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Spending watchdog says councils need highway budgets protected too

6 Jun 14 A report by the National Audit Office (NAO), the public spending watchdog, today appears to support the case for the government’s reform of the Highways Agency.

98% of the road network will see no benefit from Highways Agency reform
98% of the road network will see no benefit from Highways Agency reform

The NAO says that the lack of predictability on the Highways Agency’s funding mechanism has long-term implications for maintenance of the road network.

Under legislation coming to parliament this year, the Highways Agency is to be turned into a government-owned company, like Network Rail, specifically to distance it from Treasury budget tinkering. Its budgets will be protected for six years at a time.

However, the NAO says that protecting Highways Agency maintenance budgets in this way will only safeguard the 2% of the English network for which the HA is responsible for.  The other 98%, under local authority management, will remain victim of stop/start funding.

NAO chief Amyas Morse said: “Stop/start funding makes long-term planning more difficult for highways authorities. The Department for Transport 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 Department should work with the Treasury and the Department for Communities & Local Government to address the unpredictability of funding for both the strategic and local road networks.”

The NAO report Maintaining strategic infrastructure: roads says that funding pressures on highways authorities have encouraged efficiency and innovation in how maintenance budgets are spent, but public value will be lost unless funding becomes more predictable.

The actual reduction in budget for the Highways Agency, which maintains the strategic road network, will now be 7%, rather than the 19% announced in the 2010 spending review, owing to injections of capital funding which have offset the reductions.

According to the NAO, however, the lack of predictability has practical implications and may cost more in the long term. Historically, local highway authorities spend more revenue on maintenance, but report that they now carry out fewer routine activities such as clearing gullies which are essential to preventing water seeping into roads’ sub-structure. In addition, road maintenance contractors have cited unpredictable income as a disincentive for them to invest in improving efficiency.

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The current pattern of funding, combined with the need to spend money within the financial year, means that most road maintenance is carried out between September and March. Although this is less disruptive for road users, it is less efficient than carrying out the work at other times of year because materials can be more difficult to handle in cold and wet conditions, and daylight hours are shorter.

Additional funding for emergency repairs is also made available at the end of the financial year. As a result, almost all highways authorities need extra capacity from the market at the same time, making it less likely that they will obtain value for money.

Although recent data showed that the surface condition of the strategic road network improved between 2003 and 2013, it may be that deterioration has not yet become visible, the NAO says.

There are 183,000 miles and more than 52,000 bridges in the local road network, maintained by 152 local highway authorities

The Highways Agency looks after 4,400 miles and 9,000 bridges in the strategic road network

Reacting to the report, Institution of Civil Engineers (ICE) director general Nick Baveystock said: “The NAO rightly highlights the challenges in funding improvements to what is our most intensively used transport network – particularly the uncertainty that is caused by changes in overall funding settlements. The reformation of the Highways Agency, which will facilitate a shift from the costly and inefficient stop/start pattern of investment, to a multi-year investment plan, will go some way to addressing these issues for the strategic network.

“It will do little to address the maintenance of our local road network however. Pressure on local authority budgets and a significant maintenance backlog, has created a reactive ‘quick fix’ culture that is more costly in long term. Government will need to commit to a long term preventative maintenance regime – but foremost, efforts to clear the backlog and learn lessons from schemes proving successful, must be stepped up.”

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