How to solve congestion: Own the roads!

Under a new U.K. think tank plan, every citizen would own a share of the country’s roads. This would benefit them … and the economy.

Lawrence Solomon
Financial Post
April 17, 2010

You paid for the roads. You should own them.

That’s the message from the U.K., where a leading think tank, Social Market Foundation, has a solution for a problem that has bedeviled the government for more than a decade: How to introduce road tolls on the country’s heavily congested road system without raising the wrath of a citizenry suspicious of both governments and corporations.

The foundation’s answer: Ditch governments and corporations by transferring ownership of the roads directly to the citizenry.

The plan is impressively straightforward. Newly created holding companies, wholly owned by the country’s 61 million citizens, would operate the road systems as toll roads, the amount of toll being determined wirelessly, eliminating the need for toll booths. The value of these new holding companies, whose shares would trade on the stock market, would approach £100-billion. The value of each citizen’s share: £1,500.

That’s a windfall of about $2,350 per person, or $9,400 for a family of four. Citizens could sell their shares if they wanted to put the money to some other purpose, or they could hold their shares to collect dividends spun off from the annual £5-billion in annual profits the road system would earn.

But it gets better than that.

Under the plan, the government would also scrap the UK’s current car tax, called the Vehicle Excise Duty, saving the typical car owner £235 per year (£425 if the car is new). That’s more than the £160 a year that the typical car owner might be expected to pay in road tolls, leading to an additional savings of £75 per year, twice that in two-car families.

The savings for the great majority of citizens would be even better, however, because the new tolling system — based on prices that varied by distance and time of day — assumes that car divers take the same number of trips, and at the same time, after the tolling system comes in as before. Experience around the world shows that drivers find all manner of ways to trim their toll expense. Some will vary their travel times to avoid peak fares or avoid needless trips altogether, some will share rides, some will switch to public transit, some will shop closer to home, or arrange to live closer to their place of work or school.

Even those who don’t change their travel patterns would benefit, though, because the roads under a properly tolled system would become free-flowing, freeing road users of the frustration and expense in time and fuel of being stuck in traffic.

The economic benefits don’t end with the individual. Traffic congestion adds to the cost of shipping goods and business travel, inefficiencies that, by some estimates, cost the U.K. £20-billion per year. As important as that, however, particularly in these times of economic malaise throughout the world’s economies, would be the benefit to financial markets and innovation that would come of unlocking a £100-billion resource — Britain’s major roads — that has been stagnating in government hands. By injecting so huge a sum into the private economy, 61 million investors would suddenly be putting capital to work, in the process boosting employment and spurring prosperity, much as occurred in the U.K. three decades ago, when Margaret Thatcher’s privatizations created a new class of citizen investors.

Not least, public health and the environment would also benefit from a tolled road system. Pollution from congested roads is often 50% higher than on free-flowing roads, which also have superior road safety records.

Over the last decade, Conservative and Labour politicians alike have promoted tolling the UK’s roads, generally promising to make the toll road schemes revenue neutral by simultaneously cutting road taxes. The public, not surprisingly, did not believe the politicians’ promises. Neither did the public relish the idea of selling off the roads to a major corporation that might later gouge them.

The Social Market Foundation’s approach — let citizens own the roads — overcomes these objections. This road not taken, until now, may give us a roadmap for the future.

Lawrence Solomon is executive director of Energy Probe   and Urban Renaissance Institute and a director of PEMA, a non-profit that owns patents for several toll road technologies.


Roads to Recovery: Reducing Congestion Through Shared Ownership

Road Pricing: The Next Steps

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