Government cannot be trusted to run our roads

Shortly before Labour tried to close down all serious debate on public service reform I promised you all some more ideas on how we could raise quality and save money on public services. Let’s get back to this, our agenda, on the day after Mr Brown himself concedes there needs to be cuts after all – after the Election!

The government cannot be trusted to run our roads. They have all the hallmarks of a monopoly – expensive, poor quality, and in short supply. You literally have to queue so often when you want to use them, and motorists have to pay many times over through taxes for the costs of provision and management. Government management these days often entails expensive and fiddling changes which end up making them them less safe with increased congestion. Stopping free flowing traffic seems to be one of the main aims of the car haters who design our road policy.

Meanwhile most UK people make it clear they like the personal freedom that car use brings. It is the main way people get to their jobs, to the shops and to their friends. The last time I spoke to six formers about green issues, the questions were mainly about how they got access to a car of their own.

So I have a simple proposal. Let’s franchise the main motorways and trunk roads to the private sector to run. Let’s do it in a way which sends them clear financial incentives to cut pollution and congestion.

The maths would be good for taxpayers as well. I would start by abolishing the vehicle Excise Duty, a tax on ownership, and replacing it with permission for the private sector to impose tolls on use of the main roads. The aim would be to impose tolls that yielded £5.6 billion a year at current usage levels, the exact cost of vehicle Excise Duty. This would be neutral for motorists as a whole, but would cost those of us who travel more a bit more, and those who travel less would benefit. People who travel less tend to be worse off. There would be regulation to prevent excessive charging, with clear stated maximum toll levels.

The main motorways and trunk routes would be put up for franchising in suitable packages. Where possible alternative routes would be in different packages, bringing competition between franchise holders. In return for access to the assets and the toll revenue they would need to pay the state a premium. We would need to raise around £110 billion, so that the state could pay off £110 billion of debt which would save it currently around £4 billion of interest. By the time the scheme came in I reckon it would save us about £5.5 billion of interest given the likely trend of government borrowing costs. This makes the scheme self financing in terms of its immediate impact on state finances.It gives the first franchise holders a running return of 5% on day one, rising as they improve the use and management of the asset.

The prices of the packages could be fixed to ensure the state received enough money to pay off sufficient debt. The auction would be based on bidding for length of franchise, as the state would want the road assets back at some point to do the whole thing all over again, to the financial benefit of taxpayers. Bidding for the duration enables bidders to work out how they can make money, without changing the state finances.

The results would be dynamic and favourable. Bidders would be expected to come forward with plans to enhance the assets. They may well want to add another lane, or to use the hard shoulder. Their interests would be to encourage more free flowing use of the road, so they could charge more and charge more users. If they ran a bad or congested motorway use would drop off, going to alternative routes.

The state, as a result , would benefit financially as well. The more toll revenue the franchise holders enjoyed,the more profit there would be for the state to tax. The state, as in all private businesses, has a share in success. The immediate future after the scheme was launched would also see some much needed improvement capital investment. Free flowing motorways are both our safest and greenest roads. We need to use them more to cut deaths and raise the fuel efficiency of travel.

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47 Comments

  1. Mick Anderson
    Posted August 26, 2009 at 6:53 am | Permalink

    There are other problems with roads than poor maintenance. On the rare occasions that the Government pay for a new bypass to be put in, they normally manage to corrupt the initial purpose of the bypass. I seem to remember that the Twyford Down bypass was meant to be in a tunnel under the down, and the bypass for the A303 around Stonehenge looks as though it will never be built.

    Here in Surrey we have the Hindhead tunnel being built, several decades too late. Once completed (due 2011), the National Trust have persuaded the Department of Transport to dig up the old A3, although there are many good, practical reasons for leaving it open.

    The local Council are aware of the local problems that this closure will cause, and already have plans in place to buy up more land to put a different piece of road in. I had to point out to a Councillor that this solution only fixed the problem for half the area that would be affected, and suggested a cheaper and more effective alternative. The key was in leaving the existing road in place for local traffic, but the politicians were too busy grandstanding about “the environment” to look at the bigger picture.

    Regarding your suggestion for privatising roads on a franchise basis – I concur that the private sector is far more effective than the public, and that some small areas of road tolls have been successful. The Dartford Crossing and the M6 are obvious examples.

    However, there are alternatives to both of these privately maintained facilities, so they have to make sure that they appeal to motorists.

    If the whole trunk road and motorway system is privatised, there is no effective alternative. There seems to be a good comparison between railways and roads here – privatisation doesn’t always solve the problems, it can just create different ones.

