Roads of government money

 

          To get the economy kick started and to make faster inroads into the growing public debts, the government needs a big idea.  It needs to get some cash in, instead of constantly spending way beyond the cash generated.  How about this one?

            The government cancels Vehicle Excise Duty, saving motorists £5.8 billion a year. Insurance companies are required to issue insurance discs for display on a vehicle windscreen, and provide a back up computer record of all insured vehicles on their list which the police and other authorities can use if necessary. New vehicles are issued index numbers as at present, but these are recorded on the insurance systems.

           The government offers leases on the main motorways of the country to private operators. The motorways should be placed in packages for investors, preventing any one investor owning adjacent or competing motorways. The M1 would be under different management to the M5. The M3 , M4 and M40 would all be under diffferent management.

            Leaseholders would be able to levy tolls on users. In the first year the aim would be to keep the total toll revenue to around the £5.8 billion of cancelled VED. The government would impose maximum toll charges for any given motorway. Franchise holders would be free to offer discounts, off peak rates and any other lower charge they wished at any time of day or night. Toll revenues would rise in total as use rose. Private operators would be free to improve their motorways and expand their capacity, subject to planning, in any way they wished.

              The government would sell the motorways for £145 billion. This money would repay debt, saving the taxpayer around the £5.8 billion of revenue forgone in saved interest charges on public debt.

              The leases would be sold by open competition. The competition could be for the length of the franchise the operator would need , given the maximum toll and the required price of the lease. Alternatively the lease length can be specified and the competition is for the amount of money the lease is worth.

                  At the end of the franchise period the management reverts to the state, or the state can sell a new lease. The freehold of the road system remains in  government hands.

              The scheme has many advantages. It is good for owners of cars who only need them for short journeys on local roads, and the occasional longer journey which they carry out at off peak times. They will pay little or no toll charge and save all their VED.  It is good for those who want to limit car use, or think motorists should pay for what they use, as it means if you want to drive more on motorways you have to pay more. It will make heavy motorway users think carefully about their journeys.

                     It cuts the public debt. It is not ” selling off the family silver”, as the freehold still belongs to the state. The only losers are those  who use motorways a lot at peak times. They tend to be business users and richer individuals. Everyone has an option not to pay the tolls, as they can use slower main roads instead. Motorway users will benefit from more intelligent motorway management, where the way to maximise revenues will be to charge flexibly to move load from peak times to out of peak times, securing a smoother and better use of the motorway throughout the day and night.

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153 Comments

  1. Ian
    Posted January 15, 2012 at 7:03 am | Permalink

    Brilliant John! Now tell us what to do with the railways.

    • Bernie in Pipewell
      Posted January 15, 2012 at 12:06 pm | Permalink

      Brilliant, Ian

    • Acorn
      Posted January 15, 2012 at 12:48 pm | Permalink

      And those RBS shares you were trying to flog for 50p a while back???

      Good luck with getting £145 billion for 2100 miles of motorway, you can build a new one for £30 million a mile!

      Reply: You also need to buy the land and get the permission!

    • Electro-Kevin
      Posted January 15, 2012 at 5:28 pm | Permalink

      Ian – What to do with the railways ?

      Simple. Forget HS2

      125mph is adequate in a country as small as this. Spend the money throughout the system instead; on more coaches, longer platforms and in curing well known bottlenecks.

      I’d refute any claims that this is ‘thinking small.’ The West Coast route has already been heavily upgraded and I supported that (though I never thought tilting trains a good idea.) Do I infer from the ‘need’ for HS2 that this was a wasted effort and a failure ?

      I’m not thinking small. The measure which I propose would truly reinvigorate transport throughout our country.

    • Disaffected
      Posted January 16, 2012 at 9:36 am | Permalink

      The police already know what cars are insured and taxed John by the VEL data base.
      Good idea to cancel VEL though, a lot of people have commented on this before. Unfortunately, as you know, the money is not spent on roads.

  2. zorro
    Posted January 15, 2012 at 7:27 am | Permalink

    I have mentioned this along with others previously. The car disc should have the insurance details clearly lonked to registration. Insurance is conditional on MOT roadworthiness. Road tax should be abolished with the user pay principle through fuel costs or possibly the road scheme you mention. As long as freight is kept off secondary roads, it may lead to a more efficient use of the M Way system. It depends on how hard the industry lobby baulks at it.

    Zorro

    Way network and cut some deficit/debt costs. It depends on how load the industry lobby baulks

    • Derek Buxton
      Posted January 17, 2012 at 3:19 pm | Permalink

      I seem to recall figures that state quite clearly that the motorist pays way over what is spent on roads and associated infrastructure. In other words, our government is stealing money under false pretences. You can have toll roads if and only if the government takes no more money from motorists, end of.

  3. Antisthenes
    Posted January 15, 2012 at 7:30 am | Permalink

    Similarities with the French system which appears to work reasonably well. Costs for converting motorway slip roads for toll booths would be quite high. Using insurance companies could not be a good idea as the motorist would see their premiums rise to pay for the scheme. Also not a good idea to have the private sector involved with maintaining sensitive data a receipt for less accountability. In France the insurance and MOT disk (they are square) are displayed on the windscreen. Keep the DVLA for number plate registration charge a fee for registration and change of ownership. In general a good idea. This is the kind of thinking that is needed in so many areas that are so badly designed in terms of provision and funding.

    • Mike Stallard
      Posted January 15, 2012 at 8:38 am | Permalink

      ….and the Spanish too.

    • alan jutson
      Posted January 15, 2012 at 4:52 pm | Permalink

      Anthisthenese

      “Like the French system”

      Exactly, could even be a French Company that has the leasehold, just like some power companies.

      Ever been fined for speeding on the Peage without being stopped?

      Time you entered the toll booth at one end- time you left it at the other, they have your average speed !

      Nice little earner.

      Not been done myself, but only because I was aware of it !.

  4. zorro
    Posted January 15, 2012 at 7:30 am | Permalink

    Sorry phone went strange, can you please amend to include cutting debt/deficit costs.

    Thanks zorro

  5. figurewizard
    Posted January 15, 2012 at 7:52 am | Permalink

    Less debt, improved operating cash flows through increased operating revenues and lower debt servicing costs, all at one fell swoop. No self respecting business leader would hesitate to get to work on this.

    You’ll never get it past the Lib Dems though.

    • Jock
      Posted January 15, 2012 at 11:40 am | Permalink

      Actually if memory serves I think you’ll find the Lib Dems went into the last election with a policy similar to this – they definitely had ideas about privatising motorway management and charging tolls (because the receipts from that were the way they were going to pay for high speed rail if I recall).

      I would go further and privatise all roads. Maybe in time eh?

  6. David
    Posted January 15, 2012 at 8:06 am | Permalink

    I like it: it gives people choice – and it could also save a lot of money in the collection of the vehicle (ie Swansea). And many other benefits besides, as you point out.

  7. Mick Anderson
    Posted January 15, 2012 at 8:07 am | Permalink

    Such a promising start to a post.

    Firstly, VED should have been scrapped years ago. It is the equivalent to about £0.04 on a litre of petrol for someone who drives an average car an average distance. Consider that Mr Osbornes hike in VAT increased the cost of fuel by about this much. Adjusting the cost of fuel is also environmentally friendly – burn more, pay more.

    You don’t need insurance companies to issue imitation tax discs, because they are obliged to put every insured vehicle on a Government database (EU law). The same is true for garages and MOTs – the Police already know if a vehicle has valid insurance and MOT by their automatic number plate recognition systems (ANPR) and have both road-side monitors and cars driving around checking every vehicle viewed. It is more effective than a tax disc for checking current status, because you can’t take out a short insurance policy then cancel it once you have bought the tax disc.

    We certainly shouldn’t sell off the motorways to PFI companies. Motorists have paid through the nose for years, and to put another charge on us is exactly what we don’t need. The Dartford River Crossing tolls were meant to have been removed once the construction was paid for, but that didn’t happen. They still charge, and the charges keep rising.

    There is relatively little choice for motorists when chosing most of the routes they take. I live in Surrey, and if I want to go to Portsmouth the A3 is the only practical choice. Effectively you want to tax my journey – I’m not going for fun, simply because I have to, and there is no alternative to alleviate the extra costs you want to put on me. I can’t take the M3 or the A272 because they don’t go to Portsmouth. EDF Routes are not going to build an alternative road to compete with Virgin Trails. There is a choice if I want to go to Birmingham, I don’t need to go there. Anyway, how am I going to know which routes are cheaper? Look at the fiasco that is train ticket pricing.

    Then there is the “Big Brother” argument. I don’t want even more people spying on me, and I particularly don’t want them sending me bills based on that spying. There are already too many cameras, and you can bet that someone will insist that every vehicle is fitted with an expensive GPS recorder to track progress down country lanes. The next step will be a little program to check whenever you stray 0.5MPH above the speed limit to dock both your wallet and licence.

    There is no agreement on how to fund “Smart Meters” to charge people in domestic energy use. The Government are having to impose water meters on us because we have not been persuaded by the arguments. No chance of uncontentious extra billing technology with drivers….

    As has been observed on many occasions, the population of this Country is not under-taxed. The Government wastes far too much money, and should address this as the root of the problem. Finding more insidious ways of reaming drivers should not be considered an option.

    • James Reade
      Posted January 15, 2012 at 11:09 am | Permalink

      “Motorists have paid through the nose for years, and to put another charge on us is exactly what we don’t need.”

      Well the whole point of this is to take away at least some of the charges that the government levies and in place have private operators charge at the point of use for the roads. The current system, where essentially we all pay a flat fee, penalised loads of drivers who don’t use the roads much – they subsidise heavy road users, especially truckers.

      Drivers haven’t had that hard a deal. How often do you get free parking? How much would that space have cost to rent on the private market? Comparisons with elsewhere, say North America, where they are even more heavily subsidised, don’t mean a thing.

      • Mick Anderson
        Posted January 15, 2012 at 6:26 pm | Permalink

        Why remove VED to charge the motorist, then put another one in place? Changing fuel duty to replace VED will cost nothing because all the mechanisms are already in place. This national toll system does not exist, and it will ultimately be the motorist who picks up the tab.

        VED is indeed a flat fee for the year, although there are (far too) many bands. Changing fuel duty to cover removal is completely linear. It even costs more is you travel inefficiently in the rush hour rather than at a constant speed off-peak.

        The only free parking around here is on some common land. Supermarkets might not charge specifically for parking, but you still have to use their shops. There is a small amount of on-road parking around here, but the council want to start charging for that.

      • APL
        Posted January 15, 2012 at 8:45 pm | Permalink

        James Reade: “The current system, where essentially we all pay a flat fee, ”

        Ah! Not so, FED is a tax on use of your vehicle, distance travelled, type of vehicle. Not a flat fee at all.

        VED should be abolished.

    • Tom William
      Posted January 15, 2012 at 3:46 pm | Permalink

      Anyone who has changed to a water meter will tell you that it is a lot cheaper than water rates.

      • outsider
        Posted January 15, 2012 at 10:20 pm | Permalink

        Dear Tom William, That is why families with children living in low-value homes do not switch to water meters.

