An interesting thing about England: you can study the history of something going back at least 1000 years. Which is what this paper does with respect to road and other infrastructure pricing, from Roman England up to the London Congestion Pricing Cordon. Hypothecated finance goes back a long way as it turns out.

1. "User-pay funding of transport
infrastructure: lessons from
London and England's long
history of road pricing”
Cameron Gordon
Associate Professor of Economics
University of Canberra
Cameron.gordon@canberra.edu.au

2. Presentation outline
• English transport finance:
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Post Roman to pre-medieval
The importance of bridges
The medieval period
A transition: 1500s to early 1700s
The Turnpike Revolution (1700s to 1800s)
State-centered finance: twentieth century
• London
– The Bridges Estates
– The limits of charity
• Lessons
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Beneficiary-cost matchups and mismatches
Thinking ahead about legal framework
The land use and value bundle
The Wider Economic Benefit conundrum
The importance of regulation

3. • The Roman Occupation of
Britain saw the usual
Imperial investment in a
road network, financed by
Roman taxes and levies
• This network almost
completely disappeared
after the Romans left and
the network in place by
the thirteenth century
owed almost nothing to
the Romans except for
some of the route
placements.
•
http://www.probertencyclopaedia.com/photolib/ma
ps/Map%20of%20Roman%20Roads%20in%20Britain
%201906.htm

4. • Just a note on Roman roads in Britain: most of them
were unpaved and, in fact, provincial Roman roads
generally tended not to be paved but consisted of a
metalled surface (e.g. gravel or pebbles) on a solid
foundation of earth or stone.
• (The Agger is a well-drained base in the form of a
bank of earth or other layered material. This diagram
is a schematic of the case where an original Roman
road has been followed and covered by a modern
road.) http://www.brrp.bham.ac.uk/construction/construction.html

5. How did Medieval England build
and maintain its roads?
http://www.arts.cornell.edu/prh3/257/images/Knownrds.gif
• Despite the degradation of
Roman roads, post-Roman and
Medieval England managed to
build and maintain a decent
network of roads that
managed both to evolve and
deliver what most historians
consider a reasonable level of
service.
• How was this accomplished,
especially given the turbulent
nature of society during much
of this period and undulating
royal authority?

6. The original user-pay system
• Collective transport provision and finance in Anglo-Saxon England
focused on in-kind contributions, particularly labour levies,
delivered through traditional civil authorities and administrative
units (counties, hundreds and vills) and landowners, both secular
and religious. Essentially obligations tied to landownership put
road finance imperatives on landowners and garnered cocontributions by residents in the form of work on construction and
maintenance.
• As the economy developed in this period, transport needs
increased, and technology changed; this basic arrangement had to
be strengthened through both voluntary actions (especially
charitable and other voluntary contributions), changing business
practice (especially informal monetising of in-kind labor levies in
the form of hiring of skilled craftspeople) and periodic central
legislation.
• These were the main funding mechanisms during the Middle Ages;
thus infrastructure finance was closely tied to local beneficiaries.

7. The importance of bridges
• In a riverine territory like England water crossings are
particularly important. In fact many transport historians
argue that it was bridges that actually contributed the most to
efficiency in English movements of goods and people.
• Sir Frank Stenton has argued that in the medieval period it
was ‘by the building of bridges that Englishmen set about
improving their communications.’ Other historians have
agreed.
• Roads obviously took time and money to make and maintain
but prior to macadamized roads their construction was
obviously simpler, especially since loads were limited by
technology. Travel on roads was slow but impossible if there
were no bridges. And bridges turned out to be expensive,
sometimes requiring the most advanced technology of the
time. Bridges required the mobilization of large amounts of
capital sometimes with frequent infusions.