    Ultimately, something so important to the infrastructure of the Country needs to be managed with more accountability than simple franchising privatisation can provide.

    • alan jutson
      Posted August 26, 2009 at 9:16 am | Permalink

      Mick
      You mean that the Hindhead cross roads on A3 will be no longer??

      How will people get to the National Trust Cafe at the Devils Punch Bowl without the A3 ??.

      Perhaps the new road will be called the A3a !!!.

      Sounds like a typical green party members idea to me, covert tarmac to grass, then dig up grass or pull down houses for more tarmac to serve the same area, houses and shops, and bugger the cost.

      • Mick Anderson
        Posted August 26, 2009 at 4:01 pm | Permalink

        Apparently they are putting in a mini-roundabout to replace the traffic lights at the crossroads, with the old A3 closed at the Punchbowl Hotel. As it won’t be a through road any more, it won’t have ‘A’ road classification, so the bypass will be the A3.

        This will allow access to the NT Cafe, although nobody I know locally goes there any more. The last tenant worked hard to build up a business, only to see it grabbed by the NT when they fancied a piece of the action. They then turned it into something too touristy for the locals…. Yes, I live less than a mile from there.

        Unsuprisingly, it is the NT who have been the driving force behind lobbying for the grassing over of the old A3, as they own the land on either side. If it really cared for the local environment, it might have looked at the area in the round. I believe that leaving the old A3 open for local access to the A3 at the London side of the tunnel, and making Thursley village access only, would ensure that the traffic was on roads designed for it.

        At the moment it seems likely that anyone living in Hindhead, Beacon Hill, Churt and Tyndalls are going to tend to cut through Thursley to head north-east; down a lane that is effectively single track, and through what was a beautiful Surrey village (until they spoilt it with speed bumps and bollards).

        Leaving the old A3 in place would also provide a relief valve for those times when the tunnel is closed, either by an accident or for maintenance. The normal traffic will be so light that the road will be quite safe for ramblers and wildlife, and there is already a tarmac footpath for much of the length.

        The plan for the new road (from Shottermill to the Portsmouth end of the tunnel) was explained to me by the local Conservative councillor when he was out canvassing. Apart from the wasted opportunity to improve traffic patterns on the country lanes to the north of the A3, it seems ridiculous that they already accepted that lots of extra money will have to be spent to compensate for what has been tacitly acknowledged as a lousy situation. Surely it would be far better for the planners and politicians to grow a collective spine and tell the NT to whistle for their grassing over….

        • alan jutson
          Posted August 26, 2009 at 5:56 pm | Permalink

          Sounds about right.
          How is it that NT and like minded organisations have so much influence over local people who live in an area.
          Reason : They know how to, and who to lobby.
          Professional advice probably paid for with members subscriptions.
          Sad fact is the people who make decisions, who are supposed to represent the local people, often make decisions which have a negative effect on the local area by listening to these lobbyists, and giving their views more weight, than the locals who have to live with the decisions.
          If the decision has not yet been passed, can only suggest the locals get organised.

        • Alan
          Posted August 27, 2009 at 9:08 am | Permalink

          But the whole point of going to the enormous expense of building a tunnel was to protect the environment. If we hadn’t been interested in that we could just have widened and straightened the existing A3 through Hindhead and the Devil’s Punchbowl. Having spent all that money, after years of consideration, it makes little sense to keep the original road anyway.

          I have my own doubts about whether the planning process did come to the best final decision, but having come to a decision let’s carry it out. It takes us so long to make a decision we shouldn’t then spend time undoing it later. That way we would get even less done, and spend even more.

  2. Posted August 26, 2009 at 6:58 am | Permalink

    I am so glad that you have returned to business after the interruption of Labour horror over Dan Hannan interrupted your thoughts. This looks a most promising way forward.

    What you seem to be proposing is the Spanish system in force in Murcia where I once lived. The State provided the ordinary roads which were, on the whole, well run. Meanwhile a motorway was provided for a small, affordable toll.
    Proud signs were put up over the toll run motorway saying “Alicante 40 minutes”. This was for a journey of forty miles. It was wonderful running on the motorway too. Nothing on it. Absolutely classic motoring with no opposition. True, some boy racers enjoyed going at well over 120 kph. Otherwise, nothing.
    Meanwhile, the main road (government run) from Torrevieja to Alicante was totally blocked by buses, lorries, commercial vehicles and cars gong to Carrefour!
    Isn’t this getting a bit like pre Prescott Railtrack?

