Highways England faces an ongoing funding shortfall of £0.8bn and the threat of action from its regulator if it does not improve its capital planning and asset management.
The Office of Rail and Road (ORR) has published an update report highlighting areas where it expects the government-owned company to do more to improve its plans for maintaining and improving the strategic road network, including managing the condition of roads.
ORR highways director, Peter Antolik, said: ‘Highways England is taking action to improve planning and delivery, but it must now agree a robust, deliverable and affordable approach for its long-term investment plans.
‘We also expect Highways England to improve how it manages road condition and to improve its reporting processes around critical data.
'We will be monitoring these areas closely and take action if improvements are not delivered.’
The update report says that, following ORR’s first annual assessment of Highways England in July 2016, the company is revising its plans about what capital projects it will deliver by 2020, their timings and expected costs.
Highways England’s current forecast of capital costs is higher than its funding, mainly due to it intentionally planning extra work in anticipation of some being delayed or removed from the programme – which the ORR says is an appropriate way to manage risk.
However, the revised plans are only likely to reduce the shortfall from £1.7bn to £0.8bn. The ORR says Highways England must explain clearly how it will address the remaining difference.
It says the new plans, currently under development and subject to Government agreement, are expected to mean a better spread of when schemes start and should reduce disruption, but may mean some major improvement schemes are delayed or reviewed to ensure value for money.
Highways England chief executive Jim O’Sullivan said: 'We have read the report and noted it makes clear we are committed to delivering safe reliable roads that deliver value for money for the taxpayer. We are confident we will deliver this large programme without overspending our budget.
'We have added around 100 lane miles of much-needed motorway capacity since April 2015, currently have 17 schemes in construction and are providing funding towards eight schemes which will help deliver thousands of new jobs and homes.
'In addition, by December, we had completed more than 630 miles of resurfacing and fully expect to exceed our year-end target of 750 miles.'
Highways England was below its target for the condition of its road surface in 2015/16 due to deterioration in skid resistance. Although road condition has since improved, it remains below target, the ORR report says.
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