Highways England annual report: Challenging innovation


Highways England's annual report outlines the Government-owned company's steady progress over the last year though it has some significant challenges remaining across a range of areas as it heads into the last year of the Road Investment Strategy (RIS).

In 2018-19, Highways England met its targets for four out the five KPIs for which it had an in-year target - customer satisfaction remained slightly below the target level.


It spent £3.8bn on the strategic road network (SRN) in 2018-19, over £10m per day. Of this, £2.6bn relates to capital investment and £1bn on its maintenance and operation.

Out of the £3.8bn total, £2.6bn was capital funding - compared to £2.2bn the year before. Highways England invested £0.4bn more this year, and capital spending is 37% greater than three years ago.

Highways England's capital programme is split mainly between work to enhance and work to renew the network.

'Enhancement projects took the majority of our capital funding this year, £1.7bn, and this is set to rise again next year. This is because many of our enhancement schemes in the planning phase at the start of the current road period have now entered the construction phase,' the report states.

Scheduled renewals work accounted for £0.7bn of our capital funding, which was invested in maintaining structures and road resurfacing. The remainder of our capital funding was spent mainly on IT and estates projects.

The operational expenditure for 2018-19 was £1.1bn. This is similar to the year before, but with small increases to cover new work on managing the Severn and Dartford river crossings.

Chief executive Jim O'Sullivan said: 'Our satisfaction score of 88.4% this year is slightly below our target. It is improving though we are disappointed and will redouble our focus on improving the overall experience for our customers and communities in 2019-20.

'We achieved £362m of efficiency this year, against our in-year target of £345m. Efficiency is the economic measurement of how much we have saved by ensuring optimal use of all our resources, such as time, money, labour, and materials.

'We are now reporting a cumulative position of £848m within the current road period, against our target of £722m by March 2019, and have met our Year 4 efficiency targets across the business.'

The company has a target of £1.2bn total efficiency savings over the first RIS period, which ends next year - leaving it a further £352m of savings to make next year, which it says it is on track to make.  

During the year, Highways England agreed with the DfT to bring forward £60m of funding from the final year of the current road period to manage its delivery programme: 'This meant we did not need to scale back our investment, which would have created unnecessary delays.'

It also had to reschedule a number of schemes. As at 31 March 2019, Highways England agreed with the DfT to reschedule the start of works on the M6 junctions 21a to 26, and M56 junctions 6 to 8 to reduce congestion around Manchester.

The A47 and A12 junction enhancements were also rescheduled, to align with Norfolk County Council's Third River Crossing scheme over the River Yare in Great Yarmouth.

To date, Highways England has opened 29 schemes in this road period and have started 44 schemes. There are currently 15 schemes in construction on our network.

'Development of the remaining major schemes is well advanced, with less than 5% left to progress to detailed design stage.'

New cost pressures in 2018-19 included:

  • an £11m cost reduction challenge set by the DfT
  • the extra cost of running smart motorways (£2m), which need more traffic officers, and use more electricity through gantry signage
  • higher pay awards for front-line operations staff (£2m)

There also seems to be a significant risk due to a potential 'differing interpretation of VAT rules', which 'might result in a significant impact on our funding and an increased cost on road schemes going forward'.

Highways England has engaged a tax expert to help support our interpretation of current VAT rules

The report states it is difficult to conclude the impact Brexit will have on Highways England, but it has identified risk over the long-term.

'We have analysed potential impacts on our supply chain resources, labour market and IT systems. We believe we are reasonably positioned to deal with any short-term impacts. Over the longer term, material costs and lack of skilled labour may increase with a knock-on effect on contract value.'

Highways England spent £384m on PFI contracts in 2018-2019, although it did work with Connect Plus to refinance the M25 PFI contract, 'leading to undiscounted savings of £149m across its lifetime' and reducing costs by £12m this year.

The M25 is by far the largest PFI contract on Highways England's balance sheet; the closing balance obligation at 31 March 2019 is £840.3m, which is 58% of the total closing balance obligation.

The value of the network increased by £5bn last year and is now valued at £118.6bn. 

Key aspects of Highways England works and programmes:

Highways England has made progress across a range of different operational programmes and secured success in a number of KPIs.

Questions remain over safety targets and strategy, that we have reported on here. 

Highways England has a target of a 40% reduction in people killed or seriously injured by 2020, compared to the 2005-2009 average baseline. New figures, adjusted for the impact of CRASH - the new police casualty reporting system - show that there has been a reduction in the number of killed or seriously injured in 2017, the latest year for which figures are available.

Performance against the safety KPI has been affected by a change in methodology in how police forces record serious injuries, which has increased the number of those recorded as seriously injured.

Highways England has progress to make to ensure it reaches its 2020 safety targets.

One area of clear improvement however over the last four years, is the reduced accidents to traffic officers, which has fallen by a factor of four and to contracting staff by 30%.

