In 2010, the then new UK government announced it was cancelling plans to upgrade part of the A14 highway for £1.1 billion of public money, on the grounds that it was too expensive. It began looking for an alternative. At the start of 2012, I had lunch with a senior infrastructure financial adviser, who snorted contemptuously that the government’s delay simply meant that the new project would end up costing even more. He was right.
Yesterday, the Treasury announced it would be spending £1.5 billion of public money on doing basically the same project – and was cancelling plans to recoup part of the investment cost through charging a toll to use the road.
Not the greatest advertisement for the National Infrastructure Plan 2013 unveiled on the same day – even if it is the right decision. Ever since the previous A14 project was scrapped, there’s been an air of desperation and futility around the government’s long and ultimately fruitless search for a cheaper alternative. Last year, Prime Minister David Cameron was talking up plans to get the private sector to finance the upgrading of the strategic roads network (motorways and key A-roads) through tolling. Geoffrey Spence, the head of Infrastructure UK, the Treasury unit charged with overseeing infrastructure delivery, was talking about the A14 as being the start of a programme of privately financed road upgrades. Those plans are now, as I predicted, toast.
They are toast because the government has been forced to acknowledge that investing more in roads means someone paying more for them, and in this country, nobody likes tolling. Tolling one road in isolation has failed in this country because drivers just use an alternative route – even if , in the case of the M6 Toll, the free alternative road is already heavily congested. They just don’t want to pay. Tolling the upgraded A14 would, according to forecasts undertaken by Atkins on behalf of the Department for Transport, risk driving so many people away from the road that the benefit:cost ratio of the project could fall below one.
Effective road tolling would mean tolling all major roads, which the government has already said it won’t do. And even if tolling could work, the private sector would (as blogged previously) expect the government to guarantee their revenue in one way or another, putting the taxpayer on the hook. And of course, they’d expect to make a profit, driving up the overall cost of the project and the tolls required . The idea that there is an alternative to the public sector being liable for the cost of a big road upgrade like the A14, which the government entertained for a while, is pie in the sky. Financial markets won’t stand for it. This was obvious in 2010, but they wouldn’t listen, until now.
And so that long wait for privately financed roads I referred to last month continues, and may never end. Which if they are financially and politically unviable in this country, may not be a bad thing; but taxpayers may have to get used to paying more for roads in that case.