March 19, 2012 / 12:17 AM / in 8 years

Cameron says could privatise some UK roads

LONDON (Reuters) - Britain’s cash-strapped government could lease chunks of its road network to the private sector as Prime Minister David Cameron seeks to improve the country’s infrastructure to stop it falling further behind its competitors.

Traffic queues on the M6 motorway near Manchester, northern England March 19, 2012. Britain is to examine the potential for privatising parts of its road network as it looks at ways of upgrading the nation's infrastructure, Prime Minister David Cameron said on Monday. REUTERS/Phil Noble

The move to seek help from sovereign wealth funds and private investors came after news Cameron had only managed to secure two billion pounds from pension funds for new projects by 2013 - far short of a 20 billion pound target.

“The truth is, we are falling behind, falling behind our competitors,” Cameron told an audience of engineers in London.

“There is now an urgent need to repair the decades-long degradation of our national infrastructure ... We need to look urgently at the options for getting large-scale private investment into the national roads network - from sovereign wealth funds, pension funds, and other investors.”

Cameron said his Conservative-Liberal Democrat coalition government, due to publish its 2012 budget and economic updates on Wednesday, would look at introducing more tolling on new roads.

Britain has only one toll on a major highway, the 27-mile M6 toll Birmingham relief road.

Despite the lower-than-projected use of that road, analysts and some investors said the possibility of introducing more tolls could prove attractive.

“They are slightly more risky, compared to say a regulated utility or contracted power station - they are more economically sensitive,” said Surinder Toor, European head of infrastructure at JPMorgan Asset Management.

“But this is core infrastructure, and we would be interested in schemes involving the existing road networks.”


However, critics said expanding Britain’s road network with private cash would not solve congestion problems and could drive up costs for motorists.

“Building and widening roads to tackle congestion is a dead-end policy that will simply lead to more traffic, more pollution and even more gridlocked roads,” said Andrew Pendleton, Friends of the Earth’s head of campaigns.

“The prime minister should be promoting alternatives to driving such as affordable buses and trains - and reduce our transport system’s reliance on expensive overseas oil.”

The changes to how Britain’s roads are managed could mimic those made to water supply, where private sector capital funds independently regulated firms.

A government investigation into the idea will report in the autumn after examining several options, including the possibility of using road taxes to help fund private investment.

Last November, Britain announced plans to invest 30 billion pounds in major construction projects over the next few years, with two-thirds of the money set to come from pension funds.

The government is pushing through austerity measures to reduce a record peacetime public deficit, and Cameron admitted there was not enough money for further widescale, publicly funded road improvements.

The Conservative party, which Cameron leads, privatised the country’s rail network in the 1990s, and has advocated a greater role for the private sector in the National Health Service as well as in schools.

Additional reporting by Sinead Cruise; Editing by Steve Addison

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