New age of pay-to-drive: Motorists face more tolls under plans to lease roads

• Prime Minister says move - which could become the biggest sell-off since the rail privatisations of the 1990s - will help kick-start the economy
• Firms and investment funds 'will be allowed to compete to build, operate and maintain motorways and trunk roads
• Existing roads will be toll-free, but if firms widen them 'pay-as-you-go' lanes could be introduced to beat congestion

By James Chapman for the Daily Mail

Published: 20:01 EDT, 18 March 2012 | Updated: 12:45 EDT, 19 March 2012

Drivers face new tolls under audacious plans to put Britain’s roads network in the hands of private companies.

David Cameron will today say he wants to kickstart the economy by allowing firms and investment funds to compete to build, operate and maintain motorways and trunk roads.

Motorists would not pay tolls to use existing roads – but firms could widen them and introduce pay-as-you-go lanes that drivers could use to beat congestion.

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Money-maker: The move could become the biggest sell-off since the rail privatisations of the 1990s

New roads constructed from scratch by private investors, meanwhile, could become French-style toll roads. In addition, a proportion of the £6billion a year raised through vehicle excise duty would be used by the Government to pay contractors, probably based on the number of vehicles using the route.

Ministers hope that as well as getting more private sector investment into the economy, a sale of long-term leases of major roads could raise billions for the Treasury. It could become the biggest sell-off since the rail privatisations of the 1990s.

But motoring groups warned last night that drivers struggling with record fuel prices could ill-afford new charges – and suggested the move could lead to national road pricing, where motorists pay for every mile they drive.

Warning there is simply no longer enough money in public coffers to build more new roads, the Prime Minister will say in a speech today: ‘We now need to be more ambitious.

A taxing issue: Toll booths - like this one near Sutton Coldfield - could make more of an appearance on Britain's roads if private companies are allowed to run them

Ambitious: David Cameron (left) is set to reveal the plans as George Osborne (right) seeks to jumpstart the economy and avoid a double dip recession

‘Why is it that other infrastructure – for example water – is funded by private sector capital through privately owned, independently regulated, utilities, but roads in Britain call on the public finances for funding?’

The radical move comes as Chancellor George Osborne seeks to jumpstart the economy and avoid a double dip recession. Other moves expected in Wednesday’s Budget include:

• A big increase in the income tax allowance for 23million basic rate taxpayers, saving working couples £758 a year by 2014,
• A cut in Labour’s 50p top rate of tax to 45p next year, and possibly 40p by 2015,
• A revolution in planning rules to speed up approval for new developments,
• Limited help for higher rate taxpayers facing the loss of child benefit from 2013,
• An end to a £1billion stamp duty loophole exploited by wealthy homeowners who put properties in the name of offshore firms,
• A £20billion ‘credit easing’ scheme offering cut-price, taxpayer-backed loans to small businesses,
• A new ‘general anti-abuse rule’ to prevent the rich shielding huge chunks of their income from tax from 2013.

Ministers are proposing selling long-term leases, probably lasting several decades, to firms or investment funds who want to take over the running of major routes and be guaranteed a regular income over the life of the contract by taking a slice of vehicle excise duty.

Treasury sources said such a scheme would not be full-scale privatisation, since the state would retain ultimate ownership, but would still generate ‘billions’.

Full-scale road pricing – where drivers are charged by the mile – has been ruled out.

In a speech today, Mr Cameron will say Britain needs ‘good roads’ to boost economic growth. But he will admit: ‘The problem’s clear: we don’t have enough capacity in places of key demand. There’s nothing green about a traffic jam – and gridlock holds the economy back.

‘So here’s what we should do. Yes, move passengers and heavy goods on to rail. But also widen pinch points, add lanes to motorways by using the hard shoulder to increase capacity and dual overcrowded A-roads.

'The massive programme announced during last year’s growth review made a good start. But how do we do more, when, frankly, there isn’t enough money?

'We need to look at innovative approaches to the funding of our national roads – to increase investment to reduce congestion. Road tolling is one option – but we are only considering this for new, not existing, capacity.’

Mr Cameron will say that the Treasury and Transport Department will draw up options for ‘new ownership and financing models for the national roads system’ and report to Downing Street by the autumn.

Sources made clear all options were on the table. But they said the most likely model was that of the water industry, where private firms are overseen by an industry regulator.

Only motorways and major trunk roads, which make up three per cent of the country’s road network, would go into private hands.

Matthew Hancock, Conservative MP for West Suffolk and former chief of staff to George Osborne, told Radio 4’s Today programme, this morning: ‘We have a chronic need to get more infrastructure in.

'This is about leveraging in investment – not about selling off roads but about getting investment in roads. If we can find new ways of doing that, I think everyone would accept, this is not only needed but valuable.

'There’s upgrades to roads going on at the moment that have waited for decades. Take the A11 to Norwich. The expected return to the economy is 20 times the cost, but it’s waited 20 years to happen.

'Given the economic returns on some of these projects which aren’t being built because of the lack of money the Government’s got, then the returns to the economy, and also the millions of people stuck in traffic, are very great from being able to get that extra investment in.'

'The benefit is that because private companies doing the work would know they’ve got an income stream coming in the future from the cars using the roads they manage, then they could go to investors, pension funds and others, and say lend us the money now, we’ll be able to improve the roads, we’ll get more people going on them, faster, because of the reducing traffic.

'And that way we can get the investment now that benefits the economy that can’t done because of the constraints on public funds.'

But AA president Edmund King said: 'I'm not sure it adds up in that case. Motorists are already paying 45 billion a year in various motoring taxes, of which, in total, only something like nine billion is spent on the roads. So yes, there is money going in.

The Highways Agency could be run more efficiently, but I don't really think you need a new ownership structure.

‘The Government has indicated that tolls would only apply on new capacity, but many drivers would suspect new ownership is the thin end of the wedge leading to national road pricing. Many drivers can’t afford current fuel prices, so new charges would be a toll too far.’

Labour transport spokesman Maria Eagle said the proposals risked ‘driving traffic on to local roads, increasing congestion and emissions while yet again setting back efforts to improve safety’.

Mr Osborne insisted yesterday he intends to press ahead with a major shake-up of the planning system to speed up new developments, despite criticism from countryside campaigners.

‘It is deeply frustrating that the planning rules have held back economic development in Britain,’ the Chancellor said.