House of Commons - Environment, Transport and Regional Affairs

Select Committee on Environment, Transport and Regional Affairs Seventh Report

SEVENTH REPORT

The Environment, Transport and Regional Affairs Committee has agreed to the following Report:—

THE TRANSPORT-RELATED EXECUTIVE AGENCIES OF THE DEPARTMENT OF THE ENVIRONMENT, TRANSPORT AND THE REGIONS

1. Six Executive Agencies deliver many of the services of the Department of the Environment, Transport and the Regions relating to transport. They are the Driver and Vehicle Licensing Agency (DVLA), Driving Standards Agency, Highways Agency, Maritime and Coastguard Agency, Vehicle Certification Agency and Vehicle Inspectorate. The Agencies are regarded as "part of the Department, but have extended managerial freedoms within a framework of objectives, targets and resources agreed with ministers":[10] each has a separate budget, agreed with the Department, and each has a Chief Executive appointed by the Secretary of State.

2. The Executive Agencies fulfil a range of roles. The DVLA maintains registers of drivers and vehicles in Great Britain, and collects Vehicle Excise Duty. Its budget for 2000-01, excluding Vehicle Excise Duty passed to the Consolidated Fund, is £226.7 million. It employs 4,773 staff. The Driving Standards Agency is responsible for enhancing driving standards in Great Britain, principally by testing drivers and driving instructors. Its budget for 2000-01 is £80.0 million, and it employs 1,717 staff. The Highways Agency maintains, operates and improves the trunk road network, and has a budget for 2000-01 of £1,451.3 million. It directly employs 1,707 staff: its contractors obviously employ many more. The Maritime and Coastguard Agency promotes and enforces high standards of marine safety, seeks to minimise loss of life amongst seafarers and coastal users, and to minimise the risk and impact of pollution. Its budget for 2000-01 is £106.7 million, and it employs 1,045 staff. The Vehicle Certification Agency seeks to ensure that vehicles and parts for vehicles have been designed and constructed to meet national and internationally-agreed standards for safety and for environmental protection. Its budget for 2000-01 is £5.6 million, and it employs 87 staff. The Vehicle Inspectorate enforces compliance with roadworthiness standards by the road haulage and passenger transport industries, and by private motor vehicles. Its budget for this year is £77.3 million, and it employs 1,808 staff.[11]

3. Thus the transport-related Executive Agencies of the Department of the Environment, Transport and the Regions are major bodies: they employ more than 11,000 staff between them, and have a combined budget of nearly £2 billion.[12] They make a significant contribution to the Department's key objectives, particularly those relating to protecting and improving the environment, reducing the impact of transport on the environment, providing customer-focussed regulatory and other transport services, and improving transport safety.[13]

4. We have considered some aspects of the work of the Executive Agencies already during this Parliament, in particular during our inquiry into the Maritime and Coastguard Agency.[14] We also took evidence about the Driving Standards Agency in our inquiry into Young and Newly-Qualified Drivers: Standards and Training.[15] Our inquiries into the Annual Report and Expenditure Plans of the Department of the Environment, Transport and the Regions have also referred to the Executive Agencies.[16] In July 2000 the Transport Sub-committee decided that it would be appropriate to examine generally the administration and expenditure of the transport-related Executive Agencies, and to take evidence about specific difficulties they have faced.[17] We therefore invited written evidence from interested parties, and received eight memoranda. In January 2001 we took oral evidence on three occasions, from the RAC and BSM, English Nature and the Public and Commercial Services (PCS) union, and from the Chief Executives of all six Executive Agencies. We are most grateful to all those who submitted evidence to our inquiry.

General Points

5. The evidence we received suggests that the performance of the Executive Agencies is, in many respects, much improved, particularly when compared to the much-publicised challenges that a number of them have faced in the past. Those challenges have included the introduction of new computer systems at the Driving Standards Agency,[18] and the merger of the Marine Safety Agency with the Coastguard Agency to form the Maritime and Coastguard Agency.[19] We also note that the publication of A New Deal for Trunk Roads has amended the policies and objectives of the Highways Agency, bringing them more into line with the wider aims of the Department of the Environment, Transport and the Regions.[20] We were particularly impressed by the evidence received from the Chief Executives of the DVLA, Vehicle Certification Agency and Vehicle Inspectorate.[21] It is worth recording that we did not receive any adverse comment about those Agencies from our other witnesses.

