Britain to introduce 'new' road tolling

New age of pay-to-drive: Motorists face more tolls under plans to lease roads

- Prime Minister says move - which could become the biggest sell-off since the rail privatisations of the 1990s - will help kick-start the economy
- Firms and investment funds 'will be allowed to compete to build, operate and maintain motorways and trunk roads
- Existing roads will be toll-free, but if firms widen them 'pay-as-you-go' lanes could be introduced to beat congestion

By James Chapman

PUBLISHED: 00:01 GMT, 19 March 2012 | UPDATED: 09:03 GMT, 19 March 2012

Drivers face new tolls under audacious plans to put Britain’s roads network in the hands of private companies.

David Cameron will today say he wants to kickstart the economy by allowing firms and investment funds to compete to build, operate and maintain motorways and trunk roads.

New roads constructed from scratch by private investors, meanwhile, could become French-style toll roads. In addition, a proportion of the £6billion a year raised through vehicle excise duty would be used by the Government to pay contractors, probably based on the number of vehicles using the route.

Ministers hope that as well as getting more private sector investment into the economy, a sale of long-term leases of major roads could raise billions for the Treasury. It could become the biggest sell-off since the rail privatisations of the 1990s.

But motoring groups warned last night that drivers struggling with record fuel prices could ill-afford new charges – and suggested the move could lead to national road pricing, where motorists pay for every mile they drive.


Warning there is simply no longer enough money in public coffers to build more new roads, the Prime Minister will say in a speech today: ‘We now need to be more ambitious.

‘Why is it that other infrastructure – for example water – is funded by private sector capital through privately owned, independently regulated, utilities, but roads in Britain call on the public finances for funding?’

The radical move comes as Chancellor George Osborne seeks to jumpstart the economy and avoid a double dip recession. Other moves expected in Wednesday’s Budget include:

Ministers are proposing selling long-term leases, probably lasting several decades, to firms or investment funds who want to take over the running of major routes and be guaranteed a regular income over the life of the contract by taking a slice of vehicle excise duty.

Treasury sources said such a scheme would not be full-scale privatisation, since the state would retain ultimate ownership, but would still generate ‘billions’.


In a speech today, Mr Cameron will say Britain needs ‘good roads’ to boost economic growth. But he will admit: ‘The problem’s clear: we don’t have enough capacity in places of key demand. There’s nothing green about a traffic jam – and gridlock holds the economy back.

‘So here’s what we should do. Yes, move passengers and heavy goods on to rail. But also widen pinch points, add lanes to motorways by using the hard shoulder to increase capacity and dual overcrowded A-roads.

'The massive programme announced during last year’s growth review made a good start. But how do we do more, when, frankly, there isn’t enough money?

'We need to look at innovative approaches to the funding of our national roads – to increase investment to reduce congestion. Road tolling is one option – but we are only considering this for new, not existing, capacity.’


Mr Cameron will say that the Treasury and Transport Department will draw up options for ‘new ownership and financing models for the national roads system’ and report to Downing Street by the autumn.

Sources made clear all options were on the table. But they said the most likely model was that of the water industry, where private firms are overseen by an industry regulator.

Only motorways and major trunk roads, which make up three per cent of the country’s road network, would go into private hands.

Matthew Hancock, Conservative MP for West Suffolk and former chief of staff to George Osborne, told Radio 4’s Today programme, this morning: ‘We have a chronic need to get more infrastructure in.

'This is about leveraging in investment – not about selling off roads but about getting investment in roads. If we can find new ways of doing that, I think everyone would accept, this is not only needed but valuable.

'There’s upgrades to roads going on at the moment that have waited for decades. Take the A11 to Norwich. The expected return to the economy is 20 times the cost, but it’s waited 20 years to happen.

'Given the economic returns on some of these projects which aren’t being built because of the lack of money the Government’s got, then the returns to the economy, and also the millions of people stuck in traffic, are very great from being able to get that extra investment in.'

'The benefit is that because private companies doing the work would know they’ve got an income stream coming in the future from the cars using the roads they manage, then they could go to investors, pension funds and others, and say lend us the money now, we’ll be able to improve the roads, we’ll get more people going on them, faster, because of the reducing traffic.


