Private operation of the strategic highway network (SRN) with income for investors funded from a proportion of motoring tax revenues and its management overseen by an independent regulator are at the heart of a new CBI report looking at the future of roads.

Road tolling would be needed to help fund new infrastructure investment the business organisation said. And the SRN would need to be redefined.

The Highways Agency would be abolished under the proposals with some of its functions falling to the new independent regulator and others like the setting of performance specifications picked up by a new Highways Forum.

In ‘Bold thinking: a model to fund our future roads’ the CBI called on Government to overcome the funding gaps in the “creaking” road network.

“The UK economy is already losing up to £8Bn each year from congestion on the roads which could potentially rise to £22Bn by 2025,” the CBI said. “The CBI is calling for the introduction of a Regulatory Asset Base model to secure the private investment necessary to overcome the current funding gaps in the road network. A £10Bn shortfall in funding for Highways Agency projects and the prospect of declining motoring tax revenue due to ever increasing efficiencies in new vehicles makes the current model unsustainable,” it said.

Fuel duty receipts are predicted to fall from 1.8% of GDP in 2010 to 1% by 2030 and Vehicle Excise Duty could fall from 0.4% of GDP to 0.1% in the same period according to Institute of Fiscal Studies figures. These projections anticipate a £13Bn hole in the Treasury’s finances.

“A regulated model for the road network would address the problem of long term funding and one year cycles by taking the road network out of the Government’s budget. Users would have a proportion of their motoring taxes converted to a user charge – controlled by the regulator – to access the SRN. This charge would provide a funding stream for private operators – licenced by the regulator – who would operate regional sections of the network,” CBI said.

The charge alone would not be enough to leverage the levels of future investment needed to finance bigger capacity projects, CBI believed. “Private operators would have to finance such projects through long term borrowing which would require additional revenue streams such as tolling. The regulator would cap charges and manager the overall cost burden on drivers.”

CBI’s report said the SRN would need to be expanded to include economically important strategic routes currently in local authority hands. And a network audit establishing quality and state of the current road condition would be required to create the basic RAB asset model.

To read the full report go to http://www.cbi.org.uk/business-issues/infrastructure/bold-thinking-roads-report/bold-thinking-roads-report-in-full/

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