First State Investments head of infrastructure asset management, Europe, Niall Mills, said a well-planned road privatisation programme in the UK will benefit road-users, taxpayers and investors.
Mills said the key to a successful road privatisation programme would be to strike the right balance between risk, reward and investor appetite for such assets. While details of any government proposals are still due, Mills said that early signs were hopeful, with a proposed investment model expected to be based on a regulated asset return for existing roads, similar to the model for utilities which has been copied in other countries over the years. He added that the investment model has been typified by the UK water industry, now with over £100 billion of new investment delivered since its privatisation in 1989. “We have seen huge improvements to environmental standards, most notably river quality. Not only has the government not needed to find £100 billion of capital to support the water industry in the last 20 years, but even more importantly, consumers’ bills have benefited from a tough regulatory regime demanding ever greater efficiency from the water companies.” On road privatisation, he concluded: “Given the right model, major road privatisation can provide the next opportunity for the Government to tap into. Not only should it help the UK Treasury and, by extension, the taxpayer, but the improvements in efficiency and customer experience seen in other industries will benefit all road users.”