UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 907-ii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

TRANSPORT committee

 

 

THE WORK OF THE DEPARTMENT FOR TRANSPORT'S EXECUTIVE AGENCIES - DRIVER AND VEHICLE OPERATING GROUP AND THE HIGHWAYS AGENCY

 

 

Wednesday 15 February 2006

MR ARCHIE ROBERTSON and MR MEL ZUYDAM

Evidence heard in Public Questions 276 - 429

 

 

USE OF THE TRANSCRIPT

1.	This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
2.	Any public use of, or reference to, the contents should make clear that neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.
3.	Members who receive this for the purpose of correcting questions addressed by them to witnesses are asked to send corrections to the Committee Assistant.
4.	Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.

 

Oral Evidence

Taken before the Transport Committee

on Wednesday 15 February 2006

Members present

Mrs Gwyneth Dunwoody, in the Chair

Mr David Clelland

Mr Jeffrey M Donaldson

Clive Efford

Mrs Louise Ellman

Mr John Leech

Mr Lee Scott

Graham Stringer

________________

Memorandum submitted by the Department for Transport and the Agencies

 

Examination of Witnesses

 

Witnesses: Mr Archie Robertson, Chief Executive, and Mr Mel Zuydam, Financial Director, Highways Agency, gave evidence.

 

Chairman: Good afternoon to you gentlemen. We do have one or two small bits of housekeeping and then we shall come to you if we may. Let us begin with Members who have an interest to declare. Mr Clelland?

Mr Clelland: I am a member of Amicus.

Graham Stringer: I am a member of Amicus.

Chairman: I am a member of ASLEF.

Mrs Ellman: I am a member of the Transport and General Workers' Union.

Q276 Chairman: May I ask you to introduce yourselves for the record.

Mr Robertson: Good afternoon, Chairman. I am Archie Robertson. I am Chief Executive of the Highways Agency.

Mr Zuydam: Good afternoon, Chairman. I am Mel Zuydam. I am the Financial Director for the Highways Agency.

Q277 Chairman: Mr Robertson, did you have something that you wanted to stun us with before we begin?

Mr Robertson: No, Chairman. We have provided you with an integrated brief from the Department and the Agencies. We are ready to go straight in.

Q278 Chairman: Is it true that some of your staff are working to contract?

Mr Robertson: They are all working under contract.

Q279 Chairman: I said working to contract. I know the difference, Mr Robertson.

Mr Robertson: A number of them did vote recently to work to take action short of a strike, that is correct, and as I understand it that is continuing. They have set a date until the 28 or 29 March to continue with that. There has been no interruption to our services to customers that has been brought to my attention, but clearly it is disappointing that we find ourselves in a situation where some of our staff have felt dissatisfied enough to work to contract.

Q280 Chairman: You are quite convinced this is having no effect on your work at all, are you?

Mr Robertson: It is not having an impact on our direct and immediate services to customers. It is very important to us now, of course, that we have a direct customer interface with the rollout of the Traffic Officer Service.

Q281 Chairman: It seems to be very wide, civil engineers, bridge engineers, environmentalists, traffic management officers. Is it not true that this is going to hit the Highways Agency's ability to reach its performance indicators?

Mr Robertson: I do not believe it will.

Q282 Chairman: So you would not accept that a lot of your work depends on goodwill from your staff because they have to do an enormous amount of travelling?

Mr Robertson: All of our work depends on the goodwill of our staff. 500 staff decided to vote in favour of action short of a strike; many more decided not to strike.

Q283 Chairman: Why did they do that, Mr Robertson? It is fairly widely based and it is quite targeted. You are an Agency that has a direct interface with the public. Why are your staff so dissatisfied?

Mr Robertson: This is an action taken by 500 of the 3,200 staff that we now have. We had a protracted pay negotiation this year in which a number of issues were raised, including issues around pay bands and ultimately our ability to make sure that we had arrangements which would attract, retain and motivate all ranges of our staff. This year we have made some particular efforts to make sure that we could continue to attract graduates, both generalist and technical, and we made some adjustments in agreement with the unions on that. The unions had some other things that they would have liked us to do as well. I was simply unable to do it within the remit that was available to me from Government.

Q284 Chairman: How long do you think this is going to go on?

Mr Robertson: We have imposed pay because I do not think it is right to hold back pay from people over one dispute that affects a few people. We have made the pay settlement. People have had the money they are entitled to. We are continuing to meet with the unions monthly at our regular meetings. As far as I see it at the moment, it will conclude at the end of March. Unless advised otherwise by the unions, I believe it will conclude.

Q285 Mr Leech: Is it not the case that the dispute is to do with payments to the people who are at the top of the scale? Is it not the case that by those people being most affected by these changes you are effectively discouraging your most experienced staff from staying with you?

Mr Robertson: There is a pay scale issue here both at the bottom of the pay scales and the top of the pay scales. The issue at the top of the pay scales is where people who have been with the Agency for a number of years and who have risen to the top of the pay scales but perhaps have not got promoted to higher gradings have been given pay increases within the remit that we can afford but those increases are not fully consolidated and built upon.

Q286 Mr Leech: Is it not the case that there is a wide discrepancy between the pay increases that the people at the top of the scale are being offered in comparison to people in the lower scales?

Mr Robertson: It depends on performance, of course. Obviously you cannot draw generalisations on it. It is the case that we have augmented salaries at the bottom of the scale in order to attract people into the Agency, which is where I see the principal issue in terms of having the resource we need to carry out the job, but that is a relative issue, not an absolute one. We very much value the contributions of people who have been working with us however long it is.

Q287 Chairman: I think we will come back to that, Mr Robertson. You will remember that we did point out to you in our 2003 report that we were very concerned about the serious deficiencies with the Agency's accounting systems and we were told you were producing a strategy which would enhance project and management accounting. Can you tell us what you have done?

Mr Robertson: First of all, we have recruited people to run our finances professionally. Mr Zuydam is right at the front of that so I am going to ask him to answer.

Q288 Chairman: Mr Zuydam, what have you done about the Agency's finances?

Mr Zuydam: The approach we have taken is to look first and foremost at the financial skills in the Agency and to combine that with some immediate and urgent provision of management information. In short, what we have done in the last year and a half is restructure the finance function of the Highways Agency, bring in better financial skills combined with the production of monthly accurate and useful financial management information, which I believe has greatly enhanced the in-year financial control, budgetary control and accountability.

Q289 Chairman: Did it have any costs associated with this new system?

Mr Zuydam: At this stage not. Because it was so urgent, what I decided with my team was, rather than embark on another potentially costly and lengthy IT project, we could see what we could do with the tools we had and that is the approach we have taken, which I believe in the 2004/05 year bore some pretty good fruits in terms of returning the Agency to a state of financial control. However, we have not finished and the next stage is indeed hard coding those improvements into the Agency by automating the systems and indeed making them a little bit more robust.

Q290 Chairman: We asked whether systems were in place that would provide adequate safeguards against any recurrence of what was a very bad episode. Are those safeguards in place now?

Mr Zuydam: I believe they are.

Q291 Chairman: How effective have they been?

Mr Zuydam: I believe they have been very effective. In the year ended March 2005 I believe that the Agency not only delivered good value for money to budget but also demonstrated financial control for the in-year expenditure down at the projects management level.

Mr Robertson: Could I add something because I am the Accounting Officer after all and the effectiveness of accounts is rather important to me. I would like to commend Mr Zuydam on the excellent job he has done coming in here. Not only has he brought me good knowledge about my management accounting now so that I can make good tactical decisions to make sure resources are well deployed, he is producing for me half-year accounts, which were not produced by the Agency in prior terms, so that we can look at the big picture of the Agency.

Q292 Chairman: The people working on specific projects, do they get access to this information?

Mr Zuydam: They do, Chairman, on a monthly basis, which is a great improvement from the past. However, we have got yet further improvements to make.

Q293 Chairman: Tell me a bit about yourself. What did you do before you came into this job?

Mr Zuydam: I have been a finance director for some 20 years.

Q294 Chairman: Where?

Mr Zuydam: In the private sector prior to the Highways Agency.

Q295 Chairman: Could you tell us a name or is it secret?

