Shortly before Labour tried to close down all serious debate on public service reform I promised you all some more ideas on how we could raise quality and save money on public services. Let’s get back to this, our agenda, on the day after Mr Brown himself concedes there needs to be cuts after all – after the Election!
The government cannot be trusted to run our roads. They have all the hallmarks of a monopoly – expensive, poor quality, and in short supply. You literally have to queue so often when you want to use them, and motorists have to pay many times over through taxes for the costs of provision and management. Government management these days often entails expensive and fiddling changes which end up making them them less safe with increased congestion. Stopping free flowing traffic seems to be one of the main aims of the car haters who design our road policy.
Meanwhile most UK people make it clear they like the personal freedom that car use brings. It is the main way people get to their jobs, to the shops and to their friends. The last time I spoke to six formers about green issues, the questions were mainly about how they got access to a car of their own.
So I have a simple proposal. Let’s franchise the main motorways and trunk roads to the private sector to run. Let’s do it in a way which sends them clear financial incentives to cut pollution and congestion.
The maths would be good for taxpayers as well. I would start by abolishing the vehicle Excise Duty, a tax on ownership, and replacing it with permission for the private sector to impose tolls on use of the main roads. The aim would be to impose tolls that yielded £5.6 billion a year at current usage levels, the exact cost of vehicle Excise Duty. This would be neutral for motorists as a whole, but would cost those of us who travel more a bit more, and those who travel less would benefit. People who travel less tend to be worse off. There would be regulation to prevent excessive charging, with clear stated maximum toll levels.
The main motorways and trunk routes would be put up for franchising in suitable packages. Where possible alternative routes would be in different packages, bringing competition between franchise holders. In return for access to the assets and the toll revenue they would need to pay the state a premium. We would need to raise around £110 billion, so that the state could pay off £110 billion of debt which would save it currently around £4 billion of interest. By the time the scheme came in I reckon it would save us about £5.5 billion of interest given the likely trend of government borrowing costs. This makes the scheme self financing in terms of its immediate impact on state finances.It gives the first franchise holders a running return of 5% on day one, rising as they improve the use and management of the asset.
The prices of the packages could be fixed to ensure the state received enough money to pay off sufficient debt. The auction would be based on bidding for length of franchise, as the state would want the road assets back at some point to do the whole thing all over again, to the financial benefit of taxpayers. Bidding for the duration enables bidders to work out how they can make money, without changing the state finances.
The results would be dynamic and favourable. Bidders would be expected to come forward with plans to enhance the assets. They may well want to add another lane, or to use the hard shoulder. Their interests would be to encourage more free flowing use of the road, so they could charge more and charge more users. If they ran a bad or congested motorway use would drop off, going to alternative routes.
The state, as a result , would benefit financially as well. The more toll revenue the franchise holders enjoyed,the more profit there would be for the state to tax. The state, as in all private businesses, has a share in success. The immediate future after the scheme was launched would also see some much needed improvement capital investment. Free flowing motorways are both our safest and greenest roads. We need to use them more to cut deaths and raise the fuel efficiency of travel.