The Treasury has backed a major overhaul of local authority accounting rules in a bid to deliver savings, through asset management, worth an estimated £250M a year.
Yvette Cooper, chief secretary to the Treasury, hailed the likelihood of ‘early efficiency gains’ by implementing the recommendations of the Chartered Institute of Public Finance and Accountancy that the true value of assets needed to be included in accounts (Surveyor, 19 June 2008).
Local highways authorities will have to invest resources into work to calculate the current value of all their carriageways, structures and other assets, and their rate of depreciation, in time for a dry-run in 2010/11.
While the move will necessarily involve upfront work, Edward Bunting, senior policy adviser at the Department for Transport (DfT), said it would make it more difficult for both national and local politicians to reduce funding for highways maintenance in future.
Highways officials would be able to pinpoint how much needed to be spent in order to hold assets in a ‘steady state’ condition, and the future cost implications of short-term funding cuts.
He confirmed that the focus on asset management would fulfil the Government’s pledge, hidden in the November pre-Budget report but highlighted in Surveyor, to divert future transport funding to local authorities in ‘areas of greatest need’ (Surveyor, 4 December 2008).
The DfT will announce later this month the first funding awards from its £32M pot of money to assist councils in assembling inventories of assets and their condition, and producing figures on valuation and depreciation. More than two-thirds of England’s 152 local highway authorities have bid for ‘element two’ funding, and, therefore, believe they have well-advanced asset-management plans.
Cooper said the highways infrastructure was ‘one of the biggest assets the UK public sector holds’ – with carriageways alone, not including structures or other highways assets, worth some £283bn according to one estimate. Matthew Lugg, chair of the County Surveyors’ Society engineering committee, welcomed the announcement by the Treasury, which represented ‘the Government’s acceptance of everything we’ve been advocating’. He added: ‘We’re going to have a much better handle on the impact of our investment, which is going to be a great help in terms of resource allocation – and fighting our corner for funding in what is going to be a very tight spending review.’
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