Motorway Charging (Hansard, 2 December 1993)

§ Mr. Macgregor

The Chancellor of the Exchequer said in his Budget speech that I would shortly be making a statement about motorway charging in the light of responses to the Green Paper, "Paying For Better Motorways", which I published last May with the Secretaries of State for Scotland and for Wales. The Green Paper considered how the introduction of direct charging for the use of our most important inter-urban roads could provide another source of finance to expand the network more quickly; and how it could help to ensure that we make more efficient use of the network.

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Our aim was to stimulate an informed, wide-ranging debate. By far the most striking feature of the responses was the widespread acknowledgement among bodies representing industry and road users of the potential benefits of direct charging. An important effect of charging would be to provide another source of finance for improving the motorway network, so avoiding the congestion that will otherwise come with economic growth and increasing traffic. The motorway network carries 15 per cent. of all road traffic and 30 per cent. of heavy goods vehicle traffic. An effective network is an important contributor to our continued economic prosperity.

As many respondents recognised, motorway charging could have other important advantages. It would provide the key to increasing private sector investment in the operation and expansion of the motorway network. It would make more efficient use of the network, for example by the use of pricing structures designed to spread peak period congestion. It would put the charges on those who actually use motorways rather than the near-50 per cent. of road users who rarely or never travel on the network. And it would improve the competitive position of rail and other forms of public transport for which users are already charged directly.

The Green Paper described three options for direct charging. The first was conventional tolling with toll plazas and booths of the sort found on estuarial crossings in this country and on motorways in a number of other countries. The Green Paper said that this option should be ruled out for existing motorways because of the land that would be required and the traffic delays which conventional tolling would itself cause. There was almost unanimous agreement with that decision.

The second option, suggested as a possible interim measure, was charging by means of a permit system of the sort currently used in Switzerland. The Government have decided that the benefits of such permits would not be sufficient to justify the likely costs of introducing them as an interim measure. We shall not therefore pursue this option.

The third option discussed in the Green Paper was fully electronic tolling, where vehicles using the motorway network would carry an electronic tag which would react to signals as the vehicles passed roadside beacons. Vehicles would not have to stop. The toll would be worked out automatically and would either be charged to the road user's account or deducted from a pre-paid smart card on the vehicle. It is clear from responses to the Green Paper that this is widely seen as the best way of introducing motorway charging in this country.

The technology for electronic tolling on the scale necessary for the British motorway network needs further development. The electronic tolling systems currently operating or being tested in the United States and in Europe would not fully meet the requirements here. In the light of the responses to the Green Paper, we have decided to launch immediately a major programme of research, development and trials to identify the capabilities of the existing technology and to draw up a specification for a motorway charging system. The first step will be to invite industry to demonstrate available technology. We shall then assess in detail the most promising systems, with trials on a specific stretch of motorway. On the basis of the many discussions I have had with manufacturers and organisations involved in electronic road charging here and abroad, I am convinced that there is a great deal of work being 648W undertaken internationally, and it would be feasible technologically to install motorway charging here within about five years.

The assessment of the available technology and systems will provide the basis on which to decide when to go ahead with motorway charging and at an appropriate time bring forward the necessary legislation for Parliament to consider.

The Green Paper also invited views on the best ways of involving private finance in the operation and expansion of the motorway network. We announced a year ago that, as a possible transitional step to motorway charging, the private sector might be invited to bid for contracts under which they would design, build, finance and operate roads for which they would receive payment from Government in relation to the use of those roads. There is strong support for DBFO contracts from the construction industry and the City. Accordingly, we shall enter into early discussions with the construction industry and others to identify a list of potential DBFO schemes which could provide for substantial transfer of risk to the private sector. Our aim would be to let DBFO contracts on schemes which have already been taken through public inquiry. I therefore hope that the first contracts could be let and work started within 18 months.

The Green Paper made it clear that this was not the only option for increasing the role of private finance in the provision of roads. We have decided that the DBFO approach offers the best way forward for the present, whilst we develop for the future more extensive use of private finance and expertise.

I shall be appointing as soon as possible financial advisers to assist in preparing DBFO contracts and to work up further private finance options for the future.

Concerns were expressed in the responses to the Green Paper about the possible side-effect of charging on diversion of vehicles from motorways to other roads. I recognise that concern and devoted a whole chapter of the Green Paper to this question. Charging across the network at levels well below those used in other countries—as was proposed in the Green Paper—is unlikely to cause much diversion, and the Government are very conscious of the need to avoid this. It also has to be taken into account that, without improvement of the motorways, congestion on them will grow, and such congestion would itself cause diversion on to alternative routes. So doing nothing is not a realistic option.

Many respondents indicated that their support for charging was dependent on the resources being used to fund additional road capacity. The Green Paper gave two important assurances. First, that it would be the Government's intention to ensure that the revenue and expenditure on roads subject to charges would be transparent, and that the proceeds of charges would be applied only to the construction and operation of the charged network. Secondly, that the Government would take into account the relationship between the charges and existing motoring taxes in setting their respective levels. The Government reaffirm these assurances.

Many issues, such as the precise definition of the network to be charged and the level of charges require further exploration, which we shall undertake in parallel with the technology trial. Until these detailed decisions are taken, there is no case for amending our national road traffic forecasts and our traffic forecasting methodology to 649W take account of the contingent effect of tolling, any more than there is for anticipating the possible introduction of city congestion charging.