'And that way we can get the investment now that benefits the economy that can’t done because of the constraints on public funds.'

But AA president Edmund King said: 'I'm not sure it adds up in that case. Motorists are already paying 45 billion a year in various motoring taxes, of which, in total, only something like nine billion is spent on the roads. So yes, there is money going in.


The Highways Agency could be run more efficiently, but I don't really think you need a new ownership structure.

‘The Government has indicated that tolls would only apply on new capacity, but many drivers would suspect new ownership is the thin end of the wedge leading to national road pricing. Many drivers can’t afford current fuel prices, so new charges would be a toll too far.’

Labour transport spokesman Maria Eagle said the proposals risked ‘driving traffic on to local roads, increasing congestion and emissions while yet again setting back efforts to improve safety’.

Mr Osborne insisted yesterday he intends to press ahead with a major shake-up of the planning system to speed up new developments, despite criticism from countryside campaigners.

‘It is deeply frustrating that the planning rules have held back economic development in Britain,’ the Chancellor said.

Read more: http://www.dailymail.co.uk/news/article-2116858/Motorists-face-pay-drive-tolls-plans-lease-roads.html#ixzz1pYy8cSZn

South Africa: Gauteng E-Tolling to Start in April
13 March 2012


Pretoria — Gauteng Premier Nomvula Mokonyane and Gauteng MEC for Transport Ismail Vadi on Tuesday registered their official vehicles for the e-tolling system, due to start operating on 30 April.

This was part of an event to mark to beginning of the process to have about 6000 Gauteng provincial government vehicles registered for the e-tolling system.

South African National Roads Agency Limited (Sanral) Chief Executive Officer Nazir Alli said so far more than 320 000 Gauteng motorists had registered for e-tolling.

He said that there were many advantages for registering, including being entitled to discounts and free break down assistance. Vehicles will be removed or towed to a safe place.

Commenting on the e-tolling, Mokonyane said the provincial government was committed in improving the province's infrastructure. "We will be going out to communities to explain to them about the e-tolling system," she said.

She called on other motorists to register their vehicles.

SANRAL will request that Gauteng road users register their vehicles for e-tolling. Road users will have the option to be recognised by their number plates, or by an e-tag.

According to Alli, motorists who do not register their vehicles will not be able to renew their license disc until they have paid all that they owe.

The implementation of the e-tolls system was halted in January after a public outcry over the fees. However, government is set to commence the programme from 30 April after Finance Minister Pravin Gordhan announced a special approbation of R5.8 billion to reduce the toll burden on motorists as a result of the GFIP.

The R5.8 billion, to be included in the 2011/12 expenditure, is aimed at reducing the debt to be repaid through the toll system, and will make a steeper discount possible for regular road users. The contribution by government will ensure that tariffs are reduced by up to half the price for e-tag holders.

The total debt associated with Gauteng freeway programme is R20 billion.

The new fee structure will see drivers of e-tag vehicles pay 30 cents a kilometer, instead of 66 cents as originally planned. There will also be a monthly cap of R550 for frequent users. In addition, there will be a 15 percent discount in the rates after their toll fees reach R400.

Drivers of motorcycles will pay 20 cents per kilometre and non-articulated and articulated trucks would pay 75 cents and R1.51 per kilometre respectively.

Heavy vehicles will qualify for a 20 percent discount if they use the roads during off-peak times in the day.

Taxis and other public transport operators will be exempt from toll fees.
http://allafrica.com/stories/201203131212.html

South Africa
Author: Jeanette Clark|
14 March 2012 17:26
Business unifying against e-toll


New opposition body established, Sanral’s transparency questioned.

PRETORIA – Despite warnings and clear messages by government that the e-tolling of Gauteng’s roads will commence come April 30, business continues to oppose the tolls, with several bodies establishing a unified opposition organisations on Wednesday.

OUTA, the Opposition against Urban Tolling Alliance, is supported by the South African Vehicle Renting and Leasing Association, the South Africa Tourism Service Association, the Automobile Association of South Africa and the Retail Motor Industries of South Africa.