6. However, there is concern, reflected in the evidence we received, about the openness of all six of the Agencies, and about the way in which they consult with, and respond to matters raised by, staff, customers, and other interested parties. Although our witnesses commented on some signs of increasing openness on the part of the Agencies,[22] it is clear that further improvements are required. English Nature, for example, told us about its experiences of dealing with both the Highways Agency and the Maritime and Coastguard Agency: it concluded, in each case, that the way in which the Agencies communicate with interested bodies should be improved.[23] Other witnesses gave evidence about the openness of the Driving Standards Agency, which we comment on later in this report. The Department of the Environment, Transport and the Regions argued, however, that the Executive Agencies "seek out and respond to customer views",[24] and the Chief Executives of the Agencies detailed ways in which they had tried to become more transparent.[25] Nevertheless, further progress should be made, and so we recommend that the transport-related Executive Agencies should continue to take steps to improve the ways in which they communicate and consult with staff, customers and other interested parties.

7. We have not examined in detail the structure under which the Executive Agencies operate on behalf of the Department of the Environment, Transport and the Regions. The problems of communication, and a number of the other criticisms raised in this Report, may arise from a lack of transparency and accountability in the Agencies. There is a sense that the Executive Agencies operate at 'arm's length' from the Department, although the Department has taken steps to ensure that their accountability to Ministers, and therefore to Parliament, is reinforced.[26] Each Agency told us that it had been regularly visited by Ministers, and had frequent contact with civil servants from the central Department of the Environment, Transport and the Regions.[27] We note the efforts made by both the Department and by the Executive Agencies to establish effective oversight of the Agencies by the central Department. Nonetheless, we recommend that the Department of the Environment, Transport and the Regions examine closely its relationship with the transport-related Executive Agencies to ensure that they are properly accountable and transparent to Ministers, and so to Parliament and others.

Specific Points

DVLA

8. We took specific evidence about the additional duties given to the DVLA in recent years. For example, the implementation of a system of graduated Vehicle Excise Duty, which rewards drivers of less-polluting cars, was announced by the Chancellor of the Exchequer in the March 1999 Budget,[28] when cars with smaller engines were given a discount on the Duty payable.[29] Further changes were made in the March 2000 Budget.[30] The increasingly complicated structure of Vehicle Excise Duty has obviously increased the workload of the DVLA, and it has been obliged to recruit additional staff to meet the demands placed upon it.[31] Similarly, the Vehicle (Crime) Bill will, if it becomes law, place additional duties on the DVLA, including a requirement to establish and maintain a register of registration plate suppliers.[32] Again, the imposition of such additional duties will have an effect on staffing and other resources, although the Chief Executive of the DVLA assured us that only two further staff would be required to implement the measures contained in the Bill.[33] Indeed he told us that the resources needed to carry out all of the additional activities required of the Agency in recent years had already been allocated to the DVLA.[34] Nevertheless, we recommend that the Government and the DVLA continue to work together to ensure that the Agency is able to employ enough staff and to gain the other resources it needs to meet all of the new challenges it faces.

DRIVING STANDARDS AGENCY

Booking driving tests

9. In 1999 we commented on the difficulties faced by the Driving Standards Agency in introducing both a new system for booking driving tests, known as the Driver Test Control System (DTCS), and a new single national telephone number for doing so.[35] Both systems were delivered late, and both had initially proved unreliable. As a result those using the telephone service frequently could not get through to make a booking, and, even when they did, they experienced delays in obtaining a date for a practical driving test.[36] We expressed concern about the effect of such delays on the ability of learner drivers to gain access to the driving test.[37]

10. Since our Report, the performance of the new booking system and the new telephone number has continued to be unacceptable. BSM told us that the new booking service has "performed particularly poorly",[38] and claimed that the new system took too long to use, was inflexible, and that it had given rise to increased costs to the driving instructors and others seeking to use it. In 1999-2000 the Agency failed it meet either of its targets relating to the national telephone system: only 51 per cent of callers, compared to a target of 95 per cent, got through to the system without hearing the engaged tone, and only 78 per cent of calls, rather than 90 per cent, were then answered within twenty seconds.[39] The Driving Standards Agency conceded that its performance had not been satisfactory,[40] but argued that "we are making a lot of progress on ... the information technology front [and on] waiting times".[41] The Chief Executive of the Agency told us that there had been considerable improvements after August 2000, and that the booking system had been available for use for 99 per cent of the time in the third quarter of 2000.[42]

