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Regular news: Issue 592 19 Mar 2012

Cameron mulls using motoring taxes to lever in extra private cash for roads

Lee Baker

Prime Minister David Cameron has ordered a feasibility study to consider using existing motoring and petrol taxes to lever in additional investment to upgrade the strategic road network.

The Prime Minister announced that the Treasury and Department for Transport would conduct a feasibility study into new “ownership and financing models” for the UK roads system to increase investment to reduce congestion.

Cameron said that tolling roads to provide an income stream for concessions to build and operate new infrastructure as proposed for the Fen Ditton to Ellington section of the A14 was “just one option”.

He said: “Why is it that other infrastructure – for example water – is funded by private sector capital through privately owned, independently regulated utilities but roads in Britain call on the public finances for funding?”

The Government had given consideration to applying the regulated asset based model that applies in the water sector, which its National Infrastructure Plan 2011 says “has a proven track record in enabling increased investment”.

However, ministers have ruled out the introduction of road pricing on existing roads that would be required to provide an independent revenue stream to attract private finance. This is why the feasibility study will investigate using other potential income streams to lever in investment from sovereign wealth funds, pension funds and other investors.

Cameron suggested that this would be from existing motoring and petrol taxes, because he said in his speech: “It’s about getting more from the money motorists already pay.”

The Prime Minister also announced that ministers have gained agreement with pension funds to contribute their “first wave of £2bn investment” in infrastructure by 2013. The National Infrastructure Plan sets out a target to attract £20bn.

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