Transport lobbyists call on Government to abandon "fatally flawed" plans for new roads

In a new report (15-page / 1MB PDF), the Campaign for Better Transport (CBT) says that various options proposed by the Prime Minister and Chancellor of the Exchequer, including the introduction of tolling on new or widened roads and the use of PFI-style financing schemes, all have "fatal flaws" that would prevent them from simultaneously benefiting road users, taxpayers and private investors.

CBT chief executive Stephen Joseph accused the Government of "casting around for anything that might produce growth" without thinking of the long-term economic consequences.

"Our report shows that you don't have to look very hard at the privatisation proposals made by the Government to see that they are astonishingly badly thought through and won't help drivers, taxpayers, investors or the wider economy," he said. "The proposals risk becoming a real mess – a Railtrack for the roads – that will prove just as big a waste of public funds,"

But infrastructure law expert Graham Robinson of Pinsent Masons, the law firm behind Out-Law.com, said that the group was "comparing apples with pears" by conflating the upfront capital costs of building new roads, using public funding, with the capital and ongoing maintenance costs of a project under a traditional Private Finance Initiative (PFI) arrangement, which typically see the public sector repaying its private sector partner over the 25-year life of the loan.

"The more innovative solutions being developed by the government to encourage funding and delivery of the UK's infrastructure using private sector partners can provide better value for money for taxpayers, private investors and users of infrastructure," Robinson, co-author of a study into alternative methods of infrastructure finance, said. "The jury is still out on older methods for funding and delivering infrastructure in the UK, but there is a wide range of fresh thinking that is beginning to emerge about the ways in which infrastructure in the UK can be funded and delivered to provide significantly better value."

Infrastructure in the New Era, published last year by Pinsent Masons and industry improvement body Constructing Excellence and endorsed by a wider range of industry leaders, concluded that delivering and managing infrastructure projects with much greater efficiency over the asset's entire life cycle would create best value for money, he said.

In a speech to the Institution of Civil Engineers in March, Prime Minister David Cameron said that the Government needed to be "more ambitious" in looking at "innovative approaches" to increase funding for the road network. The Treasury and Department for Transport (DfT) are due to report in the autumn on the feasibility of "new ownership and financing models" for the national road system, such as through concession agreements or a regulated asset base (RAB) model like that in use in the water sector.

Last month, the DfT announced its plans for the future of the "strategically crucial" A14 corridor in Cambridgeshire which it suggested would be funded in part through a tolling mechanism. "More work" would, Transport Secretary Justine Greening said at the time, need to be undertaken before a decision could be made on the length of the tolled section of the road, how users would pay and what the tariff would be.

In its report the CBT slammed plans to fund improvement works through the use of tolls, saying that the "politically controversial" mechanism was unlikely to bring in the projected level of funding. It cited figures showing that the existing M6 toll lost £41.7 million for investors last year as drivers changed route to avoid rising charges, as well as a toll road operator in Australia that recently went into administration. The administrators in the latter case were, it said, suing the forecasters who had predicted a certain level of traffic would use the road.

The report cited analysis from last year of 100 completed worldwide toll road projects, which found that road traffic forecasts had been overoptimistic by 20-25%. This would likely be exacerbated in the UK by longstanding driver opposition to tolls, as well as the country's highly developed existing road network which offered a comparatively large number of alternative routes to drivers who wished to avoid tolls than other European countries.

PFI-style schemes, which the group referred to as "shadow tolls" due to the continuing nature of the payments to private companies, were an incredibly bad value alternative, the report said. The proposals put forward to improve the A14 could cost the taxpayer as much as £3 billion more if a PFI approach is used than normal public spending would, it said. A third alternative, which would see the revenue collected from Vehicle Excise Duty (VED) used to fund a private roads agency, would lead to "poor or biased funding decisions", the report claimed. VED is currently pooled with other taxes as part of the general budget pot.

By channelling private funding into public transport projects, where clear revenue streams provide a guaranteed return on investment, and instead focussing public spending on road improvement and repair projects, the report said, the Government would achieve better value for money and create more reliable longer-term jobs across the whole country rather than in small local areas for short periods of time during construction works. Maintenance budgets for trunk and local roads were cut by £672m in 2010, it said, while the Government has also reduced specified road condition standards to the absolute legal minimum.