David Cameron

UK Prime Minister David Cameron is to propose the semi-privatisation of UK roads, allowing sovereign wealth funds to lease roads in order to trigger investment into infrastructure.

Cameron is due to give a speech calling for radical action to improve UK infrastructure and is set to announce that the Treasury and Department for Transport are to start a feasibility study into the long-term leasing of trunk roads and motorways.

Under the terms of the leasing, a set of targets would be established, including the reduction of congestion and improvements to the road itself and, in return, investors would receive a proportion of vehicle excise duty.

Although no tolls will be allowed to be placed on existing roads, should new capacity be created in the form of adding lanes or constructing new roads altogether, investors will be entitled to charge for their use.

It is believed sovereign wealth funds in countries such as China have been highlighted, as UK Chancellor of the Exchequer George Osborne recently travelled there to convince the country as to the feasibility of investing in the UK’s network of infrastructure.

The plans bear a striking similarity to the current funding of the mains water and sewage network but would also be regarded as a radical step, given the Treasury’s previous resistance to hypothecation, preferring instead to keep full control of government spending.

The current funding of the mains water and sewage network is regulated by Ofwat, which oversees water and sewerage providers and carries out five-year reviews on the services provided by companies leasing the network. Cameron’s scheme would see a similar regulator established.

Privatisation of the water and sewage infrastructure has been a considerable success, with a series of investments vastly improving the UK’s water infrastructure, improving levels of service provided to customers. Responding to the plans, Shadow Transport Secretary Maria Eagle claimed the plans could backfire, increasing costs for motorists at a time of economical austerity.

"These proposals risk simply driving traffic onto local roads, increasing congestion and emissions while yet again setting back efforts to improve safety," Eagle added.

"Ministers seem to be intent on repeating the mistake of rail privatisation, 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."

Carbon Voyage director James Swanston was also critical of the proposals, citing that the way infrastructure projects are paid for is only a proportion of the entire debate.

"Tinkering with the way Britain’s motorway network is funded is like putting a sticking plaster on a broken limb," said Swanston.

"Before worrying about adding extra lanes to our motorways, we should do more to ensure that road transport is shared, and that other, greener forms of transport like rail are used to their full potential."

Image: UK Prime Minister David Cameron will announce the plans in the lead-up to this year’s budget announcement. Photo: World Economic Forum / Remy Steinegger.