UK: Road Proposals Leave Funding Questions Unanswered

Last Updated: 30 September 2013
Article by Angus Walker

The Government's proposals for roads reform last month outline a clear route ahead for the status of the Highways Agency, but leave open the question of the future funding of highways, says Angus Walker

In July, the Government published Action for Roads: A network for the 21st century, following on from the spending round in June, which promised a new era of road building. Action for Roads had been eagerly awaited for its proposals for the future of the Highways Agency and road tolling, so did it meet expectations?

The Highways Agency looks after the maintenance and development of the strategic road network of motorways and principal A-roads, which makes up only 2% of all roads in terms of length, but carries a third of all car journeys and two-thirds of all lorry journeys.

The Highways Agency is currently effectively part of the Department for Transport. In the foreword to Action for Roads, Secretary of State Patrick McLaughlin says "we will reform the Highways Agency, giving it the flexibility and the vision it needs to be the world's leading highways operator". This ambition can be traced back to the report of Alan Cook in November 2011, who was tasked with suggesting a fresh start for the strategic road network.

The details are that the Government wants the agency to become a publicly-owned corporation. This will make it slightly different from Network Rail, the latter being a private company limited by guarantee (so not owned by anyone as such). The new corporation will, from 2015, move from annual funding to a series of five-year plans (called the Road Investment Strategy), similar to Network Rail with its five-year "control periods".

The Government will consult on these proposals later this year, and bring the reforms in through legislation in 2014.

The final form of the agency is still open to debate, however, as the document says: "We will also continue to examine the case for potential further reform, to see whether new arrangements could improve the transparency and accountability of the Highways Agency".

The document suggests three possible models for this final form. The first is a contractual model, where a private operator has a design, build, finance and operate contract with the agency. This happens at the moment, on the M25 for example, but not everywhere.

The second possibility is a regulated utility model, like the water industry and others. In that case the network is divided into geographical regions each with a private company running it, and a regulator oversees pricing and performance.

Finally there is the trust model, where responsibility for operating, maintaining and developing the infrastructure is given to an independent company without shareholders or owners, which is responsible for looking after the network on behalf of its users. The document gives the Canadian air traffic control company as an example of this, but this isn't too far from Network Rail, in fact.

Those are the governance proposals, but how will the performance of the new-look Highways Agency be measured? The agency recently acquired a performance specification, published in April this year. As a hint to future performance standards, it has been asked to divide the strategic road network into managed motorway links; uncongested rural motorway links; congested rural motorway links; urban motorway links; and all-purpose trunk road links. (A link is a section of road between two junctions.) The agency will be set performance targets for these road types from 2015-16.

So much for what Action for Roads says about the future of the Highways Agency, but what about the other main topic of interest for highway policy: will there be tolling? Unfortunately, the document is silent on this pressing issue. Though the document promises the publication of a long-term strategy for ultra-low emission vehicles later this year, it does not look as though the knock-on effect on government income will be dealt with at the same time.

The only proposal on the table for a tolled road that is not a tunnel, bridge or the M6 Toll is for a section of the A14 near Cambridge, to be tolled as part of an upgrade. This is mentioned in Action for Roads but not in relation to tolling; it was, however, confirmed as part of the infrastructure spending announcements a month earlier, in a brief mention on page 74 of Investing in Britain's Future, published by chief secretary to the Treasury Danny Alexander.

The issue of future revenue-raising from road users is an important one, as more cars are likely to be hybrid or electric – with government encouragement – and income from taxes on petrol will drop further and further as a consequence. The Government must either come up with an alternative or expect highway costs to be met from the remainder of general taxation. If the government raises vehicle excise duty for hybrid and electric cars it will discourage them, but if it introduces widespread tolling, petrol vehicles will be charged twice. It is a tricky issue to deal with but is one that is becoming increasingly urgent.

This article was originally published in Transport Times.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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