11. One of the benefits supposed to derive from the introduction of the new system for booking driving tests was that driving instructors such as BSM would be able to access the system directly to make bookings for their pupils. Such a development would have obvious advantages for both the driving instructors and the Driving Standards Agency, by reducing delays and administrative costs. BSM, however, told us that direct access to the system had still not been delivered.[43] The Chief Executive of the Agency told us that he had "postponed giving them access until I am certain that the system is robust enough to survive that".[44] He said that driving schools were likely to be given direct access in "the early part of the next financial year".[45] We recommend that the Driving Standards Agency give driving schools direct access to the DTCS booking system, as was promised, as soon as possible.

Cost of the driving test

12. In its evidence BSM expressed concerned about the rise in the fee for the practical driving test during the last few years: since 1990, the cost of the test has risen by 88.5 per cent to £36.75, or by much more than twice the rate of inflation.[46] BSM said that it believed that because the Driving Standards Agency has invested in "modernising its booking systems, the driving test fee has risen to support the increased investment".[47] Moreover, there is an additional fee of £15.00 for the theory test, which was introduced in July 1996. BSM told us that the rising cost of the driving test had a particular impact on those on lower incomes,[48] and reported "anecdotal" evidence that "rises in driving test fees are deterring people [from taking the test]".[49] In our Report on Young and Newly-Qualified Drivers: Standards and Training we noted that at least 800,000 drivers were already driving illegally without a full licence.[50] We observed that there was a danger that "making it more difficult or more expensive to gain a driving licence might encourage some people to drive without a licence".[51] We are therefore concerned by any suggestion that the cost of the driving test may deter learners from taking it.

13. The Chief Executive of the Driving Standards Agency conceded that the price of the practical driving test had indeed increased since 1990.[52] He identified a number of reasons why that was the case: first, that the total number of driving tests conducted had fallen from 2 million in 1990 to approximately 1.2 million today,[53] principally because of demographic changes;[54] second, that each test now took longer to conduct, and was therefore more expensive;[55] third, that since 1997 the Agency was now a trading fund,[56] and was required to make a return of 6 per cent each year;[57] and fourth, that in 1990 the Agency had been making a loss of £3 million each year.[58] He pointed out that the price of the test had not risen since May 1999.[59] BSM agreed that increases in the price of the test had been constrained in recent years.[60]

14. The Chief Executive of the Driving Standards Agency argued that the cost of the practical driving test was small when compared to the cost of a course of driving lessons.[61] We put that point to BSM, which said that the average number of lessons taken by its pupils was twenty-six, and the cost per lesson was at least £17.50.[62] However, as the Chief Executive of the Agency admitted, learners are not compelled to take any lessons at all.[63] We therefore remain concerned that learner drivers should not be discouraged from taking the test for any reason, including because of its cost. We therefore welcome the research currently being undertaken by the Department of the Environment, Transport and the Regions into the reasons why so many people drive without a licence.[64] Driving a vehicle without a driving licence is a criminal offence, which is not excused by the cost of obtaining a taking the driving test. Nevertheless, we recommend that as part of its research into unlicenced driving the Department examine the impact of higher fees for the driving test on the decision of some drivers not to take the test.

Staffing at the Agency

15. A number of our witnesses expressed concern about staffing levels within the Driving Standards Agency. The PCS union told us that the Agency has reduced the number of its senior examiners in recent years: the union claimed that the number of senior driving examiners has fallen by a third, to 200, and the number of supervising examiners, who oversee the standards of examiners and of Approved Driving Instructors, has fallen by 30 per cent, to 85.[65] The Chief Executive of the Agency agreed that the number of senior driving examiners had fallen to around 200,[66] and that the number of supervising examiners stood at around 81, down from approximately 85, comprising 41 who oversee Approved Driving Instructors, and 40 who oversee examiners.[67] It seems clear that senior examiners have an important role to play in ensuring consistent standards across test centres and amongst driving instructors,[68] and a shortage of such examiners must, as the PCS argued, have "implications for the driving test and the quality monitoring of the test [and] is starting to be giving serious cause for concern".[69]

