Revising lane rental agreements to mitigate the economic cost of road works

There has long been disquiet at the delays caused to all road users by road works. Transport for London (TfL) undertook some work looking into the costs of road works as part of the case for the London Permit Scheme (LoPS) that was introduced in January 2010. That work suggested that the costs of congestion caused by roadworks in London are approximately £750m a year.

LoPS has been introduced with the intention of improving the co-ordination of road works and making it easier for highway authorities to challenge the proposed timescale of individual works. However, the scheme will significantly increase administration costs as it applies to all road works, whether they are on quiet suburban streets or on busy highways.  It therefore does not provide a way of targeting locations and times of day where the resulting impact on congestion is greatest.

On behalf of London First, Colin Buchanan assessed the congestion costs of road works in London and provided a set of options to charge utilities and highway authorities for undertaking road works. Our analysis suggested that the cost of road works to road users is probably five times higher the TfL estimate. This equates to a cost of £10,000 per site per day and this would apply at roadworks on major routes across the country.  We recommended three potential alternatives to the current system, all based on pricing for undertaking road works and trying to improve efficiency in the system by reducing the congestion costs imposed on road users:

Adjusted Permit Scheme – this would adjust the charges in the LoPS to better reflect the likely impacts on congestion by eliminating charges on most roads and focusing only on main roads, and by revising the charges per road work so that they reflect duration of works rather than simply being a flat fee.

Lane Rental Charges – these set out a charge per road work per day to be applied to all road works. Again this should only be applied to main roads, with works that avoid peak periods paying no charge.

Road Work Credits – these would be modelled on a carbon credit-style scheme with highway authorities and utilities being assigned budgets for their road work days and being rewarded if they came in under their budget and penalised if they exceeded it.

The potential impact of each option if applied to the Transport for London Road Network (TLRN) is summarised below.

Option Annual reduction in congestion (£m) Net public sector financial impact (£m)
Adjusted Permit Scheme 82 +17
Lane Rental Charge 199 +134
Road Work Credits 179 -26

We recommended that the Lane Rental Charge be pursued, because of the following features:

Economic Efficiency – it is the most effective end-state solution, with flexibility over charging, area of network to be covered, and its reduced administrative costs for both public and private sectors makes it financially viable;

Ease of Implementation – it is simpler to implement and administer than the road work credits system. Regulator endorsement is a potential barrier though as additional costs to utilities would be passed on to consumers; and

Financial performance – the real costs of supplying utility services should be incorporated in their price. That price should include the costs of maintaining the infrastructure and external costs falling on others. For highway authorities there would need to be no overall costs, but financial gains to more efficient authorities and vice versa.



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