Investing in roads: pricing, costs and new capacity

This study considers whether, if road pricing were introduced, the need for new roads in Great Britain would disappear. It is considered that road capacity has not kept pace with demand for decades and congestion and journey time unpredictability are becoming issues. Few public investments show as good a return for money as road building but objections to new road building and financing have deterred Government action. Road pricing would raise revenue for the Government, manage traffic growth at busy times and reduce the need for new capacity. Statistical estimates of the cost of building roads in Great Britain were developed in order to investigate how revenues from prospective road user charges could be used as an indicator as to the case for investment in new road capacity, should these charges be in place. Models for construction, maintenance and land acquisition costs are developed empirically, as far as possible using statistical analysis of real project cost data provided by the Highways Agency. The results indicated that even if road pricing were introduced, road building would remain necessary. In most cases, roads in rural areas would remain adequate but there is a case for more major roads in and around some of the larger towns and conurbations, including London. Some new rural motorways are also considered worthwhile. Tunnels may be required for some urban roads. Some costs were not included in the study, such as landscaping, carbon dioxide emissions and the effect of road construction on road user charging revenue. It is argued that if road pricing were introduced and no new roads built, then local authorities could be earning excessive profits from road pricing and would be able to abuse a dominant position. This might be judged to be against the public by the economic criteria applied in competition cases. The full text of this publication may be found at: http://www.trg.soton.ac.uk/itc/iir_main.pdf