Privatisation of Britain's entire road network would "raise more than £150 billion"

Road users would be better off if Britain's entire road network was denationalised, report by Institute of Economic Affairs says

by Natalie Glanvill on 30 October 2012 16:02

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A new report suggests that the UK Government should go beyond plans to allow road pricing on new infrastructure and denationalise Britain’s entire road network.

It is argued that road users would pay less under a privatised road network and would benefit from a better quality infrastructure under plans released by the Institute of Economic Affairs (IEA). A privatised road network would be “cheaper” and “faster” for motorists and would “raise more than £150billion” says a new report.

The briefing suggests that the money generated from privatising the UK’s motorways and major roads could be used to phase out excessive motoring taxes – Vehicle Excise Duty (road tax), and reduce fuel duty by at least 75 per cent from 60 pence a litre to 15 pence a litre. Owners of a newly privatised network would be able to “determine charges for road use and would be free to introduce innovative systems of regulation and traffic management”.

‘Which Road Ahead –Government or Market’ is authored by Dr Oliver Knipping, President of the German free-market think tank, Institute for Free Enterprise and Dr Richard Wellings, deputy editorial director and director of transport links at the IEA.

“For too long British drivers have had to pay the odds for a road network that is simply not up to scratch. It is lamentable that this vital area of infrastructure has been neglected by government after government. Denationalising the network would ensure British motorists had better roads to drive on. It would also be much cheaper and mean an end to the enormous burden of motoring taxes like fuel duty”, Wellings says.

In 2010, the British government spent £9.5 billion of taxpayers' money on new construction and road maintenance but the effect has been a rise in traffic levels and congestion over the last quarter of a century until the onset of the recession. It is still expected to rise by over a third by 2035.

The average frequency for a road to be resurfaced in England is once every 65 years and in Wales, it is once every 81 years. 

Construction of new roads in the UK has collapsed in recent years. The report authors claim that the government “favours capital spending on public transport over roads, despite much lower estimated returns”.

The government’s autumn 2012 ‘Comprehensive Spending Review’ led to several strategic road schemes being deferred, cancelled or placed under review. The average benefit-cost ratio of cancelled projects is 3.2 which are “almost three times higher than High Speed 2” and the average benefit-cost of projects that are deferred is 6.8.

The estimated cost of congestion in the UK is £20 billion per year, over £90 billion in the European Union and $115 billion (£75bn) in the United States. 

Transport statistics for Great Britain from 1986-2011 which have been adjusted for traffic levels show that Britain has a smaller motorway network than most other major economies including the USA, China, Canada and European counterparts France and Germany.

One of the main criticisms is the “obvious manifestation of government failure” on the large number of potholes across Britain’s roads.

“The Automatic Association (AA) estimates that there are 1.5 million potholes on the road network. A 2008 survey revealed that 64 percent of AA members  thought that the condition of road surfaces had deteriorated over the previous ten years, with 40 percent believing road surfaces had gotten ‘much worse’”.

A 2008 report by the Annual Local Authority Road Maintenance (ALARM) found that potholes “cost British motorists an estimated £2.8 billion every year, authorities pay out more than £50 million in compensation claims due to poor roads and road maintenance in England and Wales in underfunded by around 50 percent or £1 billion every year”.

The sum of £150 billion from privatising major road networks would be generated from cutting motoring taxes and introducing pricing on the privatised road system. “Inefficient taxes would thereby be replaced by an efficient system of toll roads” and further revenue could be generated from the sale of roads that are not currently classed as trunk roads. Roads owned by local authorities could be sold to businesses or local residents.

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