Alliance against road building

PRESS RELEASE – 31st July 2006

ROADS COSTS INCREASE BY £1 MILLION A DAY - "WORSE TO COME" SAY ROADS ALLIANCE

Reacting to the news in the Sunday Telegraph [1] that just ten schemes in the Highways Agency's roads programme have gone up by £98 million, a rate of £1 million a day since April, Road Block said that this was no surprise (cost increases had been going on for years) and warned that worst was to come as the government had approved over £12 billion of road projects [2]. Just last week the influential Transport Select Committee issued a scathing report into the Highways Agency saying they had "lost budgetary control" and predicted increases of over £1 billion [3]. The alliance pointed out that the Highways Agency in its 2006/7 Business Plan had almost doubled its roadbuilding budget for 2006/7 to cover up for the increases [4].

Whilst the Highways Agency roads programme is running massively over budget, the government's £1.7 billion programme of local authority road schemes which are paid for out of central funds is also spiralling in cost. The National Audit Office in currently conducting an investigation into the reasons for the cost increases, and is due to report in the Autumn.

Whilst the road planners will blame rising oil and steel prices and inflation, the alliance against roadbuilding argued that something more systemic is going on within the approval process. They believe that the Highways Agency and local authorities routinely underestimate costs to gain approval for schemes, with the true cost to the tax payer emerging as the scheme goes through the planning process. Road Block said that the fault lay entirely with the Department for Transport for approving every single one of those road schemes without checking the scheme justification and appraisal thoroughly.

Road Block warned that the government had now approved so many road schemes (over 200 since coming to power) that were currently costed at over £12 billion [2] that there could be big expensive problems ahead, and that it was time for the government to cut the roads programme.

The tendency for road planners to lie to gain approval for their scheme is so well known the Treasury introduced the charmingly euphemistic concept of "optimism bias" in 2003 [5]. Road planners are supposed to add this adjustment to the cost of a new road to cover the fact that costs will have been underestimated. Road Block can reveal that optimism bias is not working as two major road projects have increased massively in cost which had been approved since the introduction of 'optimism bias'.

• The High-Low Newton Bypass in the Lake District National Park had gone up from £22 million when first approved in October 2003 to £35 million today - a 59 per cent increase. The Roads Minister approved the increase in April 2006.
• The hugely controversial Weymouth Relief Road in Dorset was approved in 2004 at £54.546 million, but had gone up to £77 million - an increase of 41 per cent in just two years.

In April the Highways Agency's 2006/7 Business Plan 'raided' the budgets for technology, managing traffic and R&D to pay for an almost doubling of the roadbuilding budget. This is not to pay for more road schemes but to cover up for the huge cost increases.

Rebecca Lush, the Coordinator of Road Block said:

"The roads programme is unaffordable and bad value for money. Road schemes are not only bad for climate change, but are also very bad value for money. It is time the Department for Transport culled its bloated and expensive roads programme. Rising road costs are not just down to inflation and oil prices, but a deliberate underestimating of costs to gain approval for schemes. The blame lays squarely with the Department for Transport who approve every single one of these roads schemes, turning a blind eye to dodgy appraisal. This is a scandal, and results in billions of pounds being wasted. As these latest figures show, costs are only going to go up as the government have approved over 200 road schemes, currently costed at over over £12 billion which have yet to come through the planning process."

Notes to Editors:

[1] "£1 million a day added to 'out of control' budget for major road projects", Sunday Telegraph, 30 July
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/07/30/nroads30.xml

This data came from a Written Answer from Roads Minister Stephen Ladyman on 24 July 2006 which updated roads costs since evidence was submitted to the Transport Select Committee in April. This revealed that cost increases of £98 million had been approved. See http://www.publications.parliament.uk/pa/cm200506/cmhansrd/cm060724/text/60724w1873.htm#column_746W

[2] Costs of approved schemes were provided in a Written Answer to Chris Grayling MP on 24 May 2006. The TPI programme costs £10,323 million, the LTP programme costs £1,703 million, and the CIF programme costs £81.96 million = £12.108 billion
http://www.publications.parliament.uk/pa/cm200506/cmhansrd/cm060524/text/60524w0554.htm

Tables showing the cost increases can be seen here: http://www.roadblock.org.uk/roadschemes.htm

[3] The Ninth Report of the Transport Select Committee was published on 27 July and can be found here:
http://www.publications.parliament.uk/pa/cm200506/cmselect/cmtran/907/90702.htm

[4] The Highways Agency Business plan 2006/7, when compared alongside the 2005/6 Business Plan shows that the Agency has raided all its other budgets to pay for an almost doubling of its roadbuilding plans. The HA Business Plan for 2006/7 is here, and the Budget is in the Annexes on page 36:

http://www.highways.gov.uk/aboutus/9938.aspx

The 2005/6 Highways Agency Budget is in Appendices here on page 3:

http://www.highways.gov.uk/aboutus/documents/appendicies.pdf

[5] Optimism bias was introduced in the Treasury's Green Book in April 2003.

http://www.hm-treasury.gov.uk/economic_data_and_tools/greenbook/data_greenbook_index.cfm

[6] The Liberal Democrats have consistently highlighted the increases and called for the National Audit Office inquiry
http://libdems.org.uk/news/rising-cost-of-road-schemes-is-highway-robbery-rowen.html