Transcript from Transport Committee session on Local roads funding and governance - Apr 24

Scope of the inquiry

The Transport Select Committee is launching an inquiry into local roads funding and governance. 

Local roads in England comprise over 97% of the total road network length and carry two-thirds of motor traffic and almost all cyclist movements. They are the arteries for vibrant and prosperous towns and cities, and are critical to moving goods and ensuring all of us can get to our destination. 

The consequences of a deteriorating local road network can be significant, undermining both the economic performance of a region and resulting in direct costs to motorists, for example, through damage to road vehicles.

Witnesses

I: Jesse Norman MP, Minister of State, Department for Transport; and Steve Berry OBE, Head of Highways Maintenance, Innovation, Resilience, Light Rail and Cableways Branch, Department for Transport.

Examination of witnesses

Witnesses: Jesse Norman and Steve Berry.

Q294       Chair: Welcome, and thank you very much for coming along today. Could you introduce yourselves for the benefit of the record?

Jesse Norman: I am Jesse Norman. I am the Minister of State at the Department for Transport with responsibility for roads and a bunch of other things. 

Steve Berry: I am Steve Berry. I head up highways maintenance in the Department for Transport. 

Q295       Chair: Minister, do you think that the English local road network is in a satisfactory condition?

Jesse Norman: Let me start by thanking you, Madam Chair, and the Committee for having this inquiry, which I have been following closely, and also for the very interesting evidence sessions you have already held with expert participants from local government and other sources. I massively welcome it.

As you know, and as you will discover in this conversation, we are trying to do a lot to improve the situation in local roads, especially in the run-up to the spending review. We can perhaps explore how we might do that. I am also keenly aware that this is one of four sessions in which I am due to see you guys over the next few months. I commiserate with you on the pain you will be suffering between local roads, road safety, active travel and pavement parking.

In answer to your question, I do not think there is any doubt: the local road network is not in a great state in many ways. It is improving in some regards, although there was the beast from the east at the end of last year. Broadly speaking, as you will have seen, it has been improving in the A and B roads. The U roads and the less high status roads are a different matter altogether. As you know, of course, there are a lot of different figures batted around as to how far this very important national asset needs a new round of capital investment. 

Q296       Chair: We have had quite a lot of evidence about all of those issues. I am interested in your analysis. Who or what do you think is to blame for the current state of the road network, particularly, as you say, the local roads? Is it local authorities? Is it the Department for Transport? Are there systemic failures that have led to the deterioration? I appreciate that the latest information suggests a slight improvement in the state of roads, but you will know from your own postbag—we certainly know from our postbags—that people are concerned about the state of local roads. It is a major concern. 

Jesse Norman: Chair, we are, as politicians, like everyone else absolutely subject to confirmation bias. We think the roads are in a terrible state, and everything we see seems to confirm that the roads are in a terrible state. We do not take a historical view. If we took a historical view, we might not come to quite that conclusion. For example, the RAC is a very reputable independent source. If you look at their evidence on potholes, what does it show? The RAC pothole index, of which I have copies that I am happy to share, shows that there was a very significant rise until 2010, since when there has been a steady but sporadic fall.

That is a piece of independent evidence. There are lots of different forms of evidence one can have about it, but my point is that the situation of the local roads network is not good, but it is not new either. The interesting question is whether we can use the opportunity of the work that we are doing in the Department and the support that you are giving through the Committee framework to shift the dial and move the situation so that there is a new settlement for local roads coming out of the spending review. That is the thing which is a really interesting issue to play for. 

It is not just a function of money. Money is very important, and we can talk about why it might work, but it is also a function of all the other things you have talked about. It is a function of innovation and use of technology. It is a function of how local authorities work together, best practice spreading and skills.

Let’s be clear. The roads are being used more than ever. The amount of traffic on local roads continues to go up significantly. The weight of traffic on local roads goes up significantly. That only doubles the need for people in Government to be pressing down hard on the issue, and that is what we are doing. 

Q297       Chair: That is helpful. You have set out some of the key challenges that are faced in maintaining and renewing local roads, whether it is the weight of traffic, the volume of traffic or more extreme weather, which is obviously problematic. What is your vision for the future of the English local road network, and what are the practical steps you are going to take to achieve the goals that you set?

Jesse Norman: Let me talk about the vision and the practical steps. If there is anything you want to add, Steve, or if anything I am saying is wrong, you can correct it.

The first thing to ask is, what do we have? We have a very important national asset. That is the first thing to say. It must be treated as an asset. One of the things that is really important, and the work you have done has highlighted, is the way in which best practice focuses on local roads as an asset—and maintaining them and developing them as that.

Secondly, they have historically been something of a poor relation within transport. We have to be honest and recognise that. That has an impact on safety, on productivity and on local communities. We are going to have to up our game significantly in local roads in this Government and in future Governments. To take a very simple example, there are inadequate markings on local roads. As you start to move towards autonomous vehicles, you are going to need better marked and better lined roads, not just on the strategic highways but on the local road network.

The vision will have to be to create an asset that is worthy of the name, and of high quality, that is suitable for a move over the next generation. No one can say when, but probably later rather than sooner compared with some of the more optimistic projections for autonomous vehicles and the like to be able to use local roads. I think that is potentially a rich and inspiring vision.

Q298       Chair: Is that the focus—making roads that are fit for autonomous vehicles? Is that at the centre of your vision, rather than making roads that are fit for cyclists or pedestrians?

Jesse Norman: No, by no means. Sorry, that is a misunderstanding. The point is that a road that is sufficiently good in terms of the quality of the road surface, the lines and the embedding of technology is almost certain to be—of course we would want to make sure it was—more than adequate for the needs of cyclists and other road users, of which of course there will be a proliferating number.

We have just launched a regulatory review, as you know, on micro-mobility, which is particularly of use in the local roads network. We do not have to look very far to see the effect that e-cycling is having for older people, people with disabilities and outreach. We will come on to that when we talk about active travel. We are supporting local deliveries with e-cargo bikes. All of those things have to be able to work in a mixed ecology of roads that are safe and of high quality. I am just saying that as we look forward over the next 20 years there is a consideration that people sometimes forget about in terms of autonomous vehicles.

In the short term, my view is very simple. I have actually said this publicly, but I would welcome your support or indeed your enthusiastically going beyond it. I want us to have a five-year local road funding settlement. I think it should be transparent and announced in advance, as we would do with RIS1 or RIS2 for the major roads network thatwe have now described. Because it was announced over a five-year period, it would permit a move towards much more planned and not reactive maintenance. It would be vastly more productive and vastly better in treating the asset as an asset. 

It should include bridges and other assets that have been left out of the picture, which have a very important role to play. We just saw the disaster of the bridge collapse in Genoa in Italy. We have to take that seriously within Government. That is all going to lead to a significant increase in public support. What that increase is and how it is going to be funded is a matter for discussion with the Treasury, but that is the goal.

One other thing, which again your work has highlighted very usefully, is that there has to be a focus on maintenance. That is really important. It is not sexy but it is really important. As a cyclist—I cycled here this morning—you really notice it. I came down the new Tottenham Court Road. I take my hat off to TfL. It is a beautiful road surface. It is now a two-way road. It is very cycling friendly, and I look forward to many more roads of that kind in our major cities and in local roads more generally.

Q299       Chair: I am sure that what you have just said about a longer-term funding settlement for local roads is going to be music to the ears of this Committee, and I suspect music to the ears of all those who have given evidence to us. We will come to the issues around funding in a moment.

Coming back to what you said, you are absolutely right about creating an asset and recognising the importance of the local roads network as an asset. You recognise that it has been a poor relation. When it comes to thinking about the local roads network vis-à-vis the strategic road network, does that imply that there will be a shift of resource? Assuming that there is not going to be more money overall for roads, is there going to be a shift in focus for Government spending from the strategic road network to the local road network, or will it continue to be the poor relation to some degree?

Jesse Norman: One has to take a slightly more historical perspective. In 2010, the Government broke new ground by pushing the idea of a five-year strategic road settlement, an RIS1. That has now been extended to an RIS2, and doubtless we will be talking about that. We have extended that  to the major roads network with a five-year funding settlement. What I am suggesting is that coming out of this SR we should have a five-year local roads settlement.

I do not accept the idea that it could not be additive. The key point of these settlements is that, once you have established the envelope, it is set. In other words, in the case of Highways England or local authorities and their supply chains, they know what to expect. They know what the numbers will look like, broadly speaking, from year to year. They know what the project numbers will look like for the work they are doing, and therefore they can organise their supply chain.

