Privatising the roads

The news that the Department of Transport is to study the feasability of privatising the running of the trunk roads network is hardly surprising.  It’s been a gleam in the eye of the neoliberal Right for a long time – and it’s not difficult to see its superficial attraction for those of a neoliberal view.  The promise of a modernised network, with fast clear roads offering a pleasant motoring experience and reliable journey times, ticks all sorts of Tory boxes.  But it is – as with so many Tory/Orange Book projects – fraught with contradictions.

Some of these can be seen by travelling along the M6 Toll.  It’s a clear, free-moving and often empty road, allowing motorists to eat up the miles.  One thing you probably won’t see is a truck – the tolls are priced to keep trucks off the road, which is not surprising since nearly all the wear and tear on roads is caused by goods vehicles (essentially, what wears roads out is the weight on vehicle axles, and road wear increases to the power of four as that weight increases.  It’s why lorries do the real damage to trunk roads and why the cult of the suburban 4×4 is in the process of smashing local roads – obviously built to a much lower standards than motorways at a time when there was far less traffic – to smithereens).  You’re paying a toll, of course – for the most part stopping at toll plazas to do so, although regular users can get a tag.  And then you rejoin the heavy traffic on the main M6, with its rows of trucks.  You have enjoyed a luxurious alternative – one provided by the private sector and one over which the Secretary of State, i.e. our elected representative, has almost no control.  As with any other private infrastructure project, it’s almost certain there’s a change of law clause in the concession agreement – if the law changes in a way that changes the terms on which M6 Toll conducts its business, the taxpayer pays.  I obviously don’t know what’s in the M6 Toll concession agreement, but that’s how big private sector projects work; the taxpayer always carries the risk.

So what does this mean for a part-privatised national network?

The model that appears to be in the Government’s mind is Nicholas Ridley’s privatisation of the water network in the late 1980s which, it is argued, brought vast quantities of much-needed investment into the water industry.  But there has to be a question of whether that investment needed the private sector.  Governments can make investment; there’s a pretty powerful case for saying water needed more than the private sector has provided.  What of course is obvious is that the private sector may take spending off the Government balance sheet but there’s a price – the handing over of strategic (some would say democratic) control.  Part-privatisation represents in theory an acceptance that Government no longer has any strategic or policy interest in directing roads policy, or, as is more likely to be the case, that strategic decisions taken in the public interest must be paid for in hard cash.  The one-off income from the letting of concessions is quite likely to be offset by later expenditure to, in effect, buy the right to make policy decisions.  Add to that the costs of running a regulatory system and the fact that the network will be fragmented among private sector providers and you have all the makings of a hugely expensive, politically-atrophied mess.

Some other considerations.  New roads (and improvements) may be funded through tolls.  The Government seems to be hinting that road providers will be entitled to a cut of Vehicle Excise Duty, but that is a red herring as it will not provide a revenue stream of any significance.  VED raises about £4bn per year and only represents a very small part of total tax take from road users; it hasn’t paid for the road network since 1937; it cannot begin to provide the sort of revenue stream that would interest a private sector entity to run roads. It is the revenue stream that currently goes to the Highways Agency, and above all income from new infrastructure, that will attract the private sector.  So in effect the pass on roads policy will have been sold; all the incentives will be for the building of new roads, while maintaining the existing, less profitable stock, at the lowest possible cost – and with a strong disincentive to provide for freight traffic, which wears out the roads.  It’s the return of predict and provide with a vengeance, except that the “predict” part will be about corporate profit rather than any concept (however flawed that might be) of public need.  Moreover, if tolling is permitted for upgraded as well as new infrastructure, there is a risk that tolling will be far more widespread than the Government is willing to admit.  It is difficult to see the Treasury (who, rather than the DfT, will be driving the work on this issue, regardless of which Department’s name appears on the report) conceding the principle that motoring taxes should be offset as a result; from a Government which has generated much cheap rhetoric about Labour’s “war on the motorist” it’s a curious policy development.

Crucially, even limited tolling on the network could have huge implications for motorists everywhere.  One obvious issue is diversion – people avoiding tolls by going on to local roads.  It’s difficult to assess how great the impact could be – but of course a pricing structure delivered by the private sector is unlikely to have any need to take account of this externality.  More interesting is the question of free-flow tolling; if you are to avoid long queues at toll plazas you must have free-flow electronic tolling – the most likely method being the issuing of electronic DSRC tags to be placed in the vehicle windscreen, which register with a roadside beacon and allow toll-road usage to be charged to an account.  Vast numbers of people use the motorways on an occasional basis – unless you are to have huge queues at toll plazas you will need to have an infrastructure to manage accounts and enforcement.  None of this technology is new – but it is potentially seriously expensive and will involve what many private motorists regard as real inconvenience.  And they need to be interoperable – a system in which motorists need either to use a number of tags or pay at a number of toll plazas is just not going to be acceptable (people may cite the French motorway network, but the density of traffic is far greater in the UK).

Moreover, EU law requires that such systems are interoperable across Europe, and that it is possible to access all significant toll systems with a single tag and account – which means, for example, that lorries who are signed up to the German system must be able to use their account and on-board unit to pay for their use of a British tolled road.  It’s called the European Electronic Tolling Service, or EETS for short, and it’s an obscure piece of legislation that we may be about to hear a lot more of. The logistical issues – and inevitable costs – of this system will provide some of the Department for Transport’s bigger headaches in preparing its feasibility study.  Does a Tory-led coalition really want to be responsible for requiring millions of motorists who want to use the motorway network to carry a piece of electronic equipment in their car which, however erroneously, will be portrayed by the taboid media as a spy in the car?

And here is one of the major flaws in the scheme.  The coalition wants to portray itself as the motorist’s friend.  Moreover, it used to be standing joke in transport circles that, while the Anglican church used to be the Tory Party at prayer, the road haulage industry – represented by its powerful trade bodies the Road Haulage Association and the Freight Transport Association – was the Tory Party at work.  The AA Foundation has already shown its opposition to the proposals.  The FTA and RHA will not countenance a proposal that imposes costs on their members (and ultimately, since almost every item we buy will have spent some time in the back of a lorry, on all of us).

How far is this Government prepared to go to alienate its electoral base in order to generate more wealth for its friends in big finance? NHS policy suggests that the hold of big finance on the coalition is so great that even Liberal Democrats facing electoral oblivion will cheerfully vote for the NHS Bill.  I suppose the decisive question may be who matters more to the Tory Party – the hospital patient or the motorist.


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