“Following anger and outrage against the e-tolling of Gauteng's freeways, an alliance has been formed to coordinate the strategies of a number of organisations and associations who share a common view about this unjust action,” Savrala said in a statement about the establishment of the alliance.

The launch of OUTA will provide a platform for a united front which will lend significant support to the case, it said.

In the past day or two, the South African National Roads Agency Limited (Sanral) has also been questioned on its transparency as various parties struggle to get information from it.

An attempt by Sanral on Tuesday to promote transparency about the costs of the Gauteng Freeway Improvement Project (GFIP), backfired when parts of the document handed over to Cosatu on the cost of the project was blacked out first and elicited a reprimand from Transport Minister S’bu Ndebele.

“We have instructed the board of Sanral to ensure that all relevant information pertaining to the upgrading of the GFIP Phase 1A is accessible to the public. We have also instructed the board to call Mr [Nazir] Alli [Sanral CEO] to account in this regard, as we do not agree with access to selective information in this matter,” Ndebele said.

There has been some speculation about the true cost of the GFIP and that it is indeed more than the R20bn that is often cited as the total cost of the project.

Savrala, the Southern African Vehicle Rental and Leasing Association, said that it stands to reason that after Treasury funded Sanral with about R6bn the outstanding balance due is approximately R14bn. Savrala maintains that using e-tolling to collect the remaining R14bn is too costly administratively.

“Unfortunately, Sanral have not made the actual impact of the contribution from the minister of finance to the total GFIP debt public. This means one has to determine the relative economic efficiencies of the e-toll model at a rather crude level - however, the message is clear. Economically, it is irrational to continue with a revenue collection scheme that will very conservatively cost the GFIP users just over R6bn (although it has been estimated to be as much as R11bn), to collect the outstanding R14bn, resulting in an e-toll administration cost to revenue ratio of 43%,” the association said in a statement.

In answers to questions from Moneyweb about the impact of the special appropriation of R5.75bn, Sanral simply said it makes it possible “to keep Sanral’s debt at an acceptable level” and that the total debt will be paid off over a 20 year period.

Even with the lower tariffs announced by Finance Minister Pravin Gordhan, Sanral will repay the loans over the originally planned 20-year period, although revenue will now be lower than anticipated, the agency told Moneyweb.

With the commencement of e-tolling less than two months away, the planned amendment legislation that will ensure that e-toll offenders can be prosecuted, still has not been presented to cabinet by the department of transport.

Tiyani Rikhotso, spokesperson for the Department of Transport, told Moneyweb that the legislation did not go before Cabinet at its March 7 meeting.

“Not yet, but it will be serving before Cabinet soon. Once we have Cabinet’s go ahead it still has to go through the whole legislative process,” Rikhotso said.

A draft Bill, which has been drafted by a government department, is usually submitted by the relevant minister to the Cabinet for approval. The process thereafter is that the state law advisers must refine and approve the draft Bill, and then it is introduced and tabled in the National Assembly and published in the Government Gazette. The Bill is then referred to the relevant committee in the National Assembly which may agree to it, propose amendments or reject the Bill, generally after a process of public consultation.[b][/b]

The Bill is then debated in National Assembly and voted on. If there is a majority of votes in favour, the Bill is referred to the National Council of Provinces (NCOP) for consideration who can accept or reject or propose amendments to it. If the NCOP accepts it, the president signs it into law.

Although it seems the e-tolling will definitely go ahead on April 30, public sentiment towards the project is still extremely negative.

“It has however become painfully obvious, that this is the biggest public uprising against a decision taken by government since the birth of our new democracy 18 years ago,” Savrala said.

http://www.moneyweb.co.za/mw/view/mw/en/page295023?oid=564347&sn=2009+Detail

e-Toll economic justification queried

19 Mar 2012 14:52

SAVRALA (Southern African Vehicle Rental and Leasing Association) has commented on the claimed economic benefits of e-Tolling, presented by SANRAL, its principal the Department of Transport and more recently transport economist, Dr Roelof Botha and states it continues to be very surprised by the ongoing benefit motivations.
These parties often refer to a Gauteng Freeway Improvement Project (GFIP) 8.4 benefit cost ratio. Simply put, this hypothesis claims that for every R1 spent on the tolls, motorist will receive a benefit of R8.40. This claimed benefit is sourced from the Economic Analysis of the Gauteng Freeway Improvement Scheme prepared in August 2010 by the Graduate School of Business (University of Cape Town) for both the South African National Roads Agency and the provincial government of Gauteng. This claimed benefit cost ratio was also presented in last year's GFIP Steering Committee Report.

