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.