There's a big hoohaa in the UK at the moment over congestion charging. One of Mr Blair's trendy think tanks has made the apparently sensible suggestion that drivers might like to pay for the congestion they cause.

Far too early one morning I managed to catch a TV interview with David Begg, the author of the report. Clearly switched to mantra-matic mode he droned that "you can't introduce congestion charging until people have a decent public transport alternative."

Drivel. And double drivel. Drivel because you don't have to waste billions of pounds of taxpayers' money. Double drivel because it assumes that the State has a role to play in transport.

I'll start with the second point. In the 1920s London had the best public transport system in the world. It had the best trains (often electrified), it had a brand spanking new tube network and it had fast, frequent and reliable bus and tram networks. With the exception of inner-London trams all of this was built and paid for and run by private enterprise.

In the 1930s they nationalised the tube and the buses. If memory serves me correctly they also came after the remaining trams. In the 1940s they nationalised the trains. Since then steady decline has been the order of the day.

Nowadays, the chief problem we face is road congestion. But who owns this road if not the State? It is the State's failure to manage its own property that has led us to the gridlock we currently face. To congestion we can also add the horrors of poor surfaces, potholes, traffic calming measures and traffic engineering.

In a free market there would be tolls and there would be an initial battle to determine the best technology. After that roads would start to compete with each other. They would compete on things like speed, ride quality, price and safety. Who knows we might even see Brian Micklethwait's 3ft-high Ferrari-only tunnels.

But where will people go if they are priced out of their cars? Surely, they need an alternative? The answer is that people who are priced out of their cars will go nowhere. They will continue to use the very same roads but switch to other means of transport whether it be buses, coaches, bikes or motor bikes.

Charging simply leads to a more efficient allocation of resources. Roads will be free flowing and predictable. It will then be possible for bus companies to introduce reliable timetables and hence services that are competitive against both car and rail. It is one of the great ironies that as more people drove into London so fewer people came into London by road. Buses suffered the same jams as everyone else and lost competitive advantage.

It is possible that, initially at least, there won't be enough buses and there may be an initial period of high prices. This will quickly send out the signal that there is a gap in the market and the response will be to build more buses. It maybe a rough time but far less rough than the ten more years of gridlock we face while the State works out what it is going to do.