x Abu Dhabi, UAEWednesday 26 July 2017

Heavy toll for UK road to nowhere

Touted as an answer to endemic congestion around Britain's second city the country's flagship pay-as-you-drive M6 motorway is an abject failure.

Vehicles pass along the M6 motorway outside Manchester, England. PA Archives
Vehicles pass along the M6 motorway outside Manchester, England. PA Archives

Toll roads were supposed to be the answer to the United Kingdom's congestion problems.

Yet its first ever pay-to-use motorway, built and owned by the Australian group Macquarie, has been so unsuccessful the head of the regional transport body in the area has suggested it should be nationalised.

The 43.5km M6 toll road was built to relieve congestion around Birmingham, the UK's second city. But it is performing so badly its owners have offered to open it up free to lorries and hauliers for the whole of next month.

The operator Midland Expressway Limited (MEL) has made a £41 million (Dh 230.3m) loss in the past year, as fewer vehicles opt to pay to go on the road. At the same time, congestion on the original M6 motorway is worse than ever.

The Association of British Drivers said in January there was a "mad situation" where the toll road was operating at half its capacity, while the M6 motorway it was supposed to relieve was "operating at twice the capacity".

"Like many businesses in the United Kingdom, the M6 Toll has been impacted by ongoing weak economic conditions," says the MEL chief executive Tom Fanning.

MEL is owned by a company based in Bermuda that is part of the investment bank Macquarie. Five years ago, Macquarie pulled off a huge refinancing of the road, pushing its debt pile to more than £1 billion and pulling £390m out of the business.

It looks like motorists are now paying the price of that move. The toll has shot up from £2 for a car in 2003 to £5.50, while lorries are charged £11 - a 40p increase.

Drivers and haulage firms say the road is underused because its prices have been set too high.

But as the UK faces calls for more spending on infrastructure to help the economy recover from the longest post-war recession, the apparent failure of the M6 toll road underlines the difficulty of introducing new pay-to-drive roads to Britain.

While French, Spanish and Italian motorists have long been prepared to cough up tolls to travel on faster, safer roads, British drivers have not.

For years, civil servants and private sector construction companies have been proposing toll roads as the neat catch-all solution to the UK's twin problems of a moribund economy and dire road congestion. British motorways have two and a half times the density of traffic on Germany's autobahns and three times that of French motorways.

There are hopes a road-building programme could be financed by overseas sovereign wealth funds, insurance companies or pension funds.

The UK department for transport (DfT) said in March it was looking at new funding models for road building and "seeking money from sovereign wealth funds and global pension funds" was a key option.

Sovereign wealth funds from countries such as China and the oil-rich states of Saudi Arabia, Kuwait and Norway have been canvassed for their interest.

However, the example of the M6 toll road has thrown a spoke in the wheels.

The funds and institutions have said the losses of MEL show it would be hard to turn a profit on such projects.

One idea is that if income from tolls were to fall below an agreed level, the UK treasury would pay them the difference, possibly using revenue from British motorists' road tax. This is similar to the model in use on British railways.

The UK prime minister David Cameron has said tolls would apply only on new roads but the DfT has made it clear that routes having upgrades may be included. It is consulting on plans for tolling the A14 in Cambridgeshire to pay for improvements.

Another idea is to divide the country's trunk roads into regional franchises with investors able to impose tolls when roads are upgraded.

All tolls would be controlled by a regulator, provisionally dubbed Ofroad.

The Opposition, however, views the proposals as wholesale privatisation - despite having agreed to the M6 toll road when it was previously in government.

Another proposal is to revive a 10 year old plan to relieve congestion on the M4, which runs West from London to Cardiff, by building a tolled-road alongside part of it.

But when plans to build the road were leaked earlier this year, ministers were forced to deny the story, because of a furious reaction from road users, including the AA - the powerful UK motorists' organisation.

"Ministers look set to let private companies take over the strategic road network and charge drivers," says Maria Eagle, the shadow transport secretary.

"These proposals risk driving traffic on to local roads and increasing congestion. Motorists face a road charging free-for-all."

Yet the need to build infrastructure has taken on more urgency after the IMF said Britain should step up its spending, as a way of stimulating its sluggish economy. David Lipton, a deputy managing director at the IMF, says the government is not doing enough.

"What I've said is that in a range of policy areas, the government should be more supportive of growth than it has been ... that one of the best pay-off areas is infrastructure investment ... and that this effort should start now."

The IMF believes its infrastructure suggestion could boost the economic growth rate by about 0.5 percentage points this year.

Vince Cable, the Liberal Democrat business secretary, and other commentators have long argued the government should take advantage of record low interest rates to inject money into the economy. They say this would not just be a short-term stimulus but a long-term effort to renew failing and ageing roads and transport connections currently sapping the UK's economic efficiency.

Stephen Hammond, the roads minister, confirmed last month the government was looking at tolls for new roads.

"One of the things we've already said is we're very happy for tolling for infrastructure gain but we're not looking to toll the existing network at the moment," he said.

"What I do think there will be plans to look at, is how we can get private infrastructure in," Mr Hammond said.

"Some of that may be by tolling some of the new roads, maybe looking at charges for certain new bridges. But a general toll is not likely in the short term."

 

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