8. • Many bridges, particularly
larger ones, often hosted other
structures and enterprises.
Chapels were quite typical and
this is one reason churches,
prior to the Reformation, were
often responsible for upkeep
of bridges. Such structures
also generated revenue.
• One big technological shift was
from timber to stone bridges, a
shift which required a
quantum leap in capital
investment.
The Bridges of Medieval England: Transport and Society, 400-1800 David
Harrison

9. Customary arrangements
• Some bridge building was undertaken for strategic and economic
reasons and was led by the Saxon kings (and indeed, fortifications,
often integral to bridges, were one basis of the labour levy).
• A more significant impetus came from charitable giving by landed
and wealthy parties, e.g. an heirless merchant leaving a large
bequest for a bridge or a lord bridging a now impassable ford to
benefit his estate. As per capita incomes grew especially after the
middle ages, such ‘surplus’ income became more widely available.
And of course this same trend drove increasing demand for roads
and bridges.
• Charitable impulses in this sense constituted a sort of supply
meeting demand. Otherwise, as Harrison notes, substantial bridges
would have often been built in odd places instead of the critical
points they usually were built. Also most bridges remained well
maintained, a further indication of their economic and not just
charitable utility.

10. Source: Harrison

11. Source: Harrison

12. • By the 1500s this customary system was
under strain. It might be OK for existing
bridges and maintenance but new bridges in
new places could be problematic. Harrison
refers to a ‘fossilization’ of liabilities where
traditional obligation systems essentially
froze and were incapable of financing new
bridges at new sites after the eleventh
century.
• Technology played a role too: stone bridges
were now the norm and older limited
financing mechanisms were not sufficient for
building these outside a very few cases.
• The Reformation also was critical in removing
church lands and obligations to bridges. New
landholders generally did not honour old
church obligations to bridge upkeep.

13. • Even before 1500, new institutions such as towns
and gilds were becoming increasingly active in
bridge building. By the 1300s town officials, usually
bailiffs, often oversaw the repair of bridges.
• Grants of tolls were frequently issued to them for
this purpose and they likely collected rents from
property given to the bridge and managed that
property. Bridge wardens, chosen by the
townsmen, were common.
• Private gilds meanwhile developed the Estate Trust
to manage and disburse their increasing wealth.
• A 1391 Act extended the terms of the original
mortmain legislation to cover gilds and fraternities,
cities, boroughs and market town requiring them to
seek Crown licenses to acquire land for themselves,
but also formalizing and encouraging the use of
Bridge Trusts.
Norwich City Walls
http://www.britainexpress.
com/History/Townlife.htm

14. A note on
medieval tolls
http://www.walesonline.co.uk/lifestyle/nostalgia/welsh-historymonth-the-tollgate-3415361
• There were two main sources of
authority for tolls. Ancient
custom was one. This seems to
be the basis for London Bridge
tolls and other major bridges
through to the fifteenth century.
• A Royal grant was the other
source, called a pontagium or
pontage grant. These appear to
have originated in the 1200s.
This pontage grant was the
companion of the murage grant,
a contemporary innovation,
which was the licence to levy tolls
on good coming in for sale in the
town and meant to defray town
defence costs.

15. Pontage grants tended to be small and
for short duration until their heyday in
the 1300s, that of murage grants a little
earlier. The grant on behalf of the
Ferrybridge is typical, stating that the
sums raised are to be spent on repairing
or occasionally rebuilding the bridge.
http://www.johnhmoore.co.uk/hele/turnpikes.htm
• They were never meant to be a general levy on travelers
and there were penalties for ‘misappropriation,’ i.e. the use
of tolls for purposes other than maintenance and repair. In
particular these grants were most often made in times of
crisis. One had been obtained by the London bridge shortly
before it collapsed in 1282.
• The sums raised by these grants and their corresponding toll
revenues remained small in any case. By the end of the 15th
century, the London Bridge estate’s income derived from
tolls was less than 5% of the total. Such low yields probably
were due to the many exemptions, possibly spotty
enforcement and, in some cases, low traffic.

