National Highways has delivered well against its financial and performance targets for 2022-23, but urges continued focus on efficiency and managing inflationary pressures on its enhancements in the coming year, the Office of Rail and Road (ORR) has said in its annual assessment of National Highways.
ORR reports that National Highways achieved the expected £776 million of efficiency savings and while it remains on course to meet its target of £2.1 billion of efficiency during the second road period (RP2), April 2020 to March 2025, the company must continue to manage growing uncertainty in the next two years.
National Highways’ enhancements projects have continued to experience delays and cost increases in the last fiscal year, largely due to inflation, and legal challenges to its projects. The company thus faces ongoing risks to the delivery of its enhancements for the remainder of RP2.
National Highways did not meet its 2022 delivery plan goals for enhancements – missing one of its nine start of work (SOW) commitments and three of its 12 open for traffic (OFT) commitments. So far in RP2, seven schemes (two for SOW and five for OFT) have missed their commitments.
The expected cost of enhancements (schemes and other costs) for RP2 was £23.6 billion, but this has since increased by 21%. The Lower Thames Crossing (LTC) scheme had the largest forecast cost increase, of £2.3 billion (39%) to £8.3 billion. The increase was partly driven by the impact of inflation, additional land requirements, development consent order (DCO) related costs and other operating costs.
National Highways met its targets for incident clearance and network availability, although, over the reporting year, traffic levels and delays increased.
The company also worked with ORR and Transport Focus to reinstate the strategic roads user survey, which was suspended during the COVID-19 pandemic.
Feras Alshaker, ORR’s Director of Railway Planning and Performance, and Highways, said: “National Highways has delivered well for road users and continued to achieve efficiencies in line with its plan.
“However, planning delays and high inflation are creating pressure on some of National Highways’ biggest projects. It must adapt and implement robust mitigations to address these pressures. We will continue to carefully scrutinise the work the company is undertaking to mitigate risks to delivery while maintaining value for taxpayers.”