Better roads: Improving England's Strategic Road Network - Transport Committee Contents

4  The Highways Agency


39. The Highways Agency was created in 1994 as part of the Next Steps agency programme, which reallocated the operation and implementation functions of Government Departments into a series of executive agencies.[76] Alan Cook, non-executive chairman of the Highways Agency, explained the benefits now possible by changing the agency into aGovernment-Owned Company (GoCo), fully funded by the DfT:

    There are significant limitations on the way the organisation is required to deal with the supply chain today and, if we gave greater freedom, I believe it would enable us to get a better deal.[77]

He anticipated that the Highways Agency would focus on increasing capacity on existing roads:

    …the legacy of the organisation is one of civil engineers and road builders, and as the years have gone by we have moved from a road builder to a road operator… Most of the work of the future, with the level of investment we are talking about, is going to be more smart motorways which increase the capacity of an existing route.[78]

Graham Dalton, chief executive of the Highways Agency, explained his support for the changes:

    I think the real benefit—the real advantage—that the plans will bring is a clear brief. The Government's proposals are for a step change in performance of the network… With the proper medium to long-term plan that the new company is charged with delivering, based on outcomes and how the network performs, not tactical interventions, it will be far easier to hold the company to account.[79]

40. We heard a good deal of comment about the planned change to the Highways Agency. The Civil Engineering Contractors Association (CECA) expressed strong support for the proposal. The CECA told us that the GoCo arrangement would provide confidence to suppliers and contractors that the Government programme of investment in roads projects would not change, which would improve the value of tenders for projects.[80]

41. Some witnesses were less enthusiastic about the proposed change. Professor Goodwin said that he did "not really see the logic in the idea of a Highways Agency that of itself would be more efficient if it was less close to political influence."[81] The Highways Agency Trade Union Side told us that the advantages claimed for a GoCo were deliverable under the current arrangements, provided there was "strong leadership at senior levels across the department, that the central department relinquish some of its centralisation tendencies, and that Ministers do not interfere with the day to day running of the Agency".[82] The AA also reported doubts from the majority of its members:

    …our members were quite happy with the Highways Agency running the roads. There was quite a lot of doubt about transferring it to a "roadco", as it were. Quite a high percentage-about 58% - thought that the state should run the roads, which is surprising, especially in the light of promises of extra investment that would come [from a roadco].[83]

42. The Minister told us that the proposals for the Highways Agency, along with its five-year funding package, would enable the agency to tender maintenance contracts for between five and seven years, rather than for one or two years as at present. This would mean greater value contracts could be negotiated.[84]

43. We questioned the Minister on whether the reformed Highways Agency would simply increase salaries in exchange for a change in output that could have been achieved under a reformed version of the existing agency.[85] He argued that increasing salaries might be needed in order to attract recruits from global organisations:

    …it is important that, if we are to attract and retain the best, we pay the sort of salaries that are needed in that particular field.[86]

44. We are not convinced by the case for establishing the Highways Agency as a GoCo. Its remit will not be extended; it will not have new funding streams; and it will still be subject to changes in Government policy, while incurring ongoing oversight costs. We are not persuaded that increasing salaries will be a value-for-money way of increasing skills in the company. In that context, we note that the agency's current chief executive has worked in both the private and public sectors. The proposed benefits, including the implementation of the five-year funding plans, seem achievable through better management of the existing Highways Agency.


45. In its consultation on the changes to the Highways Agency, the DfT proposed that the Office of Rail Regulation (ORR) would have its role extended to include oversight of the reformed agency, reporting to the Secretary of State but with no regulatory powers itself.[87] In addition, it proposed expanding Passenger Focus's role to include a customer research service for road users.[88]

46. Alan Cook and Oxfordshire County Council both suggested that this oversight role would be adequate, given that the Highways Agency GoCo would not be charging for use of the roads.[89] Other witnesses argued that the proposed oversight arrangement would leave the ORR with insufficient influence over the reformed Highways Agency.[90] The RAC Foundation noted that the ORR would have no powers to take action against inefficient performance and would only report to the Secretary of State.[91]

47. Oxera compared the monitoring of the proposed GoCo with that of other utilities. It noted that, if the DfT were to allocate a "quasi-regulatory role" of the GoCo, it would need good data on the SRN's costs and assets. It was concerned that the DfT has insufficient information-gathering powers to obtain this data, which—bearing in mind the example of Network Rail—might take many years to research.[92] Oxera outlined what would be necessary to ensure that the new agency spent money efficiently:

    A lot of work goes into the other regulated utilities, in particular rail but also water, where people are employed by the regulator to go into the company and to make sure that money is being spent in an efficient manner; so quite a lot of resource will have to go on checking the money has been spent… There are many checks and balances that we see in other infrastructure sectors that we would expect to see coming into the strategic road network and, to the extent that it is relevant and necessary, into the local road network as well.[93]

48. The Minister told us that he had not made up his mind on the best model for regulating the proposed GoCo:

    We also need to ensure that we scrutinise very well how effectively money is being spent, or not, as the case may be. That is the other aspect of scrutiny. I am still undecided as to the best way of doing it. I am not sure whether the Office of Rail Regulation is the right route, or whether a panel of experts would be the way to do that.[94]

An advisory or oversight body reporting to the Secretary of State would not be sufficient to scrutinise the performance of the proposed Highways Agency GoCo, because the GoCo would not be accountable to it. The same argument applies to establishing a panel of experts. Any such panel or body would lack the credibility of an independent regulator.The new scrutiny body must have the power of a full regulatory authority. An expanded ORR could undertake this role.