When we are talking to Highways England, to take the other end of the spectrum, we work very hard with them to bear down on issues of supply, management and training. Is there enough competition in the supply chain? Is there too much competition in the supply chain that essentially cuts margins to unsustainable levels? Are they making productivity improvements? Those are all the benefits you should get. That is the kind of thing.

It is harder in the case of local roads because of the 152 authorities. Again, I welcome the work you have done in looking at best practice and how combined authorities can work, and sharing between authorities. That is exactly the kind of approach we would expect to take. I would look for a road funding settlement for local roads that is independent of the RIS2 funding settlement and, as I have said, significantly larger.

It is worth pointing out something that I do not think has been highlighted but which is useful to the Committee. We give in capital funding a little over £1 billion a year, plus bits, to local authorities. That is only about a quarter of the total amount that they spend. You have to include the MHCLG funding pot and other pots of money that they raise themselves and/or developer contributions and the like. If we are to have an integrated approach, we need to make an argument about the overall pot of money and make sure that it is not hoovered up elsewhere in the system by Government or by other Departments. 

Q300       Chair: What are you doing? What are the practical steps to make sure that does not happen? We have heard evidence that sometimes funding paid through MHCLG, because it is not ring-fenced, gets diverted to other, understandably important, services. How are you working with other Departments to ensure that the things you set out in your vision are actually delivered?

Jesse Norman: I will invite Steve to talk about the detailed workings in a second. We work very closely with MHCLG. We are spending a lot of time trying to get more transport and more active travel and more public transport tied more closely to housing settlements. We work very closely with them.

Of course, when we are talking about this kind of thing, I was really making the point that if we are only about a quarter of the pot it is important not to forget the rest of the iceberg of local funding. In the Transport Committee, perfectly understandably, you cannot necessarily have an MHCLG Minister in front of you.

When we get to the spending review, one of the points we will be making is that it should not be open to the Treasury—I do not think they will want it to be; I think they understand the productivity case—to take money from one Department in order to fund the increase in road settlement from our side, particularly because we want to take more of a maintenance-based approach and, as it were, an invest-to-save approach on the capital side. We think that is an important consideration. Steve, is there something you want to add?

Steve Berry: We have been doing quite a lot of work with MHCLG with regard to the fair funding review that they have undertaken. We have also been working closely with them on the spending review submissions that they are pulling together for any future spending review. That will include explaining to them how revenue support grant is required to do capital works. Of course, we have been making that case quite heavily, working closely with local government organisations such as ADEPT and the LGA.

It is worth highlighting to the Committee that back in 2014 we worked with CIPFA—the Chartered Institute of Public Finance and Accountancy—to see what we could do to capitalise some of the revenue services for local highway authorities in terms of highways maintenance. As you know, pothole repair was usually a revenue service. We worked with CIPFA to provide further guidance to local highway authorities for their auditors to be able to capitalise that service. Through the pothole action fund that was announced,we can now repair potholes using capital funding.

There is other work that we want to do with CIPFA with respect to revenue service and revenue support grant. We can look at capitalising some of that as well, so there is work happening in that area. 

Jesse Norman: That would be things like gully clearance. 

Steve Berry: Absolutely. 

Jesse Norman: The reason that is interesting is that one hears about big general issues, but actually how the relationship between revenue and capital plays itself out into specific regs is very much an influence on local authority behaviour. This stuff in the weeds is quite important if you want to get local authorities to have the tools of the trade to help them to make progress.

Q301       Chair: You are working closely with CLG. Also with BEIS? Presumably, they have an interest in the innovation side of things.

Jesse Norman: That is right. There is a lot of money in BEIS available for different forms of innovation. One of my concerns has been that there has not been enough focus on transport research funding. I would welcome the possibility of more bids from this sector into some of those BEIS research and development pots because these are important technologies, and it would be useful to go to the next stage of them in some respects. That could be surfacing, but it could also be assessment and scanning and the rest of it.

Steve Berry: It is worth highlighting that the Department has a research budget. For highways maintenance, we work closely with organisations such as the UK Roads Liaison Group. We go out to the sector and ask them what they want in terms of research and highways maintenance service. We provide that funding. 

We have recently announced that we will be doing a call in terms of smarter materials. That will be through the Department for Transport. Of course, we work closely with Innovate UK, Transport Catapult, Future Cities Catapult, and so on, to try to see what is happening in the technology and innovation space, as well as with other organisations.Through the World Road Association, we work closely with partners in other countries to see what they are doing in technological improvements and innovations. We can then see what we can do here in the UK.

Jesse Norman: We funded Gaist, for example. 

Steve Berry: We provided some funding for Gaist.

Jesse Norman: BridgeCat was another one of ours. There are various things.

Steve Berry: Pothole spotting is a good example where we are looking at Gaist technology and understanding the deterioration of the roadscape, which is really important. 

Chair: We are going to come to issues around data and innovation in a little while. We want to explore issues around funding reform further because that has been one of the central issues that has come up in our evidence.

Q302       Graham Stringer: Why is there a difference between the Department for Transport’s assessment of the backlog and AIA’s ALARM assessment of the backlog of road maintenance?

Jesse Norman: The cynic in me would say that the asphalt association might have its own views on these things based on the desire to lay asphalt. 

Q303       Graham Stringer: The cynic in me might say that the Department wants to save money. 

Jesse Norman: No, no. That was exactly the point I was going to make. We know the numbers as between the two. I do not know whether there are specific technical differences that Steve wants to comment on. 

Steve Berry: Not really. The Asphalt Industry Alliance goes out to local highways authorities and gets data from them. We do not verify the data in the ALARM survey. However, of course, we work closely with the AIA on their survey. We have regular meetings with the AIA to discuss things. There are a number of figures in terms of the backlog and the defect level.

We highlighted in our written evidence to the Committee that we have commissioned our own piece of work, currently happening, with regard to the state of the nation. That will give us a more robust figure for what actually is the backlog, if we want to call it a backlog. There are different ways you can class a backlog, so we have to be quite careful with the terminology. We are doing that piece of work now, and that will help build our evidence base to submit a business case to the Treasury at the spending review. 

Jesse Norman: I would add one other thing. Of course, every Department has its own peccadillos and things, but I have been staggered by how professional the statisticians and the evidence gatherers are at DFT. They may end up making mistakes in different ways, and they may be subject to unconscious bias, but in general I think they set a bit of a benchmark within Government.

The same is true of project appraisal. We might disagree about WebTAG or some other things, but it is a very elaborate, well thought-through and articulate body of thought. I think it stands comparison with any department around the world, frankly. 

Q304       Graham Stringer: Could you point to where the differences are between the statistical methods used by the Department and their assessment, and the industry in terms of the Alliance and their assessment? Do one, two or three things stand out?

Jesse Norman: I have not done the analysis myself. I am not expert enough to do the analysis. I will ask Steve. One obvious question would be, to what standard are you seeking to restore the road? Steve, from a technical standpoint, do you know of a difference, or whether we have done any analysis of a specific difference between the two assessments?

Steve Berry: We have not done a full, detailed analysis. If you look at the trend over time, the ALARM survey reports, going back a number of years to the more recent one that they published in March, follow a similar pattern to our road conditions statistics in terms of the amount of treatment.

The ALARM survey covers more of the highway than our road condition statistics do. We look at the reds. They probably look at more of the ambers and amber/greens as well, and then take it as a whole. It is based on data similar to what we see through our road condition statistics returns. 

Q305       Graham Stringer: You say in your written submission that there is going to be a state of the nation report where you will get the roads up to standard. When is that report going to come out?

Steve Berry: It is our anticipation that that will be ready by the summer. We are working closely with the sector, including the UK Asset Management Board, in pulling it together. It will look at the condition of not only the highway network in terms of the carriageway but at the condition of streetlights as well as the bridge stock.

Q306       Graham Stringer: One of the issues that strikes me as strange in the assessment of what is needed is that you do not take traffic volumes into account. There are some roads that you drive on and there is very little traffic. Other roads seem to have very high levels of traffic 23 or 24 hours a day. Why do you not take volume into account when you are looking at maintenance budgets?

Steve Berry: It might be worth highlighting that back in 2014 we did a consultation on the funding formula for highways maintenance—the needs element, the block grant. We asked that question of highway authorities: should we be taking into account traffic volumes in the funding formula?

