Prime Minister David Cameron said private investment in Britain’s roads must be accelerated, as he seeks ways to stimulate the economy without using public money.
Cameron will ask the Treasury and the Department for Transport to explore ways of attracting “large-scale private investment” from sovereign wealth funds, pension funds and other private investors. He called for “new ownership and financing” plans to be in place by the third quarter.
“The truth is we are falling behind,” Cameron said in a speech in London today. “There is now an urgent need to repair the decades-long degradation of our national infrastructure and to build for the future with as much confidence and ambition as the Victorians once did.”
While companies such as Carillion Plc (CLLN) already operate some U.K. roads, Cameron is looking at ways to pay for building programs that are being delayed because of his austerity plans. The prime minister said the U.K. loses 7 billion pounds a year because of road congestion.
“How do we do more when, frankly, there isn’t the money?” Cameron said. “We need to look at innovative approaches to the funding of our national roads.”
Cameron said he is considering several ways of running the road system. One option would be to establish a regulator that oversees private operators as already exists in the water industry.
“Road tolling is one option -- but we are only considering this for new, not existing, capacity,” Cameron said. “It’s about getting more out of the money that motorists already pay.”
The premier outlined his plans two days before Chancellor of the Exchequer George Osborne presents his annual budget. In November, Osborne announced a 30 billion-pound ($47 billion) program to finance the construction of roads, railways and infrastructure projects.
The decade-long plan is already seeking to attract 20 billion pounds of investment from pension funds and by savings from existing budgets. Cameron said today pension funds will invest an initial 2 billion pounds by 2103.
The opposition Labour Party attacked Cameron’s proposals.
`Repeating the Mistakes'
“Ministers look set to let private companies take over the strategic road network and charge drivers for access,” Labour’s transport spokeswoman, Maria Eagle, said in an e-mailed statement. “Ministers seem to be intent on repeating the mistakes of rail privatization, which was supposed to lead to cheaper fares and lower costs but has instead given powerful vested interests the chance to rip off passengers while increasing the cost to the taxpayer.”
John Major's Conservative government gained parliamentary backing for the Railways Act 1993, paving the way for the privatization of British Rail, the state-owned rail monopoly. By 1996, the track, signaling and stations were put under the control of Railtrack Plc, leaving private operators to own and run trains and lease most stations. The Labour government took over Railtrack in 2002 following a series of high-profile accidents involving track and signaling failures.
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