Mr Zuydam: Half of that was in the manufacturing sector with a company called Stylo. If anyone is a footballer here, you will know 'Stylo Matchmakers' football boots, and the second half was substantially with Balfour Beatty.

Chairman: So you certainly have relevant connections.

Q296 Graham Stringer: Can you explain your staff dispersal policy?

Mr Robertson: If I understand that ---

Q297 Graham Stringer: It is to do with moving staff out of London.

Mr Robertson: We have moved our staff out of London under an initiative initiated before I joined. Our staff are now concentrated very close to where people use the motorways, in particular with the employment of what will by the summer be 1,200 traffic officers and 300 people in traffic control centres. Then we will be operating from approximately 50 sites, many of which are very small offices where people just come in at the end of their shift and debrief. Otherwise our staff are deployed to nine locations: 11 offices in regional capitals, in Leeds, in Manchester, in Birmingham, in Bedford, in Dorking and in Bristol, those are our principal areas, and then I keep a small office to support myself and key directors here in London where there are now fewer than 50 people and falling.

Q298 Graham Stringer: Why have you not dispersed yourself? Why are you further away from motorways than all your staff?

Mr Robertson: I am here to give advice to and sometimes take advice from the Roads Minister and the Secretary of State for Transport.

Q299 Graham Stringer: And you do not have enough confidence in the roads to be able to get here on time?

Mr Robertson: It would take a while by any form of transport from any major city outside London.

Q300 Graham Stringer: I am not convinced it would take that long from Birmingham. How much is the annual rent for your headquarters in London?

Mr Zuydam: I believe our headquarters in London cost in the region of, for rent and rates, service charges, approximately £300,000 or £400,000, so it is not cheap.

Q301 Graham Stringer: And that is for less than 50 staff?

Mr Zuydam: It is approximately 80 as we speak at the moment.

Q302 Graham Stringer: How long is your lease for?

Mr Zuydam: This is not information I have at my fingertips but I am going to make an estimate. I believe it has probably another five or six years to run.

Mr Robertson: There is a lot of call for our staff to come to meetings with other officials, for example DfT officials and officials in other departments in London, so quite a lot of our office is given over to 'hot desking' facilities. Perhaps a third of the space is used by people who come in for the day, go to a meeting, come back, do their day job and then return to their office.

Q303 Graham Stringer: Have you looked at alternative arrangements for meetings? Do you have more meetings with ministers in London than you do with your management staff in Birmingham, Manchester, Leeds and the rest of the country?

Mr Robertson: Our board team is distributed amongst several sectors. Board directors are based here, in Bedford and Birmingham. So we are moving around to meet our staff at all of the locations all of the time. We meet here in London for meetings and alternatively in the offices so that we have the opportunity to talk to staff, to brief staff and to take their views, but most of the meetings are either just geographically convenient to bring people into London because that tends to be where the communications links are strongest or tend to involve people who are already based in London.

Q304 Graham Stringer: Have you done a value for money study on keeping the headquarters and the meeting rooms?

Mr Robertson: We did a value-for-money study when we undertook the original move which displaced something of the order of 600 people out of London and we have now pretty much brought that process to a conclusion. We will need to look at what our future requirements are as the organisation settles and, in particular, as we become much more distributed anyway with the roll out of the Traffic Officer Service.

Q305 Graham Stringer: Are you going to re-look at a value-for-money study on the headquarters in London?

Mr Robertson: At the moment we are looking at what our staffing needs are in London and there will be some reductions to come there.

Q306 Chairman: How many of these administration staff are actually based in London? You have got large numbers of administration staff compared with all the other specialties, have you not?

Mr Robertson: Most of the people in London are administration staff. Administration staff in the Agency includes all of our specialist engineers, they are all included in our admin budget, but many of them are technical specialists or project specialists, they are not administrators.

Clive Efford: How many?

Q307 Chairman: The 1,590 figure that you have given us, which certainly looks disproportionate with everything else, programme staff 142, staff engaged in capital projects 299, you are telling us that they are specialist staff as well, are you? Do you know how many you have got?

Mr Robertson: In rough terms less than half of the total staff in the administration budget are administrators, but we have administrators to support the technical specialists so that they can do their work and that is the way they are organised and they are distributed through the Agency's locations in order to operate in that way.

Q308 Mr Leech: You said that the cost of the office was about £300,000. How does that compare with the other offices around the country?

Mr Zuydam: Inevitably the cost of office space in London is probably the most expensive in the country, so per square foot it is probably well up. In Birmingham we have a particularly good deal at the moment per square foot, in Manchester we have quite a good deal and Dorking is a building we actually own. It varies, but I do think we would agree that an office in London is an expensive thing to have. As Mr Robertson says, this is something we will be looking at.

Q309 Mr Leech: So you are able to tell us it is £300,000 for London but you are not able to tell us what the figures are for the other offices.

Mr Zuydam: I was making an estimate. I do not have the detailed rent and rates figures with me but I am happy to supply them.

Q310 Mr Leech: Would we be looking at 50 per cent or 75 per cent costs?

Mr Zuydam: Purely as a guesstimate, I would say in London we are probably paying £25 or £30 per square foot. That would contrast with Birmingham where we have a particularly good deal of about £15 a square foot.

Q311 Chairman: You will give us a little detailed note on this.

Mr Zuydam: I am happy to do that.

Q312 Mr Scott: Mr Robertson, did you say that just under half of the staff are in fact engineers and the others are back up?

Mr Robertson: Yes. So these are people who are supporting the engineers. Again I cannot be precise because I am not carrying the numbers with me, but those are people who are then supporting the communications with the public and administration, doing the finance and accounting, looking after the staff and the payroll, providing the press and communication facilities and doing, for example, the procurement work of the Agency. Some of those staff will come out of the Agency when the Agency goes into the shared services project which it is participating in as part of the DfT family, so that number will come down, but in round terms that is what it would be.

Q313 Mrs Ellman: You tell us that you have implemented new maintenance contracts. Can you tell us how those have made improvements?

Mr Robertson: We have 14 maintenance contracts throughout the country now and those are contracts where contractors we have appointed look after the roads which are still under the Highways Agency's direct control, in other words wholly owned and operated by the Agency. In addition to that we have eight sections of road which are operated under PFI contracts but where the maintenance requirements are largely the same. The new maintenance contracts do not seem very new to me now. They are rolling through their first five or six years. Some of them are coming up to renewal. They are certainly delivering continuous efficiency and they are certainly delivering improving performance, not least on the back of the lessons of 'White Friday'.

Q314 Mrs Ellman: Have you imposed any serious penalties on contractors for the new PFIs?

Mr Robertson: Generally speaking not. What we are looking at doing is forging long-term partnerships with key suppliers, working in an environment of continuous improvement and then looking at the point when the contract comes to an end.

Q315 Chairman: What does that mean, Mr Robertson, an 'environment of continuous improvement'?

Mr Robertson: The contracts that they have do require them to continuously improve the performance that they provide us and do require them to continuously improve the efficiency with which they operate. So they are not loose terms, they are generic terms in the contract which will then set out what our expectations are and which we review with them on a regular basis.

Q316 Mrs Ellman: Are you satisfied those improvements have been achieved?

Mr Robertson: Broadly, yes. It was quite a bold experiment to venture into. In terms of improvement in flexibility, we are certainly getting that. In terms of being able to cope with the continuous growing demand that we have with an Agency and the motorways, where use is continuing to grow at four per cent or thereabouts per annum, that is going well and we are seeing efficiency improvements coming out either in the form of reduced costs but more commonly in the form of improved quality and a broadening of services.

Q317 Mrs Ellman: We have had evidence saying that on average there has been a 67 per cent increase in the costs of road projects under your targeted programme and indeed some of those increases are a great deal more than that, 220 per cent and 280 per cent.

Mr Robertson: Perhaps I can just make sure that we differentiate between maintenance contracts, which are those contracts we place for the continued operation of parts of the road, which are for the repair of the roads, looking after the technology and signaling, looking after the barriers and safety equipment and the provision of winter maintenance. That is separate from the use of contractors for building of the capital network where we are rolling out the Government's targeted programme of improvements, where we have individual projects where a contractor is appointed for a specific project, like the recently completed widening of the M25 between Junctions 12 and 15 near Heathrow. That is a specific project and it is in that area where largely because of cost inflation in the costs that go into building a road you are seeing the increases that I think you are referring to.