Minister's reply seems to refute assumptions

As this claimed benefit is one of the key motivations for the e-Tolling project, SAVRALA would encourage these parties to take note of the Minister of Transport's reply, tabled on 31 October 2011, to a Democratic Alliance question on the claimed GFIP benefits raised at the National Assembly (Question no 2598);

"As can be seen, the key assumption of the 2007 feasibility study was that the GFIP Project would reduce congestion. In my considered view, and in retrospect, the original feasibility study did not sufficiently weigh up international evidence suggesting that freeway expansion often does not in the medium term, resolve congestion challenges and often induces greater demand.

It also failed to consider alternative solutions to congestion - improved public transport provision, moving more freight onto rail and a curb on urban sprawl. The project benefits to road users therefore, may unfortunately not be forthcoming. This is the subject of further assessments and consultations by the Department of Transport and a Cabinet Task Team."

No independent, public input

The claimed GFIP benefits of timesaving, reduced vehicle expenses and lower accidents are again based on questionable assumptions derived in many instances from information unchallenged by SANRAL itself. It is also important to note that the economic analysis of the scheme did not request any input from any of the affected stakeholders like SAVRALA, which represents 450 000 vehicles. Surely, it is time for a proper public and independent economic analysis to be conducted?

Cost to revenue - 43%

It is also essential to separate the actual construction of the roads from their funding model. SAVRALA agrees with SANRAL on the need for the GFIP and that it will provide some benefit, but how much and at what cost is now a moving target. In reality, the viability and efficiency of the proposed e-Tolling model is now well beyond any economic argument.

After the Minister of Finance last month contributed almost R6 billion from Treasury to fund SANRAL's outstanding GFIP debt, the balance now due is approximately R14 billion (excluding interest payments). Unfortunately, SANRAL have not made the actual impact of the contribution from the Minister of Finance to the total GFIP debt public. This means one has to determine the relative economic efficiencies of the e-Toll model at a rather crude level - however, the message is clear. Economically, it is irrational to continue with a revenue collection scheme that will very conservatively cost the GFIP users just over R6 billion (although it has been estimate to be as much as R11 billion), to collect the outstanding R14 billion, resulting in an e-Toll administration cost to revenue ratio of 43%!

This is an unacceptable percentage for administration costs and contradicts the Minister of Finance's earlier call this year for all parties to be wise with scarce resources.

SAVRALA, and many other business and civil associations, have never disputed the need to pay for the costs of GFIP, however, jointly they continue to oppose the unacceptable levels of cost for a wieldy administration imposed by the e-Tolling funding mechanism. SAVRALA therefore calls on the government to seriously consider other less costly funding models, such as the revenue raised from the Fuel Levy, as one of several other funding mechanisms.

Bullying not democratic

[b]Further, SAVRALA remains perplexed as to why the government remains obstinate in the extreme about the drive to implement such an inefficient and costly system, given the extensive and growing resistance to e-Tolling across South African society, including some elements of government itself.

It is also of great concern that our Government agencies and their various spokespersons are reverting to verbal bullying and threats against its citizens should they wish to exercise their rights and not register for an e-Tag but rather pay the non-discounted rate, given the concerns about individual/account information protection etc.

What is needed, is greater transparency regarding the terms and conditions of the ETC (Electronic Toll Collection) tender document and the extent of the potential financial penalties, should the e-Toll project not proceed. The current stance only corroborates government's stubbornness to proceed despite all logical and economic reasons to rethink the project.

