

“But what we are looking at is how to get more investment into existing roads,” he said, pointing out that motorists already pay huge amounts of money via Vehicle Excise Duty and petrol tax to drive their cars.

“What we are saying is: ‘let’s think about what happened in the water industry’. Water privatisation freed [the industry from competing government spending priorities] so that massive investment could take place.

“To really increase investment in our roads and free it from the constraints of government, why not look at a [similar] regulated alternative model,” he said.

Cameron used the speech to set out his vision of a “horizon shift” in infrastructure investment in the UK across transport, energy and telecommunications.

“The truth is we are falling behind,” he said. “Falling behind our competitors and falling behind the great, world-beating, pioneering tradition set by those who came before us.”

There is now, he added, an urgent need to repair the “decades-long degradation of our national infrastructure”.

Struggling to keep pace with investment needs

He said that, despite the road network’s significant role in the UK’s economy, the sector was struggling to keep pace with investment required to help Britain compete internationally and drive growth.

“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,” he said. “There are very real constraints on public spending so we need to think about how more money can be put into the infrastructure we need without increasing the budget deficit.”

Cameron said he had asked the Department for Transport and the Treasury to carry out a feasibility study into options for new ownership and financing models for the national roads system. Progress will be reported in the autumn.

However, while nationwide road tolling is technically possible, Cameron was clear that this option would only be considered on newly constructed sections of highway rather than the existing network.
Cameron also insisted that the new funding model would not automatically mean the consumer would pay more.

“It doesn’t have to be the case that consumers will pay more,” he said. “We are saying let’s look at a model where you take the existing charges but have these fund separate investment in our roads.”

A new regulated model, he said, could bring private companies on board to plan, construct and manage new congestion-busting sections of highway, paid for either through direct tolls or via shadow tolls underpinned by the public sector.

“Why is it that other infrastructure - for example water - is funded by private sector capital through privately owned, independently regulated, utilities……but roads in Britain call on the public finances for funding?” he asked.

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