    • nemesis
      Posted January 15, 2012 at 6:45 pm | Permalink

      Agreed.
      Also:
      “The only losers are those who use motorways a lot at peak times. They tend to be business users and richer individuals” Except that they wont pay – they just pass the cost on to their customers – hence everyone will be paying more for goods.
      Scrapping VED and loading extra tax on to petrol would achieve the same aim and be simpler and would ensure that those that use the roads most would pay the most but probably less acceptable to the anti fuel tax lobby.

    • uanime5
      Posted January 16, 2012 at 1:27 am | Permalink

      Another problem with the lack of competition is that companies won’t have any incentive to keep the roads in good condition because people have no choice but to use these roads no matter how bad they are, just like people have to use trains no matter how dirty or crowded they are.

      • alan jutson
        Posted January 16, 2012 at 9:06 am | Permalink

        Uanimes5

        True.

      • Robert K
        Posted January 16, 2012 at 2:19 pm | Permalink

        Partly true – but today there is absolutely no competitive incentive for motorways to be kept in good condition

      • Winston Smith
        Posted January 16, 2012 at 3:05 pm | Permalink

        How does that differ from the present? Are trains cleaner than they were under BR? I’d say so. Do you see more rubbish and graffiti on the tube than on commuter trains? I’d say so.

    • London Rob
      Posted January 16, 2012 at 9:57 pm | Permalink

      Hmmmnn. A reasonable idea at first reading but then inevitably a company like Southeastern buys the franchise for the M4 like they have London Vic to Orpington rail route and you end up with the MWay unexpectedly closed or some other daily nonsense that is symptamatic of their miserable running of their rail franchise. Or perhaps worse still, some firm like BT expands into roads with interuptions and no human contact all thewhile hiding behind facelss websites and premium rate numbers. Nah. Wouldnt work past the first 3 trial months.

  8. Oldrightie
    Posted January 15, 2012 at 8:17 am | Permalink

    If, a big if, the Government implemented such a scheme fairly, terrific. They’re more likely to do it whilst retaining VED, unfortunately.

  9. JOHN A GELMINI
    Posted January 15, 2012 at 8:25 am | Permalink

    This idea has merit except that you would need to inflationproof any increases imposed by the leaseholder in a way which was not done by the civil servants or whatever incompetents were in charge of negotiating with the Australian owners of the M6 Toll road.
    This road is now little used and road haulage firms avoid it because of the way that tolls have made using it uneconomic.
    You would also need to consider how to prevent”rat running” because if you give people unfettered freedom to not use the toll road you will have motorists and hauliers using minor roads which will wear out faster leading to higher repair bills.

    • James Reade
      Posted January 15, 2012 at 11:06 am | Permalink

      Well if it’s un-economic, the firm running it will go out of business!

      Absolutely no need whatsoever to impose ridiculous limits on how firms can price. Let them do it for themselves. If, as you suggest, this company has run the M6 toll badly, that’s their problem – you can always take the plain old M6.

      Why keep interfering? The whole point of this suggestion is to get things moving a little freer again. No need to just tie up any successful bidder with ridiculous hurdles to jump over.

      • Mark
        Posted January 15, 2012 at 11:45 pm | Permalink

        The M6 toll road has been run in the interests of the concessionaires. I guess this is another area where you have little practical knowledge of the economics. The concession runs for 50 years, and requires that the road be maintained. The cost of major resurfacing works is substantial – but the need for them depends on the cumulative traffic. In particular, truck traffic is very much more damaging than car traffic – road damage increases with the fourth power of axle weight, so a single 40 tonne 5 axle truck does as much damage as 32,363 family cars of 1.5 tonne each (5×8^4 vs 2×0.75^4). Tolls have been set so that it is cheaper for trucks to travel on the regular M6, where they have been contributing to the extensive road damage on that sector, while only impacting on the toll road in rare circumstances given that traffic could also bypass Birmingham to the South on the M5 and M42.

        Meantime, the tolls also appear to have been set high enough to discourage all but Chaika lane traffic in normal conditions. That suggests that the concessionaires are hoping to avoid having to do a major resurface of the route more than once during their ownership.

        There is a very large disconnect between the private profit maximising incentive and the social benefit that could accrue were the road to take half the M6/M6 toll traffic – including trucks. That comes from the interaction between concession duration and avoiding the need for major repairs due to traffic levels and composition. If they were required to resurface the road at a fixed interval, they would have the incentive to ensure that the traffic “used up” the cost of resurfacing, and they would opt for higher traffic levels and total revenues by charging lower tariffs.

    • Tom William
      Posted January 15, 2012 at 3:51 pm | Permalink

      I use the M6 toll every time I drive north because it guarantees no hold ups. It is true that few lorries use it and one has to wonder why, when the extra cost is equated with time and money lost. Possibly because, with tachographs, drivers are forced to take rests so saving time at a cost is pointless to many of them.

      But the cost keeps going up and should be more flexible.

  10. alan jutson
    Posted January 15, 2012 at 8:35 am | Permalink

    Agree with cancelling Vehicle Excise Duty, also more than happy for an insurance disc on a windscreen (as in France).

    Not in favour of more of our existing roads being made toll roads.

    Reason:
    Your suggested sytem sounds like the so called privatisation of the railways, it has not stopped government subsidy, and it has got progressively more and more expensive.
    In addition human nature being what it is, we will have people planning their routes using only main roads, very simple for those who cannot read a map (sat nav route punched in, no motorways) thus leading to “A and B” roads becoming log jammed.

    Unlike other countries, our Motorway system has junctions at short intervals where people hop on and hop off as part of a planned journey, waiting at tolls would destroy any time gained.

    The simple solutuion John is remove VED, include the insurance disc on the screen, and stick a few pence on fuel. that way people pay for road usage automatically through a system that already exists, and we can close a governmet department (issuing tax discs)
    Since road users choose which car to drive, and thus they pay a miles per gallon (miles per litre) tax to suit temselves.

    Perhaps the above solution may also please Mr Huhne (of all people), as those who use the roads most, pay the most, thus perhaps better journey planning, encouraging less use, less pollution (if that is the so called real reason for so called green taxes).

    Our Commercial transport system would of course need to be able to claim this additional tax back again through the existing system (as they do with VAT) otherwise they would be less competitive than foreign vehicles, who fill up with cheaper fuel on the continent and put our transport companies at a disadvantage.

    Last but not least, Governments always seem to unable to keep promises.
    Dartford tunnel and bridge, tolls would stop when paid for, but they still continue at increasing rates and cause traffic jams for miles at busy periods.

    Automatic number plate reading systems (in current use) and good old parking attendents (in current use) could hlp police the use of the insurance disc as they do at present the tax disc, thus fewer people driving without insurance, everyone has to pay tax through fuel sales, so no escaping VED as at present, thus you also have less law breakers on the road, which should lower taxes and insurance policies (ha ha ha, some hope).

    The last thing e want is more tolls, run by different organisations, with different rates, at different times of the day.
    We will end up as the railways, with a huge complex pricing system that no one understands.

    • alan jutson
      Posted January 15, 2012 at 10:24 am | Permalink

      Please, please, please,do not make something else more complicated than what went on before it.

      We so called privatised the:
      Railways, Complicated fare structure.
      Gas, Complicated price structure.
      Electricity, Complicated Price structure.

      We have a Tax system, complicated structure.
      We have a Benefits system complicated structure.

      The one thing in common with all of the above, they still require taxpayer money, and were bought about by government directives.

      Please, please, please, do not complicate the road system.

      I just want to get in my car and go where I want to go, when I want to go, at a time that is convenient to me, knowing the approximate cost of fuel to get me there.

      I do not want to have to work out in advance a journey plan, where I not only have to work out the most cost effective route (by possibly looking at a computer for toll charges) and then ammend it to suit a particular time of the day, perhaps stopping somewhere en route for a coffee or a pee, not really wanting either, but because I am running too early for entry onto a particular road, and will go into a higher charging rate, than if I waited for a few minutes.

      Please, please, please,keep life simple, BECAUSE ITS CHEAPER.

      • James Reade
        Posted January 16, 2012 at 5:32 am | Permalink

        Cheaper for whom? If you make things simpler, it means it’s more expensive for some, and less expensive for others. The more complicated structures we have reflect only price discrimination, making it cheaper for some (generally lighter users) and more expensive for others (heavy users). Isn’t that more fair?

        • alan jutson
          Posted January 16, 2012 at 9:21 am | Permalink

          James

          If you read my post it says scrap VED, add a
          couple of pence on fuel, (so that it is tax neutral) and everyone is in the same boat as each other. Is that not simple.

          Everyone chooses which type of car they purchase and thus how many miles per gallon it wil use. Is this not simple.

          Road hauliers could claim back any additional tax as they do at present with VAT, thus the goods they carry will not have to increase in price. Is that not simple.

          We avoid different charging rates for parking where it is based on the size of your engine an the emmissions it makes (Richmond in Surrey) when moving, even though it is parked and does not exhale any immissions. thus we all pay the same parking fee. Is that not simple.

          We scrap the entire Tax disc department at DVLC to save on costs, is that not simple.

          Will it happen ?
          Not a chance

          Can anyone please list any government action which has resulted in lower costs, and is less complicated than a previous scheme which it replaced ?.

          Answers on the back of a postage stamp please.

          That is why I am against road tolls.

    • Tom William
      Posted January 15, 2012 at 3:53 pm | Permalink

      Actually many countries with hop on/off toll roads have electronic drive through tolls with no delay at all.

      • alan jutson
        Posted January 15, 2012 at 10:10 pm | Permalink

        Tom

        Not many with our population density I think you will find.

  11. Caterpillar
    Posted January 15, 2012 at 8:45 am | Permalink

    Leasing the motorways and installing toll infrastrucutre seems worthy of investigation (though I think any lease auctions should be Vickrey).

    Another concern might be the relative safety of motorways – if traffic shifts to less safe routes and the total death & injury toll go up, or the relatively safe moroways are available for the rich etc….

    [As an aside what would the NHS be worth?]

    • James Reade
      Posted January 16, 2012 at 5:34 am | Permalink

      Why must it be the case that people shift to less safe roads? Why the assumption the price will be so high it will drive people (excuse the pun) off the motorways? A sensible pricing structure that a profit maximising firm would employ would have a cheaper off-peak price that is affordable, with much higher prices at peak times.

      We only have congestion currently, which forces people off the roads, because we have a fixed price for road use. A pricing structure which deterred use at peak times would reduce congestion.

      • Russ
        Posted January 17, 2012 at 3:54 pm | Permalink

        “A sensible pricing structure that a profit maximising firm would employ would have a cheaper off-peak price that is affordable, with much higher prices at peak times.”

        I think you are missing the point.

        Charging people higher prices at peak times will only smooth out demand if people choose when to use the motorway. If your working hours don’t change, then your time of travel won’t either.

        The vast majority of users in rush hour have to use the roads at this time; it’s part of the national consciousness to avoid rush hour traffic if you can – most can’t.

        • Caterpillar
          Posted January 18, 2012 at 10:19 am | Permalink

          I think Russ has a good point here, and I suspect (though don’t know) that lower waged people may have less freedom in when & whether they travel.

  12. Mike Stallard
    Posted January 15, 2012 at 8:47 am | Permalink

    The total failure of our Free School has taught me a lot.

