The Highways Agency is being transformed from a quango to a go-co. But will it help projects to move faster – or just reduce its accountability?
The government is taking steps to reform the Highways Agency - as announced in the Queen’s Speech - to give it more freedom in its day-to-day operation. But the success of the reforms will depend on how the bill introducing them is implemented.
The Infrastructure Bill was laid before parliament on 5 June for the formality of a first reading to the House of Lords. The bill proposes to reform the Highways Agency (HA) from a quasi-autonomous non-governmental organisation (quango) into a government-owned company (go-co). This will make the HA a legally separate government-owned company, limited by shares, with the secretary of state for transport the sole shareholder. The bill was put to the Lords for its second reading on 18 June and will now be put to detailed line by line examination at the committee stage on 3 July.
The proposals will enable the secretary of state to appoint one or more companies as highways agencies responsible for specific areas of the country and specific highways in that area - although, the initial policy intention is for the appointment of one company for the whole of England. A Road Investment Strategy (RIS) will be set by the secretary of state to specify the objectives to be achieved by the HA and the funding which will be provided by the government for the purpose of achieving those objectives. The legislation binds the government and the HA to comply with the RIS and enables the secretary of state to impose fines on the HA if it is deemed to be contravening its RIS.
It is a lack of stability over delivery requirements that has previously undermined the HA’s long-term planning; stability is therefore a key requirement.
The government has sought to improve the HA’s work stream through the imposition of the RIS. Each RIS must be set for a period decided by the secretary of state - expected to be five years. The government expects that the RIS will enable the HA to plan projects with confidence that the funding is available and mapped out. It is a lack of stability over delivery requirements that has previously undermined the HA’s long-term planning; stability is therefore a key requirement.
The RIS is also intended to facilitate more efficient delivery of projects by the HA. Efficiency is expected to improve through better prioritisation of projects, needed to achieve the specific objectives set out in the RIS. In turn, such priority may improve the speed that the HA is able to deliver projects. The HA has said that becoming a go-co will improve efficiency and save tax payers at least £2.6bn over the next 10 years. As noted, the performance of the HA in these key areas will be monitored and sanctioned through financial penalties.
Greater autonomy is expected to benefit both the HA and suppliers contracting with the HA. Guaranteed funding will allow the HA to enter into cheaper long-term contracts with suppliers for a period of up to 10 years. The improved stability regarding specific objectives will also give contractors the certainty to increase their capacity to fulfil such long-term contracts. Current contracts with the HA will be transferred to the HA go-co under provision of the legislation.
There are, however, concerns that the increased autonomy means a reduction in the HA’s accountability to government. Critics of the proposals say that, as with all private companies, financial targets will be the priority and will inevitably lead to income-focused changes to the detriment of road users and suppliers.
The government’s proposals are promising; but their success will depend on whether they can withstand political interference. Such interference creates uncertainty over whether the government will commit to projects, and uncertainty has prevented suppliers from tendering for the projects. If they can withstand such interference, then the HA will have a robust platform from which to deliver long-term projects; and committed finance should prevent the body from suffering depleted funding streams.
The success of the proposed reforms will only be known once the bill is fully implemented. However, the legislation provides the HA with a positive framework for developing a sustainable company model and improving its delivery of projects. These factors are fundamental to the HA investing in the future of our highways.
Sheena Sood leads construction, engineering and infrastructure at solicitor Beale and Company