John Redwood is a former Secretary of State for Wales and MP for Wokingham. He writes regularly at his diary.
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 of 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 that, 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 per cent 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 National Highways. 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 A303 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 earmarked for more homes and business investment.
It took privatisation to even put in a rail spur line to link the Great Western Mainline into Heathrow, one of the world’s busiest airports and generator of plenty of travel business for surface transport. There are many other regional gaps and uncompleted main road 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 hard shoulders into additional 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 lane 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 M25. 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 the 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 users of both systems.
When I produced a report for David Cameron’s incoming 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 billion 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 businesses have voted with their vehicles, choosing 59 per cent of all trips by car and just 2 per cent by train. Rail freight’s market share has fallen a long way since the days of British 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 roads. The railway likes trainload quantities which few producers can now manage. To take a bigger share of freight as many would like it needs more active marketing of single wagon marshalling with new branch lines into leading business centres. In the meantime more truck fleets take to the roads, hammering the surfaces with their high axle weights.
If the Government cannot bring itself to allow some private capital to top up and improve our road network it needs to find the borrowings to put in more highway. You cannot have a growing economy without more transport capacity. The Government has put a target for growth of rail freight into its nationalisation plans, but so far has not produced any supporting material to show how it will identify new customers and pick up their loads, let alone deliver them to their end destination. The truth is roads go everywhere in the UK. Rail services only go to a limited number of places with stations. The marketing, service arrangements, and pricing still favour the truck door-to-door over the train for part of the journey.
When it comes to passengers too few people live close to a rail station or wish to go to a destination close to a station. Most so called rail journeys include two car/taxi/bus journeys as well as a train ride. You do not go shopping by train for the weekly groceries. You cannot usually take the children to school by train outside London. Most households with two workers need two cars to get each to work, usually travelling in different directions.
To get growth in business and to help people do their jobs we need better roads with more capacity. That starts with the national network. The debate should be about how to raise the money and how to pay for it.
What we’re reading
Boxing clever. For The Critic, Kitty Thompson of Create Streets – an Economic Affairs contributor – has made the case that Britain’s streets are cluttered with obsolete modern telephone boxes that have outlived their original purposes. Now they act as advertising hoardings or targets for vandalism or litter. Outdated planning rules make it difficult to remove them; councils should be empowered to clear away redundant boxes and improve the look of Britain’s streets.
Differently abled. Michael Simmons, a great friend of Economic Affairs, has argued over at The Spectator that the definition of disability has expanded so dramatically in recent years that it has lost much of its original meaning. As someone with a disability himself, Simmons sees the rising diagnoses of mental health and neurodevelopmental conditions as a sign that cultural, institutional and financial incentives now encourage people to pursue disability, contributing to rising welfare dependency.
China whirl. Over at Engelsberg Ideas, George Magnus has suggested that the Arctic is becoming a major arena of great power competition. China – despite having no Arctic coastline – is attempting to establish itself as a major player. Beijing’s ambitions go beyond scientific research to take up shipping routes, critical minerals, energy resources, infrastructure and technological development. Divisions within NATO could create opportunities for China to expand its influence.
Social (air) conditioning. For his Wrong Side of History Substack, Ed West has argued that air conditioning has been one of the most transformative technologies in modern history, enabling economic development in hot climates by overcoming the productivity losses caused by high temperatures. Yet Europe has been slow to embrace it due to restrictive planning rules, environmental regulations and a broader ‘degrowth’ mentality. Time to embrace our warmer future!
GD-wheee. Over with our CapX chums, Valentin Boboc has defended Gross Domestic Product as an indispensable measure of economic output, despite its criticism from JD Vance. Boboc contends that the Vice President has confused GDP with a measure of national wellbeing. Its value lies in providing a simple, standardised and internationally comparable measure of a country’s productive capacity. It is the best available benchmark for comparing economies.