16. 1530 – 1760: from User Finance to
General Finance
• 1530-1760 is one clear phase change in the English bridge finance
system. The Statute of 1510 removed traditional bridge funding
obligations and shifted them to the general tax base of the county,
which was, of course, a property tax base.
• The Statute for Mending Highways was passed in 1555 and made
all parishes or townships responsible for road maintenance in their
jurisdictions and gave them authority to force local inhabitants to
work on the roads for up to six days per year. The Chantries Act of
1547 suppressed the religious gilds and along with the dissolution
of the monastic estates there came an end to church finance.
• Wider revenue bases were thus tapped with the imposition of
liabilities on local counties, a broadening to a general tax base
composed of users and non-users (using that term in the broadest
sense).

17. 1760: beginning of a new era
• After 1760 really major breaks and changes occur in transport
finance. There was a large increase in expenditure on county
bridges, an apparent doubling from 1640-1760 to 1760-1800
and another doubling from 1800-1830.
• Many bridges previously repaired by owners now transferred to
county care, such as the three Surrey bridges at Cobham,
Leatherhead and Godalming in 1782. This was driven by
extensive reconstruction of bridges during this period as well as
an expansion of the road system.
• But it should be noted that the more traditional system of
subscriber based finance remained, though often supplemented
by Trusts when subscriptions proved insufficient (e.g. in
Shropshire). Small bridges in particular remained polyglot in
their funding sources. Even at the beginning of the 20th century
many bridges were still being repaired by landowners who had
acquired an obligation from over 1000 years ago.

18. The Turnpike Revolution
• Turnpike Trusts were statutory creations of Parliament
and had access to external finance with externally
created boards.
• A Trust board of trustees had power over a road that
was previously maintained by several parishes. They
could levy tolls, issue secured bonds and purchase land.
• Toll revenues had to be devoted entirely to road
maintenance, salaries, interest and debt payments.
• The first turnpike act was passed in 1663, but these
became regular features of legislation only in the 1690s
and 1700s and grew in surges from there. By the 1830s
there were over 900 trusts managing approximately
20,000 miles of 17% of the entire network.

22. • One issue that arises is the match between beneficiaries
and cost-bearers. Parishes, for example, were funded by
communities while users of roads who were not part of
that community often benefited from road and bridge
investments without paying for them. Also parishes
were drawn around traditional boundaries.
• Turnpikes trusts could be and were drawn for larger
areas that sometimes more closely matched transport
areas. Economies of scale in both financing and
operations allowed trusts to make investments and pay
operating and maintenance expenses much larger than
traditional authorities could handle. Realisation of
network effects was also generally more possible with
trusts which could create interlocking directorates to
help coordinate investment across trusts.

23. • Turnpike trusts could exercise more
monopoly power than older traditional
authorities. Parliament did try to legislate
protections against the abuse of such
powers, including setting maximum tolls,
and forbidding trustees from earning
profits. Parliament also required trustees
to own property which could provide
incentives for trusts to keep tolls low so as
to maximise returns from those
investments. (This strategy may also have
captured agglomeration economies).
• There was, of course, conflict of interest
and rent-seeking that might have been
engendered by such strategies. Indeed
Adam Smith wrote of these abuses
http://www.openairclassroom.org.uk/Further
%20information/informationclaiming that trustees charged tolls twice
turnpike%20trusts.htm
as high as needed to maintain the roads.
Gouging?

24. The land value nexus
• Trustees were typically local landowners and
merchants who had a direct interest in road
improvements.
• Although prohibited from earning profits directly
from tolls, trustees generally profited from
indirect returns to property value gains In a sense
this is a proto-value capture scheme that may
have allowed investments to be profitable
through indirect returns.
• Turnpike trusts were responsible for at least 20
percent of total growth in land rents between
1690 and 1815.