    • Robert K, Oxford
      Posted August 26, 2009 at 8:39 am | Permalink

      Hey! I remember the Alicante-Valencia route in the mid-70s before the motorway was built. It could take two hours from Alicante to our place in Calpe. With the motorway it was 40 mins. I was back there last summer & the m-way is still much as you describe – perhaps a little more traffic, but nothing horrendous. The coast road has been upgraded but the traffic has increased too, and conditions remain poor. Of course critics argue that the commercial truckers don’t want to use the m-way because it costs more than the coast road so the problem of coast road congestion wasn’t solved. More extensive use of road pricing would fix that problem.

  3. Robert K, Oxford
    Posted August 26, 2009 at 7:30 am | Permalink

    Yes, absolutely privatise the road network. In the private sector, competition would improve the quality of our roads and would make them cheaper and safer. My preference would be to sell the roads rather than franchise them because under franchising yet another quango would have to be set up to run them. Never mind: it is great that you are flagging this as an area for debate.
    Besides, I could console myself with the inevitable name of the regulatory body: OffRoad.

    • THE ESSEX BOYS
      Posted August 27, 2009 at 12:20 am | Permalink

      We agree, Robert, but will have to get our heads round this one.
      Normally we blame government for not making the tried and trusted simply work better but it’s time for some drastic thinking outside the box given the sheer size of the deficit.

      One concept we have regularly banged on about is incentivisation to keep heavy transport off major roads in peak hours.
      Could we not allow deliveries through the night and, say, eliminate road tax for lorries – identified by a huge sign on the cab – that travel only in off-peak hours?
      One HGV takes the road space of several cars and slows all traffic with its slow overtaking speed.

      Better utilisation of the infrastructure assets we have already could well help to reduce significantly the current congestion problems while we plan new roads and even privatisation as JR advocates here.
      The futility of trying to force folk from the car to the bus and train – as Labour set out to do – has been fully demonstrated and green considerations will simply not alter that!

      • Robert K, Oxford
        Posted August 27, 2009 at 11:09 am | Permalink

        Your ideas appear sound, but I am not a road expert, nor do I run a transportation company. The thing I would encourage you to beware of is planning (I mean this in the Hayekian sense rather than the town & country planning sense). The point about free market competition is that the optimal solution will come about through trial and error as different suppliers try different initiatives to best satisfy their customers. In this case, the supplier – the road owner – may well experiment with differential pricing for different vehicles at different times of the day to maximise the best use of his infrastructure asset. After all, congestion would be anathema to a private road owner as it would tend to push his customers towards competitors, whether they be other road owners or trains/planes/boats. The private owner would seek to optimise the balance between usage, speed, safety and congestion in a far more efficient way that a government planner could achive.

  4. alan jutson
    Posted August 26, 2009 at 8:12 am | Permalink

    Sorry John do not agree with you on this one.

    More complications, more like privatisation of rail.

    Agree certainly to scrap road tax, just put the extra on fuel to make up for it, then you can scrap road tax offices, enforcement etc.

    The problem with the roads is not that there has not been enough raised, it is that there has not been enough spent.

    We have allowed traffic obstruction systems to be called traffic management systems, when all it does is slow down everything, causing more pollution.

    Chicanes, who ever thought that directing traffic to the wrong side of the road, at a head on legal closing speed of 60mph (30mph each) was safer !!!!!

    Who thought that putting lumps of tarmac across aroad would make them safer (especially for motorcyclists)

    Who thought that leaving potholes unrepaired (to damage car spings and tyres) would be a good method for slowing down traffic.

    Excess signage (too many to read if you are looking at the road)making most places look like toytown.

    Coloured tarmac which all looks black, when viewed in the dark when its raining under street lights.

    We need to tackle the real problem, proper maintainance, sensible planning, to get as you say a free flow of traffic.

    Free at the point of use, being the operative word.

  5. Waramess
    Posted August 26, 2009 at 8:18 am | Permalink

    No doubt this is the way to go, and Cameron should be quick to adopt it as policy

  6. no one
    Posted August 26, 2009 at 8:45 am | Permalink

    the first thing to privatise is er let me think THE BANKS

    if roads are done in this way it will be important that end users get as much choice as possible, so each of the routes from london to the midlands should be with a seperate provider to generate some competition, and so on

  7. Brian Tomkinson
    Posted August 26, 2009 at 8:58 am | Permalink

    Do you really think that you can attract investors to put up £110,000,000,000 for a 5% return on capital? Perhaps good old Mervyn King would kindly print some more for them. Your scheme is laudable in trying to reduce the public debt but why do I have the uncomfortable feeling that the motorist will pay a lot more, costs of transport will in fact rise and be passed on to the consumers adding to inflation?