The majority of responses we received at that time said that traffic volume was only one factor that creates a deterioration in the road network. There were other factors that needed to be taken into account. Therefore, the overall response was that we should not bring traffic volume into that funding formula. 

Jesse Norman: As a grace note, I speak as someone whose constituency is heavily rural but also has a city, in Hereford. Any rural MP will tell you what an absolute outrage the underfunding is, when you see new roads dropped off a cliff. Equally, any urban MP will tell you that traffic volumes are not covered.

Deterioration is designed to be the catch-all that starts to trade off both of those things against each other in an equitable way. From a local authority standpoint, what matters to them is predictability, in order to manage it. Obviously, there is scale—the actual amount is good—but it is about predictability. We obviously try to achieve that whenever we can, but we are not always able to. 

Q307       Graham Stringer: One often finds that funding formulas from your Department and other Departments are all rational and work through coherently mathematically. When you stand back from them, you tend to find that more money is going into the south-east and less into the English regions and Wales. Have you done that assessment and analysis, and what does it show?

Jesse Norman: The funding formula is completely explicit as to how much money is allocated across each of the areas. It is a formula, and, if more money is going into certain areas, that reflects the inputs to the formula in terms of the levels of deterioration of the road and the amount of road covered. 

Q308       Graham Stringer: That is a circular argument, if you don’t mind me saying so. What I am saying is that sometimes the formula discriminates. It is inherent in the formula that it discriminates. What I am asking is, do you test that and do the reverse analysis on what is happening?

Jesse Norman: Just so that I am clear about testing, it obviously is not a test to say, “X is getting more than Y.” What you are trying to work out is against what assessment X is getting more than Y. Can you give me an example of what you mean?

Q309       Graham Stringer: If you take it that the system is coherent, I understand what you are saying, but if you look overall at large areas you may find that those systems discriminate because of factors in them that benefit the south-east and disbenefit Yorkshire, Lincolnshire or wherever. 

Jesse Norman: I do not think there is any doubt at all that this Government and future ones will recognise that there has been a significant level of underfunding in the north across all major modes, to take that example.

I want to ask Steve in a second because he will have a view on the formula, but I am not sure that the local roads settlement is a particular contributor to that. I tend to think of it as being much more about strategic investment in roads between large cities, major rail infrastructure and the like. Steve, do you want to comment on the local road side?

Steve Berry: The highways maintenance funding formula is just based on the assets that each highway authority is responsible for, which would be road length, the numberof bridges with a 1.5 metre width and lighting columns. It is a simple funding formula, but it is fair and consistent across all highway authorities, whether they are in the south-east or in the north-west. It is based on the assets for which each highway authority is responsible.

Cumbria, which is one of the largest areas in terms of road length, will receive a lot more than, say, Slough in the south-east. I am not entirely sure that there is the disparity you are suggesting with regard to highways maintenance funding. We provide a lot of funding to northern areas for local roads. We have done quite a lot on major schemes in the past. The Minister announced one recently in Warrington. There is quite a lot that we are doing on providing investment to the north. 

Jesse Norman: In a way, this is a slight exception to the overall picture of underfunding for transport in the north because it is allocated on a formula basis. The really interesting question coming out of it is whether there is something in the WebTAG project appraisal methodology and the things that go alongside it that in some sense is discriminatory against areas with lesser economic activity to start with. Andy Burnham has made that argument, for example, in Manchester.

It is a question I put regularly to civil servants, and they are very emphatic that that is not the case. I would be happy to take you through the discussion with them separately if you like, because it is a very important issue.

Q310       Graham Stringer: That would be interesting. In your answers to Lilian you accepted that it makes sense to secure funding for maintenance on a five-year basis.

Jesse Norman: I promoted it rather than accepted it, but absolutely yes. 

Q311       Graham Stringer: When do you expect that to be brought in, and would  it be ring-fenced?

Jesse Norman: The great rule on all these things is that everything is subject to conversations with the Treasury in the context of the spending review. That is the situation. Of course, I am not yet clear myself—I am not sure anyone in Government is clear—whether this is a one-year or a three-year review. In either case, there is no reason why it should not cast a shadow forward in terms of a commitment, because, for example, we have done the same thing with RIS1 and RIS2 outside the spending review structure.

The argument has to be made in the context of overall Government priorities, and that is how it would be done. I am not sure that I would push for, and it is not historically in the Department’s case to push for, ring-fencing for the funding. That is not because it is not important but because we have sought to give local authorities flexibility and to encourage them through an incentive component to funding, rather than through a ring fence, to spend it properly. Opinions can differ on that, but generally that has been the position taken. Frankly, I think, and evidence to you has shown, that they will fall on this with great excitement and interest. I do not think we would need to ring-fence it to make sure that the money was spent effectively and well. 

Q312       Chair: In your vision of the five-year funding settlement for local roads, would that just cover the part coming from DFT for capital, or do you see it as being the total? It was about £1 billion a year, compared with £4 billion if you pulled together all the capital and revenue. I think that is a really important question. 

Jesse Norman: The reason I mentioned both of those things was precisely to cite that. As a DFT Minister, I am not in a position to start making recommendations about other Departments. I mention it because it is important for the Committee to have a view of the whole, and because it is important for me in our conversations with the Treasury tocite them on the other aspects of local roads funding so that they understand, first, that there should not be any leeching from one to the other and that it would be a complementary view, and, secondly, that adequate support from the MHCLG side is going to be a very important component in a final outcome that works well. 

Q313       Chair: Is that something you have talked to MHCLG Ministers about? Do they agree with you about the idea that there should be a five-year funding settlement for local roads?

Jesse Norman: I have not had any detailed discussions with MHCLG Ministers about this. We are still pulling the plans together into a proposition that we can put to Government. I thought it was useful to have an early indication. I have talked about it a bit in public before, but it is nice to have a proper conversation about it with you. 

Chair: We will have a bit more on funding.

Q314       Ruth Cadbury: I will come on to some specifics on funding and ring-fencing in a minute. I want to ask a big picture question. The combined spend within all authorities on roads is about £3 billion a year. The industry says that the replacement cost of the local road network is about £300 billion a year. They say that we are spending about 1% a year on the asset replacement cost, and it is an old asset. You may disagree with the £300 billion. The £3 billion is an estimate of the combined spend. Do you think that is adequate?

Jesse Norman: Do I think that £3 billion is adequate?

Q315       Ruth Cadbury: No. Do you think that the gap between the estimated cost of replacement of asset and the current spend on asset is adequate for a country like this?

Jesse Norman: I certainly think that we should be spending more, as I have already said.

Q316       Ruth Cadbury: By how much?

Jesse Norman: The numbers I have suggest that we spend about £3.6 billion or £3.7 billion a year. You can argue about what the overall aggregate amount of the capital value being replaced would be. At 2% interest rate in the longer term, you would expect 2% to be the replacement funding rate. If it was £200 billion, it would be £4 billion a year. If it was £300 billion, it would be £6 billion a year. 

That gives you a sense of the scale of the increment that would be required, and that is before you play catch-up. The point I am making is that in a way £9 billion—the number that is sometimes put around—is a big number, but when you think that we are spending £3.5 billion a year it becomes slightly more attractive. 

Q317       Ruth Cadbury: But only half of the £3.5 billion is on roads because the rest is on other assets such as streetlights, bridges and so on. 

Jesse Norman: I am not sure if that is quite right. There are certainly many other aspects included; that is right. Part of the point I have made is that for the vision I am describing there should be a long-term asset inclusion for all those other assets. 

Q318       Ruth Cadbury: Let me go on to more of the detail. You said clearly that you would want to go for a five-year settlement, and that would obviously be welcome. Meanwhile,you have provided £420 million for potholes in 2018-19, but we have heard quite a lot of witnesses from local authorities saying that due to the short-term nature of the funding some of it will go unspent, and some of it has had to be spent on non-urgent work because of the timing.

The problem is that road maintenance is best done in the summer months, but as the announcements are often so late, and the requirement is to spend by the end of March,it means they do not have an efficient or a sensible way of spending this money. Has all the money from the previous one-off capital injections been spent—the ones that are limited to the financial year? 

Jesse Norman: Let me make a political comment and then I will let Steve comment on some of the detail. It is highly frustrating when money gets announced late in the year. There is nothing you can do about that. It bears on the point I made earlier about local roads to some extent being the poor relation. They tend to be the beneficiaries of afterthought. 

