Private investment "urgently" needed to help improve England's roads, says Prime Minister

In a speech on infrastructure at the Institution of Civil Engineering, David Cameron said the Government needed to be "more ambitious" in looking at "innovative approaches" to increase road funding.

The Treasury and Department for Transport will carry out a "feasibility study" on "new ownership and financing models" for the national roads system and report back in the autumn.

"Why is it that other infrastructure - for example water - is funded by private sector capital through privately owned, independently regulated, utilities but roads in Britain call on the public finances for funding?" Cameron said in his speech.

He stressed that the plans were "not about mass tolling", adding that investment could come from overseas sovereign wealth funds, pension funds and other private investors.

"We are only considering [tolling] for new, not existing, capacity," he said.

Potential improvements suggested by Cameron include widening "pinch points", adding lanes to motorways by using the hard shoulder to increase capacity and upgrading overcrowded A-roads to dual carriageways. Road congestion costs the economy £7 billion annually, he said.

Funding mechanisms could include establishing concession type agreements allowing roads to be leased over several years to the private sector, which would in turn receive a proportion of annual road tax to fund repairs and maintenance, according to industry publication InfraNews (registration required). The Government could also establish a regulated asset base (RAB) model, where fees for gaining access to the use of an asset under Government control are centrally regulated, such as that currently in place in the water sector.

Infrastructure law expert Jon Hart of Pinsent Masons, the law firm behind Out-Law.com, said that the Government risked "alienating the Top Gear voter" as a result of its "volte-face" from announcements at the time of the National Infrastructure Plan in 2010 and its 2011 follow-up.

"While this seems to be suggesting a difference to previously mooted schemes in respect of road-charging, there does seem to be a lot of details that need to be filled in - and, as with other aspects of the Government's infrastructure policies, it is the length of time needed to fill in those kind of details which will be of concern for industry players looking for new markets and strengthening turnover," he said.

The Government announced in November that it had signed a Memorandum of Understanding with two groups of UK pension funds to support additional investment in infrastructure. In his speech, Cameron confirmed that pension funds would make the "first wave" of an investment programme worth £2bn by 2013.

Hart said that the pension fund bodies had already pointed out that their obligations were "no different" to those of other funders.

"Concerns will be on how issues such as the construction risks associated with any new build works or major capital repairs being undertaken through this approach, and other operational risks that might impinge on the investment grade status for any schemes that they will be looking for," he said.