Auditor calls for rethink on highway plans
Difficulties getting road improvement projects through the planning system are pushing up costs and causing delays, a National Audit Office report today confirms.
The planned Lower Thames Crossing has gone up by £2.3bn and been delayed two years alreadyThe National Audit Office (NAO) concludes that the Department for Transport (DfT) and National Highways now have some “difficult decisions” to make in prioritising road enhancements projects.
In other words, more road projects will have to be either delayed or scrapped. Already, delays to road projects and inflationary pressures mean that, by March 2025, National Highways will have undertaken less work on road enhancements and at a higher cost than originally planned.
More than a third of projects have struggled to secure the planning consent that National Highways had been expecting. Most notoriously, the development consent order application for the Lower Thames Crossing was submitted only this month, two years later than originally planned. The second Road Investment Strategy (RIS2), which covers the five years between April 2020 and March 2025, initially set out that government would spend £27.4bn on the network. This included £14.1bn earmarked for 69 road projects (almost double the £7.7bn budget for the previous five years). Within these 69 projects were nine that were classified as ‘Tier 1’ – typically costing more than £500m or that are particularly complex.
However, inflationary pressures, delays to road projects and changes in government priorities have created risks to the deliverability, affordability, and value for money of National Highways’ enhancement portfolio, issues which could be carried forward into the third road investment period (2025-2030), the NAO says.
In 2021, as it became clear that delivery could not be implemented as planned, DfT reduced the total number of projects to 58 and cut National Highways’ roads budget by £3.4bn (27%). The cost of the projects remaining in the revised portfolio, however, have continued to rise. As of September 2022, costs have increased for 39 of the projects, totalling £3.6bn. Of this increase, £2.3bn relates to the Lower Thames Crossing project.
While the NAO recognises that National Highways created a £1.16bn contingency budget to address emerging risks, these funds will not be able to cover the increased costs, it says. By July 2022, National Highways had allocated £1.19bn of contingency funds – more than the original budget.
In March 2022, National Highways reported that that a third of the 58 projects in the revised plan were at risk of delay, the primary reason being difficulty in securing development consent. The NAO report concludes that both National Highways and DfT could have done more to plan for and manage the potential risks to their portfolio of enhancement works. In RIS2 National Highways had planned to obtain consent for 33 infrastructure projects but by May 2022 had experienced delays in receiving or applying for development consent for 12 of them.
In most of the cases additional work was required to show how road projects complied with evolving government policy relating to environmental standards, with some projects being legally challenged by stakeholders in relation to their cumulative carbon impact.
In the short-term, NAO has recommended that DfT and National Highways should, working alongside HM Treasury, develop a response to the current inflationary pressures, addressing the implications this will have for the cost of planned projects. They should also work with other government departments to ensure that they are taking account of wider government policies; this will allow development consent applications to be more efficiently prepared for submission. In the longer-term, National Highways needs to make further improvements to its management of risks that could have an impact upon the delivery of the third Road Investment Strategy (RIS3). NAO comptroller & auditor general Gareth Davies said: “The Department for Transport and National Highwaysput together an extensive road investment plan that has been unfortunate to coincide with the covid-19 pandemic and rising inflation.
“Nevertheless, more could have been done to manage risks. Delays to projects have meant that less work has been delivered than planned and at a higher cost.
“DfT and National Highways must now fully address the rising cost of its revised portfolio of projects, undertaking a review of all road plans that it plans to move into the time-period of its third road strategy (2025-2030). This review must consider if these projects remain feasible and provide optimal value for money.”