Potholes take a toll on our economy, so the government will reward local authorities with the best plans for repairing them.
Thank you for inviting me to speak.
I had hoped to be here to speak earlier in the day.
But the House of Commons scheduled transport questions for this morning.
It wouldn’t have gone down well if I’d missed my first appearance as a transport minister at the despatch box.
Fortunately I survived the experience, so I’m really pleased to be able to come and deliver today’s closing speech.
When the Prime Minister asked me to take on the roads brief, I didn’t realise how popular I would become.
Indeed, I have been deluged with requests from fellow MPs asking for me to help fix potholes in their constituencies.
And like all MPs, my constituency postbag contains plenty of letters from people worried about the state of our local roads.
So now that I have been appointed Roads Minister, the people of Harrogate and Knaresborough expect that I will do something about it.
And rightly so, because I am determined to see our potholes dealt with.
Sticking to the government’s plan
As a former Cabinet Member for Resources on my local council, I understand the pressures authorities are under.
So I am glad that, just before the election, the government announced significant funding for tackling potholes and improving local roads.
Our manifesto stated that the government will:
…continue to provide enough funding to fix around 18 million potholes nationwide between 2015 and 2021.
It is a long-term investment plan that we will be sticking to.
Potholes and poorly-maintained roads are a menace for all road users.
They cause accidents, and they take a toll on our economy as well as our vehicles.
So though local authorities are responsible for the local roads which are worst affected.
The government is stepping in with funding so we can get on with the backlog of repairs.
A backlog that’s a legacy of past underinvestment by previous governments, culminating in a series of harsh winters.
A new way to allocate funding
And while we are now helping to correct that legacy of underinvestment.
We have moved on from an approach in which money is handed out purely on the basis of where the need is greatest.
Frankly, sometimes the need is greatest because a local authority has not used the funds it has received as efficiently as it could.
We have learnt that if you hand out money while ignoring why local roads are in a bad state, you create a system of perverse incentives, and unintended consequences.
A system in which even local authorities that have kept their roads in top condition have an incentive to let standards slip so as to win more money.
And local authorities near the bottom of the rankings have an incentive to perform even more badly.
The risk is that the more public money the government hands out, the less efficient local authorities become at mending the roads.
It’s a system crying out for reform.
And by now, you will be familiar with the changes we are making.
£578 million has been reserved for a special Challenge Fund, so local authorities can compete for money for special one-off projects.
We have already allocated £275 million for 31 schemes across the country, such as new street lighting and bridge repairs.
I know many local authorities were disappointed that we were unable to support the proposal they had submitted to the fund.
Competition for the Challenge Fund was extremely fierce, so I am as keen as anyone to get on with the second round.
But the biggest change is aimed squarely at the old system of perverse incentives.
£578 million will be allocated on the basis of local authorities’ performance.
Authorities that spend money on roads efficiently will be rewarded with extra funds to keep up the good work.
While authorities with a history of inefficiency will receive comparatively less money.
Over time, we expect that all authorities will improve.
But I understand that some need time.
So we won’t introduce whole-scale changes overnight.
But steadily, over the course of the funding period.
The proportion of funding that is based on performance will increase year by year.
While at the same time the proportion of funding an authority can receive if it is in the lowest performance ranking will lessen year by year.
By the financial year 2018 to 19, over a quarter of funding will be allocated on the basis of either competition or performance.
How local authorities will be rated
So today I am pleased to launch our pilot scheme to test the new method for allocating funds based on performance.
Letters will be sent to local authorities today (11 June 2015), but let me share the details with you now.
Over the last few months, the Department for Transport has been working with an independent expert – Matthew Lugg OBE.
Mr Lugg is the Director of Public Services at Mouchel, a former Director of Highways at Leicestershire County Council, and also a member of the Highways Maintenance Efficiency Programme Board.
Together we have designed a self-assessment questionnaire that will allow local authorities to assess themselves against a number of criteria.
I know some of you have seen earlier versions of the questionnaire as it was being developed.
The questionnaire being issued today asks about asset management – whether authorities take a long-term view of road repair or wait for problems to develop before taking action.
It asks about customer satisfaction – and whether authorities are listening to road users and responding to their views.
And it asks about collaboration – whether authorities are working together, to share practice and resources.
And that’s a vital point.
Because the new Incentive Fund is not designed to provoke competition between highway authorities, but collaboration.
Today there are over 150 different highways authorities; a huge amount of expertise and collective wisdom.
But if authorities are not pooling that expertise, the taxpayer is not getting the best deal.
I know that this afternoon some of you will have heard from Transport for Greater Manchester.
What’s happened in Manchester is a great example of collaboration.
And we want to see more of it.
In many areas, the combined authorities model will be the way forward.
So to emphasise that the Incentive Fund is about collaboration - not competition - we have deliberately put enough money aside so that, in principle every highways authority could receive the maximum level of funding.
And over time, that is exactly what we want to happen.
The Incentive Fund will allow us to reward good practice.
The result will be better roads locally.
The full questionnaire will be published on the Department for Transport’s website today.
In all, there are 22 questions, and authorities’ responses should be backed with evidence.
It’s a dry-run exercise to give authorities until the end of July to assess their ratings and to judge how they will improve or maintain their score.
And while the content of the questionnaire is intended to be as close to the final version as possible, we welcome feedback.
We will then release the final version of the questionnaire in the autumn, with the deadline for completion likely to be the end of November, ready for money to be distributed for the 2016 to 17 financial year.
So we’ve all got work to do.
The government is providing the funding.
It’s a mark of confidence in the highways maintenance sector.
We know that given a chance to deliver, you will do so – through efficiency, collaboration, and the sheer determination that the industry is famed for.
You’ve got this government’s full support.