COMMERCIALISATION OF THE UK ROAD NETWORK
4.1 Current Situation
4.2 How to Commercialise the Road Network
4.3 Road Company Finances
4.4 Road Fund
4.5 Managing Road Companies
4.6 Local Road Network
4.7
Case Study - Arundel Local Road Network
4.7.1 Current Situation
4.7.2
Demands of Arundel People and Official
Reaction
4.7.3 Proposed Solution
4.8
County Road Network
4.9
Case Study - West Sussex County Road Network
4.9.1 Current Situation
4.9.2 Analysis and Evaluation
4.9.3
Proposed Solution
4.10
Trunk Road Network
4.10.1
Current Situation
4.10.2
Analysis and Evaluation
4.10.3
Proposed Solution
4.10.4
Enhancing the Trunk Road Network
4.11
Introducing a Commercial Charging System
4.12
Case Study - Shadow & Electronic Tolls Arundel
Area
4.13 Typical
Road Shareholding Portfolio
4.14 Technology for Road Pricing Update
(4.1) THE CURRENT SITUATION
There is growing acceptance for road privatisation (Newbery, AA, 1995), (Bradbury & Nalty, RDS, 1996). Indeed Professor Newbery calculates (53rd Henry Spurrier Memorial Lecture 1998) that a 40% reduction of the national debt is achievable from transferring roads to a company he calls Roadtrack.
The true asset value of the road network cannot be accurately forecast until floated on the stock market. However, to overcome past accusations of selling national assets too cheaply and lining fat cats’ pockets, another method could be considered.
Since roads are owned by the state, every UK citizen has a shareholding in the road network. Those citizens entitled to vote elect councillors who are ultimately responsible for all roads except Trunk roads and Motorways (although it is council employees who carry out all the work necessary to plan, maintain and develop the road network). However, councils have their hands tied partially by national legislation, but much more seriously through the significant proportion of their income that is controlled by central Government, taking away the local accountability there would be if councils raised all their income from local citizens and business.
Trunk Roads and Motorways are managed by the Highways Agency, an unelected quango that reports to the Department of Environment, Transport and Regions, whose Ministers are accountable to UK citizens’ through their elected representatives in Parliament.
This makes the control and responsibility of the roads appear far too remote from the people the roads are supposed to serve.
At the local level a community may desire a pedestrian crossing. The council will say they agree with the local community’s wish, but they have limited funds and have to prioritise and spend money where there is a known danger – generating accusations that the council will not put crossings in until there is a death to prove danger.
At the council level, new roads cannot usually be built unless they can find developer finance or persuade the Government to provide a grant. Local people campaign for roads to ease congestion or take traffic out of residential areas, and the Government studies the proposal. If it turns down the grant due to the effects of increasing road capacity, the local people do not believe this (see the proliferation of letters in local newspapers) and assume it is just that the Government does not want to spend the money for their community.
Underlying this public dissatisfaction, every year, until 2000 the road user has been paying more through the fuel duty escalator which the Conservative Government of the 1990’s introduced to gradually close the gap between what the road user pays and the full cost of the roads. However, instead of itemising receipts of fuel sales and directing the money raised to pay the costs imposed by roads on society, all the money has gone direct to the Treasury. They claimed this was an increased tax to damp down road demand and reduce emissions of Greenhouse and other noxious gases to meet our international obligations (which it has failed to do). Traffic growth continues; for every journey transferred to another mode, new road journeys are being generated.
The incoming Labour Government reinforced the previous Governments policy
increasing the fuel duty escalator – then abolished it in 2000 – but has
also failed to allocate the money raised to meet the costs in a way the
public would understand. It has therefore left itself wide open to attack, on
the grounds that the motorist is a soft target for fleecing. This resulted in
the extremely damaging fuel blockades of 2000.
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(4.2) HOW TO COMMERCIALISE THE ROAD NETWORK
We have established that UK citizens own the UK road network but, having little control and no responsibility over the management, they demand and campaign for unattainable solutions. When these are not delivered, the responsible politicians face considerable loss of popularity.
This control and responsibility needs to be transferred from politicians to the citizens.
The formal state ownership on behalf of citizens needs to be transferred to citizen shareholding of the road network similar to the way mutual building societies formalised the shareholding of their members.
As most people are interested in the roads they use the most, and not interested in other people’s local roads, the best way appears to be to distribute shares in a hierarchy of roads as follows.
Ø LOCAL ROADS that serve purely a local purpose, linking principal and trunk roads with local communities, and for journeys between communities in the local area, but not roads for the use mainly by through traffic between other communities outside the local area: equal shareholding to all residents of the parishes concerned.
Ø COUNTY ROADS, mostly A or principal roads, providing for through medium distance journeys between the main towns, villages, industrial areas, ports and airports etc, also the main links with the trunk road network: equal shareholding to all residents of the county or unitary authority concerned.
Ø TRUNK ROADS, the main long distance trunk roads and Motorways currently the responsibility of the Highways Agency: equal shareholding for all UK citizens.
We could use the analogy of a tree. Trunk roads provide the main route for
all long distance travel linking to all the branches, which connects all the
local community of twigs together. The twigs servicing the leaves (residences,
business, leisure etc.) providing access to the branches and trunk.
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(4.3) ROAD COMPANY FINANCES
The road companies would inherit any liabilities in the form of debt from borrowing to build the roads they now owned. The value of the companies would be based on whatever price the shares were traded for.
