For whom the road tolls


altAccording to Monday's Telegraph, David Cameron is considering plans to introduce road tolls after the next election. This is in essence a good idea: as Adam Smith identified in 1776, tolls, if properly implemented, have three great benefits.

A toll road "defrays its own expense" – it pays for itself. Any policy that moves the burden of expenditure from taxpayer to user should be applauded, but Cameron's tolls will only do so if balanced by cuts in general taxation, road tax and fuel duty. Motorists already pay more than 5 times the cost of maintaining the roads , and road tolls on top of this would be rightly seen as nothing more than a revenue-generating exercise.

Toll roads "pay for the maintenance of those public works exactly in proportion to the wear and tear which they occasion of them." Pricing the roads, like any other scarce commodity, encourages their efficient use: drivers have a reason to economize. When tolls are set intelligently, costing more in periods of congestion or in polluted areas, drivers pay not only for the maintenance of the roads but for the costs that driving imposes on others. This can only work, however, if the toll system is a comprehensive one; otherwise drivers simply avoid the expensive roads, and move the maintenance, congestion and pollution elsewhere.

Toll roads "can be made only where commerce requires them." Like in any market, those roads that are profitable would survive, and roads that cost more to maintain than they generate in wealth would be abandoned. Faced with abandoning a road, the government is more likely to bail it out, or put up toll prices. Only a road system owned by private enterprise can sustain the competition necessary to keep down prices and jettison loss-making roads.

Unfortunately, it looks unlikely that the Tories will introduce a system of road tolls that seizes these potential benefits. Rather, Cameron emphasizes that he can't "promise tax reductions", advocates "separate road tolls" rather than a comprehensive scheme, and has made no reference to privatization. It seems driving will remain dirty, crowded and expensive for a while to come.