King Charles III has just outlined the Labour Government’s new Highways (Financing) Bill in the annual state opening of Parliament. This intends to speed up the process of roadbuilding in England by enabling private investors to effectively fund large infrastructure projects, rather than (or in addition to) the taxpayer.
While the Bill itself is yet to be released in full, the King’s Speech did uncover that the legislation will pave the way for what’s known as a Regulated Asset Base (RAB) funding model. This enables private firms and individuals to invest in projects as ‘licence holders’.
Under these arrangements, firms will be able to charge a fee for users (and in the case of roads, drivers) to use the piece of infrastructure of which they hold the licence, whether that be a road, bridge or tunnel. To ensure things are “well maintained, efficiently managed, and provided at a fair and proportionate cost to users”, the Government says it will name a regulator to keep an eye on things. A so-called ‘backstop’ will also be set up to ensure roads remain open and financial losses are minimised if the licence-holding private firm fails.
It’s expected that the first project to get underway if and when the Bill gains Royal Assent will be the Thames Tideway Tunnel – a giant sewer project, rather than one concerning roads. However, it’s hoped that the much-touted Lower Thames Crossing could indeed be constructed under the RAB model. This, alongside a recent announcement of a £28 billion investment into UK roads, could see many other major road projects get off the ground, too.
The boss of Logistics UK, Ben Fletcher, explained how, “A reliable road network is critical for the UK’s logistics sector and the nation’s economic prosperity, with delays and costs caused by poor infrastructure felt by businesses and consumers alike.”
“It is estimated that every £1 invested in the Strategic Road Network returns over £2 to society,” Fletcher continued, “and a reliable road network is also critical for increasing the resilience of the UK’s supply chain by enabling better connectivity with all other modes of freight transport.”
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