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8 October 2012 | Anna Reynolds
The CBI has urged the government to transfer control of road building to an independent regulator that would oversee procurement processes.
According to a report published today, Bold thinking: A model to fund our future roads, the UK economy is losing up to £8 billion each year from congestion on the roads, which could rise to £22 billion by 2025.
Under the new model, motorists would have a proportion of their motoring taxes converted to a user charge, which would provide a funding stream for private operators. The regulator would be responsible for operating regional sections of the road network.
The report addressed the government’s concern about adopting a regional approach and said that fears of losing some economies of scale could be offset through changes to procurement. The study said the actual size of the procurements would not necessarily be smaller.
While road infrastructure procurement is currently done on single tranches of a specific road cutting across regions, the ‘regulated asset-based’ (RAB) model could see regional operators purchasing for a network of roads within their region.
Furthermore, by moving away from the current system of one-year ‘stop-start’ funding cycles towards a longer-term programme of projects, economies of scale would also improve.
The report referred to feedback from businesses that felt that the proposed timescales for road network upgrades are too long and the government needs to run planning and procurement processes in parallel in order to cut the waiting time.
Alain Bourguignon, CEO of major construction supplier Aggregate Industries, said in the report: “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.”
Research included in the report from the Department for Transport predicted that the volume of traffic across the UK’s road network is set to increase by 46 per cent by 2035 and that average delays will be 54 per cent longer than in 2003. The CBI said for many businesses working with sensitive cost margins, such as road-intensive logistics and freight firms, an increasingly saturated network will damage their ability to deliver on time and to act competitively.
John Cridland, director general of the CBI, said in a statement: “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 report advised that the government should learn from existing RAB models in the UK – such as that implemented in the water industry – which have a track record in attracting private capital and controlling prices.