It has however become painfully obvious, that this is the biggest public uprising against a decision taken by government since the birth of our new democracy 18 years ago.[\b]

http://www.bizcommunity.com/Article/196/464/72543.html

'Lexus Lanes' for rich, gridlock for the rest... pay-as-you-go proposals will allow wealthiest drivers to bypass jams

AA warned the Government was creating ‘a poll tax on wheels’

By Ray Massey

PUBLISHED: 23:40 GMT, 19 March 2012 | UPDATED: 07:41 GMT, 20 March 2012

Motoring and transport groups condemned David Cameron’s pay-to-drive proposals as ‘ludicrous’ and ‘a toll too far’.

Under the plans, tolls could be introduced on new highways and existing roads could be widened to create additional lanes that drivers could use to get around congestion – at a cost.

The AA warned the Government was creating ‘a poll tax on wheels’ while Labour complained of a ‘rip-off’.

Haulage firms said it was ‘unthinkable’ to introduce tolls at a time when motorists and firms were being crippled with record fuel prices and the highest levels of fuel tax in Europe.


Ministers have ruled out a comprehensive national network of road tolls, but only until the end of this Parliament in 2015. The row erupted after the Prime Minister said yesterday he was proposing a ‘radical’ plan to kick-start the economy by allowing private firms and investment funds to compete to build, operate and maintain motorways and trunk roads in England and Wales.

Under the plans, motorists will not pay tolls to use existing roads. But firms given long-term leases on sections of motorway or dual carriageway could widen them to create additional pay-as-you-go lanes that drivers could use to beat congestion.


These are nicknamed ‘Lexus lanes’ in the U.S. because only those wealthy enough to drive luxury cars can afford to use them.

New roads constructed from scratch would operate like French toll roads, much like the existing system on the M6 Toll through the Midlands from Birmingham to Stafford.

Motoring groups said Britain’s 33million drivers were fed up with being ‘fleeced’ and simply don’t trust ministers to live up to their promises.


They fear drivers will be priced off the roads by profiteering companies, as has happened with privatised train companies. The Treasury raises more than £48billion a year from motorists in the form of duty and VAT on fuel, vehicle excise duty, VAT on car sales and company car tax – but less than £10billion of this is spent on the roads.


Private operators who took over the running of existing roads would receive a share of the near £6billion raised each year from road tax according to how many vehicles used the roads.

Why this is nothing less than another tax on road users

In his speech to the Institution of Civil Engineers, Mr Cameron said there was an ‘urgent’ need for private sector funds because the Government cannot afford to address growing gridlock and pothole problems.

But AA president Edmund King warned: ‘The privatisation of the railway network has hardly been a spectacular success and millions of drivers will be concerned if one of our most important and used national assets, the strategic road network, is sold off.

‘Many drivers would suspect new ownership is the thin end of the wedge leading to national road pricing. New charges would be a toll too far.’

Neil Greig, of the Institute of Advanced Motorists, said: ‘British drivers simply don’t trust the Government to come up with a new way of paying for roads that will not lead to increased costs in the long run. Drivers already pay far more in taxes and duties than they get back in investment in new roads.’

Geoff Dunning, chief executive of the Road Haulage Association, said tolls on new roads were ‘quite unthinkable’ and ‘ludicrous’ at a time of record fuel prices hitting motorists and hauliers.

Labour’s transport spokesman Maria Eagle said motorists face ‘a rip-off’ adding: ‘The Prime Minister’s double-speak gives the impression that his privatisation plans will only see tolls applied to new roads.

‘Yet he has redefined new roads to include anything that adds capacity including road widening and junction improvements. Motorists will rightly consider that to be a clear plan for charging for existing roads.’

But Professor Stephen Glaister, director of the RAC Foundation, gave a ‘cautious welcome’ to the idea of private sector investment to tackle the ‘chronic levels of traffic and congestion’.

Read more: http://www.dailymail.co.uk/news/article-2117401/Milking-motorist--pay-lanes-allow-wealthiest-drivers-bypass-jams.html#ixzz1pegEdQFi

Privatised roads: Drivers have had enough of highway robbery
Hard-pressed motorists will accept private roads – but they’ll want something in return.

