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sector might take in the management of the company. There are relatively limited precedents as to the way in which GoCos are being used. Examples include the Atomics Weapons institute and the National Physics Laboratory.
Both of these GoCos are focused on a relatively narrowly scoped range of services working from one or two locations. This is in contrast to the GoCo model currently being considered in respect of the defence equipment and supply function within the Ministry of Defence (DE&S), which would be take responsibility for a multi- billion range of programmes. The plans being put in place by the government for the Highways Agency are much closer to those being envisaged
for DE&S, albeit somewhat smaller in the scale of capital expenditure. Like DE&S, any changes to the Highways Agency are going to require new legislation to be passed through parliament, with all the attendant political risks that would go with that.
The GoCo structure
The rationale behind using a GoCo structure is typically to maintain government ownership of sites/assets but to pass the day-to-day operation and management of those assets to the private sector. It is therefore the operational risk that is transferred.
The existing GoCos operate through a “ManCo” which is owned by a private sector partner but which government will exert control, typically through a “golden share” arrangement. Control is also exercised though a management services contract between government and ManCo. The employees all sit in the ManCo. The consultation document talks primarily about “public ownership” of the strategic highways company. It remains to be seen how closely this approach makes use of a “golden share” regime.
Critics of a Highway Agency GoCo would say that form of the agency should be irrelevant – the more important question is the way in which future investments are going to be made. It is this aspect of “Action for Roads” which has perhaps seen less considered discussion than might have been expected. The establishment of the Roads Investment Strategy is a long over due development, as is the commitment to ring-fenced funding. The Department for Transport is undertaking a separate consultation in this regard – it will be interesting to see if there is any serious debate about decoupling the ultimate form of the Agency from the long-term approach to investment.
A second key aspect is to defi ne properly what it is that the GoCo is being required to deliver. Both the “Actions for Roads” and the latest
www.highwaysmagazine.co.uk
consultation document emphasise the need for effi ciency and productivity. The experience has been that private sector support can help deliver this – but there needs to be clarity as to how this is to be achieved, both in terms of any framework contract between the GoCo and the government and any management contracts with a contractor to help run the GoCo. Where these kind of arrangements sometimes run into diffi culties is where there is lack of clarity as to how “savings” may be derived and then used to make a service better, and the appropriate delegation of authority to the contractor (and by extension, to the management of a GoCo) to seek to make genuine transformations in the procurement cultures and provision of services. If a GoCo model is to be adopted, then an important challenge will be for government to step back and allow the GoCo a true measure of the “independence” that is currently being called for.
Things to consider
One fi nal area to consider is what else is missing from the currently proposed model. There are many stakeholders which the Highways Agency and any successor body will have to deal with. There is a crucial inter-relationship with local authorities, where the strategic road network meets local roads. There is also the question of private and commercial users of the roads – many of whom are questioning where the current government thinking might be going on road charging and who might be there to protect their best interests in the face of a new entity taking over. On both points neither the Action for Roads paper nor the consultation document provide wholly convincing explanations. Maybe the results of the consultation exercise itself may provide some greater clarity, before the drafting of legislation is commenced – but clearly there is going to be a lot to do in these two areas. The Department has raised the prospect of overhauling the TRO system – but then is somewhat short on detail, whilst in respect of providing protection for road users, the Offi ce of Rail Regulation appears possibly to be lined up to extend its remit – perhaps as the Offi ce of Rail and Road Regulation?
In any event, this consultation exercise providers a pause for thought and an opportunity to consider the direction in which the industry maybe about to head. The eight questions in the Department for Transport consultation document are worth reading – and, (should the Christmas Card lists and round-robin emails have been written) – worth submitting a response upon. Failing that, the results of the consultation should be out in early 2014, with the new body – GoCo or otherwise – due to be in place – just in time for the general election, no doubt.
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