Options for user charging on private and public roads

Professor Stuart Cole, CBE, Emeritus Professor of Transport Economics and Policy, Prifysgol de Cymru / University of South Wales

Cardiff Council has been considering some form of road user charging, whether based on time/distance use of the capital’s roads, workplace parking or a city-centre zonal charge.

The options are not dissimilar to the London congestion charge, the Nottingham workplace parking levy (a tax on parking places provided by city-centre offices for employees) and even the Clifton Suspension Bridge (imposed since opening in 1864). All are accepted supplementary payments.

One might argue that we already pay taxes for car use through vehicle licensing and excise duty on fuel. These, according to HM Treasury, are part of general taxation, such as income tax and VAT, and there is no link between taxes collected from road users and the level of spending on roads. This column is not suggesting that this is the view of Cardiff Council, but road users might expect lower fares and increased bus and tram-train frequencies in return.

However, one might argue that the debate is confused by many other costs and benefits associated with roads and traffic which are difficult to measure but which should be taken into account.

Reasons for an additional tax by the Welsh Government or local highway authorities

Local authorities and the Welsh Government do not receive their fair share of this UK taxation. Even if they did, the cost of car use to our health (air quality/asthma and accidents), congestion, road maintenance and environmental damage from emissions are well above the payments by road users and, ultimately, HM Treasury payments to Wales.

If we accept the Treasury’s principle, then the ‘user pays’ in road use as in other commodities, from buying clothes to food and train tickets. We would expect to go into a supermarket and pay for the weekly shop. We would also expect to pay for train tickets even though the track is state-owned (through Network Rail or TfW) and the train operations/prices are also determined by the Welsh or English governments.

Economic versus environmental

We need to look no further than south-east Wales for the environmental versus economic contest. Friends of the Earth argued in the debate prior to the decision not to progress a new M4 at Newport that Gwent Levels habitat, flora and fauna would be destroyed by the original scheme.

CBI Cymru Wales and the pro-roads lobby argued that south Wales needed a new gateway to encourage inward investment, thereby benefiting the national and local economies in Wales, as well as users through reduced journey times and improved lifestyles.

Private roads and bridges

Those who want faster travel, perhaps with higher speed limits, might be prepared to pay to use privately built roads.

This is not a new principle. Until recently, the Prince of Wales Bridge across the Severn Estuary was privately owned. Built by a financial consortium, it, along with the original Severn Crossing, provided a faster route between south Wales and London or the west of England than the longer, slower route via Gloucester.

We were prepared to pay the tolls on both bridges. Indeed, this columnist recalls travelling home from university by car to Llanelli (1966) and deliberately crossing the bridge and paying the toll. But then I have always had this transport interest.

One might argue that this facility was only affordable by wealthier motorists, but evidence shows that most road users put a value on their journey time and fuel use, and therefore have an economic justification for paying.

Of course, privately funded construction might help out the public sector in its hour of financial need by building new roads or estuarial crossings.

The Queen Elizabeth II Bridge – part of the Dartford Crossing – was constructed for profit, as Sir Nigel Broakes, Chief Executive of Trafalgar House (which funded the bridge along with merchant bankers Kleinwort Benson and Bank of America), said in 1991: “I cannot help making a profit. It’s not my fault that an estuarial crossing which saves so much time will attract demand.”

What is a ‘private’ road?

Many of the privately financed bridge schemes depend for their success on publicly owned infrastructure at both ends. In most cases, it is expected that the structure will be handed over to a public authority on the BOOT principle – Build, Own, Operate, Transfer.

So these are “not really private schemes with no government involvement”, according to HM Treasury.

However, such structures are only likely to be built in areas of high demand where, as Sir Nigel said, “profits can be made”. A truly private scheme will look to a marketplace with levels of demand, revenue and profitability to justify its construction.

Demand forecasts are vital to decision-making in a public scheme using the government’s Five Case Investment process (often referred to in this column), covering strategic, economic, financial and environmental benefits; in a private scheme, market analysis is the basis of investment.

Locations where such private or tolled schemes would work

In either case, the charge is based on ‘what price the market will bear’. In Cardiff, investment in urban transit may be a more efficient answer to congestion compared with a new motorway.

However, in areas of relatively low economic activity such as much of Wales, there is a paradox between market supply and need, so those areas are crying out for transport investment. The commercial market will hardly glance at the Canolbarth (mid Wales), Bannau Brycheiniog, Gwynedd or south-west Wales.

Private investment in roads cannot be a basis for transport policy. It is merely providing business opportunities for land developers. Even in the case of the A55 across Ynys Môn, the socio-economic benefits were considerable, but it was built as a private investment with the Welsh Government paying a ‘shadow’ toll to the investors which, in the longer term, has cost more than if it had been built through borrowed funding.

Complex reasoning for road user charging

If the objective is to improve air quality and reduce congestion, then there is a need to significantly increase public transport capacity, frequency and route patterns (with reduced fares) and promote a longer-term cycling programme. Even then, not all residents will be persuaded and it is likely to be the less well-off who will be disadvantaged.

Road user charging in urban areas can be justified on those economic and air-quality criteria. But what of rural Wales, where current criteria may not justify either private or public-sector investment? These are complex issues for Transport Minister Mark Hooper.

---

Get more trusted Welsh news

Choose Nation.Cymru as a preferred source in Google News to see more of our journalism.