    Who will be opposing this excellent and thoroughly sensible idea?

    Sir Humphrey at the Treasury will for a start. Who gets driven up and down the motorways? Who is in charge of everything? Who gets the brilliant ideas? Sir Humphrey, that’s who.

    Then there will be the Labour Party and all the TUs because the idea smacks of Privatisation which is scarcely better to them than rape, murder and pillage.

    Then there will be all the motoring organisations because they don’t like change. Although perhaps a couple of them might possibly be persuaded……

    Kirsty Walk will no doubt discuss it on Newsnight and then come to the conclusion that you cannot draw a conclusion and that will kick it into the long grass where everyone wants it to be anyway.

    It is for these reasons that I think that this brilliant and totally sensible and workable idea will never come to pass. And Mr Cameron will not be discussing it in the TEa Room, will he. Maybe that fellow in the PM’s office who walks around shoeless might listen though. Now what was his name?

    • alan jutson
      Posted January 15, 2012 at 4:11 pm | Permalink

      Mike

      Be careful what you wish for, when you find out it will cost a suggested £1.50 per mile in peak periods.

      This was the suggested figure last time this was discussed.

      Need to catch a plane at the airport 30 miles away to go on holiday, that will be £45 .00 in tolls please, on top of your parking fees or your taxi fare which will also now include the toll charge unless you risk a more conjested “A” road.

      Just ask yourself has the Conjestion Charge in London been a success, has it speeded up traffic has it encouraged people to go to london by car ?

      Until you are aware of the actual figures this debate is very, very one sided. this proposal if implemented will create log jams just like those on the present M6 where you have a toll alternative M6 which runs near empty.

      Once set up you will never, ever, get it removed.

      • lifelogic
        Posted January 15, 2012 at 9:10 pm | Permalink

        The congestion charge in London was clearly about money and the green religion they never wanted to reduce congestion. The congestion is mainly caused by big islands, anti car traffic light phasing, bike lanes, bus lanes, big islands in roads, one man and bendy buses blocking the roads, lack of parking and poor one way systems – all installed over the past 20 years to deliberately create congestion be traffic “experts” I assume.

  13. lifelogic
    Posted January 15, 2012 at 9:07 am | Permalink

    Far too sensible and advanced to get past Cameron, Clegg and Libdems.

    Clearly each vehicle needs an electronic positioning device that tracks its movement so it can be charged accordingly perhaps linked to its tomtom. VED should go and be replaced by fuel or movement taxes. You should have the roads in private hand and they should have an incentive to run and improve them. You should also however charge something for the minor roads, you do not want everyone to use them instead – as they are far more dangerous than motorways. You can then charge the many foreign vehicles properly too. Currently they are not charged and provide unfair competition.

    The system would link in with bridge tolls so all the toll staff costs can be cut and the pointless queues caused by the tolls (at for example Dartford) can be got rid off.

    This is all obvious and has been for a long time but it will not happen I suspect.

    • Mike Stallard
      Posted January 15, 2012 at 3:49 pm | Permalink

      Above all, the EU has already planned transport for us – in 1994 (see Christopher Booker in today;s Telegraphg). We have TEN – the High Speed Rail Project instead. And that is what Mr Clegg will, no doubt, support.

  14. Daedalus
    Posted January 15, 2012 at 9:09 am | Permalink

    I quite often have to use the M62 past Leeds in the mornings and evenings, from J24/5 to J28 it can be a nightmare. So I use some of the back roads to keep moving, its probably the same length of time as if I had queued and 1/2 as far again. Charging will move the traffic onto many of the smaller roads the whole place will be blocked. At least with paying VED you know where you are.

    Daedalus

    • James Reade
      Posted January 16, 2012 at 5:35 am | Permalink

      Erm, no. Charging will lead to people travelling at different times. It will be a more powerful deterrent to travelling than even congestion.

      Changing market structures changes behaviour.

      • Mark
        Posted January 16, 2012 at 2:16 pm | Permalink

        Erm, no. People drive in rush hour because they have to get to work. The only way to change that behaviour is to tax employers for the congestion this causes, so that they have incentives to adjust working hours and to locate away from city centres.

        Reply: There is much more part time and home working now, and staggered hours. It is mainly state schools which cause major traffic peaking problems.

        • Mark
          Posted January 16, 2012 at 6:44 pm | Permalink

          Perhaps Boris can abolish the London congestion charge then, while charging state schools for causing congestion?

      • The Realist
        Posted January 16, 2012 at 3:11 pm | Permalink

        Sadly James it won’t as most people have a limited choice when they travel apart from leisure!

      • Daedalus
        Posted January 16, 2012 at 6:17 pm | Permalink

        James,
        I already travel past Leeds at about 06:30 on some days, I am currently having to travel to East Yorkshire so I get to clients somewhat earlier than would be normal, so far some have accommodated this. Maybe they won’t and then I will have to hang around for an hour or two. I work from home and my official start time is 08:00. I already go out of my way to avoid congestion, others doing the same will make my earlier starts more of an issue than they already are, you wouldn’t believe the traffic at that time of the morning. When I worked in South Manchester I used to leave home at 06:00, I was at my desk by 06:45, my normal start time was 09:00. I try to avoid congestion like the plague and now it seems a lot of others are trying to do the same.

        Daedalus

  15. Iain Gill
    Posted January 15, 2012 at 9:14 am | Permalink

    the problem is it slows down traffic and wastes everyones time too much

    all that wasted mantime could be contributing to the economy

    so not one i would support

    i lived in Chicago where toll roads are common, never really impressed with all that people time being wasted, or the extra pollution from slowing all those cars down for no reason and then letting the restart. I must say the Dartford toll crossing, Tyne tunnel crossing etc are a disaster, it must be cheaper for the country overall to scrap the tolls and stop wasting all that petrol with queues and stopping which are not needed.

    you need some popular revenue raising measures, why not significantly increase the price of work visas? to encorage people to hire and train Brits? why not target companies operating almost exclusively in the UK but registered abroad and avoiding tax here? etc

    • lifelogic
      Posted January 15, 2012 at 9:14 pm | Permalink

      Certainly age on the absurd toll queues. You build a bridge costing a fortune then restrict its capacity with a poor toll collection system and consequential huge queues.

  16. L Edwards
    Posted January 15, 2012 at 9:32 am | Permalink

    I doubt we have the physical space at every motorway junction to install tollbooths, nor would people welcome the delay. It would be the delay at the tollbooth that would put people off travelling on motorways more than the actual cost. Opponents would cite the delay as a barrier to economic progress etc.

    If cars could carry a smart chip (issued by the insurance company instead of the current tax disc or purchased at customs by visitors) so payment was automatic and fast then the system could work well. Presumably in this age such a thing is perfectly possible.

    • Mike Stallard
      Posted January 15, 2012 at 3:50 pm | Permalink

      It already happens in Dubai and in the Basque country of Spain.

  17. backofanenvelope
    Posted January 15, 2012 at 9:35 am | Permalink

    I seem to remember that you have run this idea before Mr Redwood. The last time, the reaction of your loyal readership was rather negative. I wonder why that is? Could it be that we don’t trust the government, any government.

    • alan jutson
      Posted January 15, 2012 at 4:17 pm | Permalink

      Backofanenvelop

      Last time it was a very negative response because the proposal was a little clearer, “YOU PAY PER MILE” this time the argument by JR has been put in a slightly different way, and in a rather more subtle manner.

      As Bazman may say, ram it !

    • lifelogic
      Posted January 15, 2012 at 9:23 pm | Permalink

      There is indeed this lack of trust in government which is a big problem. The idea may be good but when the government implement anything they tend to just grab the taxes and deliver very little.

      You will probably get toll roads, extra fuel duty, and still VED, fines, parking costs and VAT on top of all of it and still be all held up by empty one man buses.

      Reply: This idea takes the government out of providing and charging for roads through taxes.

  18. Simon Turner
    Posted January 15, 2012 at 9:36 am | Permalink

    Instead of HS2 which just encourages people to travel to and from London, couldn’t this huge budget be spent on drastically lowering corporation tax and increasing grants for employing more staff for companies prepared to relocate or start up in the North. Surely this would provide a more sustainable economy in areas that need regeneration than just making it easier for people to get to London?

  19. Paul Danon
    Posted January 15, 2012 at 9:47 am | Permalink

    All for tax-cuts, but we have to discourage driving and get people on to electric buses. On motorway-privatisation, we must somehow introduce competition the way that wasn’t allowed-for in rail-privatisation (hence the mess).

  20. oldtimer
    Posted January 15, 2012 at 9:50 am | Permalink

    Even with this ingenious proposal, most motorists think they already pay more than enough for their road usage via tax and duty on petrol and diesel.

    And given the recent record of the polititicians in charge – Coalition and Labour – why should we believe them if they take this scheme on board and say they will apply the putative £145 billion to reducing the deficit? There are so many broken promises.

  21. davidb
    Posted January 15, 2012 at 10:05 am | Permalink

    Insurance is for people not vehicles. I have 2 policies but can additionally drive any vehicle. It would possibly be a good idea to insure vehicles, but then you run up against the no claims problem, multiple drivers, etc. I like the blue skyes thinking however.

  22. Steven Granger
    Posted January 15, 2012 at 10:07 am | Permalink

    Just what we need yet another tax on motorists. Not to mention the probable use of big brother technology to monitor usage. Such technology would no doubt then be used to spy on us for speeding. This would also be a big blow to industry especially haulage. As ever, the inspiration behind this is our beloved EU which is still determined to impose road charging. Once again John, your true colours are exposed for all to see.

    Reply: I am hardly someone who takes my cue from the EU! This is a tax cut to pay for the road charges. it also means foreign lorries have to pay their full share to use our roads, instead of avoiding UK VED and buying fuel outside the country.

    • The Realist
      Posted January 16, 2012 at 3:15 pm | Permalink

      John, Motorists already pay throught the nose, and generate revenues well above what is spent on the road system. It is more important to reduce the level of expenditure and get Government out of our lives.

      Reply: That is what I regularly propose. This scheme gets government out of supplying motorways.

  23. Ralph Musgrave
    Posted January 15, 2012 at 10:11 am | Permalink

    Why the urgency to cut the debt? We are currently paying our creditors a NEGATIVE REAL RATE OF INTEREST!!!!! We’re ripping them off. Let’s carry on.

    As to the idea that a higher real rate of interest encourages saving, that confuses saving up money and saving REAL ASSETS. Saving up money serves no public purpose at all, though obviously a stock of money is useful from the point of view of each individual. In fact an excessive stock of money is a potential liability for the country as a whole because where there is a very large stock of money, there is a risk that consumers suddenly go mad and spend too much of it, which results in inflation.

    And as for the idea that there’s a limit to how much debt we can persuade creditors to hold before they start demanding higher rates of interest, my answer is “so what?” or “no problem”. I.e. if creditors suddenly start demanding a higher rate of interest, we just fund more government spending via tax rather than via more borrowing. And that WOULD NOT reduce UK living standards to any great extent.

  24. Ken Tindell
    Posted January 15, 2012 at 10:11 am | Permalink

    Converting existing motorways to tolls would be impractical for every slip road. And automatic toll systems requires ANPR to work flawlessly at scale (GPS tracking is technically and logistically flawed – and it has been tried).