49. We also heard concerns about Passenger Focus's ability to take on the scrutiny remit for the GoCo.[95] Professor Glaister told us:

    …their skill is in representing the interests of public transport users. They would have to expand greatly their portfolio of skills to deal with road users, not least because a third of this traffic is freight. They are also not in the business of measuring the performance of the network, as distinct from measuring the attitudes of users.[96]

The CBT defended Passenger Focus, saying that there had been similar scepticism when Passenger Focus expanded its role into scrutiny of buses, but argued that Passenger Focus had taken over that role successfully and demonstrated that it could expand.[97] The Minister told us that Passenger Focus was a "good model" for scrutiny and that he was "reasonably disposed to look at how they may engage and represent road users".[98]

50. We note that Passenger Focus has a record of successfully expanding to take on additional duties and therefore recommend extending the remit of Passenger Focus to include scrutiny of the proposed GoCo. It must be subject to a duty to represent the concerns of all SRN users to the DfT and should set up a panel of road user stakeholders to monitor its work.


51. Several witnesses told us about their relationship with the Highways Agency. The Local Government Association said that, in the past, the agency has "not engaged in a way that we feel is helpful", given that the local road network supported the SRN by providing access and diversionary routes.[99] One business group cited its recent experience in relation to the proposal to upgrade the A14 from Cambridge to Huntingdon, which they suggested had been subject to insufficient consultation and a lack of engagement with road users outside the immediate area of the project.[100] Jordan Products Limited, developers of the Conemaster system for lifting and laying traffic cones, believed that there were "vested interests" within the agency and among its contractors which prevented them from engaging with companies offering technical innovations that would make the agency's work more efficient.[101] The Road Haulage Association set out its perspective:

    I am not sure that the Highways Agency is particularly good at consulting, sometimes with other local authorities, never mind organisations such as the RHA, but there is a contribution we can make, with our members, to schemes locally, and also nationally, to scrutinise more closely how the Highways Agency is operating.[102]

52. We discussed the current relationship of the Highways Agency with its customers and other stakeholders with Alan Cook, non-executive chairman of the agency. He told us that the agency had not focused on this enough in the past, but that it was trying to improve the situation:

    There has not been a strong enough customer ethos, whether that customer is the person driving a vehicle on the strategic road network or managing a piece of road that interfaces with it. That is an area we have been focusing on a lot in the last 18 months.[103]

53. The Chartered Institution of Highways and Transportation (CIHT) suggested that, before the GoCo is set up, stakeholders should be asked to feed in to its objectives. Local authorities, LEPs, community groups, other organisations and individuals would be involved in developing what would be the GoCo's performance specification. The final specification could emphasise the importance of the GoCo's work being able to capture the requirements of the local road network.[104]

54. Graham Dalton, the chief executive of the Highways Agency, defended its record on public engagement:

    There are a lot of local authorities, and I run a relatively lean business. I do not think we offer a full active dialogue all the time with all local authorities. We have a couple of hundred of authorities to deal with, and I am sure some will think we do not engage enough, and some will be quite happy.[105]

55. The proposed new Highways Agency GoCo must have a realistic performance specification for engagement with its stakeholders. This must instil in the GoCo a view of road users as customers and other organisations as partners in developing roads for freight and passengers, as part of an integrated transport network. This specification must be agreed with local authorities, LEPs and road user groups before the GoCo is set up.

76   The Accountability Debate: Next Steps Agencies, Research Paper 97/4, House of Commons Library, January 1997 Back

77   Q 38 [Mr Cook] Back

78   Q 45 [Mr Cook] Back

79   Q 199 [Mr Dalton] Back

80   SRN 21, SRN 64 Back

81   Q 13 [Professor Goodwin] Back

82   SRN 12 Back

83   Q 122 [Mr Watters] Back

84   Q 274 [Mr Goodwill] Back

85   SRN 70 Back

86   Q 272 [Mr Goodwill] Back

87   SRN 8, DfT, Consultation on transforming the Highways Agency into a government-owned company, October 2013 Back

88   Ibid. Back

89   Q 57 [Mr Cook], Q 110 [Mr Tugwell] Back

90   Q 145 [Mr Spiers], Q 158 [Mr Hugill], Q 172 [Professor Glaister], SRN 33, SRN 35 Back

91   Q 192 (Professor Glaister] Back

92   SRN 15 Back

93   Q 193 [Mr Meaney] Back

94   Q 253 [Mr Goodwill] Back

95   Q 76 [Ms Dee & Mr Radley], Q 122 [Mr Bizley] Back

96   Q 192 [Professor Glaister] Back

97   Q 100 [Mr Joseph] Back

98   Q 253 [Mr Goodwill] Back

99   Q 141 [Cllr Box] Back

100   SRN 11, SRN 31, SRN 33, SRN 39 Back

101   SRN 51 Back

102   Q 122 [Mr Semple] Back

103   Q 37 [Mr Cook] Back

104   Q 150 [Mr Hugill] Back

105   Q 237 [Mr Dalton] Back

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