16. A related difficulty was reported by BSM, which said that tests of trainee Approved Driving Instructors are frequently delayed to an even greater extent than those for learner drivers. As a result Instructors waiting to qualify are often compelled to seek an extension to their qualification period, creating administrative work for the Instructors, their employers, and the Driving Standards Agency itself.[70] The delays to the tests are in part the result of a shortage of supervising examiners. That shortage also lies behind the fact that 'check tests', or examinations at short notice of the abilities of already-qualified Approved Driving Instructors, "are seldom carried out, if at all".[71] The Motor Schools Association says that "it is reported that the Driving Standards Agency 'check test' programme may be as much as two years behind ... it is vital that these checks are carried out if Approved Driving Instructor standards are to be improved as set out in the Government's Road Safety Strategy".[72] The Chief Executive of the Agency admitted that it did not carry out enough 'check tests'.[73] We agree. We recommend that the Driving Standard Agency employ adequate numbers of senior examiners and other staff, so that it is able to ensure that the driving test is of a high and consistent standard, and that Approved Driving Instructors are examined promptly and 'check tested' frequently.

Test centre closures

17. In its evidence, the Driving Standards Agency noted that the Government is "committed to providing public services that respond to users' needs rather than being arranged for the provider's convenience",[74] and that one of the key objectives of the Modernising Government agenda is "to make it easier for people to get access to public services".[75] At the same time, one of the Agency's targets is to reduce vacant space in its premises by 48 per cent by 2005: measures to do so include relocating to smaller premises or combining driving test centres. [76] The adoption of this target follows the closure, without replacement, of a significant number of driving test centres in recent years: between the launch of the Agency, in 1990, and January 1999, 61 driving test centres were closed without replacement in the immediate vicinity, and at that time a further eleven centres were then under review.[77] The Chief Executive of the Agency told us that there have now been 65 test centre closures since 1990, although he said that only one centre has been permanently closed since 1999: three more have been closed temporarily.[78]

18. Concerns have been expressed about the implications of test centre closures for access to the driving test. For example, two Approved Driving Instructors presented evidence to us which argued that the closure of a centre imposes additional costs on learners who have to travel to be tested elsewhere:[79] such costs may, like the increasing price of the test itself, limit access to the practical driving test. These difficulties are, as we made clear to the Chief Executive of the Driving Standards Agency, particularly acute for those who live in rural areas: if their nearest test centre is closed, learner drivers may have to travel a considerable distance to take their test.[80] BSM told us that test centre closures resulted in delays for those wishing to take the test by causing "terrible problems with regard to bookings".[81] The Motor Schools Association argued that the "driving test closure programme" should be ended.[82] We exhort the Driving Standards Agency to keep driving test centres open where possible, and to open new centres where appropriate, in order to ensure that access to the driving test is made as straightforward as possible for all sections of the population.

19. Of particular concern was the process of consultation over test centre closures. The Driving Standards Agency claimed that "in cases where the Agency is considering closing or relocating a driving test centre outside of the immediate vicinity, it has developed a public consultation process to enable the strength of local feeling to be properly assessed and options to be fully considered".[83] BSM, however, told us that consultation had often been non-existent: it said that "we do not appear to be consulted on the estate ... we merely receive notifications of changes to the estate, in that if test centres are closing or if new centres are opening we are informed of the event rather than consulted upon it".[84] The company also said that it was often unclear on what grounds centres were being closed.[85] We get notification, we get a press release in effect that the test centre has closed".[86] Two Approved Driving Instructors who gave us evidence agreed, and told us that the process is "unfair and unnecessarily secretive".[87] The Instructors were particularly critical of the fact that there is no satisfactory means to appeal against a decision to close a centre,[88] a point also noted by BSM.[89] Even the Chief Executive of the Agency conceded that the process of consultation had not been satisfactory in the past.[90] We recommend that the Driving Standards Agency reassess the means through which it consults with driving schools, its customers and other interested parties over the closure of driving test centres, and put in place a process which enables their needs to be given due weight. We also recommend that the Agency institute a procedure through which interested parties can appeal against a decision to close a driving test centre. Finally, we recommend that the Agency publish the criteria on which it decides to close driving test centres.

