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Osborne to continue policy shift in favour of roads

Chancellor George Osborne is widely expected to continue a government policy shift in favour of roads when he publishes his latest Comprehensive Spending Review next week.

A Green Paper setting out options for alternative ways of funding England’s motorways and trunk roads is understood to be ready for publication alongside the review.

The Green Paper will be the first result of the strategic roads review being carried out by Department for Transport director John Dowie. One of the main aims of Dowie’s study is to explore options for privatising the road network, possibly along similar lines to the water industry.

Roads

Roads: Government to renew focus on spending

But uncertainty about how to create revenue streams for investors is thought to have presented a key stumbling block. Creating a revenue stream would have to involve a form of road user charging and reform of Vehicle Excise Duty, both of which have been ruled out by the coalition government.

The Green Paper is instead expected to set out options for reforming the governance of the highways network to allow introduction of new funding mechanisms in future.

“Government has stated its thinking towards reform of the strategic road network and its wish to attract foreign sovereign wealth funds for capital, but the hole in the argument is always the lack of an income stream,” said RAC Foundation director Stephen Glaister. “We were hoping for a positive statement of intent in the government’s Autumn Statement so it seems the question of alter-native roads funding is certainly in the ‘very difficult’ tray and possibly proving too difficult.

But ministers have been saying it is right to recognise the need to allow for growing traffic and create growth with additional capital for road improvements.”

In a report to be published this week the RAC Foundation will present a summary of the government’s shift in roads policy.

This will show a list of 96 schemes that the RAC Foundation identified as unfunded following the government’s 2011 Autumn Statement. A third have since returned to the Highways Agency’s programme, representing a 58% increase in funding.

Osborne is expected to announce further funding for a forward list of schemes being prepared by the Highways Agency and to offer borrowing guarantees for the £1bn M4 relief road in South Wales.

“The government has recovered a lot of the position the roads sector lost in the 2010 Comprehensive Spending Review,” said Glaister.

“If some form of road user charging is out of the question, then expansion of the roads programme with conventional funding is likely, with reform of the Highways Agency and a new high output specification similar to that of Network Rail.”

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