Roads may be run by private firms

RoadEngland's major roads could be run by private firms in a deal compared to the sell-off of the water industry under plans to boost infrastructure spending being set out by David Cameron.

The Prime Minister has ordered Whitehall experts to investigate a radical shake-up of ownership and funding in a bid to encourage investors to fund desperately-needed upgrades to the ageing network.

One model being examined would see an independent regulator set up to oversee the distribution and use of money raised through road tax, which would still be set and collected by the state.

Officials insisted the move did not amount to privatisation, with roads placed in private hands on very long leases rather than sold off altogether and said tolls were not planned for existing roads. But they said they hoped it would emulate the "great success" of the 1989 water industry privatisation.

Mr Cameron will say that the taxpayer cannot afford to pay for the improvements needed to ease traffic jams meaning the Government must turn to European-style private funding systems. In a pre-Budget speech he will warn that the UK is getting left behind international competitors because of a failure of finance, vision and nerve over recent decades.

Focusing attention on roads, he will tell the Institution of Civil Engineers: "The problem's clear: we don't have enough capacity in places of key demand. There's nothing green about a traffic jam - and gridlock holds the economy back.

"So here's what we should do. Yes, move passengers and heavy goods onto rail. But also widen pinch points, add lanes to motorways by using the hard shoulder to increase capacity and dual overcrowded A-roads.

"The massive programme announced during last year's Growth Review made a good start. But how do we do more, when, frankly, there isn't enough money? Road tolling is one option - but we are only considering this for new, not existing, capacity.

"But we now need to be more ambitious. Why is it that other infrastructure - for example water - is funded by private sector capital through privately owned, independently regulated, utilities but roads in Britain call on the public finances for funding?

"We need to look urgently at the options for getting large-scale private investment into the national roads network - from sovereign wealth funds, pension funds, and other investors. That's why I have asked the Department for Transport and the Treasury to carry out a feasibility study of new ownership and financing models for the national roads system and to report progress to me in the autumn."
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