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Cameron considers lease plan for UK roads

Aims to address Britain's "degraded" national infrastructure.

The Prime Minister, David Cameron, will announce plans to hand control of Britain's major roads to private companies in an attempt to improve the state of the nation's transport infrastructure while earning a short-term cash injection into the Treasury.

The proposal would involve selling long leases to roads currently owned and operated by the Highways Agency. These make up 3 per cent of the length of the country's roads, but a third of the traffic and two thirds of the heavy goods vehicle traffic. The network it owns is valued at £88bn, and the agency's annual budget is £1bn; however, by selling leases rather than the network itself, the government can claim that its plans do not technically amount to "privatisation".

Once a private company wins the lease, it will take responsibility for maintaining and improving the roads, which would largely be funded by an earmarked proportion of the Treasury's £6bn revenue from vehicle excise duty. This would represent a major departure from typical government behaviour, since the practice of reserving specific income for certain projects -- known as hypothecation -- has long been disliked by the Treasury, which prefers to keep absolute control of government spending priorities.

Additional revenues could be brought in through tolls on new infrastructure, with the A14 -- the heavily congested road to Felixstowe, Britain's biggest container port -- being specifically cited. However, the largest share of the profits would be brought in through increased efficiency on the part of the new operators.

In his speech, Cameron will focus on the need to improve the state of the network as the primary reason for the sell-off, saying:

There is now an urgent need to repair the decades-long degradation of our national infrastructure and to build for the future with as much confidence and ambition as the Victorians once did. Infrastructure matters because it is the magic ingredient in so much of modern life. It is not secondary to other, more high profile elements of economic strategy.

It affects the competitiveness of every business in the country; it is the invisible thread that ties our prosperity together. It gets power to our lights, water to our taps, workers to their jobs, and food to our shops. It enables factories, offices, warehouses, workshops to function, to trade, to grow. But infrastructure isn't just about business.

It's not just about big, high-profile projects. It is an all-pervasive force in society too. It's the network that powers smart phones, allows us to log on to Facebook, to travel, to live the lives we choose. It is the platform for active citizenship. And its value lies in its ability to make things possible tomorrow that we cannot even begin to imagine today.

If our infrastructure is second-rate, then our country will be too.

However, as with the much-maligned private finance initiative brought in by the last government, there is likely to be a sizeable element of off-the-books lending to the project, with the initial sale of the leases playing the role of a loan to the government.

The shadow transport secretary, Maria Eagle, said:

Ministers seem to be intent on repeating the mistakes of rail privatisation, which was supposed to lead to cheaper fares and lower costs but has instead given powerful vested interests the chance to rip off passengers while increasing the cost to the taxpayer.