  8. Posted August 26, 2009 at 9:06 am | Permalink

    Whilst I don’t agree with every detail of your proposal, the underlying logic is strong as ever. Will DC have the courage to tackel the issue? Only if it is revenue neutral I fancy.

    Charges could become “just another tax” but if it really is overall revenue neutral, then it could be very popular and successful despite the inevitable media misrepresentation.

    • alan jutson
      Posted August 26, 2009 at 9:27 am | Permalink

      Stuart

      How long do you honestly believe that this would be revenue neutral.

      The temptation is simply too great for them to up charges, once the scheme is in operation.

      We (i think) have the most expensive rail transport system in Europe, and that does not work as well as promised.

      Before long you will have to have so much money either on your person, or in your car, that you will be no more than a travelling cash machine.

      Then it will be “purchase a road toll credit card for ease of use” or introduction of automatic road pricing.

      Yes if a private company wants to build a motorway from scratch, and then charge a fee/toll like M6 Toll road, then I have no problem, I still have a choice to use the old M6. But if you make all motorways toll roads, then you will have gridlock.

      Reply: It would be private companies levying the tolls, so the government would have every reason to keep the maximum permitted level down as promised when the franchise is sold.

      • Stuart Fairney
        Posted August 26, 2009 at 5:41 pm | Permalink

        Yes, of course you raise the obvious temptation. I agree our rail system is poor but then it is an obsolete form of transport over anything but short metropolitan distances.

        Nonetheless, we need to start thinking about this as the current system (government provides through taxation, free at point of use, queue to access) is the same one that the Soviet Union used to supply bread. This was of course a failure, as is our current system. JR’s solution may not be pefect, but we need change, sooner rather than later.

    • Phil C
      Posted August 26, 2009 at 9:55 am | Permalink

      One must beware the ‘argument’ that tolls are just another tax; I suppose one has to admit that Thatcher’s ‘community charge’ was the start of a deliberate conflation. Call it a charge makes it appear discretionary; call it a tax and it isn’t.

      It a tax only where there are no alternatives to paying it; however, a statutory obligation to do something does not make having to pay for it into a tax. This is not an academic distinction since it makes all the difference to the public finances, and when they are in such a desperate state transfer of responsibility for large areas of public spending onto people’s disposable income is inevitable. It also has the implication of enabling competitive provision (otherwise it remains a tax), and therefore requiring customer choice, which encourages innovation and thus improves efficiency and value for money.

      Toll roads are certainly obviously amenable to this model; as is healthcare, education, pensions and provision for care in old age. Indeed all personal public services where ‘free riders’ can be excluded could be replaced by personal payments in one form or other.

      The complaint of course will always be that this is just a means for the state to charge us twice, so it is essential that for every charge that is introduced a tax is scrapped or a personal tax allowance is awarded.

      reply: This scheme does cancel a tax, and leaves people free to ride the remaining free roads. it also offers traiff competition between competing trunk and Mway road franchise holders. there would also be differential pricing for different times of day and night, to increase off peak use.

  9. Posted August 26, 2009 at 9:18 am | Permalink

    Shock! I’m going to defend the VED. It provide a valuable point of reference to seeing what cars are roadworthy (ok not foolproof MOT test are only an indication of this on that day) but they in principle also are offered on condition of this + they also have insurance too for said transport.

    If pay as you use has to be done, do it on fuel, which is collected every minute of everyday without costs. It also allows the opportunity for a chance to provide a foreign users duty allowance to be applied to lorries coming over from the continent who are fully fuelled up and putting our own haulage companies out of business, without spending a penny here.

    Doing this will of course render the tax disc void, so introduce an insurance disk based on the same system with VED, having an expiry date and an MOT disc to support this.

    Whatever method chosen, we need to preserve and improve on the right to use roads, based on law abiding usage and not solely as a collecting mechanism without regard to the fit for purpose usage of the vehicle using our roads.

    Reply: Instead of VED we could require an insurance cert on the windscreen, and that would require roadworthiness/MOT

  10. Posted August 26, 2009 at 10:04 am | Permalink

    I don’t like tolls because they cost significant money to collect & if not done electronicaly inconvenience the driver to & also increase traffic on nearby non-toll roads.

    I think a similar effect could be achieved by having a lot more measuring of traffic levels, having them openly available & & having the £5.6 bn distributed to councils or private owners in the manner you suggest directly in proportion to the measured traffic. Measuring traffic statistically is just about as effective as collecting it individually in the same way that opinion polls tend to get results close to that of elections. This would also encourage the building of bypasses, road widening etc by private developers who would choose projects on economic grounds rather than the political ones which tend to dominate. I have no problem with most of the country’s roads being in public hands as along as the board running it is made up of engineers & acountants rather than politicians & civil servants.

