Transport Insights

True to form, National Highways’ regulator, the Office of Rail and Road (ORR), has brushed off a complaint from campaigners about the company’s alleged misuse of designated funds.

Transport Action Network (TAN) wrote to the ORR in August following publication of one of its National Highways Watch pieces on the issue, to which I contributed.

Specifically, it alleged that the company was spending the “ring-fenced” funds on:

Projects completely unrelated to roads (such as dance classes and school play equipment), acting as ‘sweeteners’ to buy local support on controversial schemes such as the Lower Thames Crossing

Mitigation for new road projects, removing the cost of conservation projects from the project budget and artificially lowering the cost estimate.

Designated Funds are a separate cash pot intended to make improvements on and around the strategic road network to address impacts such as community severance and environmental impacts, as well as delivering “additional” improvements to road schemes and improving safety across the network.

The ORR’s response to TAN’s complaint was broadly that as the government had not prescribed what designated funds could or could not be spent on, National Highways can do what it likes with the cash, which totalled £870m under the 2020-25 road investment strategy (RIS 2) and £89m in the interim period (2025-26).

It paraphrased RIS 2, which itself paraphrased its four named funds, as naming “some specific areas for investment – such as improving environmental performance, investigating innovative processes and improving facilities for those who walk and cycle” but also making clear that this is not an exhaustive list.

The ORR then directly quoted from the RIS 2 document:

To cover these areas and many more, there are a series of ‘designated funds’, which are reserved for key aspects of Highways England’s activity. Unlike the enhancements programme, these are not specified in advance.

This paragraph goes to the heart of what is wrong with the designated funds set-up. The phrase “these areas and many more” does indeed signal that the list is not exhaustive (unless only part of the list has been published) but how can funds be “reserved” for a non-exhaustive list? And in the same vein, how can they be “designated”?

Bizarrely, in an advice note to government for the interim period, the ORR said:

National Highways has allocated capital funds for other activities that fall outside the definitions of enhancements, Designated Funds and renewals.

So it seems that when the regulator wants to give National Highways a free pass on designated funds, there is no defined list of what they can be spent on. But it also believes that there are activities that fall either inside or “outside” the definition of these funds.