Q318 Mrs Ellman: What about the increases that we have identified, for example the M6 Carlisle to Guardsmill extension that was 280 per cent more than forecast or the A303 Stonehenge that was 276 per cent more than forecast. That does not suggest an efficient organisation, does it?

Mr Robertson: We have got to be careful not to talk about chalk and cheese here.

Q319 Chairman: We were just talking about your budget, Mr Robertson.

Mr Robertson: Let me take you through it, please, Chairman. We were asked to provide initial estimates for the costs of the targeted programme of improvements. These were provided. We were asked to do those without including any inflation assumptions. At that stage we did not include the cost of VAT on new land uptake and we did not include the costs of inflation of land. As we work through from the initial estimate and we take on the projects those are then re-evaluated at several points, once by the Secretary of State when he takes them formally into the targeted programme of improvements and publishes them; secondly, when they come through the planning process and the preferred route is announced at technical level then the costs are looked at again, and then, finally, the point at which now a target costs would be set out for a contractor to complete the job and that would set out a budget and a timescale within which it is done. Our record at least of late in terms of doing that is, with the two projects we have brought through, the A47 Thorney bypass and the M25 widening, is that they have been done to the budget agreed when we had made a final decision that it was worth going ahead and ahead of the timetable that was set for that. This is in contrast with the way that contracting was done in the mid-1990s when it was done on a lowest tender contract where quite often after ---

Q320 Chairman: Mr Robertson, wait a minute. I am not very clever so I do not quite understand what it is you are saying to me. You are saying to me that your initial figures did not include the costs of land or VAT or anything else that normally one includes in a calculation and therefore the fact that you then proceeded to get 280 per cent wrong or 276 per cent wrong was not serious. You do not think it would have been more accurate to have given some of these figures somewhere near what they were supposed to be in the first place?

Mr Robertson: There is a difference of ten years in the meantime, so obviously any inflation missing is going to make a dramatic impact even on RPI. The numbers that were originally provided were to enable Government to do its financial planning.

Q321 Chairman: How do you do that if you do not include even basic taxes on the cost of land?

Mr Robertson: The assumption that was made was that those would not be subject to VAT because it was a government department and therefore it would not be appropriate. In the meantime the Treasury has advised that we should include those costs. So in fact the costs of the projects to the country have not increased, it is simply that the accounting has changed.

Q322 Chairman: So it is just a different way of doing the books and we do not need to worry about it.

Mr Robertson: I do not think you do on the VAT one. Clearly we are concerned about the costs of building schemes.

Chairman: I think we are concerned about whether you know what your costs are and whether you know what you are doing. That is the sort of mild interest we have.

Q323 Mrs Ellman: Would you say that you are good project managers?

Mr Robertson: I would say that we are delivering the projects that are required as required within the scope and to the budgets that are agreed, so yes.

Q324 Mrs Ellman: What are your relationships with the Department like?

Mr Robertson: Specifically in relation to the capital programme?

Q325 Mrs Ellman: No, in general.

Mr Robertson: Our relationships with the Department are based around, first of all, the framework agreement that we have recently re-issued with them. That defines the relationships between the departments in terms of all formal interfaces; it defines my responsibilities, the Secretary of State's responsibilities and the Permanent Secretary's responsibility in terms of accountability. Around that then we deliver a programme which encompasses delivery of parts of three of the Government's key objectives and in addition to that we are delivering a substantive part of the efficiency programme, so three PSA targets and the substantive part of the efficiency programme. Our relationships with the Government are based on continuing meetings between our officials, which is why we have some of us based in London, but also regular meetings that I have with the Secretary of State.

Q326 Mrs Ellman: Would you say the relationship is a good one? How would you categorise it?

Mr Robertson: I believe it is a good relationship. It is a constructive relationship, it is a challenging relationship, but I believe there is a common vision of what we are trying to do in terms of our role as delivering the Agency's policies in relation to the strategic network and in relation to some work that has been done with local authorities.

Q327 Mrs Ellman: What about your work with the DVO Group?

Mr Robertson: We are working very closely with the DVO Group although not across the piece. There are two areas where we are most actively engaged with the DVO Group. The first if with VOSA and this is particularly relevant to the new reliability target that we will now have and was announced yesterday where there is an opportunity for VOSA to contribute to both better reliability and safety by preventing accidents happening, which is one of the key objectives of the Agency's reliability target and the deployment of traffic officers. We are also working with the DSA in terms of promotional campaigns and in advising on what should be the contents of the new Highway Code, including changes to motorway signing and especially the introduction of the Traffic Officer Service.

Q328 Mrs Ellman: The Local Technical Advisers Group describes you as "an elitist organisation" and says you "could be classed as lumbering and risk averse". Do you recognise that description?

Mr Robertson: I do not recognise it.

Q329 Mrs Ellman: Do not know what they might be talking about?

Mr Robertson: The Highways Agency is going through the most exciting time, delivering a new service which is growing the size of the organisation by 100 per cent in terms of headcount.

Q330 Chairman: Yes, its administration.

Mr Robertson: These are traffic officers.

Q331 Chairman: We will come to them.

Mr Robertson: In two years we have basically taken the approval and check and rolled that out to the point where it is now making a real contribution to improvement. I think that has been pretty special and our people have done a fantastic job.

Chairman: That is what we were told, you are very elitist, which is another word for special.

Q332 Mrs Ellman: Could you identify any risk-based activities you have undertaken? Do you think that is within your remit?

Mr Robertson: All of our safety work in particular, almost anything on the strategic highway involves taking a very high profiled consideration of safety. All of that is done on a risk basis otherwise you would find it impossible to operate. So we do tackle those risks, particularly safety on the network, but we also apply risk management as a sensible tool across the Agency in terms of looking at what might interfere with the delivery of our objectives and seeking what actions we can take to mitigate, for example, the roll out of the service. Chairman: Mr Robertson, we thought we should give you a rest so the Committee is adjourned!

The Committee suspended from 3.17 pm to 3.37 pm for a division in the House.

Chairman: Mr Scott?

Q333 Mr Scott: Mr Robertson, what level of co-operation have you experienced from local authorities? Given the Agency has no power to enforce any action that local authorities take, how does it try and encourage best practice in local authorities?

Mr Robertson: We have one power which is in relation to development which we will re-visit later. Our work with local authorities is largely based on the fact that we are partner highways authorities and that we are looking to do things together. We have important interfaces on the network. Nobody making a journey by car actually starts or finishes on the strategic network, they start on the local authority network somewhere, so we recognise that. There is close agreement between people in the Agency and people in local authorities through joint membership of the County Surveyors' Society. There is work that we do together on winter maintenance, both of the interfaces there. There is still work to do on strategic diversions where, should we lose, and we inevitably will at some stage, a piece of the national highway to an accident for a number of hours then we want to make sure that our traffic officers can divert traffic through the local network with the minimum disruption and the minimum additional risk, and we are working with local authorities to make sure that that happens in the best possible way. Not all local authorities have yet come to an agreement with us but we are working with them on the basis of mutual benefit. We are working with them on maintenance programmes and there is much more to do on that and on the efficiency agenda, but one of the examples where we have done that would be with Birmingham City Council where we jointly did the refurbishment work on the elevated section of the M6 through Birmingham at the same time as doing refurbishment on the Ashton Expressway, which belongs to Birmingham Council. We did that work together, saved money and we were able to optimise the traffic management arrangements and that is what we would like to do more of with local authorities. At an even more tactical level we all have to do maintenance on our networks, they are very hard worked, so we do regularly liaise with them to make sure that we are not doing work on an important part of our network at the same time as they are doing work on an adjacent part of the local network and all of that is co-ordinated through the partnership. Those relationships are very important and generally work well although there is more to do.

Q334 Mr Scott: If there is a problem on a particular part of your network which does involve a local authority, because yours is a major road with offshoots off it belonging to the local authority and there are major issues at stake there which have been ongoing for quite some time, would you interplay with the local authority to try and solve those issues together?