    The insurance disc idea is a bit of a red herring: police already routinely use ANPR against an insurance database and routinely stop vehicles for being uninsured. It might be more used when combined with RFID to boost the accuracy of ANPR systems. The system could also support a vignette (like the Swiss have: an annual pass to use the motorways). This would help collect money from foreign-registered lorries and level the playing field a little for British hauliers.

    I applaud the thinking: I see none from the government, merely ways of trimming a few slices off sacred cows.

  25. Iain
    Posted January 15, 2012 at 10:28 am | Permalink

    So our motorways are to become Zil lanes for the rich.

    As I understand it economic activity was greatly improved by getting rid of the Turnpike , not least it greatly enhanced the liberty of the average man. Now our Lords and Masters want to turn the clock back two centuries and reintroduce the Toll road and Turnpike.

    Someone posted a while ago that the British establishments agenda was one of reintroducing feudalism, which was based around the argument that the mass immigration policy was introduced to collapse the living standards of the majority, but when you add on the British establishments EU policy which has disenfranchised us from having a say in the way we are governed, their green policies which is designed to price people off air travel, and now the reintroduction of Turnpikes and toll roads, I have got to say he was right.

  26. Duyfken
    Posted January 15, 2012 at 10:28 am | Permalink

    Unintended consequences?

    Motorists (possibly including commercial users) would be pushed on to non-motorway roads, making these more crowded, in turn increasing the demand for more and better standard roads, but which if undertaken would result in more of the countryside being concreted over, motorway franchise-holders objecting to the unfair competition, and the additional cost having to be met by tax-payers.

    • alan jutson
      Posted January 15, 2012 at 4:21 pm | Permalink

      Duyfunken

      The Answer is simple, they find a way to tax other roads as well.

      This is the way big brother thinks.

  27. Woodsy42
    Posted January 15, 2012 at 10:34 am | Permalink

    I am old enough to remember a large hike in petrol duty with the promise it would be used to ultimately remove VED and therefore drivers would pay more directly for their road use. It was a Conservative budget speech if I remember correctly.
    As always politicians play both sides of the situation – within a few years policy was changed and VED crept up again, meaning we now pay twice anyhow.
    Tolls were a failure last time around and abolished in the 1880s, why should they be any better now?

  28. APL
    Posted January 15, 2012 at 10:45 am | Permalink

    JR: “Leaseholders would be able to levy tolls on users. In the first year the aim would be to keep the total toll revenue to around the £5.8 billion of cancelled VED.”

    Good scheme, in addition. Leaseholders should not have to extract tolls from road users because they could simply be paid by the government on the basis of traffic volume out of the Fuel Excise duty.

    Yes – Abolish VED.
    No – Tolls while Fuel Excise duty exists. Motorway operating companies should be paid, either:

    1. on the basis of traffic volume out of the proceeds of FED.
    2. Or they could levy their own Fuel tax at fuel stations on their stretch of Motorway.

    We want a tax cut, coupled with government spending cuts. Not a scheme that disguises additional revenue collection.

    This is just a scheme to allow the government to carry on spending too much.

    • sm
      Posted January 15, 2012 at 9:27 pm | Permalink

      Abolish VED. (tick)

      No tolls while fuel tax etc (HMRC would pay to leaseholder based on miles used in arrears) maybe only for cars.
      We need to level the playing field for lorries with large fuel tanks filled up without paying UK tax. So they would need to pay directly annually or per mile.

      Can we insist for all government procurement that all parties must avoid all this offshore nonsense?

      Has Vehicle excise revenue recently has it fallen? I suspect that infrequent users may be calling it a day? (Tax/Insurance/MOT/Repairs/Parking/CC)

      The move to electric fueled vehicles will cause increasing problems for fuel tax collection in its current form. Maybe electric cars and similar would have to pay per mile?

      No doubt this is a problem not to far off in the debate.

      I think possibly this should be offered direct to large pension funds, bypassing the banks. All contracting parties should be forced onshore for tax purposes including all other contracts.

  29. john w
    Posted January 15, 2012 at 11:01 am | Permalink

    John,i like the idea of that.If we scrap hs2 aswell we would have loads of cash.Imagine if there was no EU to pay for either.We could have tax cuts aswell.

  30. James Reade
    Posted January 15, 2012 at 11:04 am | Permalink

    I think we may have found something we agree on John! I’ve long thought the roads would probably work better in private hands – a sentiment I hinted to when asking you about city centre parking a week or two back.

    In the current system, those road users that, as you say, rarely use the roads subsidise those heavy users (trucks in particular) who also happen to wreck the roads, meaning the maintenance bill is higher.

    I’m not even that sure you need the government to regulate the prices – if firms are stupid enough to charge too high, and not discriminate between peak and off-peak, they will suffer a lack of road users.

  31. Mactheknife
    Posted January 15, 2012 at 11:26 am | Permalink

    John

    I’m afraid you have gone “off road” with these ideas and I’m not really sure what prompted you to do this?

    One look back to the Conservative breakup and privatisation of the railways clearly demonstrates what happens when you fragment a national network. Its a mess and so would fragmenting the road network and leaving private companies to run sections of motorway is a disater waiting to happen.

    I usually agree 100% with what you say in to your blog posts, however on this occassion you have got it woefully wrong. I will give you the benefit of the doubt and assume it was a heavy night where you were somewhat ‘tired and emotional’ and perhaps not thinking straight.

    Reply: The government did not frgament the rail network – it left the track as a monopoly, and it turned out to be badly run whether in public or private sector hands because it was a monopoly.

  32. Tedgo
    Posted January 15, 2012 at 11:39 am | Permalink

    While I like the idea of doing away with Vehicle Excise Duty I am totally against leasing motorways to the private sector. The tax payer has paid for these roads may times over and we have the perfect toll charge already. Its called fuel duty.

    Your proposal would simply force traffic on to other roads and through towns and villages.

    I am totally against using public money to capitalise private business. Look at Stage Coach, who have rail and bus franchises. Over the last few years they have returned over one billion pounds back to their shareholders. Much of this must have come from the tax payer subsidising rail fares.

    Your suggestion pales to insignificance in comparison to the amount the government proposes to spend on HS2. If it is such a good idea, then let private capital finance and operate it.

    The government needs to get on with making real cuts in expenditure. We have not yet seen a bonfire of Quangos. There is an urgent need to legislate a code of practise under which Quangos operate to control pay, bonuses, pensions and redundancy terms. Currently all these aspect seem to be left to the discretion of the Quango directors.

    Take British Waterways which is due to become a charity later in the year. Over the past few years the directors have been increasing their pay, bonuses and pension contributions to eye watering amounts. They will no doubt look forward to large redundancy payments.

    The directors have been involved in promoting property developments, marinas and pub chains which have lost large sums of money. This has all been to the detriment of the canals which are now falling in to disrepair due to lack of maintenance. This and the lack of rainfall will probably shut down large sections of the canal system this summer, affecting thousands of people and jobs.

    • Tedgo
      Posted January 15, 2012 at 1:02 pm | Permalink

      I think your franchises would have difficulty over the £5.8 billion toll limit. To finance £145 billion at 5% interest would cost,

      Over 25 years £10.28 billion a year
      Over 50 years £7.94 billion a year

      The only way to start at £5.8 billion is to allow the toll to rise by 2% each year.

      Of course this is only the financing charges to the franchises, they would require more for toll collection, maintenance, other overheads and profit.

    • Tedgo
      Posted January 15, 2012 at 1:28 pm | Permalink

      One thing about canal boating is one sees things which most people do not.

      While going under Spaghetti Junction there are massive, emergency and frightening steel support structures holding up the decaying concrete structures. I would hope your franchises’s would know what they are taking on, else they will be cap in hand to the government for more hand outs.

      • alan jutson
        Posted January 15, 2012 at 4:33 pm | Permalink

        Tedgo

        Exactly.

        I am informed from press reports last week, that the Hammersmith flyover, the main route into west London that is fed from the M4 is closed, and will be for at least 6 months due to corrosion of the steel re-inforcing cables within the concrete structure.
        They have tried to x ray the structure to confirm the extent, but this has failed, trial holes have found that some cable have completely severed.

        The el;evated section of the M4 has also had concrete falling off of it for years leaving the rustng re-inforcing steel structure exposed for all to see, remedial action seems from a visual point of view to be faling as lumps were still falling off last time I travelled under it.

        Who would undertake to repair these typeof structures John, certainly not the lease holders, as they would never get their money back!

        So back to the good old taxpayer again, just like the railways.

        Double bubble for the taxpayer. AGAIN.

        Reply: If the Hammersmith flyover were a privately owned road do you think for one moment they would let it get to the point where they had to close it for 6 months with no revenue? It proves my point that the public sector is a very bad manager of the roads.

        • alan jutson
          Posted January 16, 2012 at 9:34 am | Permalink

          Reply to reply

          I would agree with you if the leasing company had built it, but that is not the case, all of these massive and very expensive structures have been built by someone else (with government funds), and you are asking them to take liability for them !!

          Sure enough, no problem with a private company building new roads and bridges (M6 toll road) and then having to take responsibility for those.

          PFI schemes for hospitals not a good example of private build and life expectancy of buildings, designed and built for a limited design life.

  33. DiscoveredJoys
    Posted January 15, 2012 at 11:43 am | Permalink

    Wrapping VED into fuel tax is fine. It reduces administration and makes the tax more equitable.

    Charging tolls for roads that have already been paid for is just a tax increase. It collects more revenue without delivering any improvement at the point of use. It would also charge frequent users much more – they may have no sensible alternative, such as lorries on regular delivery routes. I suspect that the law of unintended consequences will apply hugely. All the untolled alternative routes and local roads around motorway junctions will quickly become gridlocked on a regular basis – one of the reasons for providing motorways in the first place. Charging tolls for new roads or bridges is a different matter.

    I don’t believe selling off government assets is always good (or always bad). It appears to have worked well with BT, it has had mixed results with water, gas, and electricity, and to have made few improvements with British Rail.

    What next? Sell and lease back the royal palaces? Sell advertising on the sides of Big Ben? Rent our armed forces out as mercenaries? Perhaps MPs could wear sponsors’ strip? I think you need to think very carefully about the consequences of putting the day to day control of infrastructure in the hands of others.

    Reply: It’s not a tax increase because it is balanced by a tax abolition

    • DiscoveredJoys
      Posted January 15, 2012 at 4:43 pm | Permalink

      But the tax abolition is ‘paid for’ by new usage charges. I don’t believe people will treat these usage charges as anything but a tax handed off to new owners to ‘farm’.

      These new owners will expect to raise the new charges at cost plus profit. The profit will be a new cost.

      • JimF
        Posted January 15, 2012 at 6:19 pm | Permalink

        Precisely right.
        Net result – motorists pay off a part of Labour’s benefits legacy to let them off the hook to do the same thing again. The economy contracts another smidgeon in unison as people are paying back the new owners for their investment plus a premium.
        Daft. And expensive.