Project bank accounts and prompt payment

'These accounts mean all parts of the supply chain receive payment for their delivery at the same time, and sub-contractors do not have to wait for main contractors to cascade payment, which can sometimes take weeks. During the year, we paid £1,422m into project bank accounts, of which nearly a third (£419m) went to SMEs. Because of the cashflow benefits, 80% of our sub-contractors chose to be paid this way.'

It also paid 90% of supplier invoices within five days of receiving a valid invoice and 99% were paid within 30 days or in line with their contract terms.

'Government has issued a new prompt payment policy that requires all Government contracts of more than £5m to include supplier prompt payment to sub-contractors. We have built requirements into our tendering processes to ensure that this is in place when it comes into force in September 2019.'

Network Availability

Over the course of 2018-19, 98.29% of the network was kept open to traffic - above its 97% target. 

'We have increased the volume and proportion of roadworks carried out at night, when there are lower traffic volumes, helping to reduce the impact on our customers.'

Incident recovery

More than 88% of incidents on the motorways were cleared within the hour compared to target of 85%

'In total, we responded to over 58,680 incidents, a 4.53% increase compared with 2017-18. This demonstrates the positive impact of our initiatives, such as intelligence-led patrolling strategies and targeting of resources on our network

'Following a trial in the West Midlands region, the practice of recovery operators being dispatched directly from our Regional Control Centres when an incident is viewable on CCTV is now firmly embedded. In December 2018, 56 such instances (a record number) were recorded. With over 20% of vehicles being recovered an average of 20 minutes quicker than previously, our ability to return the network to free-flowing conditions has been greatly improved.'

Stopped vehicle detection

In May 2018, 'we switched on our Stopped Vehicle Detection system between junctions 23 to 27 on the M25, enhancing our capability to detect and respond to stationary vehicles'.

The system is now in operation on around 25 miles of all lane running on the M25. It uses radars to automatically detect vehicles that have stopped in a running lane, allowing our operators to set signals quickly in response. This has significantly enhanced our operational capability and reduced the potential for incidents.

'We plan to roll out this capability across all lane running smart motorways, starting with the M3 junctions 2 to 4a in 2019-20.'


The Government does not set a target for this measure but Highways England must report the average time delay (time lost per vehicle mile) year-on-year, as part of our commitment to supporting economic growth. This has been steadily but slowly rising to 9.37 seconds from 8.93 seconds in 2015/16

Asset management and renewals

'In 2018 -19, we ensured that 95.5% of our network was kept in good condition, meaning that no further investigation is required for possible maintenance. This is 0.5% above target and is an improvement from last year (2017 -18), when we achieved 95.2%.

'In 2018 -19, we developed and used specialist data analytical tools to predict the likely KPI outcome at the end of the year, helping us shape our planning and in -year changes. We are building on this approach to help us develop more effective and targeted renewal programmes in the future, particularly in planning for the next road period.'

During 2018-19, Highways England invested £674m on renewing road surfaces, structures and technology on our network. This represents 18% of our total planned investment for capital maintenance within the first road period and secured renewals above target in all structural assets.

This year, Highways England established an Executive-level Asset Management Steering Group to lead the delivery of its Informed Asset Management Plan.

A number of elements from the plan have been completed:

  • HE trialled a new risk-based and evidence-based approach to our asset interventions, covering a wide range of activities.
  • HE developed our asset decision support tools to provide better information on the condition of our key carriageway and structures assets.
  • HE used these tools to underpin our business case for renewing our assets in the second road period, as well as supporting delivery of our pavement (road surface) KPI.
  • HE carried out a review of our asset inspection programmes and are implementing a new assurance approach, ensuring that our assets are consistently assessed and the right information recorded to inform future required investment

Asset delivery and insourcing 

Asset Delivery is Highways England strategy to directly manage maintenance operations and scheme delivery. Under this initiative, it is insourcing the decision-making on all maintenance activity, scheme planning and development and network access, previously undertaken by the supply chain.

In 2018-19, it rolled out the approach in Greater Manchester and Merseyside, which went live at year end, and undertook the work necessary for go-live in the East region in October 2019.

Half of the company will be using the new model by 2019-20.

To date it has:

  • let contracts worth up to £2.5bn
  • developed direct relationships with more secondary contractors than before
  • grown our Operations team by about 450 people
  • developed our first Quality Management System

'The Asset Delivery approach is performing well, with reduced asset renewal unit costs, improvements to asset condition, and increased customer satisfaction.'

A14 scheme

Over £8.5m Lean efficiency savings have been assured so far, with a further £11.57m in the pipeline for this RIS. Examples of our increased productivity include Concrete Safety Barrier installation (increased by 5% per day) and slot drainage installation (increased by 14%).

£100m growth and housing fund

'In the current road period, we have committed £93m on 28 schemes. These will bring in a further £231m of funding from private and public sectors. Seven schemes opened to traffic in 2018-19, with a further three on site. Over the lifetime of the developments related to our funded schemes, we expect over 45,000 homes and 44,000 jobs to be developed. We expect to close the fund in March 2020 at the end of the current road period.'

