Prime minister David Cameron’s plans to privatise the roads network and scrap the Highways Agency won the backing of business leaders this week. Support for the idea came in an influential report published by bosses lobby group the CBI.
The CBI wants to abolish the Highways Agency and replace it with an independent regulator and a series of licence agreements with private sector organisations.
They will operate and maintain the strategic road network via a series of regional concessions.
The CBI’s proposal, outlined in its report Bold Thinking: A model to fund our future roads, comes seven months after Cameron launched a study of the ownership and financing options available (NCE 22 March).
The Department for Transport (DfT) said the report based on its study was due to go to Cameron “imminently” and that the CBI’s report will feed into its work.
The CBI proposes that government would initially fund operators by turning Vehicle Excise Duty into some form of shadow toll or availability payment. In the long-term, more direct road user charging could be introduced.
Major capacity upgrades would be funded with private finance repaid via additional user charges such as tolls.
CBI director general John Cridland said funding from the private sector was the only way to bring in vital road maintenance cash.
He said the DfT should think “bolder” than the Cook review of the Highways Agency which reported in November last year (NCE 1 December 2012).
The Cook review recommended that the Highways Agency be retained but that five year spending cycles be introduced.
The government’s response to the Cook review in May deferred decisions on the Agency’s future until Cameron’s study was complete.
But one senior industry source said the Highways Agency was likely to be abolished.
“It is hard to see the continuation of the Highways Agency, otherwise why have the feasibility study?” said the source.
Should the Agency be axed, industry experts were divided on whether its functions should be split up regionally or kept together as a single entity.
One proposal understood to be on the table would replace the Agency with a government owned contractor operated organisation (GOCO), a model used by the Ministry of Defence.
This would keep the highway network in the public sector, although it would be run by a private company.
Cart before the horse
Other experts questioned the wisdom of wholesale change before consensus was reached on what the government wants from the strategic road network.
“Before we get to how best to deliver the strategic road network we need a clear idea of what we want to deliver,” said Mott MacDonald highways director David Tarrant. “We have not completed the strategic road network yet,” he added.
Also unclear is how any reorganisation would affect the Agency’s 11 existing private finance initiative (PFI) contracts.
Cridland admitted that the CBI had not considered current PFI arrangements - such as the £6.2bn M25 scheme - but said it would have to be “ring-fenced somehow” from a new roads management setup.
Further questions surround the CBI’s long term plan to raise revenue by tolling. WSP roads business development director Barry O’Driscoll said widespread tolling could not be introduced until there had been more research into driver behaviour.
“Tolling is largely untested in the UK,” said O’Driscoll. He added that where it has been used - such as on the M6 Toll - traffic volumes and, as a result, revenues have been below estimate.