Second European Council Directive on driving licences

20. In September 2000, the European Commission adopted a Directive,[91] to come into force by 30 September 2003, which will amend the provisions of the Second European Council Directive on driving licences.[92] The amendments will affect all aspects of driver testing, placing a number of additional duties on the Driving Standards Agency.[93] The Directive has particular implications for those taking the motorcycle test. We note that the Driving Standards Agency has begun to consult with interested parties about the Directive, and we intend to examine closely the implementation of the Directive as it takes place.

Hazard perception testing

21. Hazard perception training aims to teach learner drivers to anticipate better hazards encountered on the road, in part through simulations. The ability gained through such training can then be tested. In our Report on Young and Newly-Qualified Drivers: Standards and Training, we recommended that a system of hazard perception training and testing should be introduced without delay.[94] In its evidence to this inquiry, the Driving Standards Agency told us that it planned to introduce a hazard perception test in Autumn 2002,[95] after the test had been evaluated and proved to work.[96] BSM said that it felt the test "could have been implemented earlier".[97] We agree. Although we welcome the introduction of hazard perception testing by Autumn 2002, we question why its introduction has taken, and is to take, so long.

MARITIME AND COASTGUARD AGENCY

22. We produced a detailed Report on the Maritime and Coastguard Agency in 1999.[98] In it, we were particularly critical of the proposed closure of four maritime rescue co-ordination centres, and the co-location of two others,[99] and also recommended that the Agency be split, to re-form the Marine Safety Agency and the Coastguard Agency.[100] The Chief Executive of the Agency has said that our recommendation caused "uncertainty", which "naturally had an unsettling effect on the staff".[101] We note that view, and express our doubt that the Chief Executive could sustain an argument that our recommendations were any more 'unsettling' than the announcement and implementation first of the merger of the two Agencies, and then of the closure programme itself.

23. The Chief Executive has sought to modernise management practices within the Agency, by setting out to "break down out of date attitudes",[102] and to put in place a "commitment to good management".[103] In particular he has sought to encourage a more participative management style, establishing an "an open door policy for all staff ... opinions and comments on any aspect of improving the service they provide are encouraged at all levels".[104] The Chief Executive has sought to overcome the resistance of middle managers to this more inclusive management style through greater training.[105] Such measures are very welcome. Nevertheless, the PCS told us that although communication between staff, and the union itself, and senior management was much improved, "it is still failing quite badly at the district and regional levels".[106] We urge the Chief Executive, and other senior managers, of the Maritime and Coastguard Agency to continue to seek to modernise management structures and attitudes within the Agency. The commitment of managers to modern management techniques appears to be questionable. We support efforts by the Agency to promote a more participative, open approach.

24. The PCS told us that "staffing levels at Coastguard stations are inadequate, at times the numbers and more importantly the grade of staff on duty do not even follow the recommended levels laid down by the Agency".[107] The union cited examples of difficulties at a number of stations.[108] The Chief Executive of the Agency told us, however, that "there are no stations where the staffing numbers have fallen below the levels which are required for the minimum safety levels".[109] Nevertheless, we are pleased to note that, as both the union and the Chief Executive told us,[110] the Agency is currently undertaking a review of staffing at Coastguard stations, which will look both at absolute minimum staffing levels and at recommended staffing levels.[111] The Maritime and Coastguard Agency must at all times ensure that adequate numbers of suitably-qualified staff are on duty in Coastguard stations, having regard to the distances between Coastguard stations.

25. As we have said, at the time of our Report into the Agency in 1999, the closure of Liverpool, Oban, Pentland and Tyne Tees maritime rescue co-ordination centres, and the co-location of the two centres at Portland and Solent, was planned as part of the so-called Five Year Strategy.[112] Following the publication of our Report the decision to close the Liverpool station and co-locate Portland and Solent was abandoned.[113] The maritime rescue co-ordination centres at Oban and Pentland were closed towards the end of 2000.[114] The centre at Tyne Tees will close later this year.[115] We remain concerned about the effect that these closures will have, particularly on the local knowledge held by Coastguard staff,[116] and for that reason we record our continuing opposition to the closure programme that is part of the Maritime and Coastguard Agency's Five Year Strategy. We continue to be concerned about the introduction and operation of the new digital Integrated Coastguard Communications System, a matter to which we are likely to return in a future inquiry.