Digital roads

The key areas of digital capability are Building Information Modelling (BIM), the Rapid Engineering Model (REM) and the Business Information Framework (BIF), which are being promoted through our Major Projects directorate and specifically our smart motorways programme.


BIM uses various technologies to generate 3D technical drawings and digital representations of structures and spaces, which can be used to support decision-making before commencing the build of – or any work on – physical infrastructure. 


Computer-led design of smart motorways - a digital workflow, rather than a single piece of software, that enables smart motorway programme schemes to be designed automatically, and much faster than by traditional means

REM can generate many different output types and formats, including 3D virtual reality ‘drive through’ visualisations.


BIF defines a common language and provides a single environment in which people can access, share and use trusted information. It gathers verified data from different sources to create powerful visualisations of information to support decision-making, foster collaborative problem solving and achieve efficient assurance. This is underpinned with organisational and people development to embed these new ways of working within our company and supply chain. Over time the BIF can be used across Highways England to help maximise benefits throughout the asset lifecycle.

The future is likely to be defined by the extension of the application of BIM, the REM and the BIF to all stages of the end-to-end strategy, asset management and customer lifecycle in a joined-up manner

Connected and Autonomous trials

HGV platooning trial : 'We are working with the DfT and leading an on-road pilot of HGV platooning to better understand what greater automation of HGVs can deliver.

HumanDrive: 'We are part of a consortium, jointly funded by central Government and industry, to build an autonomous vehicle with human-like control by 2020.'

Autonomous impact protection vehicle trial : 'We are working with industry to remove drivers from vehicles used to protect road workers and users during maintenance.

Autonomous vehicle trials: 'We are working with the automotive industry, academia and others to develop safe trials of autonomous passenger vehicles on our network. Collaboration is crucial to ensure customers, road authorities and vehicle manufacturers all benefit from these technologies.

UK Connected and Intelligent Transport Environment (UK CITE): 'This is an industry-led project on the SRN and local roads in the Midlands. We are providing the roadside infrastructure to allow vehicles to talk to our systems, as well as adapting these systems to provide information to trial vehicles in real time.'

Connected corridors: 'We are working with the DfT, Transport for London and Kent County Council to create a connected corridor along the A2 and M2.

Contracts and procurement

Routes to Market

Until now, Highways England has contracted work on a scheme-by-scheme basis or used a framework called the Collaborative Delivery Framework. The new contracts developed and announced under the Routes to Market procurement approach have been designed 'to start a transformation within the infrastructure construction sector'.

Under the routes to market pipeline, Highways England has appointed 13 companies to carry out up to £8.7bn worth of work.

These companies, known as Delivery Integration Partners, will be part of the new Regional Delivery Partnerships, helping to develop, design and construct projects for the Regional Investment Programme from 2019 through to 2024.

Smart Motorways Alliance

In autumn of 2018, Highways England launched the procurement process for our Smart Motorway Alliance. This will identify six partners who will join us for 10 years to develop a smarter network and put 'integration and collaboration at the centre of the smart motorway programme'. 


While there were no cases of economic crime proven to the required criminal standards, investigations completed during the year prevented £2.9m of losses and detected a further £500,000 of fraud, which was reclaimed.

Air quality

Air quality on and around the SRN 'remains our highest risk', Highways England said.

'Government actions to improve air quality may impact on the ability to achieve our Licence obligations, internal performance indicators and deliver our capital programme.'

In RIS1, Government established a £75m Air Quality Designated Fund for RP1 (2015-20), to improve air quality on and around the SRN, with a further £25m designated for 2020-21. 

Despite this Highways England only £7m in this area last year and looks in danger of losing this most of this funding cash.

'Government formally commissioned us to review 101 links on the SRN that have been identified as potentially exceeding the thresholds for poor air quality, and to develop proposals for improving air quality at these locations. We have met our commitment to undertake preliminary modelling of these links by the end of March 2019, and to identify potential mitigation measures, where possible, for development and delivery in 2019-20 and beyond.'

Risk management

'We have deployed an enterprise-wide risk recording tool to improve the way that we record and report risk. This went live across our major projects environment in January 2018. During this financial year, we have added further capability to the tool to enhance the visibility and reporting of risk data and this has helped improve our risk management maturity. In 2019-20, we intend to roll out this tool across the rest of Highways England.'

National Roads Telecommunications Services (NRTS)

'We completed the six-month [contract] transition programme (between March and September 2018) without any disruption to the business. This was achieved safely, to time and to budget. Based on a comparison of NRTS2 to NRTS1 direct costs, we have identified £93.7m of efficiency savings: £44.1m in the current road period and £49.6 million in the next. There is up to a further £10m per year savings over the seven-year term, linked to the efficiency saving on reduced NRTS2 call-off prices for schemes.'

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