  11. Mark
    Posted August 26, 2009 at 10:23 am | Permalink

    There are a couple of things missing from your analysis. VED has a cost of collection, and so do road tolls. Currently, tolls are collected via booths in most cases: these require the road to be engineered to cater for the toll booth queue, which can cause congestion (e.g. M25 Dartford crossing). There is of course the alternative of “voluntary” payment enforced with cameras as with the London congestion charge where the cost is quite a significant part of revenue raised. Then there is the deeply unpopular and even more Orwellian spy in the sky satellite system, which would impose costs on motorists as well as being a major advance of the Big Brother state.

    Much current congestion is caused by road works – e.g. the current M25 widening scheme that affects almost all journeys on the Northern part, and by current police practice to close the road for extended periods following an accident. Road works are probably more obstructive than they used to be thanks to “safety” regulation. Changes in practice rather than tolls would help with this.

    Toll pricing is an interesting issue: M6 Toll is virtually traffic free unless there is a major snarl on the M6 itself – where major means delays of at least half an hour. That is partly because the toll is inflexible, and partly because people seem to be prepared to tolerate quite high congestion delay before parting with cash to avoid it. Tolling works well only when there is no practical alternative route.

    The underlying premise of your idea is correct: we need to find things to sell to reduce the national debt.

    Reply: As the owners of the franchises would want to maximise use they would install friendly technology for payments – as in the USA where you can buy a smart card and just drive through the toll checks.

    • jk
      Posted August 26, 2009 at 5:19 pm | Permalink

      by far the simplest payment technology is fuel taxation, as this is already in place. No smart cards, no number plate readers, no satellite tracking required. All the infrastructure is in place.

      • alan jutson
        Posted August 27, 2009 at 8:36 am | Permalink

        jk

        Exactly.

  12. John B
    Posted August 26, 2009 at 10:34 am | Permalink

    One fly in the ointment: the Government would no longer have a valuable, raise-it-when-it-likes revenue source which we know because Labour has told us, is vital – along with excise tax on petrol – for paying for the WeHeartTheNHS and other Public Disservices.

    Also how else the “better off” be punished for daring to be so, and buying Planet-destroying cars?

    Seriously, given the debt would Mr Cameron want to give up a tax source just now?

  13. Pete Chown
    Posted August 26, 2009 at 10:35 am | Permalink

    As with all privatisations, I think the devil will be in the detail. If I think back to the privatisations which were carried out by the Thatcher and Major governments, some provided large benefits but others didn’t. I think BT was probably the most successful, delivering massive reductions in call costs, and inspiring countries around the world to privatise their own telecoms networks. At the other extreme, rail privatisation probably made things worse.

    This isn’t an argument about *whether* to privatise. BT showed that privatisation can provide large benefits. The point is that it has to be done right, with careful design of the incentive structure and regulation.

    Let’s take an example: the A14 in Cambridgeshire. This road is notorious for congestion and accidents around Cambridge, and for years the government has been promising to upgrade it. Considering the importance of Cambridge as a technology centre, there should be a good case.

    Suppose a company bought a franchise to run the A14 for ten years. They would not have an automatic incentive to upgrade the road. Their franchise just wouldn’t be long enough, especially considering that it would take several years to complete the work.

    The A14 has no trunk road competition. There are various local roads which run parallel to it, but no other major roads. This means that people not wanting to pay the toll are likely to use the local roads. People living in the villages along those roads won’t thank you for imposing tolls on the A14.

    Suppose the franchise was longer, so the operator did have a chance to invest and get a payback. Because there are no other trunk roads covering the same route, they would only have to compete with local roads. The local roads would become jammed with people who would never pay a toll, however good the A14 became (perhaps because they are poor). As a result, the A14 would have no real competition. Everyone who could afford to use the A14 would do so, even if the franchise holder didn’t invest, because the alternatives would be so awful. A rational franchise holder would still not invest, therefore.

    While private sector involvement in the road network may well be a good thing, I don’t think this proposal is a good way of delivering it. I also think there are easier privatisations which should be tackled first: the Post Office and the BBC seem like obvious candidates.

    Reply: We need something large to tackle the debt mountain. Of course they would have franchsies long enough to make capacity investment worthwhile – it might be condition of the contract that capacity is increased.

  14. True Belle
    Posted August 26, 2009 at 11:03 am | Permalink

    Have you tried to get through Dorset recently?

