David Cameron's road plans are already happening

http://www.guardian.co.uk/politics/2012/mar/19/david-cameron-road-plans-already-happening

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The plan to privatise the road network that was announced on Monday by the prime minister is based on three needs: for more investment, more long-term ambition, and more "nerve", all of which he said successive governments have ducked.

Critics of the position were quick to respond with the opposite creed: that railway privatisation and many other examples show the private sector will always take fat profits and run down assets or services.

The evidence for both claims is mixed.

David Cameron himself, in his speech at the Institution of Civil Engineers, made the most powerful argument against privatisation of public utilities. Pre-empting inevitable howls about the failures of railway privatisation by a previous Conservative administration, he admitted: "Our railways are crowded and expensive – compared to the French, Dutch and Swiss railways our fares are 30% higher, our running costs 40% higher and our public subsidy is double."

Nor are these problems exclusive to publicly subsidised utilities. On the future of broadband, Cameron also admitted that, left to market forces alone, private telecoms companies would only fit modern new broadband to about two-thirds of homes, requiring government to step in and ensure they add in most of the rest of the country.

Nor is the water industry, on which Cameron based his roads proposals, a model of privatisation success. Bills have risen in real terms by more than 50%, and the industry's lack of investment and fear of upsetting customers (by appealing for customers to limit water use) have been partly blamed for the current drought. From the PM's point of view though, none of this is costing the government, and private companies are taking the flack for putting up bills, not politicians.

More relevantly, students of privatisation can consider a range of proto-privatisation models already being tried out by the Highways Agency and local authorities. There is just one privately funded new-build toll road, the 27-mile M6 toll opened in late 2003 to help alleviate chronic hold-ups on the M6: after five years of operation a Highways Agency report found use of the toll road was falling, while traffic on the parallel section of the M6 was back "at or near" pre-toll road levels, but journey times on the "old" M6 section were considerably shorter. The experience appears to undermine the argument that building new roads solves congestion, but suggests road tolls do change behaviour.

For existing roads, experiences are more mixed. The Highways Agency is currently moving its 12 regions to contracts which sound very like what the PM is suggesting, under which private companies keep roads to a certain quality, and are paid by the (publicly funded) Highways Agency, who broadly takes the role that the PM described for a new national roads regulator. Just months into the first asset support contract, though, it is too soon to judge its success. Local authorities have more experience with private contractors, ranging from individual jobs to full private finance initiatives, such as one in Portsmouth, where one company has a 25-year lease to run the city's roads, pavements and streetlights. Some have had very unhappy relationships and contracts have been terminated; Portsmouth reports huge improvements in the infrastructure, but now faces the problem that it cannot cut spending on highways when it is making big reductions in its budget, forcing other areas to take even greater hits.

The good news for the PM is that with well-designed contracts with good regulation, private companies can cut costs and improve services. The bad news for some prophets of privatisation is there is still little or no evidence that they will succeed simply because they are private companies. The only reason we know this is because what the PM "announced" on Monday is happening already - or almost.