Mr Robertson: Yes, and that is very much a part of the efficiency structure and the maintenance contract strategy that we were talking about before. We believe that there are opportunities for us to save monies by doing maintenance contracts which embrace not only the strategic highway which, when you think about it, is a very long, thin workplace or worksite, but also to combine with the work requirements of local authorities to gross up the requirement in order to get lower costs for both ourselves and the local authorities, and that is one of the threads of the Gershon efficiency initiative.

Q335 Mr Scott: If there is a problem, does it end up on your desk or one down the line? At what stage would you get to hear about it?

Mr Robertson: It depends what it is. If it is a tactical problem then I would expect it to be resolved locally by the local route manager that we have or the local regional manager if it is a bigger authority. I expect my managers to have continuous good quality communications and relationships with local authorities. Some of the bigger issues that might be coming our way we will tackle at chief executive level. For example, last week an announcement was made about the Tour de France for 2007 which is going to start in London and run through Kent. Something like three million people are going to need to get to see that. It does not affect the strategic highway at all because the cyclists are using local Kent roads, but getting people to the viewing sites and getting the materials in and getting the roadshow in and maintaining the traffic for everybody is a joint problem for us to solve, and we have already sat down at senior level to make sure that we are each resourcing that particular aspect of keeping traffic moving while that event is going on.

Q336 Chairman: You do not think that you set standards that they cannot follow and that in fact local authorities think in many instances there are all sorts of simple things you could have done you have not done? The things that you talked about are rather specialised. It is very worrying. I must tell you frankly, Mr Robertson, when we are given evidence which says you have got significant resources not enjoyed elsewhere, you set standards, you do not promote best practice, you influence the action of local authorities but you do not look for value for money, do you recognise that description?

Mr Robertson: I do not recognise that description. I hear some of those points with concern but others I think are incorrect. We are very much looking for value for money with local authorities; indeed we have an objective of doing exactly that.

Q337 Chairman: We all have objectives, Mr Robertson. The difference is the gap between aspiration and delivery.

Mr Robertson: We are delivering our objectives, Chairman.

Q338 Clive Efford: Mr Robertson, last time the Committee looked into the work of the Agency there was particular concern about a lack of co-ordination between some of your contractors, particularly in bad weather. I assume you are going to assure us that things are better now, but can you tell us how?

Mr Robertson: I am going to assure you that things are better now. Planning for winter ---

Q339 Chairman: To be fair, it would be difficult to be much worse, would it not, really?

Mr Robertson: I can only take what we found and make sure that we get the very best out of what was learned from a very unfortunate incident and indeed it was. We are now working proactively with both local authorities and with our contractors to make sure that we do everything possible to prepare for bad whether, to anticipate it when it comes, to warn road users of the potential impacts and to make sure that we deploy the right resources in the right place at the right time. In case we do not get enough real events to try out then we are also practising regularly and in particular we do tabletop exercises particularly focused on communication, which was one of the major weaknesses, every autumn leading into the winter. So I believe our capability is indeed enhanced.

Q340 Clive Efford: You have had the opportunity to test these new procedures since 2003. What has been the outcome?

Mr Robertson: I believe the winter weather that was experienced at the end of January 2004 was a more severe weather event than was experienced in 2003. Despite that and despite when it happened snow was falling at the same time as the temperature was dropping on the south-east of the country, which is thee most difficult challenge for us to deal with because of the nature of the commuting journeys that people make and because of their relative lack of awareness of winter weather, we got everybody moving.

Q341 Clive Efford: With all due respect, those factors are known. You should be anticipating those.

Mr Robertson: And we did and we kept traffic moving in an event which was more severe than the previous one.

Q342 Clive Efford: Where there is a crisis, would the Agency be taking a coordinating role?

Mr Robertson: Clearly the objective is not to have it but to keep people moving in the first place or, alternatively, to advise them that the weather coming is unlikely to be sustainable in terms of movement, therefore they should stay where they are, that is our strategy. Should an event develop where people become stranded and need help, then in that case we would expect the police to declare a major incident and take action appropriate to that. We do not ourselves have the ability at present to declare a major incident although it is something that I aspire to be able to do as a matter of good practice.

Q343 Clive Efford: I am still not clear. If there is a severe weather crisis, in order that there is a clear chain of command there must be a procedure in place for somebody to be at the head of that chain of command. Who would it be?

Mr Robertson: That would be Derek Turner who is our Director of Operations.

Q344 Clive Efford: So the answer to the question is yes, that in a crisis of that kind the Highways Agency is primarily responsible for coordinating all the agencies involved?

Mr Robertson: In relation to the strategic network and our relationship with local authorities, yes.

Q345 Clive Efford: I was not clear about the issue relating to your staff. Your staffing numbers have gone up in administration staff terms. If they are technical staff, why are they classified as administration staff in your annual report?

Mr Robertson: That is because we only have one classification.

Q346 Clive Efford: Do you only have one structure of pay then for administration staff and engineers?

Mr Robertson: In terms of our financial accounting, our budgeting and the vote we get is split into administration, which is a traditional Civil Service vote, and programmes, which is the projects that we deliver. One of the projects of programmes we are delivering is the Traffic Officer Service because the other programmes we are delivering are capital programmes. Some of our people are assigned to programmes. The only other place we have to put people is something called administration, but within this administration we have people who are in our case senior civil servants or who are members of the wider Civil Service currently across government and people who are on Agency pay terms and conditions. They can be on Agency pay terms and conditions whether they are technical specialists, administrators or traffic officers.

Q347 Clive Efford: You will be aware of Gershon and other pressures to cut down on the administration staff, so it does stand out when you see increases in the number of staff in administration. This is to do with extra responsibilities that your Agency has taken on, is it?

Mr Robertson: That is correct and indeed we are reducing what I would call our support staff within the administration. We are doing that anyway as part of our continuing efforts to be more efficient and to deploy as much resource as we can to front line service and customer delivery, anticipating that the next leap in that is going to be the implementation of the shared services project across the DfT.

Q348 Clive Efford: Can I just ask you about your property portfolio? Why do you have any properties when it is your job to build roads?

Mr Robertson: We have properties because we need land on which to build roads. We acquire land in anticipation of roads being required. We need to hold that land through the planning and public inquiry process through to the point where the road is built. Sometimes we need additional land for work sites and storage sites. At the end of that, once a project is completed, we will then dispose of the land but we do that using a system agreed with the Treasury and with Lyons which is that we dispose of land as quickly as we can at market levels but at a rate which does not in itself cause disruption in the lands market. We therefore have a continuing stock of land which is work in progress. We do not hold land generally for its own reason. There are one or two places where we hold land for security reasons.

Q349 Clive Efford: Some of the land that you hold you hold for quite some time, particularly when you are trying to assemble a package of land for a major project. Does it not make sense in those circumstances to put that portfolio in the hands of somebody who is better equipped to handle the property than perhaps the Highways Agency that should be concentrating on building roads?

Mr Robertson: Yes, and that is exactly what we do. Wherever we can we will use property agents to obtain short term lets for the land. We will get them to look for opportunities for the land and we will steer them in terms of disposal of the land. We do not manage that land ourselves; we use professional contractors.

Q350 Clive Efford: Is that in response to the Public Accounts Committee's report, that you have altered the way you manage your property, or were they mistaken when they suggested that you managed your property differently?

Mr Robertson: Yes, there have been comments before my time on the use of land by the Agency, so it is indeed partly in response to that that we have made sure that we husband land for the best benefit of the taxpayer.

Q351 Clive Efford: This may be a question for both of you: how much did the Agency pay in compensation resulting from its activities as a developer in the last financial year? How are you trying to minimise those claims?

Mr Zuydam: In the last financial year, 2004/5, without digging out the exact numbers I have a feel for the resource accounting provision that we made which was in the region of 30 million but which is not all compensation. Some of that is acquisition as well so it is a mixture of compensation for disturbance, noise and what-have-you but also the larger part of it would be provision for acquisition costs.

Clive Efford: What steps are you taking to minimise the sums of money that you are paying out for compensation?

Q352 Chairman: They are identified somewhere in your figures, are they not, the differences between compensation and acquisition?

Mr Zuydam: They are not identified in our statutory accounts. They are not analysed out as such.