HIGHWAYS AGENCY

26. In A New Deal for Trunk Roads the Government altered the aims and objectives of the Highways Agency. Henceforth the Agency would be expected to be a network operator charged with giving a higher priority to road maintenance and making better use of existing roads, and placing greater emphasis on environmental and safety objectives,[117] rather than simply being responsible for building and maintaining the trunk road network. This welcome change of direction has been coupled with changes in the Agency's practices, principally involving a greater emphasis on environmental concerns.[118] However, the Ten Year Plan for Transport set out total spending of £21 billion on trunk roads over the next decade,[119] including thirty trunk road bypasses, 360 miles of road widening, and eighty other major schemes. A further £30 billion will be spent on road maintenance.[120] We trust that the proposal in the Ten Year Plan for Transport to undertake a number of road-building and road-improvement schemes does not signal a shift away from the direction given to the Highways Agency in A New Deal for Trunk Roads.

27. We have already commented on the need for all of the Executive Agencies to improve the ways in which they communicate with the public and interested bodies. That need is particularly acute in the case of the Highways Agency. For example, it is not at all clear how priorities for the Agency are set, and how decisions about whether or not to adopt particular road schemes are taken.[121] Both English Nature and the RAC also raised concerns about their communication with the Agency.[122] English Nature told us that the Highways Agency's Road Users' Committee and National Environment Committee could "become more productive by placing greater emphasis on using them to help the Agency develop policy and best practice":[123] at present, English Nature claimed, meetings of the committees are used to give updates on individual projects, with "limited interaction with external members and little scope for influencing the direction of these projects".[124] The RAC told us that it wished to be consulted about plans set out by the Highways Agency[125] to increase the use of the hard shoulder under certain circumstances by traffic on trunk roads.[126] The Highways Agency has not excelled at communicating with the public and interested parties in the past: although there are some signs of improvement, we urge the Agency to take further steps to become open and responsive in future.

28. We have received particularly strong representations about the surface of the A30 near Marsh Green, Exeter, which opened only within the last two years. Many residents have complained that the road is extremely noisy because it is surfaced with rolled concrete. That surface has since been abandoned for new road developments, due to the level of noise generated by traffic using it. Indeed the Government has set a target that all concrete roads should be resurfaced with quieter materials within 10 years,[127] but a recent announcement by the Highways Agency of those to be resurfaced before April 2002 did not include this section of the A30.[128] Although we welcome the target for resurfacing rolled concrete roads with quieter materials within ten years, we urge the Highways Agency to complete the process of doing so more quickly if possible.

Resource Accounting and Budgeting

29. In its evidence the PCS argued that the introduction of Resource Accounting and Budgeting (RAB) at the Highways Agency revealed "a lack of good financial management at senior levels within the Agency".[129] The union claimed that an external contractor appointed in 1994 to advise the Agency on introducing RAB then bid, in 1998, for the contract to introduce RAB and, despite concerns expressed about the propriety of the arrangement, proved successful. In all, the PCS claimed, the contractor was paid £13 million to introduce RAB to the Agency. The union also said that because the original project had failed to deliver its objectives new consultants have been employed, at a cost of a further £9 million, to complete the task,[130] which is now known as the Strategy for Financial Management project. It argued that much of the £22 million which has been, or will be, spent on RAB and the Strategy for Financial Management has been wasted.[131]

30. The Highways Agency's account of the matter differed in some respects. It told us that in November 1994 an external consultant had indeed been appointed by invitation from its then Finance Director, rather than by competition, to review the Agency's preparedness for commercial accounting. A competition was then held in March 1995 for the role of Project Director of the Commercial Accounting Project. The same consultant who had previously been advising the Agency won the competition, and until March 1998 principally worked as Project Director on the Commercial Accounting Project, but also provided advice on Private Finance Initiative and 'institutional issues'. Between December 1994 and March 1998 the adviser was paid approximately £420,000.[132]

31. The Highways Agency confirmed that the Project Director, in the form of CBC and Associates won the contract put out to competition in 1998 to implement RAB at the Agency. The Agency claimed that "in the event CBC provided the only compliant tender".[133] That contract ran from February 1998 until 2 November 2000, and under it CBC and Associates was paid £8,730,000.[134] Thus in total CBC and Associates, in one form or another, has been paid £9,150,000 for advice and other work relating to the introduction of RAB at the Agency. In addition, other contractors were paid £2,668,000 between 1998 and 2001, and a further £9 million will be paid to deliver the Agency's Strategy for Financial Management project, a total of almost £21 million.

