Paying For Our Roads: The Dead Hand Of Public Opinion

The Government has to find a new way to pay for our roads. Although the motorist pays more than is spent on our roads, the revenue from fuel duty and vehicle excise duty (VED) is falling every year. Cars are consuming less petrol or they are being powered in other ways. This trend is inexorable and gathering speed. Reversing it by exponential increases in duties is not considered to be a fair or sustainable option.

The Government probably has a good idea of what it needs to do. The choices are limited. The weight of professional opinion is leading it in one direction.

Our roads could continue to be paid for by the taxpayer alone - but not on the current basis. Such is the state of our public finances that the government cannot turn to other sources of revenue to make up the growing long term shortfall. There are no growing surpluses elsewhere.

It would help to contain the problem if the Government were to transfer our strategic road network to a separate utility company or other independent body that would be subject to regulation. This model has been adopted in the water industry and for our railways. It creates private sector delivery of public (government) policy with accountability (including greater customer focus) and cost control - in short, better value for money. It could be a 'Network Road', accountable to a different "ORR" or "Ofroad".

If the rail model is followed, the Secretary of State could periodically issue a 'high level output specification' (HLOS) and a 'statement of funds available' (SoFA) setting out the outputs that the Government expects from the road network for the funds that will be available - a bargain of more assured financing in return for delivery of clear objectives, which enables longer term planning.

Theoretically, it should be possible for these benefits to be delivered entirely by the public sector. The Cook Report should result in a reconditioned and more customer-focussed Highways Agency. Experience and the economics of the issue suggest, however, that this will not go far enough.

The step change that is needed is one that will let private finance make up the shortfall left by the taxpayer's diminishing contribution. Currently, this is not possible unless it is for a new road or a new crossing (bridge or tunnel) because there is no means of providing the private sector with a return on its investment.

'Return on investment' means revenue. Revenue means some form of access charge, road user charge or...