09.06.14
Unpredictable road funding means works cannot be planned ‘sensibly’
Unpredictable funding for the Highways Agency and councils for road maintenance could lead to a loss of public value, according to the National Audit Office (NAO).
In its report – ‘Maintaining strategic infrastructure: roads’ – the NAO stated that funding pressures on highways authorities have encouraged efficiency and innovation, but it outlined that road maintenance contractors have cited unpredictable income as a disincentive for them to invest in improving efficiency.
Even though the actual reduction in the budget for the Highways Agency is not as severe as expected – now 7%, rather than the 19% announced in the Spending Review 2010, owing to injections of capital funding which have offset the reductions – there are concerns about what impact it will have for maintaining the conditions of the country’s road networks.
For example, capital funding for local highway authorities has increased by 3% instead of the planned reduction of 15%. However, revenue funding, which is for all local authority services, has fallen by more than planned – around 33% rather than 28%. The NAO stated that highways authorities said that reducing the proportion of revenue to capital budgets further would make it difficult to maintain the condition of the networks
The Department for Transport (DfT) is planning to change the Highways Agency’s status to that of a limited company wholly publicly owned by the government, with six-year funding certainty for capital projects and maintenance, and therefore the potential to achieve better value for money. However, the NAO stated that this measure in itself will not be enough to deal with the major issues.
It has been recommended that DfT should build on the steps that it has already taken to improve value for money by with HM Treasury and the Department for Communities and Local Government to address the barriers to long-term planning for road maintenance, such as the lack of predictability of funding for local highway authorities and the split between revenue and capital funding.
It has also been suggested the DfT identifies criteria to target the Highways Maintenance Efficiency Programme at those local highway authorities that need the most help, and develop evidence for local highway authorities to justify planned preventative maintenance.
Additionally, the Highways Agency should have in place better data and modelling of deterioration for all its assets for the new government company.
Amyas Morse, head of the NAO, said: “Stop/start funding makes long-term planning more difficult for highways authorities. The DfT understands the threat posed to road maintenance from the uncertainty of funding, but establishing a new government company to address the problems will not, in itself, be enough.
“The DfT should work with the Treasury and the Department for Communities and Local Government to address the unpredictability of funding for both the strategic and local road networks.”
But a DfT spokesperson stated that the reformed Highways Agency would be more transparent and accountable and able to provide funding stability over longer periods.
“We are determined to help councils tackle potholes, which is why we have increased funding by more than 27% in this parliamentary term compared with the last one. All in all, we are providing councils in England with more than £10bn from 2010 to 2021 for local highway maintenance, with clear guidance on ensuring it is used efficiently,” he said.
Margaret Hodge MP, chair of the Public Accounts Committee, stated that it “is very frustrating that the DfT still has not got a grip on how it funds road maintenance and improvement works so they can be planned sensibly”.
She highlighted that since 2010, additional funding has been announced 10 separate times, clearly showing that the Department has no long-term funding plan to make sure the road network runs properly.
“This short-termism will undoubtedly lead to increased costs in the long run as the work needed becomes more substantial and road conditions worsen,” said Hodge.
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