By Philip Johnston

8:15PM GMT 19 Mar 2012

Do you want to buy a road? What would you like: something long and straight – the M1, perhaps? Or maybe the circular, static model is preferable: the M25 would be a nice little earner. David Cameron’s announcement yesterday that the Government is considering privatising the nation’s major road network has been greeted with a mixture of admiration for his radicalism and outrage at his temerity. Does he not understand that the roads belong to us and are not his to sell off to a private equity company or the People’s Republic of China’s sovereign wealth fund? How long before we are driving along the Chairman Mao Highway connecting Leeds and Manchester? Surely the highways are a national asset for which we have already paid at least once through our road taxes?

Well, that is true up to a point. But that point was long ago, when what is today called Vehicle Excise Duty (VED) was known as the Road Fund Licence. David Lloyd George as chancellor set it up in 1909 specifically to collect revenues for the roads. But while that may have been what the Welsh Wizard intended, it is not what happened.

Within a few years, the Treasury started to raid the fund, blurring the link between what motorists paid and the roads they got in return. As with the National Insurance Fund, ostensibly set up to pay for pensions and welfare, road taxes became just another way of raising money for general expenditure. It stopped being called the Road Fund Licence in 1935. Today, it is estimated that the combined taxes raised from motoring are around £45 billion a year; yet only about £10 billion is spent on new roads and maintenance.

Taxing motorists is a significant source of general revenues which the Treasury, in this time of austerity, is hardly likely to give up. A[b]nd yet the only way the hard-pressed motorist will be persuaded to support the sale of the roads or the introduction of pay-as-you-go lanes is if there is a quid pro quo in the form of lower road taxes. While the economic case for privatisation can sound persuasive to a prime minister looking for new sources of revenue to kick-start the economy, the political case is very hard to make.[/b]

Mr Cameron has ordered Whitehall to carry out a feasibility study into how private sector funds can be used to maintain trunk roads and motorways that would otherwise go unrepaired and unmodernised. But officials need not waste too much time on this task, because just such a study was presented to the three main political parties in 2009 by the investment bank N M Rothschild. It estimated that a sale could raise £100 billion and help revive the nation’s battered public finances. Toll-road companies and infrastructure funds would compete to operate and maintain stretches of the network. In one version of the scheme, the state would pay for upkeep through a system of “shadow” tolls. A more radical option would be for companies to charge motorists directly, through toll booths or electronic card readers.

So road privatisation is not a new concept. The RAC Foundation has also advocated it in the past. Indeed, it was supported by Vince Cable when he was in opposition as “an attractive, positive idea that could release considerable resources to the public finances and may have real environmental merits”. At the time, the Tories were less enthusiastic than the Lib Dems; but clearly Mr Cameron has now been convinced that this is a good plan. Is it?

Whether we think we pay quite enough to use the roads through VED and some of the highest fuel taxes in the world, there is not enough money to keep them in a good state of repair, let alone build new ones. Moreover, the greater fuel efficiency of modern engines means the Treasury’s take per vehicle is actually declining.

The facts are inescapable: new and improved roads are needed because the existing network is too decrepit and congested, costing the country £8 billion a year. But the investment that is there to improve our water and power infrastructure isn’t available to roads. The key difference is that the privatised utilities have access to money. But if we are to go down this route with our roads, how can companies make a return if they cannot charge tolls for existing road use? The Australian infrastructure group Macquarie owns the 27-mile stretch of the M6 around Birmingham where, for a £5 charge, motorists can avoid one of the country’s most snarled-up motorway sections. But traffic numbers have not expanded as expected, since many local drivers still use the free road even if it is jammed (this also happens in Spain and France, where tolls are more common).

Mr Cameron might well want the private sector to step in, but it won’t unless it can be guaranteed a profit. Contractors would expect a generous, PFI-style deal before agreeing to manage and maintain existing highways. There would, however, be more takers if our busiest roads were sold outright and the private owners could charge motorists for using them. This would be a more radical approach and would see tolls back on all our major highways for the first time since the turnpikes were abolished in the 19th century. There is no obvious reason why roads should be in public ownership, any more than the airlines or the railways. But, without cutting other road taxes, it will take all of Mr Cameron’s persuasive powers to convince motorists of this. After all, they already pay through the nose every time they get behind the wheel.

http://www.telegraph.co.uk/motoring/9153266/Privatised-roads-Drivers-have-had-enough-of-highway-robbery.html