32. Although the Highways Agency disputed some of the claims made by the PCS, it agreed that there had been some difficulties. The Chief Executive of the Agency agreed that the outside contractor originally appointed to advise the Agency was "somebody who had previously worked with the [then] Finance Director".[135] He said that "what was disappointing and, in retrospect, not managed carefully was the time it took [to implement RAB]".[136] The Chief Executive told us that "it is not the way I would necessarily have handled things ...There are elements of the way in which that process was managed, both in terms of procurement arrangements and the time it took to deliver, which ... are very disappointing".[137]

33. The PCS told us that concerns about the propriety of the arrangements made by the Agency with CBC and Associates were first raised by the head of the Agency's Internal Audit Team. The union said that having done so the Head of Internal Audit was then "removed from his post and ultimately transferred out of the Agency".[138] The Chief Executive of the Agency told us that "there were discussions with him [the Head of Internal Audit] about his general level of performance",[139] following which he "agreed to move".[140] The Agency told us in a supplementary note that "discussions had been held with the Department of the Environment, Transport and the Regions Internal Audit in January 1998 about the need to upgrade the post of Head of the Agency's Internal Audit function and for a change in leadership. This built on previous discussions between the Head of Internal Audit and the Agency's Personnel Director in November 1997 ... It was [eventually] agreed that the post be upgraded, to be filled by an existing member of Department of the Environment, Transport and the Regions staff, that the Head of Internal Audit would seek a post outside the Agency and that the Agency would use its best endeavours to help him".[141] He is now employed in the central Department of the Environment, Transport and the Regions.

34. We are profoundly concerned about several aspects of the evidence we have received about the introduction of RAB at the Highways Agency, including the way in which the outside contractor was originally appointed to advise the Agency, the processes through which he, and his company, were then able to secure two further contracts with the Agency worth, in total, more than £9 million, the total cost of implementing RAB at the Agency, and the time taken to do so. We are not satisfied with the explanations we have so far received about these matters from the Agency and from the Department of the Environment, Transport and the Regions. We recommend that the Government urgently investigate these matters, and all aspects of the introduction of RAB at the Highways Agency, examining their propriety, whether they comply with relevant domestic and European legislation, and whether the costs incurred and the time taken to implement RAB have been acceptable. Finally we seek further reassurance that the decision to move the Head of Internal Audit from the Agency was not influenced by the fact that he had raised concern about the implementation of RAB: the Government should conduct further inquiries into that matter. We intend to return to this matter in the future.

10 Department of the Environment, Transport and the Regions Annual Report 2000, Chapter 14, p.211, which can be viewed at www.detr.gov.uk/annual00/index.htm. Back

11 Cash budget and staff figures (both for 2000-01) are taken from HC Deb, 21 December 2000, col.285w. Back

12 Excluding almost £5 billion of VED collected by the DVLA, and passed to the Consolidated Fund. Back

13 See Department of the Environment, Transport and the Regions Annual Report 2000, Chapter 14, p.210, which can be viewed at www.detr.gov.uk/annual00/index.htm. Back

14 The Maritime and Coastguard Agency, Sixth Report, HC (1998-99) 31. Back

15 Young and Newly-Qualified Drivers: Standards and Training, Nineteenth Report, HC (1998-99) 515. Back

16 See, for example, Departmental Annual Report 1999 and Expenditure Plans 1999-2002, Fifteenth Report, HC (1998-99) 440. Back

17 See Environment, Transport and Regional Affairs Committee Press Notice No. 51 of Session 1999-2000, 27 July 2000, which can be viewed at www.parliament.uk/commons/selcom90/etrpnt51.htm. Back

18 See TEA01, paras.3.2.3 to 3.2.7 and Appendix F. Back

19 See TEA01, para.7.4.1, and The Maritime and Coastguard Agency, Sixth Report, HC (1998-99) 31. Back

20 See TEA01, para.2.1.2. Back

21 See QQ.324 to 455. Back