Rethink road funding to target investment and stimulate growth
Councils build, manage and maintain some 96% of all roads in England. The state of roads is high on the list of voter priorities, a fact that has been exacerbated by cutbacks and the legacy of the winter of 2011.
The backlog of investment needed to address the deteriorating state of the nation’s roads is set at £10bn and a decade of work.
Complaints from the public went up by 10% last year.
It is no surprise that councils face the dilemma of ‘running to stand still’. They know that this asset base will continue to deteriorate unless they invest now - either by diverting funds from other much-needed services, by increasing prudential borrowing or, increasingly, by considering other financing models.
Prime minister David Cameron has called for an urgent look at the options for getting large-scale investment into the national roads network. Having initiated a joint review by HM Treasury and the Department for Transport, the government appears to be suggesting several options.
One is an evolution of private finance initiative schemes (which combine an up-front capital programme to address legacy problems, with a continuing maintenance programme) effectively allowing private funds to ‘lease’ a specific stretch of highway for a set number of years in exchange for maintaining and upgrading it.
The focus for the public sector is shifting from one of accessing private capital to fund improvements to one of getting a capital injection in exchange for the private sector improving maintenance.
To be of interest to the private sector, concession periods will need to be long enough to incentivise concessionaires to inject capital and expertise into revitalising roads and sizeable enough to make bidding worthwhile.
The economic argument in favour of new investment into roads is strong. Many councils are sitting on undeveloped sites and stalled regeneration schemes which could be revitalised by accessible transport links.
Excellent short-term stimulus and good long-term returns can be gained by clearing road maintenance backlogs and bringing forward well-chosen local area road schemes. The advantages of these investments include use of the local labour force, a fast start-up and a quick delivery of economic benefits through reduced road congestion.
In summary we need to rethink local authority road funding as a priority so that appropriately targeted infrastructure investment can provide much-needed short-term fiscal stimulus.
Chris Wilson, vice-president, LeighFisher