Road sell-off pondered but is it best for the long haul?
August 1st 2010 The Department for Transport is looking at a proposal for privatising parts of the road network, according to the the Daily Telegraph. The plan has been put together by NM Rothschild, the investment bank and an expert in state sell-offs.
The move coincides with the publication of MP Tim Yeo’s pamphlet Green Gold: The Case for Raising our Game on Climate Change which expands on the issue. On the face of it, Yeo’s book has no great relevance to the UK transport industry but the opinions outlined by the former environment minister will have a huge impact on the sector if they become Government policy.
Yeo proposes a radical overhaul of the UK transport industry including widespread road privatisation. As well as cutting emissions and raising cash for green projects, Yeo anticipates this will also help reduce the deficit, free up cash for investment in projects such as high-speed rail and allow for cuts in fuel duty. The revenue would be derived from selling off stretches of motorway and trunk road to private contractors who would then charge tolls for their use and be responsible for their upkeep. The attraction is clear. The scheme would generate cash in a time of scarcity and lessen the burden on the Department for Transport.
The privatisation of roads could also dovetail into the PFI model for funding future infrastructure build. Thus companies would be encouraged to build and manage roads, lessening the funding burden on the State.
The concerns that will be raised are also obvious. Road users will resent another tax and drivers will be tempted to avoid toll roads, creating congestion on other routes, even if these roads are not suitable for heavy traffic. The worth of the scheme would also rest heavily on the calibre of the companies that take on toll roads.
Companies taking on state assets have sometimes been criticised for putting profit first with the experience of the user and the quality of the end product seen as less important. Also, will the money generated cover the wide range of causes mentioned, reducing the deficit, lowering fuel duty etc? It would need to be a huge amount to make a dent on each of these areas.
Furthermore, with so many small players with a stake in infrastructure - how easy would it be for the UK to pursue a long term strategy for the benefit of the country as a whole? The example of the energy sector is perhaps pertinent. This was privatised decades ago but investment in the next generation of power stations has not been forthcoming from energy companies that concentrate on short term profits rather than long term strategy.
Another caveat is that the move may not succeed in greatly reducing the Government’s bureaucratic role in transport. The private companies are likely to need a regulator in mould of Ofgem to make sure minimum road standards are adhered to and pricing is not extortionate. These bodies can take on the dimensions (and costs) of a significant Government department.
For all the nation’s economic difficulties, this is one measure which I expect the public won’t swallow. The hassle of road privatisation would outweigh the benefit of the cash bonanza.
Simon Duddy, Editor More articles from Handling & Storage Solutions: | 
