There is one nationalised industry that most people support. They often do not see its failings. Indeed, most do not think of it as a nationalised industry. Most think it as a natural monopoly. Most protect it because it is provided “free” at the point of use. I am talking about roads.

The truth is like many nationalised industries state run roads let us down and cost us a fortune. The state provides too little capacity and makes using the roads difficult. It is run as a monopoly with rationing, and with an ever increasing array of rules enforced by fines and other penalties. Far from being free to users, drivers are fleeced in so many ways. Drivers are made to pay an annual fee for keeping a vehicle. They pay 55% of their fuel costs in tax, with VAT even charged on the fuel duty itself. They pay high VAT and tax on buying new vehicles. They have to pay heavy parking charges for parking in publicly owned car parks and on sections of the highway, tolls on some bridges, and congestion charges in some urban areas. Some have to pay high fees for residents parking.

This contrasts with nationalised rail where fares are VAT exempt, diesel for trains attracts a very low duty rate and there are no special charges for keeping or buying a train.

Worse still is the state of the roads. The main motorways and A roads, usually dualled, that take the bulk of the traffic are run by the national government through the Highways Agency. There has been no attempt to complete a proper network serving the main cities, ports, airports and train stations. There is still no south coast motorway. There is no fully dualled A 303 road to the south west. There is too little capacity across the Pennines, inadequate roads to Felixstowe and Dover, two of our busiest ports and no main highway between Oxford and Cambridge to top the golden triangle ear marked for more homes and business investment. There are many other regional gaps and uncompleted main routes. The state has usually adopted a string of beads approach, dualling individual by passes along a main highway but not dualling the whole. The Highways Agency seems to be run by people who want to ration our access to roadspace, rather than by a growth driven organisation that wishes to expand to meet the obvious existing and growing demand.

Road management often leaves much to be desired as well. Potholes and poor surfaces are becoming a problem even on these national highways. There is endless tinkering with them overnight with clumsy lane and whole road closures disrupting journeys and driving trucks onto smaller roads. The policy to convert some safety lanes into additional running lane capacity had its critics which led to expensive and complex initial works being followed by more cost and disruptive remedial works. The advent of so called smart motorways gives them powers to intervene over lanes closures and speeds which are not always judged well.

The state did build one of the most vital pieces of twentieth century infrastructure when it completed the M 25. Without this the UK economy would be throttled by having to route too many goods and people through London with its medieval street plan and hostile Councils. The road was so successful that soon its critics switched from claiming it was not needed to claiming it had become a large car park from congestion. Subsequent attempts to widen it were always too little too late. The expansion has also led to intrusive works delaying traffic over a period of many months. The failure to put in wide enough bridges initially left no room for expansion without expensive replacement of bridges.

A similar attempt to provide a ringway around Birmingham also produced a good road that was too small. There government allowed an experiment with the provision of additional private sector roadspace. The M6 toll road has provided much needed extra capacity at no cost to the taxpayer. Those who want the certainty of no congestion or no delays pay for the toll road, freeing more of the space on the nationalised alternative for those who do not want to pay or cannot afford to. It’s a win win for payers and users of the free system.

When I produced a report for the incoming Cameron government on economic policy with Simon Wolfson of Next we argued that we needed to go over to private capital for roads to tackle the scarcity and poor performance. We suggested selling long leases of the main roads for around £100 bn to companies that would improve and manage them and expand them, collecting toll revenues which would be subject to regulation. This money would be used to cut the state debt, cutting the interest bill by enough to abolish Vehicle Excise Duty. The tolls were to be set so that on average no-one was worse or better off from the tolls versus the cancelled VED. The scheme would have been mildly redistributional from richer to poorer as lower income people tend to drive fewer miles. Drivers could also always divert from the national highways to the free local roads if they wished. I understand why George Osborne rejected this as too difficult, as polling said people would oppose it , believing they would end up paying more. I did not pursue the idea further and am not recommending it today.

This leaves the Birmingham model as the obvious hybrid to adopt. Letting the private sector build new relief roads is a win win, freeing road space on so called free roads whilst offering those in a hurry or wanting a better service the option of paying for it. Every time I have used the M6 Toll it has been free flowing, with a good quality of service and easy payment technology. The services are also good and not under the same pressure as the often crowded and sparse service areas on the free network. The free network decided to strictly limit service areas giving them strong monopoly like positions.

The government could draw up a list of motorways and main A roads where a relief road or a new route is needed. The government would need to offer planning permission for the construction to companies bidding to be granted the rights. The government could offer a long lease with future reversion, or the freehold. They could set criteria and requirements on the private contractors bidding, and award to the one in each case that offered the best package.

This government is cutting back on the scarcely adequate new roads programme it inherited. The public and business votes with its vehicles, choosing 59% of all trips by car and just 2% by train. Rail freight’s market share has fallen a long way under BR and now Network Rail. Gone are the days of more sidings in industrial plants and branch lines into business estates. Today new business parks are located near motorways and trunk

John Redwood's Diary

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