Q353 Chairman: You have just been tell us that you are analysing everything every month on a rolling basis so somewhere you must have a figure that says, "This much is compensation and this much is acquisition" which you are going to let us have, are you not?

Mr Zuydam: I would be more than happy to do that, yes.

Mr Robertson: In terms of the scope for us to manage, generally the rules for compensation and acquisition are longstanding and set out ----

Q354 Chairman: Mr Robertson, I do not want to stop you but you got an absolutely stinging PAC report in your Agency which said you lost on average 32 per cent of the value of any property which you held because you did not maintain it. I am using the word "you" of course in the generic sense. The reality is that that is not something to be continued. Are you assuring us that that has changed? You are telling Mr Efford you have now changed that totally. Of course you do not know how much of the compensation is actual compensation but you are going to tell the Committee that.

Mr Zuydam: Absolutely, yes.

Q355 Mr Clelland: Mr Robertson, your Agency is responsible for the major road network in this country but one region, namely the north east, is still as yet not directly connected to the motorway system. Do you regard that as a failure on your part?

Mr Robertson: I do not recognise the issue. The north east is connected in particular through the M1 and TransPennine routes to the rest of the country. I certainly do not see it as remote in any way.

Q356 Mr Clelland: There is no motorway linking the A1M in the north east to the M1.

Mr Robertson: There is motorway or close to motorway standard.

Q357 Mr Clelland: Dual carriageway?

Mr Robertson: Yes.

Q358 Mr Clelland: It is not a three lane motorway.

Mr Robertson: No. That is an observation of fact.

Q359 Mr Clelland: Is it not important that the north east does not have any three lane motorway connected to the rest of the system?

Mr Robertson: I do not think it is an objective in itself because it is certainly not the objective of the Highways Agency to build roads. It is an objective of the Highways Agency to make sure that the country's strategic road transport needs are met.

Q360 Mr Clelland: You are concerned about congestion?

Mr Robertson: I am, yes.

Q361 Mr Clelland: What major impact have you had on congestion in the north east in the last ten years?

Mr Robertson: We have invested in the A1 with significant improvements particularly in the Darlington to Dishforth scheme with an upgrading of the network to motorway standard. We have carried out a number of improvements of junctions in order to let traffic move more smoothly and of course we are now deploying traffic officers on all of that network in order to make sure that we get the best out of it and more reliable journeys for travellers.

Q362 Mr Clelland: The congestion is worse now than it was before you started all this improvement.

Mr Robertson: You could recognise that as a circumstance right round the country. Indeed, it is not my mission to do that. The objective I have been given by the Secretary of State is in respect of investing to tackle the worst bottlenecks through both the TPI and other programmes of investment in the existing network, making the existing network work harder through deployment of the traffic officer service, for example, technology in order to keep people travelling more smoothly and better traffic information so that people can make their own decisions about travelling, that leading of course to the demand management measure that the Secretary of State is now considering and making announcements about.

Q363 Mr Clelland: Is the Highways Agency part of overall joined up government thinking or do you just go merrily on your own way regardless of what the government's other policies might be? I am thinking of the Office of the Deputy Prime Minister, the Treasury, the Department of Trade and Industry. They are all very concerned that regional disparities are happening when regional economic development takes place. Are you cooperating in all of that?

Mr Robertson: We are cooperating actively at the tactical level. These are what would be described as ministerial and departmental initiatives that ought to be joined up. We are a delivery agency but we recognise that an important part of what we do is not only making sure that existing strategic traffic can be looked after properly but that development can be enabled in a sustainable way.

Q364 Mr Clelland: Can you explain what your Agency's broad policy is for issuing Article 14 directions? Are they issued as a matter of routine or as a last resort?

Mr Robertson: They are issued for different reasons in different circumstances. In the simplest of cases, I suppose, they are issued where a developer is proposing a development which would require to be joined to a major trunk road or motorway, where it is simply unsafe, which we are not prepared to sustain. In that case, we would give a direction prohibiting those sorts of connections. We do that occasionally and generally for very small developments and generally in places where there is a lot of high speed traffic. We use Article 14 directions from time to time in examining developments and in making sure that proper consideration has been given to the development in terms of sustaining the road network, to make sure that information is available and has been used to come up with the most sustainable solution. As you will recognise with the busiest motorway network on the planet, it is challenging to be able to support development when our roads are as busy as they are. It is increasingly the case that we cannot simply say, "Yes, you can come on" or, "You can upgrade this junction." Increasingly what we are finding is that we need to agree with developers not just capital injections but travel plans so that traffic is managed in a particular way, public transport is maximised and traffic is controlled so that ----

Chairman: I think we get the idea.

Q365 Mr Clelland: Such is the extent of congestion in the northern region that you and your colleagues have indicated that one extra vehicle could be material in terms of making decisions around Article 14 directions. Therefore, just about every development that is proposed will fall into that category. That means, as far as the north east is concerned, your department is crucial so far as economic development is concerned. Do you agree with that?

Mr Robertson: Yes, and our regional director is working very actively.

Q366 Mr Clelland: Is that Mr Steve Spink?

Mr Robertson: No, Mr John Bagley.

Q367 Mr Clelland: Do you know Mr Spink? He is one of your managers.

Mr Robertson: I know the name.

Q368 Mr Clelland: It was put to him recently that the north east needs 65,000 additional jobs to take it from 80 per cent of the national average to 90 per cent in terms of economic activity. Mr Spink's reply was, in terms of your Agency's influence in the region, "I doubt that we will be able to sustain that level of development. I do not think it will be possible." If your Agency has anything to do with it, the north east cannot even rise to the modest level of 90 per cent national average.

Mr Robertson: I can assure that we will do everything that we can to enable development to take place consistent with the responsibilities I am given by the Secretary of State to make sure that highway traffic is kept moving.

Q369 Chairman: You might like to give us a detailed note on that, Mr Robertson, because I am sure Mr Clelland would like that. We would like to know approximately what the timetable is and what involvements you have in the north east.

Mr Robertson: Can you be specific as to what you want a note on, please?

Q370 Mr Clelland: I am concerned about the overall strategy of the department in issuing Article 14 directions and the effect these are having on economic development in the north east. Can I give you an example? Answer this question and I will give you an example: in issuing Article 14 directions, would account be taken of imminent road improvements?

Mr Robertson: Yes, it could be. What we are trying to do now is sit down with the developer at an early stage to look at the problem in the round.

Chairman: You did explain that to us.

Q371 Mr Clelland: Can I just give you an example? Durham Tees Valley Airport is hoping to develop a new terminal. It is an investment of £56 million with the possible creation of 1,800 jobs. Despite a ministerial announcement that the Long Newton interchange on the A66 is to be put out to tender for construction to commence in 2006, your Agency wants the applicants to undertake an exercise to show the traffic impact without the Long Newton interchange being built. This is delaying the scheme and we are now told that there is no prospect of getting a decision from the Highways Agency. This is an extremely important development and your Agency is holding it up. How is that part of overall government thinking in terms of economic development in the regions?

Mr Robertson: We are using Article 14 directions to make sure that the right information is pulled together so that when we do sit down with developers we can have a properly joined up conversation about what the pressures are now, what the impacts of things coming in the future might be, because nothing is such a precise science that you can do it. What we need to do is have good information and sit down to see what is the best we can facilitate. That is what we will do.

Q372 Mr Clelland: Has Sir Ron Eddington raised these issues with you? He told this Committee he would raise these matters with you. Has he done that?

Mr Robertson: I have met Ron Eddington in other circumstances. He has not formally raised that with the department. His report is not due until July.

Q373 Mr Clelland: You think your Agency strikes the right balance on issuing Article 14 notices between local and agency interests?

Mr Robertson: Not between local and agency interests because the agency interest is the agency responsibility and the agency responsibility is to keep the strategic highways moving so that people in the North East can ----

Q374 Chairman: What Mr Clelland wants from you is a short memo that sets out the numbers of schemes in the north east where Article 14 is involved.

Mr Robertson: I would be happy to write to you.

Q375 Mr Clelland: Are you doing anything to improve your performance and speed up the process of these Article 14 notices? Why does it take so long?

Mr Robertson: Yes, we are using Article 14 directions to get better information out of developers quicker so that we can sit down and get these things sorted out.