  34. James Sutherland
    Posted January 15, 2012 at 11:52 am | Permalink

    I’ve advocated abolishing the “tax disc” and associated bureaucracy for years – eliminate it, have insurance companies remit the appropriate fee to the Treasury extracted along with the insurance premium. Insurance companies already know the engine size, fuel and everything else that matters, and already transmit the relevant data to the Government as well: simply have them include a payment to match that data. There should be enormous efficiency savings there, even without abolishing VED, though I would also like to see it changed to be more usage-sensitive.

    Equally, I’d love to abolish the Student Loan bureaucracy. Include the relevant sum in payments to their universities (again, information they already collate and submit for other funding reasons, and much of the loan usually goes to them anyway in fees and rent); have HMRC recover the sums themselves through the existing mechanism for agreed repayment plans, rather than involving a superfluous second chunk of government trying to coordinate with HMRC.

    • JimF
      Posted January 15, 2012 at 6:28 pm | Permalink

      Both good ideas, per my post below on transferring VED to motor insurance IPT.

      Indeed, why not allocate HMG money direct to Universities? The academics could then decide how to allocate money on fees, bursaries, etc., according to merit rather than some political social agenda, and hence which level of borrowing each student should take on. Universities would themselves compete for the ablest students by offering better or worse loan deals to students.

  35. simon
    Posted January 15, 2012 at 12:12 pm | Permalink

    Very similar to the French system. Were the fuel duties not so high in the UK, you could also suggest that fuel duty increases so giving the local driver another advantage.

  36. Nick
    Posted January 15, 2012 at 12:29 pm | Permalink

    To get the economy kick started and to make faster inroads into the growing public debts, the government needs a big idea. It needs to get some cash in, instead of constantly spending way beyond the cash generated.

    ==================

    Yep – the solution is screwing the public over.

    More tax
    Less services
    More inflation (except you hide government services off the inflation figure)

  37. Bill
    Posted January 15, 2012 at 12:29 pm | Permalink

    Like it! We certainly need innovative thinking if we are to get out of the mess we are in.

    I would like us, at the same time, to shift as much cargo onto the train system as possible to get some of those huge lorries off the road. You can tell the difference they make if you drive north to south just before Christmas when the big continental lorries are somewhere the other side of the Channel.

    Please can this government also build a fast train link between Hull and Liverpool so that the M62 can be freed up?

    I know that we used to move freight by rail until the Rail Unions held the country to ransom and the whole system was broken into pieces to prevent one group of workers wrecking the economy. But if we have rail and road options, we should be ok.

  38. Nick
    Posted January 15, 2012 at 12:33 pm | Permalink

    The only losers are those who use motorways a lot at peak times. They tend to be business users and richer individuals.

    ================

    And what does that mean? The businesses don’t lose. The customers lose. That’s me and other people. The employees lose when they can’t compete because you loaded them with extra costs that their competitors don’t have. So some will go bust. Employees lose there and the shareholders which are likely to be pensioners.

    It’s a stupid idea. For someone that realizes that loading up firms on the high street with parking fees doesn’t work, it shows a lack of thinking to come up with the idea that loading up firms with other costs doesn’t work either.

    However, here is an idea. How about charging full price plus a tax on MPs meals in Westminster. That will raise money.

  39. Martin Ryder
    Posted January 15, 2012 at 12:41 pm | Permalink

    I am afraid that for the first time I disagree with one of your ideas. I live on the A5, which in my part of the world runs parallel to the M1. Your plan would simply fill up the A5 with heavy goods vehicles, especially those from the continent, because the A5 would be free. Life would become far more difficult and dangerous for the local citizenry, in fact it would put us back to the time when it was almost impossible to cross the High Street.

    It is becoming more and more difficult to see why voting Conservative, which I have done for the last 40 years, is a good idea and, I am afraid that your idea would be a clincher. By all means get rid of VED and put the cost on the price of petrol but but renting out our major roadways to private companies, many of whom would be foreign owned, so that they can increase the cost of driving, as they have water, electricity and just about everything else would not make me sign up for another five years with our dear leader.

    Sorry, Mr Redwood. It sounds like a good idea but it is not. It is one that is tailor made for the ‘law of unintended consequences.’ Just imagine the fun the Civil Service would have with this.

  40. Rebecca Hanson
    Posted January 15, 2012 at 12:52 pm | Permalink

    Hmmm – where to begin.

    Well firstly there’s not much point in getting rid of VED. Superficially it sounds like you’re more likely to get a new tax through if you give people back some money but it doesn’t work like that.

    Secondly charging for motorways involves vast capital outlay. Ever junction changed to have toll booths including those in cities? How expensive will that be?
    You claim “The government would sell the motorways for £145 billion” despite this incredible cost.
    Please convince me this figure is realistic John.

    Reply: You do not need tollbooths with drive through technology these days.

    • Rebecca Hanson
      Posted January 15, 2012 at 5:47 pm | Permalink

      Are you vehicle recognition software or are you talking about microchipping cars? Each has substantial costs and implications which need to be thought through but also has other benefits. For example it would be essential foreign freight vehicles were charged the same as British ones if we’re to avoid a situation where our freight industry is put out of business, but this is really difficult to implement with vehicle recognition or microchipping (but easy with toll booths).

      One of the benefits to the abolition of VED would be that it would engage with the challenges rural communities face in the costs of running cars where they are forced to do so as there is now no viable public transport. It would also make it easier for people to have vintage cars as hobbies.

      On the downside – traffic through towns and on non-motorway roads will obviously increase as people bypass the tolls which obviously means, among other complications, deaths. This is a real barrier which will make this policy particularly hard to sell to the public.

  41. Martyn
    Posted January 15, 2012 at 1:13 pm | Permalink

    Didn’t know that an Australian company owned the M6 toll. Was aware that a French company owns the Severn tool bridge, so assume that if John’s excellent suggestion was taken up just how much of our roads would be bought by foreigners. Whom in any case already seem to own most of the UK infrastructure…

    Do you suppose that the following has anything to do with UK tolls? “The European Electronic Toll Service will enable road users to easily pay tolls throughout the whole European Union thanks to one subscription contract with one service provider and one single on-board unit”.
    “The Commission Decision on the definition of the European Electronic Toll Service and its technical elements has been adopted. It will be notified to the Member States under document C(2009)7547.”

    • outsider
      Posted January 15, 2012 at 10:52 pm | Permalink

      The main reason that the infrastructure usually ends up in foreign ownership, I believe, is that this way the whole operation can be financed by debt with the interest being paid to an offshore company, thus ensuring that no tax is paid on the UK income.

  42. Bernard Otway
    Posted January 15, 2012 at 1:20 pm | Permalink

    To Mick Anderson
    When I go to Portsmouth from Surrey,I go Horsham/Billingshurst/Petworth/Midhurst/
    Portsmouth,NO motorway AND about 1hr 15 mins from Epsom.When I lived in South Africa
    in Durban I owned a chain of shops all over the country,if you look at the map the straightest
    and supposedly shortest route to Cape town is via East london/Port Elizabeth/Knysna/
    George/Mossel Bay /Cape town,NOT AT ALL the best or quickest as the roads in the transkei
    [Eastern Cape] were terrible.I went via Bloemfontein on the N1 straight down to Cape town
    journey time 16 hours for 1756 Kilometres door to door ,the other SHORTER way took at the LEAST 20 hours,and HUGE frustration. Moral of my story Innovation,ie there are many ways to skin a rabbit,same applies to travel,this is great thinking from John.

    • Mick Anderson
      Posted January 15, 2012 at 6:48 pm | Permalink

      Bernard:

      I live near Guildford which is on the A3. You have described a route from West Sussex, along the A272. From Midhurst, I rather enjoy the drive over the Downs, along the A286 to Chichester. The last bit along the A27 to Portsmouth is a little dull, though.

      The nearest alternative to the A3 for me would be the A31 to Alton, the A32 down to Fareham, and back along the A27. Again, this will take about twice as long as the logical route. It’s not really an alternative. Yes, there are country lanes, but they have never been viable for long distances.

      If I was on the other side of the County in Croydon, I could drive down the A24 through to Horsham and across, but that’s quite a fiddle. I would guess it would also double the journey time and cost a lot more in fuel.

      Should everybody take twice as long to go anywhere, I rather suspect that the economy would suffer.

  43. Brian A
    Posted January 15, 2012 at 1:28 pm | Permalink

    These are really good, economically rational ideas, although as a former Secretary of State for Wales you will be especially aware of the role of the DVLA as a job creation scheme for that country. Abolition of VED would generate huge hostility in Wales as did proposals related to the rationalisation of Passport Offices. Faced with a possible loss of seats the government would undoubtedly back down rather than favour consumers – an example of ‘producer interest’, where the benefits of VED, i.e. localised employment, are concentrated whilst the costs are distributed across all motorists.

    • JimF
      Posted January 15, 2012 at 6:33 pm | Permalink

      Never mind that the UK benefits, just look after the good people of Wales’ vested interests. I’m starting to think Welsh independence might be a mighty fine idea too.

  44. Bernard Otway
    Posted January 15, 2012 at 1:31 pm | Permalink

    And by the way we should SCRAP foreign aid and spend the £9 Billion on our complete road system,apropos what I said about South Africa,most of the roads I travelled on there were BETTER than here,AND I only returned here in 2008,our roads have MORE SLAG GATS
    [Pot Holes] than theirs as well,we a supposedly a First world country should be ASHAMED
    but what the hell, rather spend revenue from vehicle use on people with 6 children from 5 DIFFERENT fathers [OR as I call them SPERM DONORS] or housing asylum seekers in
    Luxury London accomadation.better still waste it all on a scrapped NHS computer system or
    build aircraft carriers with NO planes and sell of wonderful Harriers at a huge discount to the USA,I could carry on with a LAUNDRY list,but the words Piss up and Brewery come to mind.

  45. outsider
    Posted January 15, 2012 at 1:40 pm | Permalink

    On your figures, Mr Redwood, the annual budget deficit would rise immediately unless interest rates on gilt-edged were more than 4 per cent or the cost of maintenance of the motorways concerned is more than £2 billion a year. For the average motorist/taxpayer costs would rise unless the annual efficiency savings on motorway maintenance were greater than the difference between the higher cost of finance for the private motorway operator and the interest rate on comparable gilt-edged stock – plus the extra insurance premiums.

    I am not familiar with the highly complex motorway network in the North West but it seems to me that an enormous number of toll points would be needed round the M25. Even if the M25 were not itself privatised, it would require a further eight toll stations at junctions with other motorways. Given that the Dartford Crossing tolls are the single most regular source of jams on the M25, I fear that journey times would spiral.

    I assume that is why fans of road pricing advocate the Orwellian spy-in-the-sky system . You would also need a new regulatory quango.

    Altogether, your plan seems unlikely to attract popular support though it will doubtless appeal to Whitehall because it would greatly improve the business case for HS2.

  46. Jon
    Posted January 15, 2012 at 2:02 pm | Permalink

    The authorities would still need to identify who doesn’t have insurance so a central database, department would be needed though not as expensive as the VED is to run. I can see an improvement there, perhaps not as much as estimated, a reduction in the VED cost and a slight increase in insurance costs. I like that if this central point of data (so we know who doesn’t have insurance) doesn’t result in all the VED people being re-employed in same numbers under another name. There could be a saving there though.