25. The payoffs
http://www.turnpikes.org.uk/The%20Turnpike%20Roads.htm
• Bogart estimates that
‘social savings’ from all
transport innovations,
including trusts, equaled
1.2% of national income
in 1800 and 2.0% in 1820.
He estimates that the
invention of the trusts
accounted for around
30% of that improvement
(and around half of the
40% reduction in freight
charges during the
period, even with tolls
being imposed).

26. • Many turnpike trusts were wound up
under General Acts of Parliament
between 1873 and 1878. The transfer
of resources and sale of assets to
repay loans were supervised by the
Local Government Board which acted
as arbiter in the case of disputes. Tollhouses were sold, gates torn down
and responsibility for the main roads
passed to Highway Boards. Bondholders were paid off with any residual
funds, though sometimes with losses.
• Under the Highways Act of 1878 all
disturnpiked roads became "Main
Roads" as did some ordinary highways.
By the Local Government Act of 1888
the entire maintenance of main roads
was thrown upon the County Councils.
The end of
the trusts
http://www.schoolshistory.org.uk/year9/industrialr
evolution/images/roads3.jpg

27. State-centred transport in the 20th
century
• In the 20th century the central government took more
of a leading role. The Roads Act 1920 created the Road
Fund, with the Government receiving revenue from
excise duty on road vehicles and from the sale of
licences for horse-drawn carriages and driving licences.
• As road traffic began to grow, the condition of the road
network became an issue and the new Ministry of
Transport created a classification system for the
important routes connecting large population centres
or for through traffic.
• This pattern of oversight and road investment
quickened after World War 2.

28. The London situation
• In 1097 William Rufus, second son of William the
Norman, raised a special tax to help repair the London
Bridge. Proper maintenance and then the building of
new stone bridge allowed for the addition of shops and
houses which by the twelfth century were building
increasing cross-river trade and perhaps more
importantly increased taxes, rents and bequests.
• The increasing surplus generated was managed by a
building on the south side of the bridge known as Bridge
House. Hence the creation of the Bridge House Estates
and its related Trust. The City of London was confirmed
as Trustee formally in 1957 but its leading role in
managing the bridge and its revenues came long before
then.

29. http://www.elfinspell.com/AndrewsBridges.html
(A variety of income sources beyond
these contributed to the bridge’s
revenue. The oddest was the
practice of charging the City and the
Tower of London a shilling to display
the heads of traitors on poles on the
draw-bridge on the Southwark side.)
• London Bridge originally contained
houses, hostelries, shops and even
brothels, 138 enterprises at the
peak. There were also bakeries,
water-wheels, corn mills and a
chapel.
• An Order of monks was set up to
look after the bridge and tolls were
imposed on carts going over the
bridge, boats going under it and
fines imposed for fishing and
dumping rubbish off the bridge.
• As funds from rents and tolls built
up, large swathes of land and
property were bought in
Southwark, the Square Mile and
the area that later became
Mayfair.

30. A bridge trust as charity
• William Rufus had the intent of providing Londoners
with a stone bridge, which was a clear public benefit.
This original intent means that the Trust has to stay
focused on bridges only and things like roads had to be
left to someone else (in the modern era this being the
Highways Agency.)
• Since income generated went far beyond bridge needs
the Charity Commission eventually approved a cy-près
scheme which enabled the Trust to apply such surplus
to the broader charitable activities it carries out today.
(this being the legal doctrine that when the original
objective of the settlor or the testator became
impossible, impracticable, or illegal to perform, the
terms of the charitable trust could be amended as
closely as possible to the original intention of the
testator or settlor to prevent the trust from failing).