Technology has now moved on that the proposal for shadow tolls is probably
not necessary, this section in italics left in for interest can therefore be
missed. Initially in the absence of a better method of revenue, the road
companies would receive income from Shadow Tolls. This may involve developing
and installing at strategic locations an axle counter that also measures
weight. This will count all the axles using a road and raise a charge based on
weight which will be paid to the road company from the Road
Fund see (2.3)
The road company would be required to service its liabilities, maintain the road to legal standards; pay externality costs incurred e.g. compensation for noise pollution. Policing would be purchased, but this should be a neutral expenditure, because part of the restructuring of the road industry I would recommend making road offenders pay all police and court costs so that they are not a burden on the law abiding driver or road companies (see PART 3.6 Safety recommendations award of costs). Where policing is required for traffic direction due to special events, the events organiser would be required to pay for the necessary policing – if they failed to organise the policing, the road company having to call the police out, then the organiser would be charged a punitive fee. Where the police are required to attend an accident, the relevant insurance companies should pay the police fees.
Road companies would be able to spend money out of profits, or borrow against future revenue to improve the road network or on any other project the shareholders agree to.
The technology is already with us see 4.14 Technology
for Road Pricing Update. The section in italics left in for interest can be
missed. As technology improves, the road companies working together will be
free to change the charging system. They could, if the shareholders agreed,
charge for road space an economic price based on the laws of supply and demand
through electronic tolls. As the price increases some drivers will change their
journey plans while others will pay. If enough choose to pay, causing
congestion to continue, the shareholders may agree to increase capacity to meet
the demand prepared to pay the economically higher price borrowing against
future revenue. This would be economically sustainable road building based on
what the user is prepared to pay, unlike previous road building where the user
has not paid at point of use and extra capacity has generated extra traffic.
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(4.4) ROAD FUND
The original Road Fund of 1909 became discredited, as there were no proper road accounts. Money from road users went direct to the Treasury and money for roads came from the Treasury. This was often raised due to borrowing, incurring interest charges paid for out of general taxation, while no attempt was made to link the external costs of road use to the price paid for road use.
In this proposed commercial system, politicians will be unable to either abstract money from road users or subsidise road use, all decisions will be with the shareholders and the directors of the road companies they elect. Initially the shareholders will be UK citizens, and I would hope they would all retain at least a partial shareholding to ensure public influence in road policy.
Technology has advanced beyond the section in italics see 4.14 Technology
for Road Pricing Update Initially there are no satisfactory electronic
toll systems working; therefore a system of shadow tolls is desirable to pay
the road companies from a road fund
The road fund would receive revenue in two ways. When fuel is sold the
road fund would collect, in proportion to quantity, revenue to send to the road
companies in proportion to the shadow tolls charged on the basis of vehicle
distance travelled. Those vehicles weighing more than say one tonne will
additionally be charged I recommend the New Zealand method of Axle Weight
Distance (see
PART 2.1.2 Cost of Roads – Road Maintenance) to pay for the maintenance
necessary from the extra damage they cause, encouraging the use of more axles
on less damaging LGV’s.
All vehicles entering Britain will be charged at the port of entry a road
charge based on the assumption that they had a full fuel tank. LGV’s would be
charged by the same method as British LGV’s using the New Zealand method.
Eventually, as technology improves, the road companies will be able to
install a comprehensive electronic tolling system and collect their revenue
directly from vehicles. Once installed the road fund would be discontinued.
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(4.5) MANAGING ROAD COMPANIES
The shareholders will appoint a Board of Directors to manage the roads under their control. A Road Regulator will set minimum standards, with safety and continuous access as the main priorities, and an inspectorate would be sent out regularly to ensure maintenance and other standards are adhered to with strong enforcement powers.
The directors will probably draw up a contract with a road maintenance company to ensure the road network meets the minimum standards set by the regulator and any higher standards the shareholders may demand.
Law enforcement will need to be bought-in, in the same way the Train Operating Companies buy-in the services of the British Transport Police.
Noise monitors would be required, with a formula devised to pay compensation to those suffering noise pollution on the basis of research that shows the ‘willingness to pay to avoid noise’
The road company with shareholders support could use surpluses or borrow against future income to invest in improving the road network. Because of the necessity as with any PLC to be financially sound, roads that were economically unviable would not be built purely for political reasons (as has been a feature of the second half of the 20th century) and the policy would have the support of the citizens as they will be the same shareholders who are responsible for the policy.
Historically there has been much demand for road building to improve journey times, relieve congestion and improve safety; this has often been turned down due to lack of money. The shareholders will now have the responsibility and will have to balance investment against revenue and decide how much borrowing can be afforded. Many road schemes will not seem so attractive in these circumstances, and where there has been a poor safety record they may take the decision that proper law enforcement would reduce accidents more effectively than road investment since, after all, it is not roads but drivers that cause accidents. As the policy will have been agreed by shareholders who buy-in the policing, there will be public support for the police to be tough on offenders, helping to overcome problems the police currently have with the minority of people who think road laws do not apply to them. The police and courts will be able to say this is what the majority of shareholders requested.
As with any PLC, shareholders would be free to sell some of their shares,
which will provide a commercial value for the road network. However,
people selling shares eventually could tip the balance of accountability. To
overcome this it may be necessary to have some special rules. May be when
shares distributed, a proportion could be tied to property ownership and included
in the value of property – only sold when property sold – similar to existing
arrangements for ownership of roads on some private estates.
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