1 Funding for road maintenance |
1. On the basis of a Report by the Comptroller and
Auditor General, we took evidence from the Department for Transport
(the Department) and the Highways Agency (the Agency) on the maintenance
of England's road infrastructure.
2. England's strategic and local road networks are
made up of 187,000 miles of roads, 61,000 bridges and numerous
other infrastructure assets including embankments, retaining walls,
and drainage systems. The strategic road network, which includes
almost all motorways and the most important 'A' roads, consists
of 4,400 miles of road with 9,000 bridges. The remaining local
roads are 183,000 miles long, including 113,000 miles of urban
backstreets and rural lanes. The combined networks carry 90% of
passenger traffic and 68% of freight movements and are the nation's
most valuable infrastructure asset at around £344 billion.
Just under 1% of the asset value (£4 billion) was spent on
maintaining England's roads in 2012-13.
3. The Department is responsible for operating, maintaining
and improving the strategic road network through the Agency. In
2012-13, the Agency received £2 billion from the Department
and £68 million from other sources, of which it spent £720
million on maintenance.
Local roads are managed and maintained by 152 local highway authorities,
including Transport for London. The Department sets the legislative
and policy framework and provides guidance on network management
to local highway authorities. The local highway authorities spent
£3.3 billion on maintaining local roads in 2012-13, including
£779 million capital funding provided by the Department.
Local authorities' revenue funding comes mainly from the Department
for Communities and Local Government, council tax and a share
of business rates that they retain. Authorities use this funding
for a range of services, including road maintenance.
4. In 2012, we reported in Reducing costs in the
Department for Transport that the Department cut road maintenance
budgets by £1.2 billion over the four years to March 2015.
We concluded that the Department did not have a full understanding
of the likely impact of these reductions, and that these reductions
risked deterioration of the road network and higher costs in the
long run. The Department
and Agency told us that since then, highways authorities have
taken a range of actions to reduce their maintenance expenditure.
For example, the Agency told us that instead of requiring its
contractors to keep incident support staff on standby around the
clock, it now specifies that roads should be kept operational.
This means that staff are now able to do other work, such as grass
cutting, when they are not needed to deal with incidents on the
network. We were also told that some highway authorities are achieving
efficiency savings through innovative methods such as sharing
depots with other authorities or by sharing examples of good practice.
5. Although it is too early for us to judge the long-term
impact of budget reductions, the most recent data show that the
surface condition of the strategic road network has not declined.
There is less information on the state of local roads but the
Department admitted that there is evidence of stress and strain
with the greatest problems in London and the South-East. The Department
told us that it is aware of public concern about the state of
local roads. This is highlighted by the National Highways and
Transport Survey, which reported that only 30% of the public were
satisfied with the condition of the roads and the speed and quality
of repairs, the lowest level since the survey began in 2008.
6. In the 2010 Spending Review, the Department cut
road maintenance budgets by £1.2 billion for the four years
from April 2011. However, on nine occasions since then it has
announced additional funds for road maintenance which total £1.1
billion. Thirty-five of 46 local highway authorities in the National
Audit Office survey said that the stop-start funding had hindered
them from getting value for money.
The extra money has reduced the extent of the planned budget reductions.
The fall in the Agency's budget will now be 7% over the 4-year
period to March 2015 instead of the 19% that was announced in
the Spending Review 2010. Local highway authorities' capital funding
from the Department for road maintenance is increasing by £97
million (3%) over the four years instead of the planned £557
million reduction (15%).
7. We were concerned that funding uncertainty has
undermined value for money. The Department agreed that funding
needs to be more predictable so that highways authorities can
plan properly. Unpredictability also deters the right behaviours
in the supply chain, such as investing in training and other ways
of improving efficiency. Infrastructure UK has reported that certainty
of funding is associated with cost savings of 10-20% for routine
Asphalt Industry Alliance reported earlier this year that the
average cost of filling a single pothole in England and Wales
was £52, or £70 in London. It also reported that it
cost £31.6 million in 2013/14 to pay and process compensation
claims from road users for damage to persons or vehicles arising
from poor road conditions.
8. We heard from the Department that it is working
to provide the Agency and local highway authorities with more
predictable funding. The Department explained that it has set
out its capital funding for local road maintenance for the six
years from 2015-16 to 2020-21: £976 million a year.
The Department also told us that it
plans to provide greater predictability of funding to the Agency
through its reforms included in the Infrastructure Bill. The Department
and Agency told us that the reforms would change the Agency's
status to a limited company wholly owned by the government, with
at least five-year funding settlements for capital projects and
new arrangements are a step in the right direction but by themselves
are not enough to guarantee improved value for money. For example,
Network Rail has had fixed 5-year funding settlements for over
a decade but still faces challenges in maintaining the rail network
in the most cost-effective way.
9. The main effect of changes to road maintenance
budgets has been a fall in revenue funding. The reduction in revenue
funding is concerning because essential routine maintenance activities
such as inspections, clearing drains and winter gritting can only
be paid for from revenue funds. We therefore challenged the Department
on whether the fall in revenue funding will increase the risk
of flooding and long-term damage to infrastructure, particularly
with increasingly frequent severe weather conditions.
The Agency spent 29% less revenue funds in 2012-13 than it had
in 2010-11. Local highway authorities' revenue funding, which
is for all local authority services, fell by around 33% in real
terms over the 4 years from April 2011, and it is set to fall
by a further 10% in real terms from 2015-16 to 2020-21. Local
highway authorities' actual revenue spending on road maintenance
has fallen less steeply, it was 7% lower in 2012-13 than in 2010-11.
10. The Department told us that it understands the
importance of revenue funding for road maintenance. It said that
it will work with the Agency to ensure that it has the appropriate
level of capital and revenue funding.
However, the Department explained that the £976 million a
year that it is to provide for local road maintenance from 2015-16
is all capital. Revenue funding comes from the Department for
Communities and Local Government and local authorities' own resources.
The Department therefore argued that the level and use of revenue
funding for local road maintenance is a matter for the Department
for Communities and Local Government, local authorities and their
2 C&AG's Report, Maintaining strategic infrastructure: roads, HC 169 Session 2014-15, 6 June 2014 Back
Q 1; C&AG's report, Key facts, para 1 Back
C&AG's report, para 1.6 Back
Qq 44, 66; C&AG's report, paras 1.7-1.9 Back
Committee of Public Accounts, Reducing costs in the Department for Transport, Seventy-first Report of Session 2010-12, HC 1760, 13 March 2012 Back
Committee of Public Accounts, Reducing costs in the Department for Transport, para 5 Back
The term 'highways authorities' refers to the Agency together
with local highway authorities Back
Qq 33, 48, 52, 55-57; C&AG's Report, paras 1.20-1.21 Back
Qq 41, 63-65; C&AG's Report, para 9, 1.32-1.35 Back
Qq 10, 29-30, 44; C&AG's Report Figure 2 Back
C&AG's Report, paras 7, 1.12 and Figures 2, 3 Back
Figures are in cash terms so there will be additional pressures
on road maintenance budgets due to inflation Back
Qq 29, 44-45; C&AG's Report, paras 12, 2.5, Figure 13 Back
Qq 27, 29, 44-45, 49 Back
Q 1; C&AG's Report, para 2.20 Back
Qq 7-9, 36, 42-43, 49, 66; C&AG's Report, paras 1.5, 1.17, Figure 1 Back
C&AG's report, paras 1.13-1.14, 1.18-1.19 Back
Changes to budgets and spending are in cash terms throughout unless
otherwise stated. Back
Qq 43, 66 Back
Qq 10, 49, 66 Back