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Transport minister warns against privately financed roads

Roads minister Robert Goodwill has pledged that the major roads network will not be privatised and said government-funded roads provided better value than private schemes.

Speaking to the transport select committee, Mr Goodwill said the existing main roads run by the Highways Agency would not be privatised wholesale nor would additional private finance be sought for them except in a few circumstances, such as the Lower Thames Crossing.

The new £600m Mersey Gateway bridge, being built by a Kier, FCC and Samsung team, will also be tolled.

Mr Goodwill made his comments almost two years to the day after prime minister David Cameron said the government would consider privatising parts of the road network in a bid to improve investment in the UK’s infrastructure.

Mr Goodwill told MPs that taxpayers would feel that they had already paid for the existing roads network “and would not take kindly to paying for it again”.

He also said government-funded roads schemes were better value than privately funded ones – a key argument against PFI projects.

He said: “We are in a situation where the UK government can borrow money at very competitive rates certainly more competitive than some institutions and contractors that would come up with schemes of this sort.

“That’s a cost-effective way of doing it. If you look at some other PFI schemes delivered around the country in terms of schools and public buildings they have not covered themselves in glory.”

The government plans to turn the Highways Agency into a government-owned company, and it was suggested that this could be the first step in greater privatisation of the roads network.

But the roads minister said said: “We are not using this as a Trojan horse to deliver any form of privatisation whether [through] wholesale sale of the network or a way of leveraging more private money into the network.

“There are one or two possible exceptions to that [such as Lower Thames Crossing]… there is no plan B or secret plan where we will start charging for roads.”

The government last year scrapped moves to toll the new A14 project, but Mr Goodwill said the A14 was an “unusual case as it was a new piece of infrastructure rather than dualling an existing road or making a motorway improvement to capacity”.

He added: “But I think that is important that this sends a very clear signal that we do not intend to fund new motorway and A road provision by imposing tolls, with a few exceptions [such as Mersey Gateway].

“I think there is general acceptance that if you are using a tunnel or a bridge that is a slightly different situation to a piece of road.”

He admitted that turning the agency into a company with longer budgets, would not give it guaranteed protection against cuts by a future government, but he argued that such cuts would be harder to make because the government would have to cancel projects.

He admitted that salaries for some Highways Agency roles could rise after it becomes a company in order to “attract the best people” but that pay and bonuses would still be controlled by the transport secretary.

Mr Goodwill said he was undecided on the best way to regulate the newly configured Highways Agency, but was open to the idea of creating a new quango to oversee them.

Options included setting up a department within the Office of Rail Regulation, a panel of experts or forming a new quango.

He said: “I would be happy to go to the Cabinet Office to say we do need to set up a specific quango or specific monitoring organisation, particularly in respect of financial performance.“

He was in favour of Passenger Focus, which represents rail, bus and tram users, representing the interests of road users and taxpayers.

Highways Agency chief executive Graham Dalton said setting up the new company would give the organisation a “clear brief” and longer-term plans.

Greater financial certainty would mean it could do longer deals, get better pricing and allow for “more risk transfer” to contractors, he said. He added that contractors could decide how to phase work in a five-year renewal programmes as long as the roads keep running.

He said he had reduced unit costs over the last three to four years by around 20 per cent “getting nearer to 25 per cent in some major projects.”

These cost reductions came from measures including the agency putting more competitive propositions to the market.

Mr Dalton said “some of that is hunger of supply chain in construction industry, which I am sure will disappear in a while. We are working our suppliers quite hard especially on the current form of maintenance contract”.  

He said the biggest challenge for any new body would be having the confidence of its suppliers and staff as it took necessary risks.

He said: “It will involve taking some risks, doing things faster and investment faster, managing the network more firmly more aggressively.

“There will be kickback and it won’t all work. For the company it is about having the confidence of people when it is pushing boundaries. If you don’t try it and don’t take the risk it is not going to work.”

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