The Government is turning the Highways Agency into a Government owned company, moving it from the public sector. In effect this will create a Network Rail for roads. We've blogged about the changes before.
Alongside this they are 'tripling' the budget to £3bn a year (by 2020/21) and guaranteeing this budget for five years. The change applies to England.
Why does it matter?
There has been severe underinvestment in our roads for decades. In addition, where road projects have been given the go ahead, political interference has often seen these projects reversed - the back and forth over the A14 upgrade being a classic example.
Moving the Highways Agency to a Government owned company will give it greater day to day independence, allowing it to avoid cumbersome and bureaucratic public sector rules around contracting and staff recruitment.
By tripling the roads budget and locking this for five years, it also then allows the Agency to plan projects with certainty – allowing the supply chain to invest and drive down costs, ensuring value for money and savings for the taxpayer compared to the current system. We've previously blogged about how the supply chain factors into these changes.
What's our view?
EEF welcomes the change; the road network is the most important part of the transport network for manufacturers and is the glue which binds the rest of the transport network together.
Q: How critical/important/not important are the following transport modes for your company?
It is also a significant part of the UK's business environment, poor roads hamper investment intentions and overall dents productive capacity as highlighted by the chart below from our 2012 Investment Survey.
We have some concerns about the oversight procedures and how a £3bn per annum increase could be sustained beyond 2020/21 given the continuing fiscal squeeze. However on the whole we welcome the changes and the Government's intention to have the changes in place by April 2015.
If all goes to plan the changes should create a more nimble organisation capable of unblocking the barriers in our road network which could potentially stymie growth over the long term.