    Tolls would be a little like the rail franchises. A lot of freight is transported on the motorways. There is a huge demand to transfer more freight to rail so we need HS2 but would this discourage even more road freight. That is a major part of our economy, charging hauliers more (as is done over the Dartford Bridge) would increase product prices.

    I like privatisation but when its for creating private monopolies like the rail franchises then it tends to cause problems. These would be the same. Not sure about this one but like an idea.

    When we get all our Chinese goods arriving at Folkstone etc it goes by road and rail along the motorways and rail. I have no idea but it must be cheaper to transport it by sea to Liverpool, Hull, Edinburgh etc instead and alleviate some of the
    congestion/cost. Many European countries don’t have an option there but we are an island. Maybe that second freight transfer by sea already happens? I believe they get a cheaper tax status as well.

    Reply: If all had to show a valid insurance disc enforcement would be easy.

  47. Mark
    Posted January 15, 2012 at 2:14 pm | Permalink

    Some previous discussion of this proposal on this site:

    http://johnredwoodsdiary.com/2009/08/26/government-cannot-be-trusted-to-run-our-roads/

    http://johnredwoodsdiary.com/2008/06/09/bring-on-proper-road-pricing-not-more-taxation-of-the-motorist/

    http://johnredwoodsdiary.com/2010/05/01/cutting-capital-spending/#comment-28905

    I remain to be convinced that this is a workable idea in the context of the densely populated UK, and the public distaste for the Orwellian implications already expressed in the 1.8 million singatures for the anti spy in the sky petition. Doubtless it would be supported by such measures as reducing speed limits on all non-motorway roads to 40 mph (just “reflecting” the added congestion that the charges cause). You might as well privatise other tax collection in exchange for a capital sum up front. Would Capita provide £1 trillion cash in exchange for VAT receipts for the next X years? In any event how do these types of deal look against our notional ability to borrow at record low interest rates?

    It would be easier to sell off say 2 million council houses at £100,000 apiece on average to generate £200bn of cash. At least so long as you don’t mind effectively renting from China, as about the only country with the surplus cash to fund it.

  48. Faustiesblog
    Posted January 15, 2012 at 2:33 pm | Permalink

    It’s good to see new ideas emerge.

    However, I have a number of reservations about your scheme.

    For private-sector toll system to both be fair and to work, there needs to be competition as to which routes to take. Otherwise, we drivers run the risk of being held to ransom by monopoly operators overcharging and the ‘regulators’ doing nothing about it. Most often, the penalties that are imposed on such companies for sharp practices are dwarfed by the profits they on breaking the rules / the law. We’ve surely had enough of this sort of thing in the energy sector and the banking sector – the latter effectively representing the privatisation of the money supply.

    Quite frankly, until the government sorts out these fiascos, I’ll not be in favour of any further privatisations. Clearly, the formula is faulty and must be changed.

    And then there’s the matter of data marketing. Would the private company running a road toll scheme be permitted to market our data? I find this particularly offensive since I am obliged, by law, to obtain a licence, car insurance and relevant information. As such, companies should not be permitted to profit from that data in any way at all.

    Under your scheme, would such companies be subject to FoI? If not, I think you’re onto a loser. The public has had just about enough of unaccountable rent-seekers fleecing us of our dosh, stacking the law against us and in their favour.

    Before you can take such a scheme forward, there must be a comprehensive accountability system that stands up to scrutiny.

    • Faustiesblog
      Posted January 15, 2012 at 2:39 pm | Permalink

      Edit: “the latter effectively representing a private monopoly of the money supply, where competing currencies would be fairer.

  49. David John Wilson
    Posted January 15, 2012 at 2:36 pm | Permalink

    I agree with your proposal to get rid of VED. It has a number of other advantages:
    Foreign vehicles, lorries in particular would be treated equally.
    It improves cash flow for UK companies by moving the tax to later in the business cycle.
    It reduces the oportunity for evasion.
    However I am not so happy about the idea of creating more toll roads as a result. This is creating another service industry. I would rather see an increase in petrol duty to cover the loss of revenue.
    At the same time VAT on petrol should be reduced and the extra revenue found from a comparable increase in duty. This would reduce the disadvantage of higher petrol prices in remote areas.

  50. Harfield
    Posted January 15, 2012 at 2:46 pm | Permalink

    A great idea, but be aware that those of us who live on off shore islands have first hand experience of privitisation of these types of assets. Our ferry service now lies in the hands of Macquarie Bank, with the second service in other private hands.
    Fares are high,service poor, just the same as when it was in government hands, but, after 20 years now very expensive and a drag on the economy.

  51. Frank salmon
    Posted January 15, 2012 at 3:29 pm | Permalink

    No No No.
    You will have monopolies like all the others starting with the letter ‘B’.
    There would be overcharging.
    We’d need A-Z’s with road prices as well as mileages and routes.
    There is unlikely to be a net gain.
    Inelasticity of demand will mean Britain becomes one long congestion zone.
    How about we keep VED and use the money to serve vehicle users as if they are customers rather than leg-irons?
    Forget road tolls – look at the M6 to see what happens – the free part is over used and congested, the toll part is empty and underutilised.
    More importantly, by ending subsidy on the railways and getting some VED equivalent back in taxes, only the lines that are really necessary would survive, and we’d save, ahem, about £6 billion a year on that alone.
    So please look at this again John. The revenue side is not the problem. It’s he supply side that needs sorting out.

    • Mike Stallard
      Posted January 15, 2012 at 3:52 pm | Permalink

      Do you honestly trust the government to devote money to roads when they have much more pressing lobbyists to listen to?

    • Joe McCaffrey
      Posted January 15, 2012 at 10:38 pm | Permalink

      Are you truly not aware of the irony of your statement?

      Monopoly? Overcharging? What do you call the current system of all the roads being owned by one entity, the state? And with the maximum charge plan John includes in his plan the charges would not be higher than is currently payed through VED – you could argue that there is already overcharging and this doesn’t stop that, but it is certainly not the case that this would create overcharging.

  52. waramess
    Posted January 15, 2012 at 3:53 pm | Permalink

    So, this then is the new SmithKeynesian answer to indebtedness; why on earth would you want to lease the roads? What sense is there in having the government own such a valuable resource as the infrastructure?

    Sell the roads freehold and you sell in fe simple; simple faith with the ownership still vested in the crown and the government retaining its regulatory powers to ensure the quality of the roads is as high as contracted and that fair competition exists. Why on earth would you want the government to retain future ownership?
    Sell the roads, sell the railways, sell the schools, sell the hospitals, sell the lot because the “government” are incapable of running any of them in a meaningful way.

    Margaret Thatcher had the right idea in the end but it took time and when she eventually saw the light she was spoilt for choice. Now there is less choice but there is still such a vast amount of value that can be sold to reduce or even eliminate the National Debt it would be foolish to ignore it.

    Sell the family silver? there are now few families with such idle assets and certainly there have been none in my family for the past several centuries, so fret not and sell the stuff, if that is what it is; pay down the debt and get on with the business if managing and legislating.

  53. Geoff
    Posted January 15, 2012 at 4:39 pm | Permalink

    Excellent idea but the revenue should not be a total of £5.8 billion. The government is, at the very most, half as efficient as private business, total should be £4 billion. That would be a generous amount and provide more than enough profit.

  54. Electro-Kevin
    Posted January 15, 2012 at 4:45 pm | Permalink

    “The only losers are those who use motorways a lot at peak times. They tend to be business users and richer individuals.”

    Disagree.

    Richer individuals tend to have homes both in town and out of town.

    You’ll be spanking the usual suspects: The squeezed middle who are classified as rich and who pay 40% tax but who are utterly brassic and cannot afford to live anywhere decent close to where they work.

    Few people drive in this country for the fun of it.

    I happen to think that the likes of Jeremy Clarkson and his acolytes are pathetic btw.

    • Electro-Kevin
      Posted January 15, 2012 at 5:17 pm | Permalink

      Further: Most people know that motorists have already paid for existing roads many times over.

      Rationning of these roads by means of a toll enabling private profiteering will be anathema to most – the scrapping of the VEL will be a minor sop if faced with this.

      Get privateers to build new toll roads by all means.

      Public debt is made up of many things which the Tories promised to tackle but haven’t:

      – bonfire of the quangos anyone ?

      – 2.5 million unemployed with around that amount net immigration in 15 years… hello ???

      – Europe still shafting us over the CAP.

      – The Human Rights rip offs …

      – Wars that no-one agreed with and which are still ongoing …

      But spanking people trying to get to work under the lash-up of a transport system and housing crisis created by politicians ???

      Sorry, John. I’d rather pay my £160 up front, pay my petrol tax (even though it’s presently at 200% of manufacturing cost rather than 60% of pump price as politicians keep telling us.) and travel where I need to when I need to.

      I’m pretty sure this would be a poll tax moment on wheels. Only I agree with the poll tax !

      • Electro-Kevin
        Posted January 15, 2012 at 5:34 pm | Permalink

        PS, Making business users pay more ?

        Aren’t these the operators we here being put out of business because of heavy fuel duties ?

        And what of those business users who are creating wealth and jobs ? Are you saying we make them pay more for transport ?

        Reply: They would save their VED charges. I do want to charge all the foreign lorries more, who currently pay no VED and usually buy fuel abroad.

        • Tedgo
          Posted January 16, 2012 at 8:30 am | Permalink

          John the simple solution is to have a toll booth at the port for incoming foreign lorries. £500 a time.

        • Electro-Kevin
          Posted January 16, 2012 at 3:47 pm | Permalink

          Mr Redwood said “They would save their VED charges…”

          Mr Redwood also said “The Government needs to get some cash in” (original post)

          Clearly the aim is to extract more money than is being taken presently.

          One presumes that the EU would have to endorse any special charges on foreign lorries.

          Around £40bn is extracted from drivers in various taxes pa. £9bn of that is spent on roads.

          Reply: The government under the scheme gets in more cash because it sells the franchise forward, whilst drivers overall do not pay more.

  55. Barbara Stevens
    Posted January 15, 2012 at 4:58 pm | Permalink

    I don’t drive but my children do, to to work each day, this will increase charges for business in the long run. Charges have a bad habit of not staying low, they increase, take the toll roads we already have. I’m sure this is a good idea on paper, but in reality will meet opposition. I can understand the reasoning to save the government money, but surely there are many other ways we can save money.
    Firstly, take the arguement of child benefit we’ve seen this week. Yes it should be universal, but the number of children we support should be in the equation. Again, whom we pay it too. Should it be British citizens only? I think it should. Not (people from elsewhere in EU -ed) perhaps. Then we should look at the numbers we support. Many, not all, women have children from different fathers, as many as 8 per family, should we limit the number we pay for. Social responsiblity as gone out of the window. Why have children if you cannot support them? Again, we see the problem of ethnic marriges, one legal here, (polygamy under other systems-ed), some now at the number of five or more. When they procure children they claim as single parents, and we pay child benefit for them. Is this fair to the taxpayers? I don’t think so, but it’s an area where the government need to take action. Limiting the numbers is sensible reasoning, why should the taxpayers pay for people’s procurement of children, this would stop the abuse straight away. Those who want more would be forced to keep them not the taxpayer.
    There are many more areas we could save money, its wasted in the millions; I’m sure others will enlighten us where and how.

