My Lords, in lending my support to my noble friend Lord Davies, I speak to my Amendment 39. It proposes that:
“The power to set a toll or a tariff on a strategic highway may not be delegated to any company or person but must remain the sole prerogative of the Secretary of State”.
We have heard from the Minister that there are no immediate plans for privatising the highways company, which is set to replace the Highways Agency. However, this does not allay our anxieties about the privatisation of our strategic highways network. Nothing that the Government have said will preclude them from asking private contractors to administer parts of the network under concessions. The contractors would derive their income from tolls.
We need only look across the Channel to see an example of a strategic highways network that is largely under the control of private profit-making agencies. The example is provided by France, where 45% of the motorway network is now operated under commercial concessions, including all the main arteries. This circumstance has been the result of a major sale to private investors of the state’s holdings in auto-route companies, which began in 2005, under the Villepin Government, during the presidency of Jacques Chirac. Initially, the tolls on the roads were set by the French Government, but the private companies have been permitted to make year-on-year increases in the tolls. There is now widespread discontent at their exorbitance and at the excessive profits of the companies, which acquired their assets at knock-down prices. Clearly, the French Government ought to have retained the sole prerogative to set the levels of the tolls.
The only example of a tolled motor road in the UK is the M6 toll road of a mere 27 miles in length, which bypasses the Birmingham conurbation. This is controlled by the Australian company Macquarie, which holds the concession until 2054. In contrast to the French toll roads, this under-used road appears to be a commercial failure. In 2012, the operator, Midland Expressway, claimed to have made a loss of £41 million. I have no way of confirming this figure, which seems to have been exaggerated; there would have been a tax advantage in exaggerating the loss. The recourse of the company was to increase the tolls. This may have increased the
company’s revenue, but it would certainly have diminished the traffic on the road, thereby reducing its social utility and increasing the costs of congestion and physical depreciation that are borne by the adjacent M6 freeway.
These circumstances should serve to emphasise a fundamental principle. Road charges need to be set by a central authority with an overarching concern to maximise the utility of the roads. High tariffs should be levied to deter vehicles from travelling on congested roads. High tariffs that deter traffic from using empty roads should be lowered or abolished. It might seem to be redundant to declare such principles at a time when there appear to be no immediate plans to impose additional tolls and tariffs on our roads. However, I believe that such charges are certain to be imposed sooner rather than later.
There are two factors here. The first is the likelihood that this Government, or a future Government, will desire to raise revenue to finance additional construction and maintenance. The second is the availability of new and effective technology that will greatly facilitate road-charging. My concern is that, unless the Government think ahead and resolve to take a strategic oversight of the matter, a piecemeal and dysfunctional system of road-charging will arise that will reproduce the problems that can be clearly discerned in other countries that have already applied tolls and tariffs to their roads.
Finally, whenever private enterprise is charged with undertaking motorway projects, it has been expected to raise the finance for those purposes from the open market. That has certainly been the case for the French toll roads, and it has been the case with our only toll road company, which administers the M6 toll. By going in their own right to the market, the companies have been denied the advantage of the superior creditworthiness of the Government. In consequence, they have had to bear much higher interest rate charges. There should surely be a way of conferring the benefits of the Government’s creditworthiness on all borrowings in favour of investment in social infrastructure, whoever undertakes them.