In this case, we were very lucky because it was an extremely mild winter, and an awful lot of work could be done, which could not have been anticipated at the time when the £420 million was actually made available. I would be quite surprised if much, if any, of that money had not been productively invested, given the needs that there are and given that local authorities keep a backlog of projects, because they are not ignorant and unaware of the potential for this kind of thing to happen. I think that money was highly welcome, unexpected and well used. Steve, do you want to comment on some of the detail?

Steve Berry: Basically, the £420 million has been spent. We asked highway authorities to provide statements of how the money was spent. I can categorically say that they have spent all the allocations they received.

It might be worth clarifying that the £420 million was not just for potholes. It was for general highways maintenance, including bridges as well as other defects on the network. A number of authorities have done quite a lot of catching up on some of the works needed because of the beast from the east in the previous winter. They have caught up on that, and have been investing in technology and machinery to help deal with some of the problems on the network. They have invested in pothole repair machines. They have done quite a lot of work on thermal repair technology as well. It has been very pleasing to see that, although there was a challenge in terms of the winter, they got on with the works. 

Q319       Ruth Cadbury: Have you had discussions with the Treasury about the timing of those funding announcements so that they no longer only have three to four months to spend it? 

Jesse Norman: They are extremely aware of the concerns, and we have a very close working relationship at official level with the Treasury. Several of my senior officials are former Treasury officials, and they have taken senior officials of ours. It is a known source of concern, but sometimes the decision has to be made to do something even if it is not perfect. I think that is what probably happened. 

Q320       Ruth Cadbury: I am going to move to the overall headline cuts to local authority budgets and how they have impacted on how councils are monitoring and maintaining their road networks. What assessment has the DFT made of how these cuts are affecting road spending?

Jesse Norman: It is hard for me to comment on budget spend decisions made by other Departments. Our job is to make sure that we understand, to the extent that we can, the state of the local roads network, to chart changes in it and to work with local authorities to co-ordinate investment and manage new technologies. I do not particularly want to get drawn into a conversation about the overall local government funding settlement, which has very little to do with what I am tasked with.

Q321       Ruth Cadbury: I just wondered if DFT had done an assessment of the impact of cuts for local authorities and councils.

Jesse Norman: We have done an assessment of the state of the roads, which is what our job is. 

Q322       Chair: You have said already that you were not in favour of ring-fencing funding. One of the concerns is that there is an allocation that is nominally for roads, but it does not get spent on the state of local roads because there are other funding priorities that local authorities face, given the wider funding cuts. Surely, you have an interest in knowing how much of what you anticipated was going to be spent on roads is actually spent on roads maintenance.

Jesse Norman: The best thing I can do is let an official give you their view of the extent to which the money is being cannibalised or not. 

Steve Berry: We work closely with local highway authorities. We are aware of some of the concerns they have raised with regard to revenue versus capital. As I mentioned earlier, we try to make the case, where we can, to help capitalise some of the revenue services to help local highway authorities to ensure that we know about the maintenance of the roads.

We have official level conversations with MHCLG, and of course they are ongoing at this moment in time with regard to the spending review and revenue support grant and what that means. The National Audit Office did a report about 18 months ago that highlighted some of the issues, not just on highways but across council services, with regard to revenue support grant. MHCLG officials are quite aware of some of the impacts, and we work closely with MHCLG. We work closely with the local government sector.

It might be worth highlighting that in 2010 the local government sector came to Government and asked for non-ring-fencing. They wanted freedom and flexibility based on their local needs and priorities. That is why Government decided to stop ring-fencing. The local government sector came to the Government at that time. 

Q323       Chair: Absolutely, but that is why I am interested in your perspective in DFT, because your concern is about the state of roads. I am not trying to make a political point. Do you at DFT, given there isn’t ring-fencing, look at whether the money that you would anticipate is spent on local roads actually gets spent on local roads in the context of the wider funding pressures that local government faces? Do you do that sort of assessment?

Jesse Norman: If we thought that there was a serious risk of DFT money being used for other purposes, we would look very closely at that. I personally have seen very little evidence, if any, of that. These local authorities are—

Q324       Chair: Not DFT money; the money that you would anticipate. As you have already said, you do not expect that DFT money is the bulk of it. It is whether money that is rolled up into revenue support grant that you anticipate would be spent on the local road network actually does not get spent on the local road network. I am just asking whether the Department makes any assessment of that, or whether you say, “We accept that there is no ring-fencing and therefore we don’t.”

Steve Berry: We do not make an assessment of that. We understand some of the pressures that are faced by local highway authorities. That is one of the reasons why we brought in the incentive element of the funding. Some of that is about how local highway authorities can collaborate and share resources. It is another way. If there are pressures on budgets, how can they be more efficient or more effective? That is what we have done through the incentive element. Back in 2012, we set up highway alliances and service improvement groups. They do a lot of work on benchmarking between highway authorities in a region. Basically, they share resource or good practice where they are making savings to deal with any revenue support grant issues. 

We work closely. We have not done a formal full assessment, but we are aware of the pressures that local highway authorities are under. We have not gone into the level ofdetail as to whether they have cuts to the revenue support grant and it then does not go on to the road service.

Jesse Norman: You will understand that the revenue support grant includes an enormous number of different things. It is not part of our function to mark another Department’s homework. Indeed, we do not have great insight into how that budget is composed. Our job is to make sure that the money that we support local authorities with is properly and effectively spent, and we think it is. 

Q325       Daniel Zeichner: I find this slightly baffling. We are talking about the amount of money that gets allocated, but we do not appear to know whether that is what it is actually spent on. I think that is what I am hearing from you, and I find that extraordinary.

Jesse Norman: We have a reasonable understanding of what is spent. 

Q326       Daniel Zeichner: When you say spent, that means passed to local authorities to do the work. 

Jesse Norman: We mean spent by local authorities.

Q327       Daniel Zeichner: You know what percentage of the money that is allocated is actually spent on local roads rather than diverted.

Jesse Norman: No, we do not know that. We know what they spend on local roads. We do not know how much has been allocated for local roads. You are very welcome to call an MHCLG Minister and have that conversation with them. Our job at DFT is to make sure that local roads are funded through DFT budgets effectively and well. That is what we do. 

Q328       Daniel Zeichner: I am still not convinced.

Jesse Norman: We have the evidence on the expenditure side to suggest that. 

Q329       Robert Courts: My West Oxfordshire constituency is not dissimilar from yours. It is a largely rural area with a big latticework of rural roads, with a major road, the A40, going through the centre. We are probably not on particularly controversial ground between us; we would both like to see more spent on all of the roads in our areas. 

You have spoken of your enthusiasm for seeing innovation in terms of surveying and repair. My council is busy innovating away, but we are probably in a position where we need to find some more money to put in. Given your enthusiasm for innovation in repair, monitoring and surveying, what about innovation in financing? Do you have any views on that?

Jesse Norman: Yes, I have views on finance innovation. As you know, I am someone who led a successful campaign for several years against the use of the PFI. That exploded about 20 years ago and has had some good results, but has had enormous cost. Some of the better PFIs have been in roads, but it is by no means a consistent picture. In some cases, you have had a more strategic approach taken to the asset as a result. In other cases, it has been an expensive way to get what you could potentially have had through other governance methods. 

I am not sure that a track record of innovation in this area, from a financing standpoint, is particularly attractive, certainly not at a 2% interest rate with a Treasury that is making headway on the capital account. It ought to be much better to do it through public financing, to the extent that public financing needs to be used. 

Q330       Robert Courts: We are looking at longer-term financing of roads. I think the Isle of Wight is a council that has done quite well out of PFI. You have also mentioned invest to save. Councils like Blackpool have had success with that. Can you tell us a bit more about that? Invest to save is frontloading capital expenditure to prevent excessive revenue expenditure on repairs. 

Jesse Norman: Yes. Invest to save is a buzzword, which I use reluctantly just to tag the idea that sometimes there is a fungibility between capital investment and revenue spend downstream. That is what is implied by our approach to push councils or local authorities towards an asset management strategy, which by and large they have adopted.

Steve may want to offer a comment specifically on Blackpool. In that case, we certainly welcome the longer-term approach that that implies. We are trying to create more flexibility within budgets to permit it. 

Steve Berry: In Blackpool, basically they have done an invest-to-save project—project 30, as they called it—looking at the long-term highways maintenance funding model. They used Gaist as one of the data collectors. They did a model survey of all the network. They did a deterioration model that then worked out what funding was needed in thelocal area. They then used the funding that we allocated through our highways maintenance block grant, and I believe other council budgets as well, and borrowed the money to get that paid back over a 10-year period. 