  56. JimF
    Posted January 15, 2012 at 6:03 pm | Permalink

    I am against your idea because:

    1 Under this scheme, car users, having already paid for these motorways several times over, would now be paying off the Labour Government’s benefit bill. Rip-off Britain would take another step forward.
    2 Those motorists who want to avoid paying twice they would clog up villages and towns along the A40 etc.
    3 Our public transport alternatives to the motorway system are so dire that nobody should be disincentivised by tolls from using a road which has already been built and paid for by drivers.

    There are far better ideas to generate revenue AND decrease traffic congestion, viz:

    1 Increase dramatically taxes payable by any LHD truck in the UK. These are more prone to accidents and causing congestion on our roads than RHD trucks.
    2 Increase fines and penalties for drivers causing accidents on motorways and other roads, proportional to the traffic congestion caused.
    3 By all means remove the VED but replace it by an additional % tax on insurance premia, which again would encourage responsible driving and lower miles per year.

    Reply: This scheme does solve the problem of LHD trucks paying little or nothing to us. THis is not a new tax but a user charge for a service. We get a large capital sum to reflect our previous tax payments to buy the motorways.

    • alan jutson
      Posted January 16, 2012 at 9:50 am | Permalink

      John

      If your idea is to simply get the foreign trucks to pay more, then tax vehicle entry movements at all of the ports in the uk.

      On Second thoughts it would probably not be allowed under EU rules, and there you have the problem in a nutshell, we can no longer do and legislate as we like, in our own country.

      But please do not come up with a scheme which makes it more complicated for the majority.

    • waramess
      Posted January 16, 2012 at 1:15 pm | Permalink

      You would not be paying for the roads twice, but recovering what you first spent in the sale price. You would then pay a toll that would provide a reasonable rate of return on the investment to the operator.

  57. john w
    Posted January 15, 2012 at 6:04 pm | Permalink

    John,i chose to be selfish with my earlier comment,it would be good for me.I dont have a fleet of drivers to worry about or a haulage firm.

  58. backofanenvelope
    Posted January 15, 2012 at 6:05 pm | Permalink

    I like this idea of scrapping the VED. You can just see it. Of course, the government would still want vehicles to be registered. And someone would have to maintain a register; someone who looks rather like the DVLA. And it wouldn’t be unreasonable to make a small charge for keeping the cars details on a suitable database. And this charge would obviously have to be updated for inflation and things. And in no time at all, it would be as much as the VED is now.

  59. backofanenvelope
    Posted January 15, 2012 at 6:05 pm | Permalink

    The only way to cut public expenditure is to STOP DOING THINGS!

    Reply: No – you can also cut publoic spending by transferring things the state does badly to the competitive private sector, and giving people choice over them.

    • Robert K
      Posted January 16, 2012 at 2:25 pm | Permalink

      Ideally, transfer everything to the private sector and then stop doing things

  60. Simon_c
    Posted January 15, 2012 at 6:24 pm | Permalink

    Sounds like a plan, but the details are very complicated and probably will stop it from working.

    Your forgot to take into account the economic costs of more gridlock on the local roads that parallel motorways, such as the A4 through Reading, Maindenhead & Slough.

    Also, local councils will be cross and ask for more subsidy because of the increased traffic on local roads.

    Presumably, we don’t want huge amounts of land on the sides of the motorway turned into Payages so it will need a huge IT investment and upgrade of the motorways to install readers to note the relevant tag of the cars (I don’t think auto numberplate readers would work as they are too easy to copy.)

    Virtually every motorway junction will need to be changed to allow people a chance to realise they are on the motorway, but don’t want to pay the charges and want to not pay.

    And even France has free motorways around Paris and the like.

    Reply: More will continue to use motorways than you think, as the US, Spain etc show with tollways. Poeple will pay for convenience, and the road owners will be keener to keep the roads open and flowing, as you wont pay for congested motorways.

  61. james c
    Posted January 15, 2012 at 7:19 pm | Permalink

    The motorist will have to pay more because the borrowing costs of the private operator will be much higher than those of the government.The whole exercise will involve enormous fees but create no value.

    A big idea that does creates enormous value is for the government to auction off planning permission for certain plots of agricultural land. This will trigger a private sector construction boom and generate a huge tax windfall.

  62. English Pensioner
    Posted January 15, 2012 at 7:24 pm | Permalink

    Not an idea that I would support.
    I would support getting rid of the Road Tax, and putting the extra on fuel, this means that the payment would be proportional to road use and the wear and tear dependant on the size of vehicle. Vehicle licensing would then be simply a matter of keeping records of vehicle ownership, and save all the fuss related to taking a vehicle off the road for a period. (A friend has a sports car which he uses in the summer only and has to go through the whole “SORN” procedure every October.) Just unnecessary work to keep people in jobs!

    • alan jutson
      Posted January 16, 2012 at 9:52 am | Permalink

      E P

      Exactly

  63. Richard1
    Posted January 15, 2012 at 8:29 pm | Permalink

    Excellent idea. Also the insurance one – people are fed up with uninsured drivers. Under this scheme they could be identified and charged immediately. This could be a real runner. As in many other areas, technology is enabling lower cost and market based solutions to problems.

  64. Bazman
    Posted January 15, 2012 at 8:50 pm | Permalink

    0.5% growth in the British economy and a 33% growth in the pay of FTSE chief executives pay in the past year.
    A reply from the apologists is required and will be pursued.

  65. Phil Richmond
    Posted January 15, 2012 at 9:28 pm | Permalink

    BRILLIANT IDEA JOHN.

    If only you were Chancellor…….

  66. Phil Richmond
    Posted January 15, 2012 at 9:29 pm | Permalink

    Alternatively we could just leave the EU!

  67. NevermindtheMolluscs
    Posted January 15, 2012 at 9:58 pm | Permalink

    I like the sound of abolishing a tax- given that motorists are already taxed far too heavily that sounds good!
    Im not liking the motorway taxes. Its not the rich (privileged etc) who use the motorways but folk like company reps, construction workers and project managers who have absolutely no other choice, especially given the poor and expensive public transport alternatives. These are the folk who are the backbone of industry and are predominantly private sector and can ill afford to pay more- in essence they are the very people you are hoping will pull us from the quagmire that Brown has left behind him.
    To start the economy, politicians should stop spending OUR money and let more of us decide how to spend it. Stop overseas aid. Stop spending on HS2- there is no convincing business argument to support this white elephant. Stop mass unqualified immigration and halt all further wind powered developments. Stop the proposed carbon taxes on business and further air taxes. Stop handing over hugh amounts of money to the EU and banks (do they help any business in trouble? Like hell they do!!!). Get rid of more quango’s and LA / Health Service managers.
    Build new roads (British contractors only), new power stations. Open up more local railways or even the canal network for freight. Build Grammar schools and fund apprenticeships/ cadets etc. Thats just a start. Im sure you can think of many more.

    Reply We need to make economies in public spending as well as do something like this to get the debts down.

  68. Joe McCaffrey
    Posted January 15, 2012 at 10:32 pm | Permalink

    Excellent idea, bringing in free enterprise and competition will allow for a much more efficient system of motorway improvement. And, particularly with our enormously high (and growing) state sector, any reduction in public expenditure is very welcome.

    In particular the initial proceeds going towards debt payments would be extremely welcome, with the current lack of any debt repayment the BoE is having to pursue its QE policies to monetise that debt and keep government borrowing costs down which is contributing to our current high levels of inflation and – much more importantly – creates a long term inflationary trend that will likely continue for several years.

  69. John Hill & Co
    Posted January 15, 2012 at 10:57 pm | Permalink

    Another idea (apologies for being off-topic) – in the interest of fairness, why not cut public sector salaries by 10% across the board? Many self-employed people have seen far greater cuts in their income since the start of the financial crisis. That should make a good contribution to reducing the deficit.

  70. Max Dunbar
    Posted January 16, 2012 at 12:25 am | Permalink

    An interesting proposal but probably better left as an intellectual rather than practical exercise. It would lead to one almighty balls-up and never ending recrimination (shades of the poll-tax?). Also, human nature being as it is, we may be paying more under the existing system but it may feel worse under the new one. The toll on the Forth Road Bridge, amongst others, was removed and it felt good. Straight through provided that one travels at sensible times, normally at night.
    Best not to be diverted from public sector reform and straightforward tax reduction if possible.

  71. Mark
    Posted January 16, 2012 at 12:59 am | Permalink

    There is some relevant information to be found here:

    http://www.highways.gov.uk/aboutus/documents/HIghways_Agency_2010_11_Annual_Report_and_Acounts_11_July.pdf

    The HA values its network at just under £100bn, with some £58bn of that attributed to revaluation reserve (i.e. excess of value over depreciated cost). Valuation methodology is as strange as you could expect for a public sector body. There appears to be some £14bn tied up in PFI. Interest or capital charges on the cost of the assets do not appear anywhere in the accounts (other than in disguised fashion in relation to PFI).

    Spending on actual highway maintenance and construction is rather limited, despite the extent of motoring related taxes including £27bn in fuel duties as well as the £5.8bn of VED, a share of Insurance Premium tax, and over £10bn of VAT on fuel.

    Of course, a privatised network would take on many of the same tasks currently done by the HA in terms of road maintenance and improvement/extension. It is not clear that the cost of extracting toll revenue would be any cheaper than the cost of collecting VED – and it would certainly be much more expensive than the cost of collection of fuel taxes.

    If the idea is to get private companies to borrow so that a large capital sum can be used to fund deficit spending by government, it seems unlikely that the borrowing cost would be less than the government’s.

    Given the complexities and long term nature of highway economics, it is not obvious that it would be easy to structure lease conditions in a way that produced a better outcome for road users. Certainly M6 Toll has failed in that regard. There is a smell that introducing toll charges on the motorway network would be designed to reduce the competition for HS2.

    Reply; The £100 bn valuation is an old one. I have revised my estimate higher to take account of lower interest rates today than when the £100 bn estimates were around. The highways can be worth what you wish within reason, as it all depends on what you are allowed to charge to use them. They have no value if you cannot charge and have to keep them as roads.

  72. uanime5
    Posted January 16, 2012 at 1:48 am | Permalink

    John I have a question regarding competition. Let’s say the M4 is leased to a company and to save money this company doesn’t repair the road so it is now poor quality, how am I meant to use their competitors’ motorways instead of the M4? Should I drive twice as far down down the M2 or half as far down the M8?

    Reply: For many journeys west the M3 and M 40 are competing routes. The firm would be regulated as a franchise holder so letting it become difficult to sue through non maintenance would trigger regulatory action.

    • uanime5
      Posted January 16, 2012 at 1:22 pm | Permalink

      John the M40 goes from London to Birmingham, while the M3 goes from Surrey to Hampshire. So if I want to go from London to Banbury how do I use the M3 rather than the M40? Am I supposed to drive down to Southampton then take the A roads to the Midlands?

      If you meant the M1, rather than the M3, then this would turn a 1 hour 49 minute journey into a 2 hours 19 minutes one. So the competition between motorways will be low unless people are willing to take long detours.

      Reply I mean when going west out of London into home counties there are choices for the shorter haul journeys.People often live between the M3 and M4, or between the M4 and M 40, so they have choice.

