A series of freedom of Information (FOI) requests submitted to government departments and arm’s length government bodies has revealed that spending on legal fees has increased faster within the Department for Transport (DfT) and National Highways (Highways England) than any other organisation contacted.
The FOI request asked for a breakdown of legal costs per calendar year for the period from 2016 to 2020 and showed that DfT’s spending had risen 428% over the period from £3.9M in 2016 to £16.8M in 2020. Over the same period National Highways spending increased by 348% from £4.8M to £16.9M.
Although the costs cover a wide range of legal situations, a link has been made between the judicial reviews brought against major projects based on environmental grounds and the rise in legal costs at DfT and National Highways.
BDB Pitmans partner in the planning and infrastructure team Angus Walker said: "Given the likely breadth of legal spend it is difficult to draw conclusions as to why costs have increased by so much in recent years.
"Highways England (National Highways) have been delivering their first Road Investment Strategy, for example, which is bound to have meant a large commercial legal spend.
"However, looking to the future, the litigation element of legal costs is likely to be taken up by environmental challenges rather than Covid or Brexit related ones, as these seem to be more amenable to crowdfunding, which has been the source of recent challenges to infrastructure projects.”
A DfT spokesperson did not explain the rise in legals costs but stated: "With increased investment in transport infrastructure, the department may be required to undertake independent legal advice to ensure taxpayer money is invested responsibly and efficiently."
However, National Highways general counsel Tim Reardon did provide more insight into its increased costs.
He said: "The increase in legal expenditure is due to increasing volumes of work and the need to appoint external law firms to help to deliver the £27bn Second Road Investment Strategy (RIS2), which represents a large increase in investment from the previous road period.
"We ensure value for money by appointing firms from the competitive Crown Commercial Services Legal Services Framework and by close monitoring to ensure that the legal services are delivered to an agreed scope.”
A spokesperson for the Office of Rail & Road added that, while the organisation does not require Network Rail or National Highways to report on legal costs, the figures for National Highways “broadly match projections” seen during the Road Investment Strategy 2 (RIS2) efficiency review. The spokesperson added that RIS2 includes plans for National Highways to expand its internal legal team to bring some functions in-house. “Which is likely to deliver around £5M of efficiency savings,” said the spokesperson.
Network Rail’s legal spending was revealed to be the highest at £85.2M over the five year period (the second highest was National Highways at £53.9M) with a peak seen in 2018 at £20.6M. A Network Rail spokesperson explained that this peak was as a result of Project Corridor, which saw the disposal of the commercial estate (railway arches) for £1.46bn and also contributed to increased costs in 2017, 2019 and 2020. “If you remove the effects of Project Condor across the years in question then our legal expenditure on external firms remains pretty consistent across the 5 years,” said the spokesperson.
Network Rail group general counsel Stuart Kelly added: “Network Rail is a complex company and one of Britain’s biggest landowners, with more than 40,000 staff, millions of assets, and responsibility for running 20,000 trains a day across 20,000 miles of track. Our legal obligations are wide and varied and range from managing intricate legislative requirements around the thousands of projects we delivers every year, acquiring and negotiating land agreements, and dealing with issues around operational incidents and accidents.”
The Environment Agency, Northern Ireland’s Department of Agriculture, Environment and Rural Affairs and Transport Scotland also responded to the FOI and their figures demonstrate a steady level of spending on legal costs. Figures supplied by Transport for Wales show a sudden increase in 2020 to £5.4M from between £1.2M and £1.9M in the previous three years, but the costs remain relatively low compared to other organisations.
After reviewing the figures gathered by NCE, Civil Engineering Contractors Association chief executive Alasdair Reisner called on the departments and organisations to ensure effective engagement with communities during the early stages of projects to gain support and avoid costly legal disputes.
“Development of infrastructure provides huge benefits to the UK but must be delivered with the support of communities,” he said. “It is vital that those that have concerns about development have the ability to engage in the plans for projects, and that work is delivered in line with relevant government policies.
“We recognise that there are often legal challenges to projects that have to be defended by clients and the government. While this may impact upon project delivery, it is an important element to confirm that the projects are being delivered within the law.”
The FoI regarding legal costs per calendar year for the period from 2016 to 2020 was also submitted to the Department for Environment, Food & Rural Affairs, HS2 Ltd, Natural Resources Wales, the Scottish Environmental Protection Agency and Transport for London but no responses have yet been received from these organisations.
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