Q331       Robert Courts: This is borrowing.

Steve Berry: What we have seen in terms of invest to save is that a lot of highway authorities are using it particularly for street lighting. We have done 34 street lighting PFI projects; another avenue is street lighting and invest to save. It is a very good return. We have been working with some of the financial institutions, where we can get zero interest rates for local highway authorities. That is something we have been doing, again to try to make savings. 

There is another model where a number of highway authorities have pooled together and done one joint procurement to replace columns and luminaires across about four different highway authority areas. They do it through invest to save. 

Q332       Robert Courts: It is a prototype essentially.

Steve Berry: It is a model that is actually being used quite a lot vis-à-vis street lighting. Essentially, we are seeing a strategic overview of management of an asset that is applied to street lighting. You could do the same thing with road surfaces. You borrow in order to finance them. Is that what you mean?

Jesse Norman: The reason street lighting works is that the cost saving is significant and the financing is inexpensive. It is simple. A local authority can develop a proposition. A PFI market can then come into being and that proposition can be replicated across a bunch of different projects, which is what happened in this case. When you increase complexity and the potential level of risk, the financing costs change and it is harder to read across. 

Q333       Robert Courts: Do you think you can do it? Is it a serious prototype?

Jesse Norman: Street lighting with 34 projects is not a prototype. It is an established, successful model. 

Q334       Robert Courts: Sure. But can it be replicated?

Jesse Norman: There may well be other areas. Certainly I would welcome, and I have always welcomed, a spirit of innovation from combined authorities, sub-national transport bodies and collections of local authorities if they want to take forward innovative joint procurement or financing schemes. We would be very interested in that. 

Q335       Robert Courts: You are open to hearing about it if councils come forward with that.

Jesse Norman: Very much so. I will spare you the horrors of the PFI in its NHS incarnation because that is a very expensive way of paying for a hospital on a full repairing lease. Let’s not confuse, under that heading, what are very different sets of projects. Some road projects can work with PFIs, and these lighting projects are a great example.

Q336       Robert Courts: Despite the fact that the Chancellor said there will be no new PFI projects nationally, there is still space for an amended borrowing strategic finance initiative.

Jesse Norman: We will have to see whether they count it as a PFI; that would be the question.

Q337       Robert Courts: Are local authorities going to be in a position to provide long-term strategic repairs of local roads otherwise?

Jesse Norman: Why would they not?

Q338       Robert Courts: If they are in the position of not being able to borrow.

Jesse Norman: One of the reasons for having a five-year settlement is precisely that it gives them the capacity to know that the revenue stream is going to be coming in. Therefore, it gives them more financial scope to, if not borrow against it, at least make deals that reflect the certainty of future income. 

Steve Berry: In the Blackpool case, it is worth highlighting that it helped reduce compensation claims for the authority. By reducing those and not having to pay out those claims, they could then help to pay back some of the borrowing. It is something that Blackpool has been sharing through the local councils road innovation group that they set up. A number of authorities are working with Blackpool looking at that sort of model.

Robert Courts: That is what I wanted to explore. That is very helpful, thank you.

Q339       Chair: I want to clarify my understanding of the PFI question. It seemed to me that you were saying that some of the street lighting PFIs had been successful and had seemed like a sensible idea, so a local authority in the future is not going to be told, “No, you cannot do it because PFI has been abolished.” Local authorities would still be able to do it if they could show that it was good value for money.

Jesse Norman: It is very easy to get lost in the question of what a PFI is or is not. It has been an established way of thinking about projects in the Treasury. It has lots of rules and regulations associated with it. It was then changed to a thing called PF2 a few years ago. The risk allocation was changed.

The Treasury has set its face against that, but that does not mean there will be no use of private finance in roads or other building. People will have to be more creative and sensible about the models they use and try to avoid some of the mistakes of that particular financial risk-sharing model.

Q340       Chair: So the headline that it has all been abolished does not actually mean that it has all been abolished.

Jesse Norman: I do not think the Chancellor ever said that the use of private finance within Government was going to be abolished. How could it be? 

Steve Berry: It might be worth highlighting the way that the funding model works for highway authorities. Under the Local Government Act, they have borrowing powers. While they may not need to receive anything apart from capital funding through the Department for Transport or the revenue support grant, that does not preclude them from going out to borrow. They can do it in a different way. That is why we have been working with the banks to be able to get zero interest rates to help them on that journey of invest to save. 

Q341       Chair:  I appreciate that they can do prudential borrowing. My question was whether PFIs that seem to be successful are now blocked, or whether they can continue. Maybe it is about phrasing. 

Jesse Norman: I do not think there is any obstacle to having a conversation about what a future lighting financing arrangement would look like. 

Q342       Robert Courts: I think we have covered it in reality, but we need to be careful. PFI is a particular scheme.

Jesse Norman: Yes. 

Q343       Robert Courts: We should not use it as an umbrella against all borrowing and all private financing. That is the distinction. 

Jesse Norman: That is right. That is exactly the point I have been making. 

Chair: Steve, you started to talk about some of the ways you are encouraging good practice, collaboration and the use of data. Jack will ask a bit more about that. 

Q344       Jack Brereton: What is the Department for Transport doing to encourage the sharing of good practice and encouraging local authorities across England to do more to share good practice?

Jesse Norman: This is really a matter for Steve, but we have an enormous array of different things that range from sponsoring industry events to roundtables, demonstrator projects and funding specific trials. There is an enormous array of different things designed to try to get best practice across the 152 authorities. As I said, we have incentive schemes within the funding arrangements themselves designed to reward good behaviour and to nudge people towards talking together.

We have particularly close relationships with the sub-national transport bodies and combined authorities, which are attempting to reach out and bring a more strategic perspective to some of the local authority arrangements. Are there any particular points you want to raise, Steve?

Steve Berry: I attend a number of sector groups that highway authorities attend. That helps to disseminate quite a lot of the best practice. As I said, we are a member of the UK Roads Liaison Group, a public sector body set up for highway engineers. Back in 2016, as an example, we published the well-managed highway infrastructure guidance code of practice. We worked closely with the UKRLG and other organisations to bring that together.

We are very active in the Department, working closely with the sector, in disseminating best practice. We announced a trial at the end of January—what we classed as the live labs trial—which is working in eight different highway authority areas on innovation and technology, looking at smart materials, kinetic energy and an array of new technology and innovation to help with the highways service and future-proofing the road network. We have done that work with the Association of Directors of Environment, Economy, Planning and Transport—ADEPT. We do quite a lot of work with the sector groups. Although we are only working with eight authorities, as part of the conditions we want to share that across all highway authorities. Any highway authority is open to go and see what is actually happening, so that maybe they can replicate it.

We do a lot of work with other sectors; for example, we are working closely with the water sector. They have been doing quite a lot of work with robotics. We are keen to understand a lot more about how we can transfer some of that technology into the highway service. We work across a fora of organisations that deal with highways maintenance and best practice. 

Q345       Jack Brereton: You mentioned the eight authorities you are working with on that specific example. How do you plan to scale that up to other authorities across the country?

Steve Berry: These are trials. They have not started as yet; they start in May. We class them as demonstrator projects. We encourage highway engineers to go and view what is happening, working closely with other highway authorities. From the bids we receive, we will see which are the ones we believe can be scaled up across the country. Of course, they are trials and we may have to undertake some learning before we can get them to the next level across all highway authority areas. 

Jesse Norman: Let me add a couple of things. Of course, they are trials so they may not work, or they may work less well than we think. They may have to be tweaked before they can be rolled out. The sector is very conservative, as you know. In many ways, it is good that it should be when safety is an issue. You do not want to be mucking around with road surfaces unless you really know that what you are doing is going to be better in terms of skid resistance, drainage, resilience, durability and all the rest of it. 

It is a sector that has historically been quite slow-moving in terms of technology. That is rapidly changing. It is amazing how quickly different technologies are starting to come on to the market. We see that in micro-mobility, but it is also true in the core road technologies. One of the things we are having to think about is what the next generation of road would have to look like and what kinds of things it should have built into it in terms of sensors, and so on. We are not at that stage yet, but I think that is the kind of thing that will be, if not in this round of trialling, in the next round.

Q346       Jack Brereton: As you suggested, there is reluctance in the industry to innovate, to share and adopt some of those good practice ideas. Do you think the Department haspotentially a bigger role to play in encouraging local authorities to adopt some of the new practices that are coming through in the industry?