31. • The Trust built some and now
maintains five bridges that cross
the Thames into the City of London
– Blackfriars Bridge (built between 1760 and
1769 and replaced between 1860 and 1869)
– Millennium Bridge (a pedestrian bridge built
in during the Millennium celebrations and
funded jointly by the Bridge House Estates
and the Millennium Commission)
– Southwark Bridge (built between 1814 and
1819 and purchased by the Trust in 1868;
replaced in 1912-1921)
– London Bridge (the first stone bridge across
the Thames built between 1176 and 1209
and replaced between 1967 and 1972)
– Tower Bridge (opened in 1894). (Tower
Bridge Tourism operates the substantial
visitor activities and income generated by
that complex.)

32. A fast-forward to London today
• The London Bridge House Estates 2012 Annual
Report notes that only 25% of expenditure was on
repair and maintenance of the bridges under its
purview (6.4 million pounds).
• 69% of its total spending was on grants to voluntary
organisations. Its other working names include
Bridge House Estates Trust Fund; Bridge House Trust;
Bridge House Grants; The City Bridge Trust.
• Its public benefit statement notes that ‘the objects of
the charity are the maintenance of the river bridges
and grant making and related activity for the benefit
of Greater London.

33. Lesson 1: Beneficiary-cost
matchups and mismatches
• A key finding of the England/London transport history is how
important matching beneficiaries and cost-bearers are in
institutional and financing arrangements.
• Many of these connections are very subtle and interwined and
they are continually evolving.
• England’s focus on custom and tradition initially provided very
close cost-beneficiary matches. When they didn’t new
practices sometimes emerged organically and when that was
not enough legislative solutions were offered. But they
generally extended rather than replaced customs.
• Also boundaries were very important. Early on parishes
captured most of the beneficiaries but later on counties and
trusts became more viable and effective administrative units
(though there was an issue of diffusion of benefit/cost as well).

34. Lesson 2: Thinking ahead about
legal framework
• England’s transport arrangements have been very
law-bound and typically are creatures of law.
• The bridge estates are important examples of this.
Charitable law allowed for the extension of private
and limited charitable acts into powerful and wealthy
institutions capable of funding and maintaining large
infrastructure.
• However this same legal basis became a constraint in
the modern age as the London Bridge Estates now
has to spend the greater part of its surplus on nonbridge related activity.
• Adaptability of legal framework over time is critical.

35. Lesson 3: The land use and value
bundle
• Although there is a modern renaissance in land-value
capture finance, the history of English transport finance
indicates that this notion was recognised long ago.
• Medieval transport finance was built on land property
rights and it grew with this as its ongoing foundation.
• Turnpike Trusts could be seen as land trusts that built
roads and having landed interests driving transport
facility investment had the advantage of such
investments being closely tied to development
potential. It also offered diversification of revenues and
returns (something also present in the London Bridge
Estates).

36. Lesson 4: The Wider Economic
Benefit Conundrum
• Wider Economic Benefits (WEB) are a key aspect of
many large scale transport projects today. With
government-centric finance, these must be estimated
by benefit-cost analysis, not always easily.
• Older English transport institutions were inherently
private and in many ways ‘organically’ considered and
captured agglomeration economies from the inception
of an investment. Or managed to evolve to capture
them later on.
• Thus potential WEB might be, if possible, weaved into
institutional arrangements from the outset of a project.

37. Lesson 5: The Importance of
Regulation
• Although glacial in pace by modern standards, English
legislation did intervene at various points to address
problems and limitations that arose from the actions
and practices of customary institutions.
• The 1391 extension of mortmain to include the ‘new’
actors in bridges of towns and gilds is an example of
liberalisation of regulation to evolve with changing
times.
• The various features of the Turnpike acts to address toll
gouging and self-dealing are an example of fetters (not
always effective) being placed on private initiative to
protect the public interest.

38. A final takeaway
• So is the answer to modern day transport
finance to return to customary English
practices? Of course not.
• But there is much in that history that can
inform, sometimes directly, the current
subtleties of user-pay finance in a flexible,
subtle and full-bodied way.
• In particular, English history shows that a fully
funded user-pay system of investment was
never really possible yet at the same time user
pay implicitly was a fundamental building
block.