  73. Peter Davies
    Posted January 16, 2012 at 7:19 am | Permalink

    In general good idea, though I wouldn’t put too much data into the hands of insurance companies. I would stick with the DVLA to handle tax disks and the data side in the same way they do now with a small admin fee.

    There would need to be safeguards though with prices – we’ve seen how greedy the rail operators have become so there would need to be some sort of capping system.

    The motorways in France look well maintained and their prices seem quite reasonable, no reason why it shouldn’t work here.

    The Birmingham by-pass if I’m remember rightly rocketed in price in the first few years of operation – as long as there are no repeat of this then why not?

    If the Lib Dems had this in their manifesto even they would not get in the way of this.

  74. javelin
    Posted January 16, 2012 at 9:12 am | Permalink

    I would like to see tax breaks given to the old Labour heartlands rather than benefits. The Labour party had killed new business growth in its heartlands and replaced it with new Government jobs – which was not sustainable. Tax breaks should be given to manufacturing, non-service jobs, IT software, farming – sustainable jobs – not jobs that could be exported over night.

    The Government needs to start allowing new communities to be built. This will (1) help the housing industry (2) bring house prices down (3) create jobs etc. A percentage of the profits need to be used to extend local schools etc to pay for the new houses.

    The Government need to create THE BEST environment for investment – once the Euro has shaken out its problems with Greece and Portugal defaulting. Italy may bring the Euro down. But whatever happens rebuilding will be needed next year. This means lower coporation tax.

  75. Martin
    Posted January 16, 2012 at 10:30 am | Permalink

    A brave idea. I’m not sure the M4 commuters would be chuffed at this. I like the M6 toll around Birmingham as I use it rarely.

  76. Derek Emery
    Posted January 16, 2012 at 12:40 pm | Permalink

    It won’t work because HGV operators are already virtually skint because of fuel price rises. I have never seen a single heavy goods vehicle on the M6 toll road ever and its always as empty as motorways were in the 1960s as far as cars are concerned. At the same time the M6 is bursting at the seams. Very few private vehicles use the M6 toll. Goods vehicles use the A40 rather than pay the toll to crossover from the M5 into Wales.
    My guess is that private individuals who have to pay themselves and virtually all goods vehicles will move off motorways onto other roads in large numbers. Say the toll is £5 in each direction for a car. This adds £50 per week or £2500 pa to your travelling costs. The average wage is less than £30,000 so people cannot afford it. For HGVs it will be much more.
    You can expect a higher accident rate from traffic that moves off motorways.

  77. Robert K
    Posted January 16, 2012 at 2:28 pm | Permalink

    Why stop at the motorways? I’d love it if the rural roads around where I live were maintained as if the owner gave a damn about their condition. Privatise the lot; why not?

  78. Bickers
    Posted January 16, 2012 at 2:28 pm | Permalink

    This is a great idea that deserves fleshing out, however I believe the focus of this Parliament should be:
    1. reduce the deficit faster by increased culling of unproductive public sector departments, especially quango’s (what happened to ‘the cull’?). Don’t let civil service managers set the culling agenda, (i) it’ll happen very slowly & (ii) they’ll cut front line services rather than management and waste.
    2. cut red tape
    3. Simplify the tax system and incentivise small businesses by enabling then to more easily employ/fire staff & retain a higher % of profits
    4. opt of EU directives that affect business competitiveness

  79. Chris
    Posted January 16, 2012 at 2:56 pm | Permalink

    “The only losers are those who use motorways a lot at peak times. They tend to be business users and richer individuals. Everyone has an option not to pay the tolls, as they can use slower main roads instead.”

    How is this in any way consistent with your usual desires to reduce the tax and regulatory burdens on businesses and individuals? How is it fair that drivers (like myself) that rarely use motorways are in effect subsidised by those that do? And would the government not need to invest significant amounts of money into maintaining and improving those “slower main roads” if their use suddenly increased dramatically?

    Could you please explain the benefits of this approach over simply increasing the fuel duty to gather the needed £5.8bn? To my mind this would both increase fairness (heavy users of the whole road network will pay more than light users) and reduce regulatory burdens for all (no wasted time on VED forms, no wasting time in tollbooth queues)

    Reply: In the case of motorways the fairness is you pay for what you use – isn’t that what we do for most things in life, and doesn’t that model work better than monopolies?

  80. Conrad Jones (Cheam)
    Posted January 17, 2012 at 9:20 am | Permalink

    £5.8 billion pounds – what a windfall. No, wait a second- didn’t we give the Banks £200 billion in QE1 and are in the process of handing out another £75 billion to help the Banks in QE2?

    So your plan is to wreck Haulage Firms by a tariff system that will further squeeze smaller firms off the roads while providing a monopoly of control for Private Companies on a road network paid for by tax payers.

    If the Government is so short of money and the money supply is shrinking – why doesn’t the Government just create the money instead of Government Bonds? That
    would provide more than this “sell off”. You propose putting our transport network into the hands of people motivated by profit, benefitting from the years of tax payers’ money which was uesd to build this Network.

    Perhaps we should also sell off the Police, Fire and Ambulance services to private companies. I’m sure there’s a few quid to be made there in the short term. Why not privatise the Armed Forces – lots of assets there too.

    Privatisation of public services in the 1980s was also hailed as a genius idea – but only a couple of decades later, the Country is in debt and we are now desperately looking at short term measures to raise a bit of cash to kick the can further down the road.

    The poll tax was afair tax as it remained in public control and everyone paid for the services they received. This privatisation of transport links will allow foreign powers to covertly take over our freedom of movement.

    Why can’t we privatise Banks and bring back our money supply into the Public domain. Surely that makes sense than this crazy idea. Or is the Emperor really wearing a fine set of clothes – or is he just stark naked?

    Reply: UK haulage firms under this scheme no longer have to pay VED, whilst their foreign competitors would have to pay the same toll as them to use UK roads. That would help UK businesses.

    • Conrad Jones (Cheam)
      Posted January 17, 2012 at 11:53 am | Permalink

      Thank you for your reply.

      “Leaseholders would be able to levy tolls on users.”

      I’m not in the Road Haulage Business myself but would be interested to know the views of those who are. I believe some views have been expressed already stating that there would be a drop in usage of main motorway routes and a sharp increase in Toll Free Roads.

      There is another reason why this would not help as the Post Office would have to pay increase costs (as would other Delivery Services). These costs would have to be passed onto to consumers or restrict employment. How would that help stimulate the economy ? This would pump money into the Private Companies that set the Road Tarriffs through a stealth tax of increased costs affecting: Delivery, Food Distribution, Building Materials Transport, Petrol Delivery Transport, anything that uses the motorway network, that along with increaing fuel costs – How exactly is that going to help stimulate the economy – money pumped into who’s Company?

      So Leasholders would set the Tolls – gain a profit and drop the Lease as soon as expensive Road Repairs were required, which would then be paid for by taxpayers.

      ” It cuts the public debt. It is not “ selling off the family silver”, as the freehold still belongs to the state. ” – it may cut the public debt, if all Government Transport is exempt from the Tolls set by private firms, but what about the rest of us?

  81. Winston's Black Dog
    Posted January 17, 2012 at 12:51 pm | Permalink

    The Elephant in the room.

    The EU wants to introduce road pricing but “eurosceptic” Tories deceive the electorate by pretending it’s something else just as they are doing with HS2 and just as they did with the privatisation of British Rail which was done to comply with EU diktats that operating and maintenance companies were separated in order to remove accountability to passengers.

  82. mart
    Posted January 17, 2012 at 3:41 pm | Permalink

    Dear John,

    Questions:
    Why involve the private sector at all?
    Why not just have the Department of Transport operate the motorway-toll-replaces-VED scheme you describe?

    IMHO, the privatisation of the railways has not been a conspicuous success for the privatisation-of-transport idea. Massive public subsidy is still needed to provide this service, and negligible beneficial effects are felt from competition.

    Why believe that essentially the same scheme would work with roads?

    This is the bottom line for me: An industry that has no meaningful means of open-market competition is not a fit industry for privatisation.

    Kindest regards

    • Socrato
      Posted January 21, 2012 at 1:45 am | Permalink

      Yes competition in the product market seems to be a key metric for successful privatisation. Not sure how this could be generated with motorways. The second point is regulatory oversight. This is simply failing, everywhere.
      1) Financial Markets – doesn’t need explaining here

      2) Energy – Where for example French companies can buy UK franchises and charge what they like while home consumers in France are subject to price caps. We are in fact subsidising French energy consumption.

      Or the fact that Natural Gas prices are at their lowest level in over a decade – yet Gas prices delivered to consumers are at record highs? In the US Natural Gas Futures prices for 10,000 mmBtu work out at $23330 (£15051 @ 1.55 FX rate).
      This gives us 2.93 mill kWh of energy (or a cost of half of one penny, per kWh).
      If I look at Southern Electricity Gas current retail tariffs the rates being charged are c.8p per kWh (with no standing daily charge) (or 16 times the wholesale price in US). The cheapest tariff I have seen is with EBICO – which is 4.5p per kWh (no standing daily charge) (still a 9 times the wholesale price in US).
      In Europe, the UK Natural Gas Future that trades on the ICE exchange is calculated slightly differently (in that the contract size in terms of kWh is 1.5 times that of the US contract – though through the magic of mathematics, readily allows for comparison). In the UK the wholesale price is even lower than in the US at just over a third of a penny per kWh. This makes the Southern Energy tariff mentioned above a whopping 21.44 times!!! the wholesale price and the EBICO tariff 12 times the wholesale price. It doesn’t take a genius to see that there are some fairly high profits (aka rents) being made here. One would also expect that OFGEM would look at this. The tagline on their website is “Promoting choice and value for money for all electricity and gas consumers” , followed by loads of waffle that I really cannot be bothered to go through – save to say I haven’t seen this sort of simple comparison – which is ultimately the bottom line for consumers – mentioned anywhere (amongst the volumes of studies and justifications for price increases). Recently however, I have seen that some companies are reducing gas prices by 5% – which is a pittance compared to the ‘serial rape’ seemingly occurring here. (I hope my figures are right – I have double checked them)

      3) Rail – anyone with a ticket can tell you this.

      I’m sure there are many more examples. My point is that the government could easily improve its reputation by tackling these things and clamping down on such abuses – but it does not – even after lengthy and costly investigations. Instead of providing rhetoric about championing consumers – they should concentrate on facts and action. We of course need to raise money to lower debt – but we need to make the framework surrounding this function adequately first. Then the taxpayer / consumer will have confidence to go along with new more radical measures.

      • Socrato
        Posted January 21, 2012 at 3:19 am | Permalink

        Apologies….my natural gas numbers are out by a magnitude of 5 as the contract values I used only represent the initial margin amount (20% of full contract value). This therefore leave us with the following wholesale cost of UK Natural Gas on ICE exchange of 1.8p per kWh, so the southern energy tariff is 4.42 times the wholesale price and the EBICO tariff is 2.49 times the wholesale price. Still pretty large differences. To make ammends for my error, I reluctantly looked on the OFGEM website and they claim in Factsheet 108 that typically half of a users bill is the raw material cost and half is the transmission and provision cost. This would seem to indicate significant rents are still being made in this industry. Apologies for my oversight.

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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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