Q376 Mr Clelland: You are improving your performance? You are speeding up the process of these Article 14 notices?

Mr Robertson: The critical issue is finding a way to enable those developments to take place at the same time as developments on the strategic network. We are also reviewing, with the department and with the Secretary of State, whether there are ways that the requirements could be facilitated so that we can be helped to come to more prompt and effective conclusions.

Mr Clelland: You are not succeeding in convincing the local authorities in the north east that you are being very helpful.

Q377 Chairman: I think he has got the message. He is going to go away, do some homework and let us have a note on what is going on in the North East. You said that you are currently using Oracle as your financial management system.

Mr Zuydam: We are.

Q378 Chairman: You also made it clear that you are going to migrate to this SAP system so that you will be compatible with the department.

Mr Zuydam: That is correct.

Q379 Chairman: Do you want to tell us very briefly what the differences are and what assessment has been made of the costs?

Mr Zuydam: They are both leading edge enterprise resource planning systems.

Q380 Chairman: I think we have assumed everything you do will be leading edge.

Mr Zuydam: Oracle and SAP are very similar. Quite frankly, they are two enterprise resource planning systems.

Q381 Chairman: Why do you need to spend a whole lot more money when you have only just been using Oracle for a short time?

Mr Zuydam: There are two very important points. Firstly, we are not about to spend that money.

Q382 Chairman: You are going to bring on somebody else's system but you are not paying for it? That is a good innovation. Is that something you could tell us about?

Mr Zuydam: We are not going to move to SAP in the near future.

Q383 Chairman: What is the timetable?

Mr Zuydam: The timetable is three to four years, which is a good timetable to get the best use out of our existing Oracle system. I believe that generally speaking financial IT systems these days have a shelf life of three to four years. That would demonstrate a good value for money timetable.

Q384 Chairman: Are you going to have the same difficulties that you had when you moved on to Oracle?

Mr Zuydam: Moving on to SAP will be a significant challenge for the Agency, for a business the size ----

Q385 Chairman: Careful, Mr Zuydam; you are in danger of saying yes. You are telling me that the present system has a number of customised elements and it has several systems which you have developed in house which have an interface with your main management system. How are you going to do all that in relation to SAP?

Mr Zuydam: By making sure that we resource the projects in three or four years' time at the point of change over correctly.

Q386 Chairman: Have you a time and any estimate of the cost? Do we know how long it is going to take and what it is going to cost us?

Mr Zuydam: We certainly have a feel for that. In terms of the time, I would estimate that the design of the requirements on SAP and the implementation would take at least 12 to 18 months. I would estimate the costs in terms of bringing in external expertise to help design the new processes on the new system could be in the region of £10 million to £15 million.

Q387 Chairman: When you bring in experts from outside, do they not only operate the system but transform and transfer that technology to civil servants or are they going to be on a perpetual contract?

Mr Zuydam: In today's IT systems world, there is always going to be a need to retain external expertise in a business of the size of ----

Q388 Chairman: What I am asking you is if you are going to pay consultants are they going to come in and teach your staff how to run financial systems or are you going to retain them for the ultimate future?

Mr Zuydam: Most of that knowledge will be transferred to our existing staff but we will have to retain an element of consultants.

Q389 Chairman: Is that costed into your original contract so that the taxpayer is aware that they are going to pay for continuing contract arrangements with a private supplier?

Mr Zuydam: I certainly will ensure that it is costed in the future.

Q390 Chairman: Mr Robertson, would you do that on any other kind of supply anywhere else in your Agency? Would you say, "We will not only buy this special, noise defeating substance for our roads but we will make sure that we keep on buying it for ever more"?

Mr Robertson: Not in respect of surface materials but certainly in respect of our maintenance that is all out-sourced business. It is not done by the Agency. It is done by contractors.

Q391 Chairman: Different contractors presumably, Mr Robertson. You put it out to tender every now and then. You are telling me that because it is an expertise you have to retain arrangements with the same people. Is that what you are telling me? I am looking for a career when I leave politics. I feel I am missing something.

Mr Zuydam: With a business the size and complexity of the Highways Agency moving to a leading edge ERP system, sadly, the level of IT skills for certain parts of the ongoing maintenance of a system like that means that we do have to retain those specialist external people simply because ----

Q392 Chairman: Because they have a monopoly, yes. What you are saying is it is going to take 18 months. You are not at all sure what the figures are going to be. You will have an ongoing relationship with these people because you are going to make sure that they retain control over that element of the IT which you need and cannot get your fingers on.

Mr Robertson: I am responsible for a part of government which has a turnover in total terms of something like £5 billion per annum.

Q393 Chairman: We have a very clear idea how much you cost the taxpayer.

Mr Robertson: I do not take lightly those responsibilities. I want really good, professional help to make sure that the progress we have made to get a grip of those finances remains.

Q394 Chairman: Your operating income has decreased, has it not, by 30 per cent?

Mr Zuydam: It has decreased. Are you talking about in the year 2004/5?

Q395 Chairman: Yes.

Mr Zuydam: That is largely because we did less work under the Section 278 approach, which is where we arrange for work to be done on behalf of developers.

Mr Robertson: Developers give us money to do the improvements to join on to the network and we carry out the improvements.

Q396 Chairman: You have more administrators but you have less private work?

Mr Zuydam: Indeed.

Q397 Clive Efford: Is the integration of traffic officers into the Highways Agency going well and are there any significant problems?

Mr Robertson: I think it has gone really well but it has not been without challenge. Everybody who has been involved has been very dedicated and has found it quite demanding. This is a completely new service, a completely different approach from what the Agency was involved in before so, yes, we are going through a major programme with some significant teething problems.

Q398 Clive Efford: Are there satisfactory liaison arrangements between the Agency and the police?

Mr Robertson: One of the things that has gone really well has been the relationship between the Agency and the police. It was right at the top of the risk register when we started out because we were not sure how much support we were getting from the police. It has been super. We have excellent support from ACPO. They have not only supported us in the roll out of the traffic control centre but they put effort in at the individual management level to make sure that their staff are aware of what the consequences are. They have now appreciated that the deployment of traffic officers enables the police to do what the police are there for, which is to chase criminals, not do traffic management. That has gone well and indeed I expect, in my 2006/07 business plan, subject to ministerial advice, to pull back the full implementation date of the service by six months because it has gone so well.

Q399 Clive Efford: Have you sought to address the concerns of staff? We understand the trade unions have raised concerns about self-serving claims and overtime.

Mr Robertson: I am aware of the claims that the trade unions have made. I am afraid I do not recognise them particularly. I think it is just important that I reflect to you that the terms and conditions for traffic officers are terms and conditions that were agreed with the unions. There are some issues to deal with that I will explain as some of those teething problems. One is in the deployment of traffic officers who are extremely enthusiastic people and who have been through a significant training programme, but we are very carefully controlled in the move to a work type called hard shoulder work to live carriageway running, the difference being that those operators are then directing traffic in live lanes and, in our view, entering into an area where the hazards are quite significantly different. We have been very careful to make sure that all the teams and all the supervisors are fully trained before they go to that step. Some of our new colleagues have been quite patient about doing that. We all share the frustration about getting there but we are determined to move this forward positively and safely. That is the first area of frustration. The second one has been in the traffic control centres themselves, in the control and command network of seven centres round the country, which are rather harder to define. Some people who have been coming into those roles have found that it was not quite what they expected it to be. It is not like a customer service centre. Some people have found that difficult and have decided to move on to other things. I think that is also part of the teething process. We have equally had some issues in some places with local supply and demand in terms of availability of staff. We have, where necessary, sought to make sure that we can employ good people where there is a local issue.

Q400 Chairman: What are the total numbers and what is the breakdown in gender?

Mr Robertson: The total numbers are about 1,150 traffic officers and approximately 350 regional controllers. In terms of gender, I do not have the number. I can provide you with the number. In the regional control centres it tends to be close to 50:50. In the front line, traffic officer service it is not as high. It is happily higher than in the traditional Highways Agency but ----

Q401 Chairman: Could you give me a detailed note that not only sets out the gender basis but also give me some indication of the ethnic background of your officers?

Mr Robertson: I can, yes.

