My heart sank when I read that the British Government is considering the privatization of UK roads....i.e. selling off and stripping yet another public asset. England's major roads could be run by private firms in a deal compared to the sell-off of the water industry under plans to boost infrastructure spending being set out by David Cameron. http://www.guardian.co.uk/commentisfree/2012/mar/19/david-cameron-privatisation-roads
 |
| Photo of Indiana Toll Road: http://www.nwitimes.com/ |
I instantly thought of the privatization of the 157-mile Indiana Toll Road and Chicago Skyway (which I use each week). It took years to complete a recent reconstruction of the Indiana Toll Road around Gary, and the cost of the Toll Road and Skyway has increased considerably since privatization in 2006. Tolls for cars driving the length of the road are now $8.80 as compared to $4.65 when the lease was signed. Tolls for large semitrailer trucks are now $35.20, as compared to $18 when the lease was signed. Meanwhile, we have absolutely no say in the matter.
As you can see from the following Northwest Indiana Times article, the private operator of the Indiana Toll Road could be in danger of defaulting on its huge debt in the near future. The road was leased to a private consortium backed by Spain-based conglomerate Cintra and Australia-based Macquarie in June 2006. And the lending group for the Toll Road privatization led by Royal Bank of Scotland.
The British Government's privatization idea is, in essence, a return to the old turnpike network of roads developed in the 18th Century during the Industrial Revolution in Britain. Local businesses could build and run roads around the country and charge horse-drawn coaches a toll in order to get their money back. Before then, the roads were run by the Church. Roads were nationalized in the late 19th century when people worried about the clogging of roads with the turnpike system being so fragmented and owned by different people.
There are also question marks over the precise way the British government will fund the privatization:
1. private companies will be able to charge tolls on newly-built roads and 2. those running existing roads will be given a portion of the revenues the Government receives from road taxes. While number 1. is a tried-and-tested model, there is evidence from America that number 2. is rather less reliable.
Here is a 2007 article entitled "Roads to Riches" in Bloomberg Businessweek magazine -- on why investors are clamoring to take over America's highways, bridges, and airports -- and why the public should be very nervous: http://www.businessweek.com/magazine/content/07_19/b4033001.htm
No comments:
Post a Comment