A major culture change among highway authorities could be the only way to save Britain’s roads from irreversible disrepair. At least that is the latest message to industry from local government spending watchdog Audit Commission.
Last week it published its report on achieving better value for money for road maintenance. There’s no denying that there is huge pressure on highways spending as the reality of savage cuts to roads and local authority spending takes hold. The report highlights the fact that resources are reduced as councils face increasing traffic, high public expectations, bad weather and substantial cost inflation.
There is a 26% cut to local government funding and capital allocations for Local Transport Plans will fall by 16% over the period 2011/12 to 2014/15.
Research by the Labour Party, also published last week, found that 73% of councils had faced the challenges by cutting road maintenance this year.
While there was a sense of inevitability that the axe would fall on maintenance there remains the issue of how to tackle the national backlog, which Labour’s survey of 111 councils put costs at £13.4bn.
The Arudit Commission’s report points out that councils had increased road maintenance spending by 73% since 2000 but as cost hikes outstripped general inflation they have struggled to deliver real improvements.
So what’s the answer? The watchdog makes a number of suggestions but one that stands out is that councils have little choice but to collaborate with each other to find a cheaper way to make things work.
“Highways authorities have done well in the last couple of years,” says Audit Commission head of studies Katie Smith, referring in particular to their collaboration with supply chains to drive performance. “But what is needed now is quite radical. Challenge yourselves to come together to bulk buy… set up consortiums.”
Evidence of the approach being successful does exist, says the watchdog. And collaboration can even include the Highways Agency.
The Midlands Highway Alliance is the first such collaboration. It was established by 13 councils and the Highways Agency. It estimates that it has delivered £5.1M in savings for councils and £7.8M for the Highways Agency in its first three years, and is looking to a further £14M of savings between 2010 and 2014. Ten local authorities in the East of England have also formed an alliance to save £6M over five years, with £3.3M from shared back office costs alone.
The watchdog says political differences and contract end dates are among the understandable barriers to further collaborations but that they must be overcome.
“The Midlands Highways Alliance suggests that where there’s a will there’s a way,” says Smith.
Other problems include a desire to keep things local but Smith warns that this often comes at a high cost. She says that without comparing unit costs across regions, councils are often unaware that they are paying over the odds.
Others question whether the collaboration is the right answer to saving money. “Obviously there is more attention than ever on what you can do efficiently,” says Local Government Association senior policy consultant Caroline Green. “And councils are in the process of learning — we’re not saying we can’t make progress. But collaboration and big procurement can become quite risky and quite complex.”
Highways authorities have done well in the last couple of years. But what is needed now is quite radical. Challenge yourselves to come together to bulk buy… set up consortiums.
Katie Smith, Audit Commission
Green adds that a blanket approach to gathering small contracts into one huge contract creates diminishing returns. “Part of doing a good deal is having the competition,” she says. She says that much of the solution lies in being better at finding the money to pay for things.
Firstly, councils need to be better able to ensure that organisations — such as utility companies — who are responsible for damaging roads, pay to fix it.
And secondly, perhaps more significantly, she says that more innovative and new ways to fund road spending must be developed.
While there is a commitment to roll out lorry road user charging and consider tolls for new roads, the government is more reluctant to discuss implementing either on a grand scale.
Green adds that further innovative funding — including tax increment financing — might be the key to saving our roads maintenance issues.
A further problem, and one that is trickier to fix, is about perception. The watchdog says that councils could adjust their attitude. “In cash terms, its road network is a council’s single most valuable asset,” says Audit Commission chairman Michael O’Higgins. “Yet councils struggle to apply asset management principles to roads. They cannot be sold and they don’t generate income. Indeed they consume large resources. Hardly surprising that some councils see roads as liabilities rather than assets.”
It could be argued that the public also which fails to appreciate that roads are assets, and that only when there are problems do people talk about roads. Hopefully attitudes are changing: the recent warm reception given to the new Hindhead tunnel and the popularity of a major junction improvement in Essex are examples of that. Until they do, it may be difficult to find that much needed money.