    Have you been down to Weymouth to see the preparations for the the sailing Olympics in 2012? I bet you were stuck in some almighty traffic jams once you left Ringwood.

    There is going to be a single lane Weymouth Dorchester relief road which will be a hopeless single lane not dual carriageway as we all supposed. The Puddletown bypass is all well and fine but it leads straight into Dorchester and creates HUGE traffic jams. This traffic is trying to access the coastal towns and beyond.

    The Tories should have had the Folkstone Honiton by pass sorted out years ago. Dorset was promised some relief too- not the case now thirty years down the line- nothing but dangerous windy roads still. Weymouth is a port as well as Poole.

    We have heavy sand and gravel and portland stone quarrying lorries in addition to the cross channel freight. The roads are crumbling quickly .

    Tourist traffic and agricultural equipment also hammer our roads, the MOD and their heavy vehicles need to exercise and train their people , but the roads just end up a mess.

    This government is trying to encourage people to cycle – take your life in your hands more like.

    The investment in our road system is very very poor, and this goes back years and years.

    Why are we accepting heavier continental lorries on narrow poor roads, we just cannot cope with it all.

    reply: i visited Dorset this summer to make a speech to local businesses. I agree the road system needs improvement.

    • alan jutson
      Posted August 26, 2009 at 1:17 pm | Permalink

      True Belle

      Yes stuck on the very road you mention for more than an hour, just two weeks ago. No reason other than volume of traffic.

  15. Alistair Morley
    Posted August 26, 2009 at 11:55 am | Permalink

    The principle is good, but needs a bit more thought in its implementation.

    The license auction should be run on proposed tariffs rather than fixed or variable payment to Treasury. The LOWEST proposed tariff set should win and be locked in for the duration of franchise. That way competing operators are incentivised to hold down prices rather than engage in tax farming.

    This way you create ersatz price competition rather than an auctioned monopoly. Needing to employ “maximum rate cap/anti-gouging” rules (with attendent monitering bureaucracy!) is a sign that you haven’t designed your auction correctly.

  16. Mark M
    Posted August 26, 2009 at 1:13 pm | Permalink

    I’d have to disagree. There is no real competition (if I want to get from Preston to Birmingham I’ve really no choice but to use the M6) and the best that could happen would be a false market similar to the points system used in the regional-monopoly water industry.

    I also feel that roads should be provided by the government, but I agree that some form of competition would help. Perhaps we can create an internal market between local transport authorities as to who can provide the best roads, with bonuses for staff in the region with the best roads (however that gets decided).

    Either that, or how about we push the roads budget down and out to local citizens who can decide for themselves whether they want to pay a little more council tax in order to spend more on local roads.

    • Posted August 27, 2009 at 11:10 pm | Permalink

      The real competition is as follows.
      1. Take the train, or coach v. the car.
      2. Travel off peak

      You may have a point. Like I believe happens with conjestion charging in cities, the initial impact of the localised cost is to cause a decrease in volumes. However, over time, people adjust their budgets, so volumes adjust back to where they were prior to the charge being introduced.

  17. backofanenvelope
    Posted August 26, 2009 at 3:54 pm | Permalink

    The problem with the roads is that we have a mismatch between capacity and demand. The answer is to increase one and restrain the other. And the easiest way to reduce the amount of traffic is to increase the tax on fuel. Capacity could be addressed by improving what we have got and building more. If we build more motorways, then they could be built as toll roads.

    • True Belle
      Posted August 26, 2009 at 4:59 pm | Permalink

      backofanenvelope

      Tolls on our major highways /motorways are a far better collection system than clobbering everyone who drives a motor car for more fuel tax.

      We pay to use toll bridges so a small fee for using motor ways will supplement the building of other arterial roads, with the advantage of keeping our smaller roads in good shape.

      Traffic will never reduce, there are out of town shopping malls and now the popularity of on line shopping is killing town centres, white van and delivery man is more visible than ever.

      In these rural parts Waitrose and Tescos and Asda deliver, which is a boon for elderly people and families in areas where there are infrequent rural buses.

      I do wish people would engage their brains before they damn motorists. We all depend on our cars in the countryside.

      Wouldn’t it be better if train carriages were designed to accommodate prams pushchairs bicycles and shopping and large suitcases and back packs, and have cheaper fares, so that families could use trains as they did for their annual holidays, over forty years ago.

      • backofanenvelope
        Posted August 27, 2009 at 6:42 am | Permalink

        I’m not damning motorists – I am one! What is more I live 7 miles from just about everywhere.

        Mr Redwood’s plan needs a time line. Ten years to set it up perhaps? Another ten to cover the country?

