Rumblings in the press in the past few weeks have ruled in and then ruled out toll funding for a new relief road in South Wales.
The issue has in turn shone a spotlight on whether government’s ambitions to make tolling part of the future of road financing have any legs.
Where a toll is to be levied on a new bridge or road that provides an alternative to an existing route, both must be tolled if the new project is to attract private finance.
This is now accepted wisdom in the light of Midland Expressway’s loss-making experience with the M6 Toll, which bypasses the congested and toll free M6 around Birmingham. Transport for London (TfL) has acknowledged as much in the small print of its proposals for the new Silvertown Crossing of the River Thames near the Blackwall Tunnel. The latter will also be tolled if a new tunnel is built, say TfL’s consultation documents.
Likewise, if tolls were to be used to pay for a new M4 relief road to the south of Newport in South Wales, the same charge would have to be levied for going through the M4 Brynglas Tunnels - the bottleneck that the new road would be built to relieve.
During rush hours average traffic speed through the Brynglas Tunnels falls to less than 20km/h. A new motorway link to the south is top of the list of essential infrastructure for South Wales - a lifeline for its economic recovery.
But given the stark new realities of tolling and the fact that motorists already pay £6.20 to cross the westbound Second Severn Crossing, further tolls on the M4 are a political impossibility for the Welsh Assembly Government.
Chancellor George Osborne has indicated that the M4 relief road is likely to get support from Westminster, denying any tolling intentions and stating his hopes that the project will be funding with public money (News last week). NCE understands that this is likely to come in the form of a Treasury guarantee which will allow the Welsh Assembly to borrow the estimated £850M which is needed for the scheme.
So where does this leave the government’s notion that investment from the private sector, repaid by tolls, can be used to pay for new highway infrastructure?
“Tolled assets have to stay on the government’s balance sheet”
Osborne as far back as the 2011 Autumn Statement said that the government will look to toll new infrastructure where possible, but so far very there is very little sign of support from private investors. While the Treasury is pushing the tolling idea, it and the Department for Transport (DfT) are carrying out another study into the privatisation of England’s existing trunk roads and motorways. That review is months overdue and understood to be proving difficult.
Establishing regional roads businesses akin to those of the privatised water industry is feasible, but the government would have to present attractive revenue streams for the private sector, via national road user charging or reform of vehicle excise duty. The former is a regularly stated political impossibility, while the latter was quietly ruled out by the Treasury in this year’s Budget.
Tolling of discrete roads or bridges is not privatisation in the same sense, given that the asset remains government property. Tolls are levied to repay loans taken out by private operators to fund construction costs. The Mersey Gateway bridge in Runcorn will be tolled, but with government guaranteeing toll revenue to reduce the risk, as will a new Lower Thames Crossing.
These rare tolled bridge schemes are manageable. They will also have local alternative routes but these will already be tolled, or in the case of the Mersey Gateway’s alternative, the existing Silver Jubilee Bridge, substantially downgraded for use by local traffic only.
The picture is more complex for building new roads or paying to upgrade existing ones with tolls. Former transport minister Stephen Ladyman has pointed out that tolled assets have to stay on the government’s balance sheet.
Rules enforced by public spending watchdog the National Audit Office insist so, which may be an important factor hindering Osborne’s hopes of finding alternative funding without adding to public debt.
The one project Osborne has repeatedly mentioned in the context of tolling is the A14 improvement north of Cambridge. Plans for a £1.1bn upgrade of the A14 from Ellington to Fen Ditton were cancelled in the government’s 2010 Comprehensive Spending Review. An exhaustive study into alternative multi-modal options for improving this hazardous and heavily congested corridor was then launched.
The A14 study of recommended options continues. The most likely outcome is a road scheme expected to cost over £1bn. This would include a new Huntingdon Southern Bypass connecting with the A1(M) and M1 to the west and with an upgraded A14 to the east. The existing A14 through Huntington will be downgraded and designated exclusively for local traffic use.
“Osborne said that the government would look to toll new infrastructure where possible, but so far there is very little support from private investors”
Consultant Atkins’ latest outcomes report for the DfT indicates a preferred tolling regime of £1 per car and £2 per HGV “applied all day every day with no multi-use discounts and limited exemptions”.
A higher toll could result in up to 30% of traffic diverting to other routes and even the £1 price is likely to increase traffic on local roads, the report says.
There is no mention of whether there will be suffi cient return on investment for the private sector, but the report does acknowledge the fact that toll operation costs will be high and that levying tolls necessitates more significant downgrading of the existing A14 through Huntington and a new dual three-lane instead of dual two-lane bypass.
It also says more study of likely impacts is needed.
Tolling is certainly unlikely to form any part of an initiative to speed up delivery of UK road projects. Osborne is probably minded to stick to more conventional means of funding.