Q402 Clive Efford: We have some evidence from the trade unions about self-serve that needs to be addressed here. Their experience is that there are five staff to each PC. There has been an incident where one member of staff attempted to self-serve and was disciplined. It turned out that the software was not working properly. In some locations where people work, they do not have access to computers so they cannot self-serve and they have to do it in their own time. There are one or two other issues. Do you feel you are addressing these concerns from the staff?

Mr Robertson: Yes, we are. I do recognise them as part of the energy that has the traffic officers deployed as quickly as we safely can in the set-up of some of the outstations, some of which are in our depots and some of which are in police compounds. What we have not done is prioritise giving everybody a full, high speed connection to e-mail or the systems of the rest of the Agency. We will do that.

Q403 Clive Efford: Why would you implement a self-serve system if the staff cannot access it?

Mr Robertson: Perhaps I can take the self-serve system separately. What I am talking about now is my being able to communicate with all of my staff and them being able to communicate with me. At the moment, if I host a web chat or something like that, they cannot come in because they do not have the band width or the number of PCs to enable them to do that. We will address that as part of the rolling out of the service. Next year as part of the implementation of the shared services review we will move our human resources management into the shared service and as part of that we will all have to operate differently in terms of looking after our own basic details about where we live and so forth, and I will do that in the same way as our staff will do that. If we did that now we would not be able to in the Traffic Officer Service because the facilities are not there. Indeed, when we go live with it next year we will still not be able to fully address it in terms of being able to link up our traffic officers to the shared service centre which is in Cardiff. Therefore, we will be using, I am afraid, paper systems for a while until we get this sorted out, but we will be able to do it. It will be a bit archaic and it will need patience and understanding, but it will be done.

Q404 Chairman: It is a new system, it does not work, and you have not got it in place, and they have not got access to the IT; otherwise it is fine?

Mr Robertson: They do have access to the IT; they just do not have the access that we would like all of us to have.

Q405 Chairman: Sort of intermittently they have access?

Mr Robertson: No, it is speed.

Q406 Clive Efford: We have representations that morale amongst traffic officers is low. Have you heard this complaint? If so, what are you doing to deal with it?

Mr Robertson: I think there have been one or two concerns from people specifically in relation to the issue that I mentioned with regional control centres and people getting aligned. I do not otherwise recognise the morale issue. I think that the morale and motivation and enthusiasm of the traffic officers is very good indeed. Their sickness absence rates, which is one of the measures that I use to monitor motivation, is excellent, and whenever I go out with them or see them they are always bursting to get on with the job, so I really do not find commonalty in the suggestion that there is a morale problem at all.

Chairman: Gosh!

Q407 Clive Efford: Can I just pick you up on this bursting to get on with the job. I am sure the ones who are there probably are but what we are told - and it is only right to give you the opportunity to comment - is that "morale amongst traffic officers is low owing to overwork caused by a lack of staff and concerns over low pay and shift patterns/allowances. Failure on the part of the Agency to recruit and then retain sufficient numbers of personnel have led to, amongst other things, a failure to deliver full-cover working in control rooms and delays to the implementation of 24/7 operations cover." So is that people "bursting to do the job"?

Mr Robertson: Ultimately the test is do I have the people I need to do the job and the answer is, yes, I do have the people. Some of them are still coming through training. So I find that description quite difficult.

Q408 Chairman: You are saying that you do have the full complement?

Mr Robertson: I am able to attract people. I am able to retain and to train them. I am able to deploy them. I do not deploy them all 24/7 on day one. We run our regional control centres 24/7.

Q409 Chairman: No, Mr Robertson, you are saying the answer to Mr Efford is yes, you have a full complement and you do not have any difficulty recruiting?

Mr Robertson: That is correct.

Q410 Chairman: Why would we be told something very different?

Mr Robertson: I really do not know.

Q411 Chairman: You do not know?

Mr Robertson: I am delighted to take it up on behalf of the unions because clearly I do not like being in that position, so I will investigate.

Q412 Clive Efford: Do you think that the information about incidents attended by traffic officers is sufficiently disseminated to the travelling public?

Mr Robertson: No, not yet. One of the things that I noticed when I first came here was that although there were technology plans for the Agency, although there was a capital plan for the Agency, although there were maintenance plans for the Agency, and although there was a wish to disseminate better information to motorists (because motorists can make their own decisions about how they travel, which is different from almost any other form of transport) there simply was not a strategic approach to informing people better. Therefore, I hired an Information Director who has experience in this area, and she has now produced for us an information strategy which we are consulting with the Department and elements of which we will include in our next business plan. There are basically three elements of that. The first one is that we do have quite a lot of variable message sites now, which are a good way of delivering information to people, but the information is not always trusted, so we have a first action to make sure that people trust and therefore will act on the information that is supplied to them. The second area is that there are more products that we can provide to road users in order to give them more information, both in planning their journeys and in executing their journeys, and therefore a stream of work that introduces new products there. The third one is that this is not an area where I think the Government needs to be directly involved in supplying all of the information, so what we want to explore is, first of all, assurance of our information and then the creation of an environment where others, for other reasons, can come in and provide information and value-added services to our customers, for example the delivery of information into the card electronically rather than it simply being posted on the board.

Chairman: I think we are a long way away from that, Mr Robertson, are we not? Can we move on to Mr Scott.

Q413 Mr Scott: We heard earlier about problems in the North East of the country and in this case it is nowhere near my own constituency so it is nothing to do with that, but the problems of the experience of places such as Lowestoft where the A12 between Ipswich and Lowestoft is not even a dual carriageway. Indeed, I am told that the nearest motorway is in Holland rather this country! What is your view on this? I understand that you cannot commission a new motorway yourselves but what is your view on this and the fact that industry is losing vast numbers of jobs here?

Mr Robertson: There is a programme called the Targeted Programme of Improvements which is capital improvements to the network which came out of a number of studies that were done quite a few years ago now. Those identified something like 130 schemes in total that would be enhancements to the network, whether they are motorway widening, or whether they are bypasses, or whether they are roundabout improvements. There is not much in that in terms of new motorway creation but they responded to a demand at that time. That programme has been rolled out on priority now, but in addition to that the Department for Transport has asked regional bodies to give the Secretary of State advice on which road projects should be given priority and taken forward. That process has been taking place over the back part of 2005 and all of the regional authorities have now given their advice on priorities to the Secretary of State who is going to use that information to inform the road projects that he asks me to take forward initially next year and beyond that in the next spending review period, so the opportunity is there therefore for the regional organisations to say, "This is a priority for the resources that Government is investing in East Anglia and will you please, Secretary of State, put this at the top of the queue". If he does that then we will build it.

Q414 Clive Efford: Would you not agree that it is fair to say that having no dual carriageway and no motorway would make it a fairly high priority when jobs are, I am told, under a lot of threat, or perhaps they should apply to the Secretary of State in Holland?

Mr Robertson: The development of the Strategic Road Programme is focused, as I think Mr Clelland has observed, around keeping strategic traffic moving, and the programme that we have now was based on the pressures that were identified a number of years ago. We do do continuous route management strategies and I will need to check that we have done one for these (although it seems like one of them we would have done) from which we would recommend upgrades should the demand or the anticipated demand be such that it would restrict ultimately the growth of trade and GNP.

Chairman: Can I move on. Mrs Ellman?

Q415 Mrs Ellman: Why has there been a 45 per cent increase in the land and property acquisition contingent liability?

Mr Zuydam: That figure will be driven by certain trigger points in the scheme procurement process. Mr Robertson referred to the Targeted Programme of Improvements, a long list of capital schemes that are proposed, some under construction, others further off in the planning process. As we move through that planning process we hit milestones. An important one of those is called compulsory purchase. At that point we are issuing a notice to say this scheme is now going ahead and this is the land-take that we need to go ahead with the scheme. Prior to that point, however, in order to inform the public in our statutory accounts, we do actually give notice of the sort of value of those liabilities as contingent liabilities, so what you are seeing there - an increase in contingent liabilities - would say that at a pre compulsory purchase order stage we have got an increase in the number of schemes that require land-take.

Mr Robertson: If I could add to try to help understand, we are going into a period where our capital spend is increasing significantly. In the last three years we had a capital project spend of £1.1 billion; next year it is going up to £1.9 billion, so we are building more roads and we need more land.