Jesse Norman: The word “innovate” is a very positive word now, but it was not a positive word in the 18th century. What did Burke say? “To innovate is not to reform.” What we are looking for are things that make a positive difference and can be shown to do so.

Local authorities spend public money. They are intensely locally accountable. As I said, they cannot allow themselves to be associated with something that might decrease safety or have adverse unexpected financial or environmental effects. They are going to be slow to take up technologies. We have to be as quick as we can about trying to identify the stuff that is working well and get it well understood and shared, and then promote best practice. An awful lot of it is not about technology; it is about practice. It is about how you actually implement something. It is about putting the right camber on a road, making sure it drains properly and making sure you have the correct sensory systems and gullies. It is all those kinds of things. 

Q347       Jack Brereton: A lot of our witnesses have suggested that there is a lack of that repository of best practice advice at national level. Is there a call for that sort of facility, where there can be greater sharing of best practice ideas?

Jesse Norman: That is very interesting. I want Steve to comment on that, but I shall say a couple of things. First of all, there clearly are examples of outstanding practice. You have discovered some of them in the testimony that has been given. There is obviously an elephant in the room that is not always applicable, but very important, which is TfL. TfL is a global leader in integrated transport provision.

In a way, an awful lot of best practice there is being assessed and developed. I was at the mini-Holland Waltham Forest cycling project the other day, as you will have seen. That has strengths and weaknesses, but it is a very interesting example of innovation in outer London. 

Steve Berry: It is also worth highlighting the supply chain. We do a lot of work with contractors and the supply chain. I attend a number of client forum days, where the contractor has framework contracts with a number of highway authorities across the country. They bring them together and they help to share best practice—who is doing what in what area.

The local council road innovation group, based in the north-west, has what they class as a speed dating event for contractors and highway authorities. It brings them together and allows the contractors, including the SMEs, to showcase some of what they can bring to the highway authorities. It has been working really well, and we encourage a lot of that.

As a repository of best practice, we have the UK Roads Liaison Group. I keep mentioning that group, but it is a key group in terms of where we share best practice. We share it across all the highway authority networks, not only in England but in the whole of the UK. That has really been helpful.

We do a lot of work with the groups. We do a lot of work with local government itself. There is more we can do. I try to encourage highway authorities to share best practice. They do it through their highway alliances, but I want to share it across all of the country rather than just in little silos. I am encouraging that and it is getting better. As the Minister said, innovation and technology have moved on quite a lot over the last few years. Local authorities are starting to embrace it a lot more than we might have envisaged five years ago. 

Q348       Jack Brereton: That is something we have picked up. Is it envisaged that the review and audit group that was announced on 31 March will play a role in that?

Steve Berry: The review and audit group is more for the incentive element. We brought in the incentive element in the 2016-17 financial year. We had a dry run in 2015-16. It was encouraging asset management, best practice, collaboration and more standardisation of contracts. There was an array of things that we brought into that incentive element. The review group is now going to look at what we can do next. All highway authorities have been on a journey, and they continue on that journey, and through the work we have done in the highways maintenance efficiency programme, which we have now embedded in the incentive element, and the work that we are doing through the innovation and live lab trials, we are looking at how we can bring it all together. The review group will look at doing that and what the next stage of the incentive element will be from 2021 onwards.

Q349       Jack Brereton: There was mention a minute ago of the UK Roads Liaison Group. Could you go into a bit more detail as to how the Department for Transport is working with that group, and what role it is playing?

Steve Berry: My director for local transport chairs the UK Roads Liaison Group. It is made up of the devolved Administrations, and includes Transport for London, as well as local government sector groups, ADEPT and the Technical Advisers Group.

It provides advice and best practice on highways maintenance service. The key suite of documents is the highway asset management guidance, as well as the codes of practice. There is the well-managed highway infrastructure code of practice and a network service code of practice for traffic managers. We review that. As I said, we undertake research. We have been doing quite a lot of work recently in the footway and cycle management group, which is a sub-group of the UK Roads Liaison Group, looking at how highway authorities can understand more about footways and cycleways under a risk-based approach, which we brought in for highway authorities to adopt back in 2016.

It is a good group to understand some of the issues that highway authorities and engineers are facing, and how we can tackle and end all of those problems. 

Jesse Norman: Madam Chair, may I make a cheeky suggestion?

Chair: Well, you are going to.

Jesse Norman: With your permission, I think there is an area the Committee might want to consider looking at that is related to this and which is really interesting and important and on which I am trying to get us to move. It is the whole issue, which I suspect is very close to your hearts, of footways, byways and open to all traffic footpaths and bridleways, and how those are going to be registered in time for the definitive map that is going to be produced in something like seven or eight years.

It is a big issue for local authorities. It is a priceless national asset. It would be really interesting if the Committee at some point were minded to think about taking it up. It is a very interesting cross-Government and cross-local authority, national and nations and regions issue. I just put it out there because it bears on some of the things that Jack was describing. 

Q350       Jack Brereton: I agree with that. From my experience of working with local authorities, that is a very high priority. 

Finally, on the UK Roads Liaison Group, do you think that the Department is engaging at the right level with that group? Do you think it is reflecting Government policies and priorities effectively?

Jesse Norman: Opinions differ on it. The thing I have been struck by is that there are an awful lot of different committees of the kind that Steve has described, but they serve a purpose. The function is to try to cascade best practice where we find it, and get people to talk to each other.

There is obviously a danger, particularly with some local authorities, where they just have very close relationships with one or two local contractors and it is all very cosy and there is not enough sharing. It is not shaken up quite enough and possibly there is not enough competition, or maybe they are locked into a framework contract—those kinds of things. It is really important to get people properly aerated across the whole of the local authority network, and indeed the contractor network, in order to make sure that opportunity, possibility and technology are not ignored.

Chair: We know that the work of local authorities in this area very much depends on the data they are collecting. Of course, new technology is changing the ability to collect data. Daniel will ask a bit more about those aspects. 

Q351       Daniel Zeichner: At the outset, Minister, you described the network as a great national asset, but you were very honest in admitting that all is not entirely well with that asset. How does the Department know? Can you say a little bit about the data gathering and how you assess the state of our local roads?

Jesse Norman: Sure. As you, understand, it is a very technical topic, and you have received a lot of evidence about it already. I am by no means expert in it. I just try to make sure that it is doing its job. Steve is not just Steve Berry OBE; he is the Obi-Wan. He knows all this stuff extremely well, so we will go to him when we need the detail. 

From my point of view, the key thing is to make sure across the Department that we have datasets that are of high quality and are consistent. People often forget that the consistency part is really important. You do not get the comparisons without it. That has a backward drag. It sometimes means that one can be too tied to a particular data source or method of gathering because one wants to ensure consistency. There is a question about how you bring in new technology to overlap with that.

You see that now. Historically, it was done by visual inspection. Then you had SCANNER. Now you have Gaist and other tools. They are doing different things when it comes to assessing the state of the road, but the goal is to try to build a consistent national picture. Is it perfection? By no means. The technology, in the SCANNER case, is getting on for 15 or 17 years old. Some of the new technologies are really interesting. They do not do quite the same thing, as we have described. It does not extend to the less well-used roads. As we have described, some of the roads that are most in need of support are essentially the cart tracks of 50 or 70 years ago, which have had a layer of asphalt laid on top of them. It is not a perfect position and there is plenty of scope for improvement, but it is still worth valuing and appreciating. 

Steve Berry: As the Minister said, we collect data for our national road conditions statistics. That is based on SCANNER, which surveys the local road network. Local highway authorities undertake that using a survey vehicle, which transverses and collects the data. We only ask for one figure in terms of the roads that are required to be treated or need maintenance.

The Minister alluded to the fact that a number of highway authorities are looking at different technologies now. The market has changed slightly since SCANNER was introduced. We announced at the end of March that we would be undertaking a call for evidence at some point this year looking at road condition data and looking at the data we collect, as well as other technologies that could be adopted.

The key issue is data consistency. I have been quite vocal about data. I see it as an asset in itself. I say to highway authorities every time I can, “You need to understand your assets. If you understand your assets, you will be able to understand your lifecycle and deterioration modelling, which will help you make the case for funding not only to central Government but in the local highway authority.”

