As public money dries up for new roads in the UK, the use of private finance has been touted by the government, but this could have huge hidden costs if deals are not managed properly.
Last week, roads minister Mike Penning urged the industry to “think outside the box” if it was to get more roads schemes off the ground (News last week).
As is often the case with these grand statements, there was not much detail, although Penning advocated a US-style system of roads financing where communities and businesses could help.
He highlighted the A5-M1 link in Bedfordshire as a good example.
In this case, the project had been put on hold following the 2010 Comprehensive Spending Review but it recently secured £45M funding from developers Lands Improvement Holdings and Friends Life Company in addition to £5M from the local council.
However, the circumstances of this agreement are unusual and may not be a panacea for the industry.
The companies have provided the capital for the road because they are developing land adjacent to it under a section 278 agreement.
This is the same agreement made between the Department for Transport (DfT) and developer DP World to provide improvements to the M25 in order to go ahead with the construction of the new London Gateway Port (NCE 13 October).
A DfT spokesman said that although the developers have committed to the finance arrangements, the road still needs to go through a public inquiry before it can go ahead.
He added the government would be committed to building new roads that are privately financed and experts say revenue would most likely be generated through a toll system.
Turner and Townsend transport director Anooj Oodit says tolling is one of the only ways where private financing can work well on a roads scheme.
“The only other way is if you use some sort of regulated asset base and pay for use of the asset, like Network Rail does,” he says.
But Mott MacDonald divisional director for transport management consultancy Forbes Johnston says tolling has never been well received in the UK, and he doesn’t expect that to change.
“The UK public is very reluctant to pay tolls unless they can see a saving in their pocket,” he says.
He cites the M6 Toll as an example of this reluctance.
“You’ll be coming down from Manchester and you’ll see the signs telling you there’s a delay. You can join the queue or pay the money to take the toll road. Most people will sit in the queue and wait,” he says.
Both Oodit and Johnston say the real priority for roads in this country should be making the most of existing assets.
“The Highways Agency has been pretty good,” says Oodit. “There are not many black tops coming up but it has been all about using new technology. You have to ask the question: Do we need more roads to increase capacity? It’s not about having more roads, but getting the flow of traffic working better.”
He suggests the Agency’s managed motorways programme is a great example of this.
Johnston adds that a good idea would be to tax freight vehicles for using roads that aren’t part of the motorway system.
He says this can be implemented through already available satellite positioning technology that is used in freight vehicles across the Continent.
Penning is right to say the industry needs to think outside the box, but the government also needs to stop thinking in isolation, Johnston says.
“The government really needs to make sure that its whole transportation system has got the best balance and it has looked at maintenance and future requirements.”
Perhaps the idea of leveraging private money needs to be put on the back burner while innovations are made in transport strategy, planning and making the best use of what we already have.