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CBI calls for new approach to road funding

The Confederation of British Industry (CBI) calls for road charging should be introduced on the strategic road network in England. Proposals in the report, Bold Thinking: A model to fund our future roads also suggest that responsibility for the network’s budget should be taken away from the Department for Transport (DfT) and given to an independent regulator. Launching the report, CBI director-general John Cridland said a regulatory asset base (RAB) model was required to address the problem of long-term fu
October 11, 2012 Read time: 3 mins
The 6694 Confederation of British Industry (CBI) calls for road charging should be introduced on the strategic road network in England.  Proposals in the report, Bold Thinking: A model to fund our future roads also suggest that responsibility for the network’s budget should be taken away from the 1837 Department for Transport (DfT) and given to an independent regulator.

Launching the report, CBI director-general John Cridland said a regulatory asset base (RAB) model was required to address the problem of long-term funding.  

According to the report, UK economy is already losing up to £8 billion each year from congestion on the roads, which could potentially rise to £22 billion by 2025. The CBI’s recent infrastructure survey also showed that three in four businesses were not confident that transport networks will improve in the next five years.

The CBI is calling for the introduction of a Regulatory Asset Base (RAB) model to secure the private investment necessary to overcome the current funding gaps in the UK’s road network. A £10bn shortfall in funding for 503 Highways Agency projects and the prospect of declining motoring tax revenue due to ever-increasing efficiencies in new vehicles makes the current model unsustainable.

A regulated model for the road network would address the problem of long-term funding and one year cycles by taking the road network out of the Government’s budget.  Users would have a proportion of their motoring taxes converted to a user charge – controlled by the regulator – to access the strategic road network.  This charge would provide a funding stream for private operators – licensed by the regulator – who would operate regional sections of the network.

In the long term, the CBI says, private road operators would have to finance larger projects through long-term borrowing, which could require additional revenue streams, such as tolling, above a standard charge.  The regulator would continue to cap charges and manage the overall cost burden on drivers.

Mr Cridland said: “Every day, people up and down the UK lose time and money because of our clogged-up roads – whether you’re a business waiting for an urgent delivery, or a commuter stuck in the morning rush-hour. Gridlock is an all too familiar tale of life in the UK, and one that is already costing us £8 billion a year.

“With public spending checked, the case for new funding solutions is even more compelling, and the government recognises this. Infrastructure matters to business, and delivering upgrades to our networks is one of the highest priorities for the CBI to get the economy moving again.

“It’s clear we need a gear change in how we manage and pay for our road network in the 21st century. A lack of investment means we are really struggling to increase road capacity, let alone adequately maintain what we already have.”

The CBI’s call was backed by Alain Bourguignon, CEO of Aggregate Industries, who said: “We understand that government tries to make the most of its limited cash – but unfortunately the most cost-effective course of action is rarely followed. A ‘best value’ approach is not always taken in repair and maintenance programmes.  By transferring the management and maintenance of the road infrastructure to long term investment vehicles, we will see better planning, procurement and design of the assets, leading to better results for all.”

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