CBI urges government to enhance and boost UK road network

Posted on 8 Oct 2012

A new CBI report argues that the UK needs a gear change in investment, performance and efficiency if it is to develop a road network fit for the 21st century.

With public finances constrained, the government must secure new sources of funding to help support economic growth in the long-term, the head of the CBI said today.

Launching Bold Thinking: A model to fund our future roads, John Cridland, the CBI’s director-general, made a call to action for the government.

The UK economy is losing up to £8bn each year for congestion on the roads, which could potentially rise to £22bn by 2025 according to the business organisation.

At the same time 83% of all goods in the UK travel on roads, and the Department for Transport predicts a rise of 46% in traffic volumes by 2035.

The CBI is calling for the introduction of a Regulatory Asset Base 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 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.

But in the long term the charge alone might not be sufficient. Private operators would have to finance 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.

To achieve this, the government should examine the most suitable elements of existing RAB models in the UK.

John Cridland, CBI director-general, said: “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.”