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Highways Agency review says five-year spending plan and wide-ranging reform needed

The government has been urged to create a new, independent board to oversee new five-year work pipelines and cost efficiencies of £200 million each year for the UK’s strategic roads.

Highways Agency board non executive chairman Alan Cook has set out a series of recommendations to transform the way roads are procured in the UK and establish new governance for the future.

The report calls for the Department for Transport to publish a long-term strategy for motorways and trunk roads within six months of its response to the review followed by an outcome-based specification for the current network, detailing firm commitments for the next five years within 12 months.

As part of the spending review settlement in October 2010, the government committed to an independent review to examine whether it has the right approach to operating maintaining and enhancing the strategic road network.

In the A fresh start for the Strategic Road Network report, Mr Cook said the unique position of the Highways Agency and its relationship with government has “failed to reflect the wider interests of our economy”.

The report states that the relationship between the Department for Transport and the roads agency has led to “little pressure on government to take, or stick to, long-term decisions for investment in the network”.

Mr Cook calls for a new non-executive chairman to be appointed to a board made up of industry-leading non executive directors to assess future delivery capability in the roads network.

The new board would be directly accountable to ministers for their performance in meeting contract terms, under Mr Cook’s proposals, which he states could see £200m efficiencies annually after the first five years.

Civil Engineering Contractors Association director of external affairs Alasdair Reisner welcomed the recommendation of a five-year vision for the network, but warned a fresh start should ‘not mean a complete overhaul’ of the Highways Agency.

He said: “Despite being the single largest asset owned by the government, the development and maintenance of the strategic roads network has been held back by short-term funding.

“For many years the industry has campaigned for greater long-term certainty for roads funding. We know from other sectors that longer funding cycles drive efficiency by allowing work to be more effectively managed, smoothing investment.

“But a fresh start should not mean a complete overhaul. We believe that in many of its activities the Highways Agency leads industry best practice. We hope that any reform will accommodate and build upon this existing capability, delivering the world class strategic network that road users demand.

The report also states that the:

DfT should consider providing any new connections as private toll roads in the first instance

New board should secure greater efficiency including using contracts to create incentives for suppliers to reduce unit costs on an annual ‘RPI – X per cent’ basis, consistent with the aim to reduce overall unit costs by at least 20 per cent within five years.

DfT should, with Treasury support, set out a funding package for the existing English motorway and trunk road network, committed for five years to accompany the specification, which represents the government’s best assessment of the economic and efficient cost of that specification

DfT should, within a year of the government’s response to the review, reform the corporate status of the Agency to embed and formalise its new relationship with government, and to provide a catalyst for reforms to create a more commercially flexible and focused organisation

Board should exploit opportunities to earn income from commercial ventures, for example through the use of advertising and commercial sponsorship around the network, where this can be done safely and without serious adverse environmental impacts

While advocating a five-year forward pipeline, the report also finds there is a case for providing a slightly longer funding control period, for example up to seven years, for recurrent spending on maintenance and renewals, citing evidence from the water sector that five-year funding settlements still drive inefficiencies in delivery around control periods

Among the reasons for reform cited in the report is that the Highways Agency estimates that it suffers around five weeks of additional delay for a number of decisions which have to be referred to the DfT for approval.

The report also calls for new network managers to be given the commercial freedom to manage its own budget, including access to a working capital reserve, allowing the smoothing of investment and expenditure between budgetary periods and effectively ending the constraint of annuality.

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