Jan 2010 07

The Highways Agency: Getting to grits with contractors5

"The basic point is that the Agency does not know enough about what it is getting for the taxpayers’ money it spends on maintenance across its whole network. Without a better understanding of the costs of network-wide activities – such as resurfacing – it cannot hope to drive those costs down”

So said Edward Leigh, Chairman of the Public Accounts Committee (PAC), who today released a report about the Highways Agency (HA), which identifies key areas of improvements. As the quote above highlights, the HA need to hold contractors up to the true costs of projects to ensure that the taxpayers – and motorists in particular – will receive value for money.

Following quintessential principal agent theory the central issue of delegation of administrative power to a road contractor is lack of information held by the HA. This can prove particularly problematic in terms of contractors delivering projects that are reflective of their true costs. The PAC however identified that detailed information about the contractor’s costs is held by the HA. The problem is that it is too often not fully utilised by the agency.

Consequently contractors are not measured on how closely they deliver to the true cost of a programme, and hence efficiency improvements are hindered. Furthermore there is discrepancy between contractor costs for very similar jobs between agency areas.  In short the highways agency need to challenge job processes more effectively than they have been doing.

The lack of effective management of road projects is exemplified by many road contracts that have ran over budget. The TPA Government Overspends report highlighted that road transport projects included within the report were running, on average, 13.1 percent over budget. The net figure for these overruns stands at £404 million.

The extent of overruns may suggest that roads deserve less of the disappearing transport budget. However, road spending in 2007-08 was £8.3 billion yet passenger kilometres totalled 749 billion. The rail budget was marginally smaller at £8.2 billion, however passenger kilometres was around 13 times smaller at 59 billion. Road can therefore carry more passengers for a given amount of public spending. And if the HA took the PAC’s recommendations on board, efficiency savings could deliver even more value for taxpayers’ money on roads than it currently does.

The HA therefore needs to ensure that road retains its competiveness in transport policy. This will be done be through effective management and holding contractors to account for their costs. Motorists pay £30.3 billion a year in Fuel Duty and Vehicle Excise Duty so it’s only fair that these taxpayers receive value for their money.

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  • Steve Robson

    I think you should run the Highways Agency, Jen, that would sort it out; I’m sure your very well qualified.

  • Nice Boy Nigel

    I don’t think that Jennifer does have the necessary qualities actually, Steve. I’m not certain whether you have any “inside information”, but I suspect a CV that reads
    “I’m an ambitious twenty-something with an almost insane objection to speed cameras and parking fines. I’m more than willing to jump on any pro-car bandwagon no matter how lame or non-exsistent the evidence and to post comically poor, ill-thought out, articles on the TPA website”
    is quite what the HA would be looking for. But then again, you never know.

  • mike, Cardiff

    I like everybody else in this country ( well almost, apart from the 2 million + who don’t!) pay road fund licence, fuel duty @ 80% + VAT.
    We also pay our local rates which is the 2nd highest in Cardiff, yet not one road in our area has been gritted!
    The Local Education Authority has closed all schools in Cardiff, blaiming it on the roads & schools for not having grit, who grits the local roads why its the same council which has closed the schools!
    Im a Drivng Instructor, so Im cancelling alot of lessons. Oh well look on the bright side, less hours worked, less income tax to pay, less miles done, less fuel duty to pay.
    So less money for Brown and his idiots to waste!
    The sooner him and his clowns go the better!

  • http://www.fairdealabd.org.uk/campaign.htm Brian Mooney

    There is an attempt to use an under-publicised consultation to seek
    approval, at least in principle, for London-wide road pricing and a range of
    other stealth taxes (e.g. parking charges, unspecified levies for new projects).
    Although they are happy to see drivers as easy meat for ever more taxes, I could find nothing on how Transport for London would keep essential transport services and roads running in our increasingly colder winters! Nice to know their priorities…
    Whether or not they live in London, the public should be allowed to have their say on the Mayor’s Transport Strategy.
    http://www.fairdealabd.org.uk/londonmts.htm
    The Transport for London consultation leaflet is biased, leading readers
    towards agreeing with a loaded statement supporting ‘fair road pricing’. It makes no attempt at any objective discussion on
    what might or might not be fair. Nor does it remind you that drivers already pay five times over for using the roads.
    You can fight back, though – send in a short personal response to [email protected] by Tues, 12th January.
    “The Mayor must respect the majority view – twice given – and remove the Western Extension of the Congestion Charge without further delay. He should remove the Congestion Charge itself as soon as possible.
    He must not extend the Congestion Charge or bring in other road user charges.”
    Please do use your own words and add your own ideas….

  • Anita Thomas

    The Highways Agency has very little idea as to the runnings of the contracts for Motorway Maintenence.I know an engineer on a contract for one of the counties.The Company with the contract are so determined to save every penny they can that the engineers have not been provided with appropriate vehicles for daily use(sub-standard) let alone provide any 4×4 vehicle to work in the present conditions.No emergency telephone maintenence has been done for over a week now yet it is exactly at this time they are essential.H.A have little knowledge of the dreadful conditions imposed upon the engineers by the present company.Previously they were equipped with 4×4′s & even a survival kit,working in pairs to do the essential work- now nothing is being done.(Health & safety rules).
    An area of emergency telephones were not cleaned by the engineers for 13 months as they were not provided with the equipment or the worktime to do this duty- they were only cleaned then due to complaints from the public.A very shoddy service is being given by the contractor- yet the H.A are unaware as the engineers are too afraid to whistleblow.Everyone needs to complain about the service being provided if they have any issues- only this way will things change.