Transport Insights

National Highways’ regulator falsely told Parliament that the company had a projected overspend of nearly a quarter of a billion pounds, but the fictional deficit was almost entirely the result of collusion within government to pretend that a shelved road scheme was still going ahead.

The revelation raises further concerns about whether the Office of Rail and Road (ORR) sees its role as holding National Highways to account or keeping the company’s secrets from Parliament and the public.

It is the latest revelation in the scandal that saw both organisations falsely claim in reports presented to Parliament that the A1 Morpeth to Ellingham scheme, which was shelved in February 2022, would go ahead in the 2022-23 financial year.

Not only did the ORR’s annual assessment of National Highways for 2021-22 falsely claim that work on the scheme would start in 2022-23, but it reported that the scheme had a huge overspend (£216m) resulting from “forecasting spend of £255m against a RP2 baseline of £39m”.

However, this forecast spend was fictitious and the regulator knew it. It knew very well that the funding for the scheme had been withdrawn (apart from sunk development costs) and that National Highways was delaying formally pausing the scheme in order that it could hide from MPs the fact that it had been shelved.

The ORR chose not to tell MPs that the A1 scheme had been shelved but in the main part of its report stated that, following changes to funding and projected spending:

National Highways is forecasting an overspend of £237m in RP2. This is due to £86m of forecast overspend on enhancements schemes and £151m on other enhancements costs, including legacy costs of previously completed projects.

Almost all of this overspend was fictitious, resulting from the fictitious overspend on the A1 scheme. In fact, National Highways still had a forecast underspend of £251m on the Lower Thames Crossing due to planning delays and would have had a significant forecast underspend on ongoing enhancement schemes without the fictitious overspend on the A1 scheme.

The regulator has previously told that it was unable to include “the detail of ongoing governmental policy decisions” in regulatory reporting of National Highways, by which it presumably means that the pausing of the scheme had (deliberately) not been followed up with the correct paperwork.

It has also stressed that “the scheme remained committed under RIS2 until a formal change had been agreed by the Secretary of State for Transport, as legislated under the Infrastructure Act 2015”.

However, the change control form by which National Highways formalised the cuts to its funding following the 2021 Spending Review shows that the company knew that a separate change control submission was required to formalise the decision to pause the scheme.

National Highways lied to Parliament by including in its 2022-23 delivery plan a “paused” scheme that was not going ahead in reality but whose formal status was being manipulated for political reasons.

The ORR, which received a copy of this document, therefore knew that National Highways’ delivery plan and spending plans were fraudulent.

While it was correct to report that National Highways was officially planning to spend money that it did not have, it should have explained to MPs and the public why this was the case – i.e. from a deliberate and ongoing delay in formalising something that was (not) happening in reality.

It has refused to say why it did not do this but the likely reason is that it had been co-opted into the lie that the A1 scheme was still going ahead.