We understand the network to a certain extent. We understand the red roads. We also understand, by working with local highway authorities, where there has not been a change in the red number—what percentage in that authority area needs treatment. There may be a reason behind that. A lot of authorities call it “going for green”, whereby they treat the ambers rather than the reds to make sure that the ambers do not go to red. Sometimes you say that 3% or X roads need treatment, but the authority may befocusing its efforts on some of the other roads that are just turning amber from green. 

Q352       Daniel Zeichner: Given that inconsistency, which is recognised, it must make it very difficult to make decisions on how to allocate resources. We have had a number of witnesses who have pointed that out. The Chartered Institute of Highways and Transportation told us that the DFT “does not know what level of investment to make for the outcome it wants to achieve, it is working in the dark. There needs to be a national lead on what should be collected and how it is used.” What would be your response to that? Is it a fair criticism?

Steve Berry: I do not believe it is a fair criticism because, of course, road condition or the condition of the assets is not tied to the funding. We took out condition from our funding back in 2013-14. We phased it out due to the fact that it looked like we were rewarding, dare I say, bad practice. The call for evidence that we said we will launch—we are working on that at this moment in time—is to ask those questions. Are we collecting the right information? Should we be collecting more information? How does that affect highways maintenance funding?

As the Minister said, following on from the spending review, one of the considerations we may need to take is whether we look at reviewing the funding formula again, due to the fact that we may want to look at it in a different way, using the data that we collect going forward. Whether we will target funding in a different way, I do not know. That is something we will need to consider following the spending review.

The key point is that the call for evidence will take into account what the CIHT is saying. We need to understand data and we need local authorities to understand that data much more. A lot of authorities have done that assessment. They have an asset management strategy or plan, but when you start to ask in more detail about each of their specific assets, they say, “Well, we’re not entirely sure.” Are we in the dark or are they in the dark?

Q353       Daniel Zeichner: What is the situation you would like to get to? I am assuming that some of these new technologies will be helpful. Where would you like to get to, for what purpose and what would you then do with that data?

Jesse Norman: In a way, you are asking what the policy goal should be. There are several aspects. Obviously, what you want is a tip-top local road network that is able to support all users and adjust to changes in technology. That is the canonical state of perfection one would seek in an ideal world.

What does that need? Obviously it needs data that is consistent. Steve’s point is a very important one. In many respects, the aggregate data tells a story over a period of time. There is a more interesting question, which is whether the investment decisions taken by local authorities are always as good as they should be. That is a concern. One of the reasons why there is an incentive component in the funding is to make sure that local authorities support what we take to be best practice in the work they do. It is a relatively modest share, but that is again part of what a revised road assessment would look like. It would be whether or not that is an appropriate level at which to set the incentive.

The other aspect is obviously not just to make sure that there is data doing its job, pointing upwards and downwards, but also that it is being acted on. There is the question of the incentives. Those are the two aspects that really come out. 

Q354       Daniel Zeichner: I am still not entirely clear where you think you want to get to with this review and what kind of data you expect us to have in five or 10 years’ time.

Steve Berry: At this moment in time, we know that highway authorities collect data on the carriageway. There are still some gaps in data evidence with regard to bridges and retaining walls. Drainage is a key area where we are starting to see that there are quite a lot of gaps. The data that we want to consider, going forward—I do not want to pre-empt the outcome of the call for evidence of course; I want to see the responses that we receive and analyse them in the right way—is whether we should be looking at more of a roadscape. Should it be hedge to hedge, fence to fence or whatever you want to call it?

Jesse Norman: Footpaths. Footways. 

Steve Berry: Exactly. 

Jesse Norman: That is really interesting. You have footways and bridges. What about new roads and road surface on areas where it is hard to scan? I am thinking about other areas where data is short.

Steve Berry: Absolutely, the unclassified road network. At this moment in time, it is very difficult for a SCANNER vehicle to bring in data on unclassified roads. Potentially,there is a suite of data providers for local highway authorities; you may have some sort of hybrid approach. At the moment, we just prescribe SCANNER as the tool for data collection, although, as I said, we know that a number of authorities are using Gaist and others to collect data.

However, they could use SCANNER for some roads and Gaist or other companies as well. It is basically making it more of a risk-based approach for highway authorities. It is allowing them freedom of choice and what is best for that highway authority in understanding the condition not only of the road but all the assets they are responsible for. 

Q355       Chair: Is there any intention to include or to collect data on unadopted roads, ones for which the local authority does not have responsibility? Is that off the radar?

Jesse Norman: I think that is the subject of your next inquiry, Chair.

Steve Berry: We do not collect unadopted road data. Highway authorities are quite aware of the condition of some of the unadopted roads in their area, but, no, it is not our intention. 

Q356       Daniel Zeichner: Finally, moving forward to the world of better information and more rational decision making as a consequence, is there a cost to that, or should the extra costs of collecting the data repay themselves in better decision making, or is that not a judgment you have made so far?

Steve Berry: We have not made the judgment, but we know that highways maintenance projects offer value for money. For every £1 spent, you get a £5 to £6 return. We know that. We have that evidence. There are a number of tools that model funding options. If you can put the data into those models, you should be able to get a better return.

At this moment in time, there may be two companies doing road condition monitoring. If you open up that market space, you can reduce the cost, which will therefore give efficiencies for highway authorities going forward.

Chair: Hopefully, we are into the last 20 minutes or so of our session. We want finally to turn to the issue of innovation. 

Q357       Grahame Morris: We have covered much of it. Minister, I know that you understand the terms of reference and, unusually, we are on the same page. We are not at odds on a party political basis because we all want to see the public pound go further and deliver more. We would like a magic bullet. I do not know whether innovation is a kind of magic bullet to a superhighway of better local roads.

I understand what you said initially, when you said that you were reluctant to talk about the historical backlog of repairs. There is an issue of climate change. We used to have a severe winter or a torrential downpour every 20 or 50 years, but those storms now seem to be becoming much more frequent, and that does immeasurable damage to the bridges and road network, so I fully appreciate that.

How can the DFT aid our understanding as a Committee, to help you in effect, when it comes to driving forward improvements? I am using a lot of driving puns. Earlier, I heard lots of buzzwords like joint working, conferences, sharing good practice, cascading and so on. You mentioned the specific example of the lighting arrangements, where local authorities are coming together to jointly procure. Specifically in terms of the local roads network, what is the DFT doing in association with some of the local authority organisations such as ADEPT? Could you give us an example of what you have done as a Department to promote good practice?

Jesse Norman: There are two or three things. First of all, I absolutely agree with you, Grahame. We are on the same page and the same side. We have covered some of this before, but I think it would be helpful to go into more detail. I can take a specific example. We have talked about two or three already.

We touched on the pothole spotter trial and we can talk a little more about that. You have discussed the trials in Cumbria; there are several. There is BridgeCat, which is the bridge assessment technology we have pioneered. There is also the plastics in the road technology that we are trialling up there as well. Steve, do you want to pick up any of those? The helpful thing would be to work through them. BridgeCat is not in the early stages of development, but the others are.

Steve Berry: BridgeCat is a good example. We were approached by Cumbria County Council, following the floods of 2015-16. One of the key issues with a flood scenario is that you have to close a bridge until you can see what sort of damage has happened to the foundations of that bridge. 

Jesse Norman: They have a thousand and something bridges, and all those communities were getting cut off. 

Steve Berry: It has an impact on the local economy as well. Of course, you cannot allow a diver to go in, which is the normal inspection route, because the river levels are too high and the flows are fast. It is health and safety, and sometimes the bridges are closed for a number of weeks, which is not very good for the road user.

Cumbria said, “Is there a way that we can look at doing something different?” We had been doing a lot of work with Gaist on other initiatives. Gaist is one of those companies that, basically, is a data company, but it has a strong ethic in terms of looking at innovative ways and approaches. We went to them and said, “Is there anything you know of?” We came up with BridgeCat, which is basically a Unimog with a crane—

Jesse Norman: Can you explain what a Unimog is?

Steve Berry: Apologies. A Unimog is a high terrain vehicle. 

Jesse Norman: It is another one of those Star Wars references. 

Steve Berry: It can be used in various circumstances. The wheels are absolutely massive. It is for off-road. It is a Unimog vehicle with a crane, and we put sonar and cameras on the end of the crane, and it could then go into the water and scan for any damage. 

Jesse Norman: You are under the bridge and also under the water if you need to be. 

Steve Berry: The engineers can see information in real time as to whether there is scour damage to the bridge foundation. They also check for other issues as the camera is coming back up, in terms of brickwork or anything else. If there is no damage, the bridge can then be opened much more quickly. That is one way.