        Last year when petrol prices got up to about £1.30 a litre, motorists started to cut travel, responding to the one thing you can be sure will work – price.

        I can just about remember my ‘O’ level economics – something about supply and demand?

      • alan jutson
        Posted August 27, 2009 at 8:39 am | Permalink

        True Belle

        Do you really think the cost per mile will be small ?????

        Be afraid, be very afraid.

        Car parking charges were small once, as were residents permits.

        • True Belle
          Posted August 27, 2009 at 8:53 am | Permalink

          I do agree with you, but some councils may throw the idea of a visitor/bed tax in to the arena.

          Day trippers to coastal towns clog up the roads and although they create revenue of a sort, there is still the clear up and cost to the infrastructure that is becoming increasingly difficult!

  18. Posted August 26, 2009 at 4:39 pm | Permalink

    It took a long time for you to come up with an idea I didn’t agree with but you’ve finally managed.

    One of the things that makes us free people and not slaves of the state is the ability to roam. One of the ways we choose to do that is by road.

    Although it may seem the same to move tax from petrol and cars to roads, keeping the amount the same (as if that would ever happen!) it is not. There is a subtle and fundamental different.

    You are correct that a tax on ‘ownership’ like Road Tax feels wrong. But not as wrong as a tax on movement would.

    I could never support an expansion of road tolls in this way. Its wrong.

    reply : it’s a price for use, just as you pay for all the phone calls you make. The important things in the scheme are a) no more cost than present b) you can aovid the payment by going on slower roads but you can’t avoid VED, c) the road controllers will want to make it easier for you, not more difficult as the state does

    • Posted August 27, 2009 at 7:51 am | Permalink

      Sorry John, it is not. Its a tax on Movement. Not the use of the car, not the fuel in the car, and certainly not the use of your phone. It is a tax on your moving along a piece of your own country and A to B. A very dangerous line to cross.

      (and yes, im opposed to Congestion charges and other tolls in the same way … but this is worse!)

  19. Alan Wheatley
    Posted August 26, 2009 at 5:10 pm | Permalink

    Reading through your ideas, John, and some of the comments to date I was musing on whether the incentive was to make the roads a better experience for the user or to reduce government debt. And then in your reply to Peter Chown I had my answer: “We need something large to tackle the debt mountain”.

    So the real objective is to further milk the fat cash cow, otherwise known as road users.

    reply: Not so – as my scheme makes clear. it can be win win, as it harnesses private capital and private sector efficiency. The people running the roads will need to be nice to motorists – now there’s a radical idea.

  20. Posted August 26, 2009 at 7:56 pm | Permalink

    John, I came up with this myself a few months ago. (Not that I’m bragging! 😉 ) My figures looked a little different from yours, though, and I only dealt with the numbers side, not the policy aspects.

    You said you’d need to raise £110bn, but the Highways Agency’s estimate of the value of the motorway network is a shade over £80bn. I can only lend credence to their figures, and guess that assumes that the roads are sold in perpetuity; selling a franchise would achieve a lower price, one imagines.

    However, my lower capital uplift is balanced by assuming that we can basically lose most of the Highways Agency. (Perhaps the ops side of the HA could be sold off, too?) So the lower saving on debt interest is topped up by a budget saving on an executive agency, which probably indistinguishable from a quango in the minds of the public.

    http://melangerie.blogspot.com/2009/03/jump-starting-ved.html

  21. Simon
    Posted August 26, 2009 at 8:15 pm | Permalink

    I have just received a letter from the Highways Agency telling me that the Dartford Crossing is to be handed over to Balfour Beatty, Skanska, Atkins and some other company and that the tolls from my Dart Tag must now be paid to them. Is this the sort of thing you are proposing? If so I wouldn’t agree with it. I have already paid through the nose for the Dartford Crossing (the Tory Government at the time of building promised tolls would be abolished after 10 years).

    Not only have I been overcharged, and forced to sit in jams for up to 2 hours caused purely by the toll booths so they can get another pound out of me. I now discover that I am to pay the toll to a bunch of private companies, some of whom were involved in the disatrous Metronet venture and one who was exposed for price rigging by the OFT last year. I will now be sitting in the jams in order to contribute to Directors’ bonuses and Shareholder Dividends for incompetent and corrupt companies who have been handed a monopoly. Where’s the advantage for anyone in that (excluding Directors and Shareholders)?

  22. Adam Collyer
    Posted August 26, 2009 at 9:54 pm | Permalink

    It’s not often that we see you, John, musing on ways to increase government revenue! If I’ve understood you right, your proposals don’t actually suggest new roads. They simply suggest that private companies could charge tolls on existing roads in exchange for funding £110 billion of public debt. So how would that reduce congestion??

