The ICE has urged the government to increase the use of toll finance to fund highways infrastructure work.
In its annual State of the Nation (SoN) report, the ICE has warned that the rise of electric vehicles will lead to a drop in government income from fuel duty and consequently new funding streams must be found.
The State of the Nation 2018: Infrastructure Investment report adds that 47% of the population would be in favour of a new system of road use charging drivers, if it replaced current taxation streams. This compares to 23% who oppose the idea and 30% who were either undecided or expressed no opinion, when asked by the ICE.
ICE vice president and chair of the SoN steering group Paul Sheffield said: “It’s important that we recognise the changing societal landscape and adapt accordingly – moving towards an electric vehicle fleet will require a change in the way taxes are charged and collected, just as a change in emerging technologies will require variation in how energy is stored.”
The report also warns of a similar funding problem on the nation’s railways, claiming that the current system of market-led propels needs to be reformed.
“Like the UK’s road network, the rail industry relies heavily on public funding,” the report states. “Policy initiatives to increase the level of involvement that the private sector has in the development of the UK’s rail industry are welcome.
“However, to boost participation, the current framework for market-led proposals requires simplification and reform so that the intellectual property associated with different bids is fairly rewarded.”
ICE president Lord Mair added: “We face a time when the demands on infrastructure services are changing and increasing, with pressures from population growth, ageing demographics, increasing urbanisation, and resilience issues due to climate change.
“To respond to these in the long-term, and remain globally competitive, we must have an open and robust debate about how to fund our future infrastructure needs – and encouraging private investment must be considered.”
State of the Nation recommendations in full:
Sector-specific interventions to enhance infrastructure investment:
• The government should give serious consideration to replacing the existing generation of road taxes with a “pay as you go” model for the busiest roads in England.
• Energy storage and other emerging technologies should receive enhanced government support through appropriate mechanisms drawing on the successful impact of contracts for difference in the renewable energy market.
• Water Asset Management Periods should be flexible enough to enable the planning and delivery of long term programmes, which meet future demand caused by demographic and climate changes and enable more effective financial planning.
• Market-led proposals in rail should be reformed in a way which simplifies applications and respects the sharing of intellectual property from all bidders.
Overarching policy recommendations for government:
• The feasibility of establishing a UK Investment Bank should be explored as a contingency against a loss of access to low-cost anchor finance from the European Investment Bank and to maintain domestic expertise in infrastructure investment.
• Active steps should be taken to facilitate the use of alternative funding and financing mechanisms, including asset recycling, land value capture and crowdfunding.
• The National Infrastructure Commission should be placed on a statutory footing in the long term to ensure its permanence and enhance its ability to give independent expert advice.
• The National Infrastructure and Construction Pipeline should support the investor community through providing increased detail of the risk and viability of individual projects.
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