www.highwaysmagazine.co.uk
DECEMBER 2013
Considering the future of the Highways Agency
This month, partner Jonathan Hart from infrastructure law fi rm, Pinsent Masons LLP takes a look at the government company ‘GoCo’ model and the potential future form that the Highways Agency may take
“Drawing on the fi ndings of the Cook Review, the Highways Agency will be transformed into a publicly- owned corporation which has the long-term funding, certainty and fl exibility which will enable it to deliver capital effi ciencies worth £600 million by 2020-21. This investment and these reforms will be underpinned by legislation to provide certainty for the public, business and industry.”
Action for Roads – a network for the twenty-fi rst century, DfT July 2013
The border between the public and private sectors sometimes takes on the appearance of an obscure frontier: it is often hard to tell when you have crossed from one side to the other.
“Cook fi rst put forward a range of radical reforms to the way in which the Agency managed the strategic road network”
Some of the crossing points on the frontier are well-known. Privatisation has recently come back onto the map, in the shape of the Royal Mail sale by the UK government. Public private partnerships under the PFI have also been debated long and hard. Similarly, many UK banks are presently stranded with one foot on either side of the divide and have been much talked about. By contrast, the checkpoint ‘GoCo’ has received much less attention from commentators – and it is this that we will be considering this month.
Even the acronym ‘GoCo’ requires some un-packing. To some, it simply means “government company” – e.g. a corporate entity established by the government at arm’s length from the rest of its political functions. For others, ‘GoCo’ means “government-owned, contractor-operated”. This emphasis on who might be running (as opposed to owning) the company is an important one – and a distinction that we may be
hearing much more about in months to come, as the future of the Highways Agency is subject to further debate, in the UK parliament, and more widely in the highways industry.
The consultation process
The debate has now started. The UK Department for Transport highlighted that it was looking to see the Highways Agency transformed into a GoCo in the green paper, Action for Roads, that was published back in July. The green paper emphasised that a publicly-owned company would have greater certainty, commercial fl exibility and independence to deliver the commitment to spending previously announced. At the end of October, the Department commenced a consultation process into what a GoCo might look like in practice. The consultation is due to conclude shortly before Christmas.
This consultation represents the next stage of a journey which was commenced by the Cook Report from November 2011. Cook fi rst put forward a range of radical reforms to the way in which the Agency managed the strategic road network. Given that many of Cook’s fi ndings apparently went a long way beyond what the government might have anticipated and the length of time often taken to develop policies, it is perhaps surprising that we have travelled so far, so fast in the last two years. The consultation questionnaire issued by the Department provides a clear explanation of key aspects of its thinking, at the heart of which is the “strategic highways company”, which will be counter-party to a framework agreement and licencing arrangement with government. The company will input into the Roads Investment Strategy to be published in 2014, which is due to set the framework for investments in respect of the period through to 2021/22. The majority of existing employees of the Highways Agency will TUPE transfer into the company.
Although the consultation is emphatic that this is not going to be a “privatisation”, the document is a little coy on precisely what role the private
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