    Today we’ve seen Network Rail seriously propose spending £34 billion on a new railway. The government welcomed the proposal. But Theresa Villiers actually attacked the government for not supporting new railways strongly enough! Meanwhile, our existing railways are a crumbling mess, and the government is borrowing five times that amount this year alone.

    Please, please, would you all get real? The only way to get us out of the astonishing mess this government has got us into is to CUT PUBLIC SPENDING. Is somebody, somewhere, in some party, going to actually propose this? Or will the IMF have to do it for us (again)?

    Reply: I have offered plenty of ideas to cut spending. The roads proposal does offer a way to increase road capacity through private sector investment. When telecoms were public sector we were short of phone lines and any new ones were a cost to taxpayers. Now they are just provided by private capital.

  23. Mike H
    Posted August 27, 2009 at 12:19 am | Permalink

    Great idea.Then the Germans and French will own our roads as well as our railways and itilitys.And we pay them instead of taxes to the UK

  24. Posted August 27, 2009 at 3:22 pm | Permalink

    Mr Redwood. Road pricing would inevitably involve vehicle tracking, and probably a personal smart/ID card that would be automatically debited. Surveys show that the public doesn’t trust either the government or the commercial sector with our private travel data, and I can see lots of scope for fraud.

    I can’t imagine any sane companies paying £110 billion for rights to maintain our roads, even if they were guaranteed a profit. Any company daft enough to take on overall responsibility for our main roads would probably be sued for accidents, closures and failure to repair potholes promptly.

    The next Conservative government will need all the friends it can get, without making enemies of 33 million drivers, most of whom have votes. Although they have soaked up being treated as a cash cow for years, they are becoming increasingly militant and well-organised.

    If a future government needs to trim spending, it should look first at reducing the vast state advertising bill and the money wasted in trying to stop naturally-occurring climate change?

    Reply: I have gone hoarse talking about reducing waste and needless public spending. We need to do that as well.I am dead against government tolling and surveillance of our highways. I have in mind the kind of smart pre payment card and drive through toll system they have on US roads. They only need log the ones without the prepayment card. Why don’t you want to get the government out of our pockets as motorists, by abolishing the poll tax on cars and giving us better roads?

  25. Posted August 27, 2009 at 10:51 pm | Permalink

    This sounds as good scheme – and one where most of the bases are cover. In particular
    1. It would tackle a significant chunk of national debt, with (possibly) a net revenue increase (revenue neutral in terms of VED minus interest on debt, but than tax on profits providing the net increase).
    2. Would incentivize the road operators to invest.

    However, there are three major problems.
    1. The incentives have their limits Building a competing road might make good sense but the existing road operator would have an entrenched interest in blocking such a scheme. What is more, new competition would cause an existing operator to lower prices. So a road like the M6 Toll might never have been built in a competitive environment, as it relied on being able to raise tolls over time. One might get less new roads as a result, not more.
    2. Politics get in the way – most schemes get evolved, there are compromises made. As private companies would need to be incentivised, it could either mean huge profits for the operators (with a net welfare loss to society), or such onerous conditions that there would be insufficient bids for the franchises to mop up much of the national debt. A big bang approach (that is implied here) would probably lead to too much profit.
    3. The alternative – the piecemeal appraoch over time, would lead to a slow impact on the national debt. Also a phases approach would have the VED and the tolls running concurrently. As the onus will be on maximising revenue over the next few years, you could end up with both road tolls and car tax.

  26. Posted August 27, 2009 at 11:21 pm | Permalink

    Another thought.
    This proposal will not fly because of the “green” lobby.
    The VED is weighted according to emissions. Unless a similar structure is introduced in the tolls (making it unfeasibly complicated) it will get severe opposition. The government would be accused of favouring the rich at the expense of the planet. Maybe an absurd suggestion, but less so than many pronouncements in the world of “climate change” politics.

  27. Frank
    Posted September 4, 2009 at 4:38 pm | Permalink

    I do not believe tolls are the answer. Surely it would be much easier to remove VED and add the tax to fuel. The more you drive on the roads, the more you pay. The less efficient cars would pay more tax per mile. Two birds with one stone and no big brother tracking systems to pay for or maintain,but most importantly to track us. Simples

  28. Mike Slattery
    Posted September 4, 2009 at 7:13 pm | Permalink

    Has nobody learned from the referendums in both Edinburgh and Manchester, how unpopular any form of road toll is to the motorist. They are another tax, a way of tracking our every movement and we will not accept this form of highway robbery, the fight continues.

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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