A recent report from the RAC Foundation by Stephen Glaister suggests a ‘pay as you go’ system for roads. It calls for an elimination of vehicle tax (roughly £250/yr), cuts to fuel duty (57.19p/li), and regulatory oversight.
Basic reasoning tells us scarcity imposes cost and public goods fall to the tragedy of the commons. Traffic and road conditions exemplify the marriage of these phenomena well. The proposed scheme is really semi-privatization through contracting. It shifts major costs to those who actually use the roads. Moreover, the institution providing the roads is held accountable in a more direct way than publically managed roads.
Whatever company woos the government well enough and wins the bid is subject to regulation. Regulators will ensure fractions of revenue are set aside for road upkeep. In reality, this means the company will just do as the regulators demand and not keep the roads to an efficient standard. However, the report also calls for oversight to ensure efficiency. This seems impossible since government management is precisely why reform is needed. Although Glaister acknowledges these potential problems, there’s little to be done about it.
It’s important to keep a critical eye on how political motives and regulatory inefficiencies alter outcomes. There are always unfair and unjustified winners at the cost of others when private enterprise and government are partners. Still, the report is a leap in the right direction and researchers like Stephen Glaister should be applauded.