Government urged to introduce voluntary pay-as-you-go road pricing

Customers, not governments, should determine the amounts and locations of road expansion

New research published today by the Institute of Economic Affairs finds that the introduction of a voluntary pricing mechanism for road usage would have a sizeable impact on traffic and congestion.

In this new report, Moving the Road Sector into the Market Economy, leading transport economist Gabriel Roth highlights important lessons for UK policymakers in tackling chronic road congestion through the introduction of road pricing. The research calls for customers, not governments, to determine the amounts and locations of infrastructure expansion.

Roads are chronically underfunded

  • 90% of passenger traffic and over 60% of freight movement is by road, compared to 8% and 10% by rail, respectively. Despite this, government spending on roads is just a third higher than on the railways.
  • Britain’s roads have become the most crowded in Europe, with congestion costing around £20 billion a year in the UK.

Road development has been hamstrung by the government

  • Road users are not getting the benefits of competition. Governments are all too easily swayed by political considerations, which do not take into account what is best for drivers.
  • Despite a shortage of roads, suppliers are disincentivised from providing additional capacity because investment is constrained by government policy.

The research recommends:

  • A focus on consumer demand

Private providers should be allowed to enter the market and compete on equal terms with government providers. Prices determined by supply and demand are crucial to allocate scarce road space and signal shortages, alleviating traffic congestion for road-users.

  • Voluntary mileage-based tolls

Drivers who opt to use toll roads could receive an exemption from vehicle taxes. A voluntary system such as this could test road-users’ reactions and allow private firms to test out equipment and billing technology. The current operation of mobile phone networks could be replicated in achieving a system for road pricing.

  • Tolled express lanes

Private road providers could build these where government roads are congested. If just 20% of drivers opted to use these, it would have a substantial impact on congestion. Many customers would be prepared to obtain quicker travel by paying more to drive on commercially provided roads.

  • A step towards privatisation

Gradual and voluntary road pricing should be seen as a step towards much more widespread pricing on a system-wide basis, whereby tolls would be offset by an equivalent cut in Fuel Duty and Vehicle Excise Duty.

Commenting on the research, Dr Richard Wellings, Head of Transport at the Institute of Economic Affairs, said:

“For too long motorists have been used as a cash cow by successive governments which have received vast sums in fuel duty but have invested relatively small amoun