DFT Highways Incentive Fund Newsletter

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New DFT Highway Funding Scheme will reward efficiencies and penalise poor performance

In December 2014, the Secretary of State for Transport announced that £6 billion will be made available between 2015/16 and 2020/21 for local highways maintenance capital funding. 

Of this, £578 million has been set aside for an incentive fund scheme, to reward councils who demonstrate they are delivering value for money in carrying out cost effective improvements. DFT has published details of how the incentive fund will be allocated, which will result in well performing councils receiving their full allocation, whereas others will be penalised by a reduction in funding.

Each local highway authority in England (excluding London) has been invited to complete a self-assessment questionnaire consisting of 22 questions. Depending on the answers provided the Authority will be placed in one of three bands, with Band 1 being the poorest ranked authorities and Band 3 the best performing.

For 2015/2016 all authorities will receive their full share of the fund. In 2016/17, only authorities in Bands 2 and 3 will receive their full share, whilst authorities in Band 1 will receive 90% of their share. These percentages for Bands 1 and 2 decrease in each subsequent year, with only authorities in Band 3 being awarded their full share of the funding.

Although based on self-assessment the DFT retain the right to conduct sample audits of a select number of authorities. The Council’s Section 151 officer is required to sign-off on the submission. Before doing so they must be satisfied that there is sufficient evidence to support the self-assessment score awarded. This should provide some level of scrutiny and challenge.

Authorities have been asked to submit the questionnaire for 2015/16 by 31st July 2015. They have until the end of November 2015 to complete and submit the questionnaire for 2016/2017.

This new self-assessment process has a number of implications for those interested in reviewing and improving the risk profile of a highway authority. In particular, a number of the questions are directly relevant to the risk profile:

– Question 8
Does your authority have a comprehensive approach to managing current and future risk associated with the highway infrastructure assets?
– Question 10
Has your authority implemented the relevant recommendations of the 2012 HMEP pothole review?
– Question 11
Has your authority implemented the relevant recommendations of the 2012 HMEP guidance on highway drainage assets?
Initiatives designed to reduce accidents and improve an Authority’s ability to defend claims could potentially be used to provide evidence of good practice. This may provide additional incentive to Highway Managers to engage and support risk management initiatives:
– Question 15
This asks for evidence of how authorities seek to benchmark their own year on year improvements and also how they compare with others. RMP is working with a number of Highway Authorities to ensure key metrics around highway liability are measured and monitored. We also regularly benchmark highway defensibility rates with similar accounts.
– Question 16
This seeks evidence of processes used to measure on-going cashable and non-cashable efficiencies that are being delivered. It may be argued that improvements in claim numbers and claim defensibility rates are cashable efficiencies. Success and best practice in collaborative working, shared services and supply chain management is also examined:
– Question 17
Looks for evidence of good practice in collaboration and management of the supply chain and makes references BS11000. The work RMP has completed on outsourcing of highway functions is very relevant to best practice in this area.

Authorities might expect that insurance carriers will be interested to know into which band their highway service has been rated and will take this into account when assessing the risk profile presented by the Authority.

How can we help you?

For more advice on how we can help lower the cost of your risk, please email contact@rmpartners.co.uk


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