Your Money, Your Highways

17 October 2017

By Adam Spencer-Bickle, Senior Economist, Office of Rail and Road (ORR)

Highways England was established as a Government company in 2015 with a mission to modernise, maintain and operate England’s motorways and major A roads. The Road Investment Strategy (RIS) laid out how much money Highways England had to spend on roads between 2015 and 2020 and what performance targets it had to meet.

The economy relies on a reliable, well-run road network. Businesses and individuals depend on it for work and leisure. Taxpayers rightly demand that their hard-earned money is spent wisely. The Office of Rail and Road (ORR) was set up to monitor Highways England’s work and ensure it delivers value for taxpayers’ money. Now, as attention turns to RIS2 covering 2020 to 2025, we are benchmarking Highways England to understand its current performance and how it could improve in the future.

We identified Highways England’s own regions, local and national road authorities, and companies in other sectors, as realistic, if not exact, comparators for our benchmarking. This varied set of comparators help us to benchmark the wide range of what Highways England does. For example, comparing road safety with other countries, looking at efficiency savings made in other sectors, and comparing maintenance spending across Highways England’s regions.

This part of our work, benchmarking maintenance spend across Highways England’s regions, uses a 3 step process:

  1. determine what factors, like network length and traffic levels, drive maintenance costs – the “cost function”
  2. estimate the lowest (or most efficient) cost of maintaining the network – the “efficiency frontier”
  3. identify the potential scale of efficiency improvements from the gap between actual costs and this “frontier”

Simple? Well, yes and no. The theory is straightforward but in practice there are challenges. It can be hard to get consistent data on costs and cost drivers, to compare across organisations or regions, and to conclude what the lowest efficient cost is.

But, we have developed an approach to provide evidence of how efficiently Highways England is spending the £5billion of taxpayers’ money it was allocated in 2015 to maintain its network. More detail on this approach is given in a paper I recently presented at the European Transport Conference, available to download from this link.

We will refine and improve this work as RIS2 gets nearer. And we will explore how we can widen our benchmarking to cover other areas of Highways England’s work and spending. This will help to inform the discussion about how much money should be given to Highways England and what performance levels should be planned, as RIS2 is finalised in the coming months and years.