The government is to consider privatising parts of the road network in a bid to improve investment in the country’s ailing infrastructure, Prime Minister David Cameron will announce today.
In a speech to the Institution of Civil Engineers, Mr Cameron will highlight the water sector, arguing it illustrates how vital infrastructure can be successfully owned andfunded by the private sector.
Mr Cameron will say: “We need to look urgently at the options for getting large-scale private investment into the national roads network – from sovereign wealth funds, pension funds, and other investors.
“That’s why I have asked the Department for Transport and the Treasury to carry out a feasibility study of new ownership and financing models for the national roads system and to report progress to me in the Autumn.”
The government is considering greater use of tolls with projects such as the A14 upgrade, but Mr Cameron will say this is only one option and that it will be limited to funding new, not existing capacity.
Construction leaders welcomed the announcement.
ICE director general Nick Baveystock said: “It is encouraging to see further evidence of government’s commitment to infrastructure forming a central plank of the plan for growth and some decisive steps to secure long term, targeted investment not only for important infrastructure projects, but for networks as a whole.
“Our national road network is a valuable and essential asset that relies on continued investment to function.
“Government is right to investigate more radical funding models and consider how infrastructure investment might be better managed. This will be extremely important in ensuring potential investors get a predictable rate of return and we welcome government’s imagination and ambition in tackling this.”
The Civil Engineering Contractors Association has long called for new models of private finance to be considered for roads funding.
CECA director of external affairs Alasdair Reisner said the announcement should be welcomed but cautioned it must not hinder ongoing work programmes.
“The government has shown considerable commitment to improving the UK’s essential infrastructure, recognising that in doing so it will help kickstart recovery in the economy”
“We believe that this feasibility study offers the chance for sensible consideration of the options for private sector funding of road improvements.
“However experience from other sectors has shown that such major changes can lead to delays in the delivery of work programmes. We would have concerns about
CBI director general John Cridland said: “Getting growth going must be the Chancellor’s number one priority in this year’s Budget. As we’ve said, one of the best ways we can create activity and new jobs is by attracting investment into our ageing infrastructure.
“Congestion on our roads costs the UK economy up to £8 billion a year, so the Prime Minister’s ambition to get much-needed private investment into the strategic network could not have come at a better time. Every £1 spent on infrastructure adds £3 to the economy as a whole.
“In the short-term, we need contracts to be agreed with companies to maintain our roads and repair the potholes. In the longer-term, investor confidence will be critical to injecting new money into removing bottlenecks, reducing commuting times and helping firms to transport their goods.”