The Highways (Financing) Bill may initially be about unlocking private investment for the Lower Thames Crossing, but its significance could extend much further. If the model proves successful, it could create a new route for financing major road infrastructure at a time when pressure on conventional public spending is intense.
For decades, one of the biggest constraints on major road building in England has not necessarily been identifying where additional infrastructure is required. It has been finding the money to deliver it.
The Highways (Financing) Bill could begin to change that equation.
Introduced to Parliament this month, the legislation would create the framework necessary for private capital to finance major highways infrastructure through a Regulated Asset Base (RAB) model. The Lower Thames Crossing is intended to be the first road project to use the approach.
That makes the Crossing much more than another major National Highways project. It potentially becomes the test case for a fundamentally different way of paying for some of Britain’s largest roads.
Moving beyond the traditional funding model
England’s Strategic Road Network has traditionally depended heavily on government funding.
The third Road Investment Strategy demonstrates the scale of that commitment. In March, the Government announced £27 billion for England’s motorways and major A-roads over the five years from April 2026.
But government budgets inevitably have limits.
Road investment competes with rail, health, defence, education and numerous other demands on public expenditure. Large individual schemes can consume substantial portions of an infrastructure budget and potentially restrict the number of projects government can progress simultaneously.
Private finance offers another source of capital.
Under the proposed RAB approach for the Lower Thames Crossing, a regulated private entity would finance, construct, operate and maintain the infrastructure. The Government says the majority of construction costs would ultimately be financed through the model, supported by revenues generated from road-user charges.
That distinction matters.
Instead of government having to provide virtually all the capital required to build a major project upfront, institutional investors could potentially provide much of it.
Why investors might be interested
Major infrastructure can be attractive to pension funds, insurance companies and other long-term investors because assets can potentially provide predictable revenues over several decades.
But investors require confidence about how those revenues will be generated.
The RAB framework attempts to create that certainty through economic regulation.
For the Lower Thames Crossing, the Office of Rail and Road is preparing to become the economic regulator. Its proposed responsibilities include protecting highway users while promoting efficiency and ensuring that the licensed organisation remains capable of financing its activities.
The intention is therefore not simply to hand a road to private investors and allow them to determine what motorists pay.
There would be a regulated relationship between investment, operating costs, performance, user charges and the return available to investors.
Government confirmed earlier this month that actual Lower Thames Crossing charge levels have not yet been determined. Under the proposed system, charges are expected to cover efficient service costs and provide a fair return on private investment, with regulatory oversight intended to protect road users.
Lower Thames Crossing could become the proving ground
The importance of the Lower Thames Crossing extends beyond the project itself.
If private capital can successfully be raised for one of Britain’s largest transport projects, the obvious question will be whether the approach could be replicated elsewhere.
That does not mean every future bypass, motorway widening or junction improvement will suddenly become privately financed or tolled.
Many projects would be unsuitable.
A viable privately financed scheme requires an investable proposition and, under this type of model, a credible mechanism for generating sufficient revenue.
But there are potentially major projects where those conditions could exist.
The result could eventually be a mixed road-investment landscape: conventional publicly funded projects delivered alongside major schemes incorporating regulated private finance.
For the highways supply chain, that could be significant.
If alternative financing enables projects to proceed that might otherwise wait years for space within public capital budgets, the overall infrastructure pipeline could become larger and potentially more continuous.
It could change the debate about road investment
There is also a broader economic argument.
Major road projects are frequently judged against what government can afford during a particular spending period.
Introducing private capital does not make infrastructure free — ultimately somebody still pays — but it potentially changes when and how the capital required for construction becomes available.
That could allow government to consider infrastructure investment partly through a different question:
Can this project support a viable long-term regulated investment model?
rather than simply:
Can government afford to build it now?
That could be one of the Bill’s most consequential effects.
The Government’s February assessment of the Lower Thames Crossing illustrates the trade-off. It concluded that both full public funding and the RAB approach could viably deliver the project. It also said their relative value-for-money positions were marginal, while identifying RAB as the option that best met the objective of having construction costs primarily met by users and limiting the requirement for taxpayer funding.
So private financing should not automatically be confused with cheaper financing.
Its attraction can instead lie in mobilising capital and allocating funding and risk differently.
There are important questions too
The approach inevitably raises issues that policymakers and the industry will need to resolve.
The most obvious concerns user charging.
If private investors finance infrastructure on the expectation of regulated returns, the revenue supporting those returns has to come from somewhere.
For Lower Thames Crossing, that means charges paid by users of the crossings.
There will therefore be legitimate debate about affordability, how charges are calculated, the appropriate return for investors and how effectively regulation protects motorists and businesses.
There are also questions surrounding construction risk, cost escalation and who ultimately carries those risks.
The Government’s own assessment acknowledges uncertainties including investor appetite, user-charge levels, the delivery timetable and the eventual balance-sheet treatment of the project.
Those details matter enormously.
A model that successfully attracts billions of pounds of investment while maintaining strong cost and performance controls could become highly attractive for future infrastructure.
A model associated with excessive financing costs or poorly allocated risk would produce a very different conclusion.
A potentially important moment for highways
The Highways (Financing) Bill should therefore be viewed as more than legislation needed to get the Lower Thames Crossing financed.
It creates a mechanism that could potentially be available for future road infrastructure.
That does not signal the end of publicly funded road building. Government investment through programmes such as RIS3 will remain fundamental to maintaining and improving the Strategic Road Network.
Nor does the Bill itself guarantee a wave of privately financed motorways.
But it potentially adds another tool to the infrastructure funding toolbox.
For contractors, consultants, technology providers and the wider highways supply chain, that could eventually mean a broader pipeline of major projects and different relationships between government, National Highways, regulators and private investors.
The Lower Thames Crossing will provide the first major test.
If the regulatory structure attracts investment, construction is delivered effectively and the model demonstrates that the interests of investors, taxpayers and road users can be balanced, its influence could stretch considerably further than the Thames.
In that scenario, the most important legacy of the Lower Thames Crossing might not simply be the road itself.
It could be establishing a new way of getting Britain’s biggest road projects built.