There is another example. I met an authority recently where they had been using smart gully sensors. They mapped out all their gullies and overlaid that with other data such as flood data. They could then see where the key flood hotspots were. They then focused all their attention on those gullies and put the sensors in. That will now tell them when they need to be cleansed. They have made a 30% efficiency saving per annum just on gully cleansing itself.

Q358       Grahame Morris: Forgive me, Mr Berry. That is terrific. I understand there is joint working going on with a variety of organisations. You have identified terrific schemes like that one for the identification of damage to bridges and gullies and so on. Using the innovative techniques that have been piloted in Cumbria and elsewhere, is the Department about to say, “We are going to roll that out and encourage it across the whole country so that other authorities can take advantage of it”?

Steve Berry: Yes. Absolutely. BridgeCat has been trialled and deployed for the last 12 months. We have not had the amount of rainfall that we have seen in previous years,but an evaluation report will be published, which we will then disseminate across all the highway sector.

We work with colleagues in the Highways Term Maintenance Association, the organisation for all the contractors. We also ask them to share best practice across the piece. We have recently produced a pothole repair guide, which is being disseminated to all highway authorities. That was produced in conjunction with ADEPT. ADEPT engineers helped to write that guide. That tells you what sorts of treatment there are for different pothole repairs, depending on various factors. We do quite a lot of that work and share it across the country. 

Jesse Norman: Can I make a slightly wider point? You will appreciate that there is a scale to pothole science that makes rabbinical inquiry into the Old Testament look positively naive by comparison. There is a very wide range of different contexts and road treatments potentially available.

One of the reasons for going for a five-year settlement is to give local authorities more comfort about the revenue stream, in order to allow them to feel more positive about innovation. If that works, I hope part of it will be to liberate some of that and possibly take off some of the dampeners that have been inhibiting innovation.

Q359       Steve Double: We have heard a number of examples where innovation is taking place and the positive impacts that are happening. Some of those are sponsored or funded directly by the DFT. Can you say how much in total the DFT is spending on innovation in road maintenance? 

Jesse Norman: I don’t know. We have a whole bunch of different pots of money. 

Steve Berry: It is very difficult to put a figure on it. For the various innovations, I am looking at around £25 million to £30 million that we have put in at this moment in time. 

Jesse Norman: ADEPT alone was £23 million. One of the reasons why it is slightly difficult is that Highways England has an innovation fund. That is a lot of money. When we are supporting different activities—for example, through the transforming cities fund or the national productivity fund work—we often support innovation, although as part of a particular piece of work rather than as the trialling of a specific new technology. 

Q360       Steve Double: You do not have a specific budget within the road maintenance funding that is allocated for innovation.

Steve Berry: Not specifically for innovation. Innovation comes out of some of the projects that we fund. For example, there will be an element through the highways maintenance challenge fund; some highway authorities will say, “When we do this scheme of highways maintenance, we will bring in some innovation.” Where they have done a bridge upgrade, for example, they may consider putting sensors on the bridges. It is that sort of thing. It is not a specific fund, but we fund it in various ways. 

Jesse Norman: There is a parallel case which is quite interesting. You will know that book, Steve, “The Checklist Manifesto”. It turns out that the way you improve hospital outcomes is not through whizzy technology but through very carefully making sure that the doctors have just ticked all the boxes in terms of care and sterilisation, and so on.

An awful lot of that is true with roads. Have they actually gone through all the little checks and balances, outcomes and tests that cover the whole network to make sure they are doing their job properly? That is really valuable. It is not direct innovation, but it is incredibly valuable. It is transformative in terms of value for money from a local authority standpoint. I do not want to get too lost in the word “innovation”. 

Q361       Steve Double: I accept that, but I think there is general acceptance—you have stated some very good examples—that new technology and innovation is very much part of the solution in having better maintained roads and getting better value for money for the taxpayer.

You talked about a five-year funding programme for road maintenance, which we would all welcome. Do you think there is a case to be made within that for a clear funding stream over a longer period of time to encourage and promote innovation?

Jesse Norman: That is interesting. You will appreciate that that money is different from the annual managed expenditure—the departmental expenditure for the Department. It is money that goes to local authorities. In a way it runs parallel to the data point, and the way I would think of it would be to ask ourselves whether we should be tweaking the incentive arrangements around that to nudge local authorities to be more mutually supportive and more open to innovation.

As you were saying that, I was thinking of three sources of innovation. One is the private sector just doing its own thing, irrespective of us. There is a lot of that going on, as you can imagine. The second thing is new entrants with ideas, where we are trying to bring them to work. The classic example is rubberised roads. The third thing would be areas where we see a problem that no one else has spotted and the private sector is not doing anything, and have tried to fund a solution: BridgeCat.

The really clever thing, which is something for us to think about, is whether or not each of those three things could be picked up or developed in the context of a new funding settlement, in a way that gave a bit more of a nudge.

Q362       Steve Double: Is there a danger that you effectively end up picking winners in a competitive market?

Jesse Norman: It is interesting. I do not think there is a danger if we adopt a formula-based system responding to local needs in the way that has been described, such as length of roads, and so on. If we are being bid for in competitive contracts, and it is not a very competitive contract, the danger is that you might end up funding something that was not a particularly good idea. None of this is an enormous amount of money. This is cheap failure and cheap testing, if you know what I mean. 

When you think about it, if you have a £25 billion national road settlement, and we are talking about £20 billion of local road settlement over five years or £17 billion or £18 billion between ourselves and MHCLG, £20 million is neither here nor there. The key thing is to try, and then see if you can roll it out, because the benefits of rolling it out are so good. 

Q363       Steve Double: Thinking more about research activity in this field, how much money is DFT putting into research as opposed to on-road practical pilots?

Jesse Norman: That is a matter for our TRIB—Transport Research Innovation Board. We have a separate board that works across not just the Department but the different agencies across the different modes. It is run by Phil Blythe. It is a very interesting separate issue. They publish a report, which we can send to you if you would like.

We are getting much better, I am pleased to say, at doing two things. One is knitting together our understanding of how transport innovation can work across the Department and across Government. The second is raising the profile of transport. For example, we do not through UKRI do anything like enough funding for transport as a category, yet we have a grand challenge looking at us in the future of mobility. We have to raise our game nationally on the funding we do for deep research in transport, and on the number of PhDs we fund and the number of centres we have at academic institutions.

Little of that directly relates to local roads. With some of it there is a carry-over. Some of this stuff was pioneered by universities or within university departments, but we could be focusing on a much bigger picture. 

Steve Berry: Basically, we have just announced some funding for a consultancy that has been bringing out a digital intelligence innovation hub. It is looking at how we can work more closely with SMEs and academia. One of the problems that we are asking them to consider, for example, is the pothole problem. Could we look at it in a different way? We have tried and tested a number of repair technologies. What is out there now? For example, we are aware that some universities are working on 3D printing for potholes. How can we bring all of that together and then disseminate it more widely across the highway sector? 

The Minister has alluded to this: it is really important to highlight that contractors work closely with highway authorities and they are bringing in innovations all the time. Of course, they have a commercial interest, which is very difficult to share, but we highlight some of those initiatives to other highway authorities and say, “You may want to consider something similar.”

Q364       Steve Double: One of the concerns is to get the pathways in place to get the results of that research to market. Is there a way to pull that through and share it, so that it results in outcomes?

Jesse Norman: I personally always want to see more. The area I see as a worry at the moment is not so much the cascades of sharing best practice that we have talked about; that is starting to get going. This is a sector that is traditionally relatively hostile to change. It is radically changing and the rate of change is improving. That is good. I am more worried about the deep research part and the academic support for transport as such. We particularly need it in the context of all the work we are doing on electric vehicles and autonomous vehicles.

There is an enormous amount of work to be done just on data, thinking about how we use data intelligently and what the Government’s transport philosophy on data is. I do not want to get too far into that, but it is a very big issue for us. We are at the early stages of trying to understand the different issues, and the way it can affect different players, the danger it poses to competition or the ways it can enable competition. You will have seen the Furman report for the Treasury on digital markets and competition.

You are touching on a really interesting area of transport policy. I suspect it may be something that we can come back and talk to you about on future occasions. My worry at the moment across the whole sweep is more on the basic research side than at the applied end. 

Q365       Chair: Thank you both very much for giving evidence today. That concludes our public session. We look forward to seeing you next week, Minister. 

Jesse Norman: You have a high pain threshold, if I may say so. Thank you very much.