Chairman: A joyous thought!

Q416 Mrs Ellman: Your accounts also show a big increase in losses due to damages to the road network where the culprits could not be found, in fact a figure of 179 per cent. You say it is all to do with changes in the way you are keeping records. Is that correct and what else are you doing better now?

Mr Zuydam: That increase in losses, I believe the figure from memory is in the region of £4 million that we have written off, is part of the tidying-up exercise from earlier years where, quite frankly, we did not keep a proper handle on those things. What you are seeing there is a sweeping out of the areas where we did not have control. What I am pleased to say now though is we have a very effective green claims team.

Q417 Chairman: A what claims team?

Mr Zuydam: A green claims team. They do an excellent job, I feel, in ensuring that where we do suffer loss on the network from our customers, sadly, that where recompense is due we do get it. You will see in the same set of accounts a figure of £11 million as income which was successfully recovering the cost of such damage.

Mr Robertson: So when a truck runs out 100 metres of hardcore we get the money for replacing that back from the owner of the truck, but we do not always succeed because we cannot track down the person who demolished part of the network.

Q418 Mrs Ellman: So you are sure that you are super-efficient in that area?

Mr Zuydam: What I would be very happy to say is that we have improved greatly, but I would never say that we are such super-efficient, I would always say we have got further to go.

Q419 Chairman: £2.8 million write-off of debt from third parties arising from book-keeping errors would not quite seem to imply that you are super-efficient.

Mr Zuydam: Except those are really, Chairman, I am sorry to say, historical problems that we had.

Q420 Chairman: For a government agency to write off VAT incorrectly recovered from the tax authorities, you talk about 2.5 and special payments of £400,000. It may be historical but they seem to me, being a poor girl, to be quite interesting as sums go.

Mr Zuydam: I would wholly concur with you, Chairman, that it is representative of a time when things were out of control.

Q421 Mrs Ellman: Are there any other areas of poor record-keeping which are now historic?

Mr Zuydam: The biggest area, in my view, is some of the things that we referred to earlier where historically I believe we did not have some of the most important record readily available, namely our monthly contract management and profit standing, so that really was the first and urgent area of focus, but that is now in place.

Q422 Mrs Ellman: You are planning a 30 per cent increase in expenditure in 2006/07. What does that relate to?

Mr Zuydam: In total, our expenditure, as Mr Robertson mentioned just now, for the current year is in the region of £5.5 billion. For next year this rises to £6.5 billion. This is, as I am sure you can see, made up of quite a complex set of different types of expenditure in different categories, etcetera, so there are many reasons for this, but to try and summarise, one area is our cost of capital which out of the £6.5 billion is in the region of £2.4 billion. That is a notional charge on the value of our balance sheet. Our balance sheet is increasing in size so that charge is increasing. That is an easy one. It is only a notional charge anyway. Mr Robertson has already said that next year our capital programme is increasing and indeed that I would say is the second most important increase that we are seeing. The capital programme, I think from memory, approaches £1.3 billion next year compared to this year of just under £1 billion. So those are the two key aspects of that. Beyond that we do have some increases in our resource expenditure. We continue to roll out the Traffic Manager Programme. When the Traffic Manager Programme was in an earlier development phase, the expenditure would have been largely capital - building regional control centres and such like. Now the Traffic Manager Service is up and running, the expenditure is more resource and operating costs. So that would be one reason for increased resources expenditure next year. The other reason is very much around information and technology, which again we have talked about a little bit today but the future does lie in better information to our customers supported by cleverer technology on the networks.

Q423 Mrs Ellman: Your statement on internal control states that there are still "significant weaknesses". What are those and what is being done about them?

Mr Zuydam: I would be happy to comment on that. Our Head of Internal Audit and his assurance team do an excellent job in trying to seek out areas where there are still risks and weaknesses. In the first half of 2004/05 a lot of the improvements in financial control that I was talking about earlier were still in gestation, so the opinion there from our Head of Internal Audit really does refer to the fact that in the earlier part of the year we had not got those controls in place but he was satisfied that by the end of the year we at least had those controls in place.

Q424 Mrs Ellman: Are you satisfied that you are getting value for money on all roads?

Mr Robertson: On all roads? It is very difficult not to get value for money from roads when they are in such demand but, as I mentioned earlier, there is continuing growth in use. We are seeing increases on most of the network of about four per cent when the country's wealth is growing at perhaps only half of that rate, so there continues to be a demand for the service which I have to assume enables a growth in GNP and an improvement in social and economic welfare.

Q425 Chairman: Do you have that reaction right the way across your responsibilities? Are you better with the strategic network than you with other roads?

Mr Robertson: I do not understand.

Q426 Chairman: We need to know if you are delivering value for money. You are costing the taxpayer a lot of money. You are getting a lot more money this year. Are you spending that money wisely? Do you know what you are doing with it? Are we getting value for money or could we actually do ourselves a favour by outsourcing the whole of you?

Mr Robertson: Let us look at benchmarking as a means of checking that out. We have a number of benchmarks in place. We have got benchmarks in place in terms of the efficiency of the capital programme. We have got benchmarks for the efficiency of the maintenance contractors. We have just embarked on a joint venture with our Dutch colleagues who are the most comparable in terms of ---

Q427 Chairman: Oh, you are thinking of following the Scott Theory, are you?

Mr Robertson: I will steal a good idea from anybody! We are going to work with them because they are ahead of us in terms of their use of traffic management techniques and they are very interested in the way that we do maintenance contracting so we have got a joint opportunity to learn from each other.

Chairman: Finally I just want to bring Mr Leech in.

Q428 Mr Leech: The Targeted Programme of Improvement projects come under three categories, I understand. One is fixed price; one is time and materials; and one is unhelpfully known as "other". In an answer to a parliamentary question on 24 January I understand that we heard that only three of those projects were on fixed price, 39 were on time and materials and 17 were done under the "other" category. Do you think that has had some impact in terms of the escalating costs and the fact that some of the estimates that you have made have been completely underestimated?

Mr Robertson: There are quite a number of factors that impact on the cost, but the main thrust of your question was about the way in which we do business with our contractors, so let me address that first. In the mid-1990s we were doing contracts on the basis of lowest price tender. People were putting in low prices to get that business and then taking as much out of the Government as they could in extras at the end. That meant that the projects we undertook were escalating in costs on average 40 per cent over the tender price and in some cases 100 per cent over, beyond the point we had made the decision to go ahead. That was not a good use of public money. We have therefore followed the Gershon initiative and the Lyons initiative in terms of new ways of doing procurement. We have moved through fixed price contracts and we used them when they were recommended by Government but these also tend to give you high costs because the contractor takes all the risks and he prices it with all the risks and you have given away that money whether the risk at the end of the day existed or not. We are now working on partnerships and early contractor involvement which means that we get the contractor in earlier so that they take responsibility for what they are doing earlier. They build the road quicker so we get the benefits of it quicker. We work with completely transparent, open-book contracts, so what it costs to buy the concrete, what it costs to buy the steel, what it costs to hire the sub-contractors is all transparent to us, it is the same whoever we would be using anyway, and the competition between the contractors is on the basis of their innovativeness and the quality of their management. So that gives us a faster delivery, more reliable, more open and clearer contracts, including incentives on contractors because if they do not deliver for the prices that they say then they lose money. If they do better they get a bonus because they bring in something better. We share the gain and the pain between the Government and the contractors. That is giving us better and quicker results. What it does not do is take away the fact that construction costs are rising, that the oil price has a very significant impact on construction because steel and concrete, which are our main materials, are both bits of rock heated up with oil, because we use oil to make the asphalt and we use oil to move people around, so we are quite oil-dependent and oil has doubled in price over the past few years.

Q429 Chairman: So you are demanding all sorts of innovative, new solutions from your suppliers?

Mr Robertson: We are.

Chairman: Mr Robertson, we have got several things we need to ask you about water and about ramp metering and a number of other subjects and we are going to have to write to you. We are very grateful to you. When this new era of transparency dawns we shall be delighted to ask you next year where the gaps have appeared, but I am sure that all will be revealed. Thank you very much.