Transport Insights

The decision to cancel Skanska’s £300m contract to design and build the A46 Newark Bypass – apparently to free up cash for defence – makes a mockery of the road investment strategy (RIS 3) that was published just three months ago – and indeed the whole concept a of a five-year strategy for strategic roads.

The decision was reported from the bottom up:

Skanska has received a cancellation of the contract from National Highways to deliver the upgrade of a 6.6 kilometer stretch of the A46 Newark bypass in the Midlands region, UK. The cancellation, worth GBP 297M, about SEK 3.7 billion, will reduce the European order bookings in the second quarter of 2026.

National Highways has given no explanation for the decision – usually a sign that it has been given instructions from above – and it isn’t clear that the cancellation decision applies to the scheme or just Skanska’s contract.

The Department for Transport has declined to deny that the decision was taken by central government – instead presenting it as an issue for National Highways as it relates to the supply chain.

But this is disingenuous. The BBC reports:

The PM goes on to say that some road and energy projects that are not “immediately vital” would be scrapped to pay for increased defence spending.

Of course, the whole point of the RIS framework is for the government to give National Highways a five-year plan that will not see enhancements and other investment constantly at the mercy of Treasury raids. It just hasn’t turned out like that.

The RIS document states:

Work will also begin in the Midlands on both the A38 Derby Junctions and A46 Newark Bypass, which will be completed in the next road period.

The investment to upgrade the A46 at Newark will support sectors which are dominant in the local economy and reliant on roads for growth, including manufacturing and logistics. Improved access to Humber ports will support exports and their Freeport status.

It adds:

Later this year, National Highways will provide more detail on the opening to traffic dates and start of works dates in its Delivery Plan.

Rather bizarrely, it doesn’t seem that the DfT understands the order in which these things happen.

It looks though as if the start of the Derby Junctions scheme has also been put back to the end of the period (2026-31) covered by the RIS – possibly to allow the Treasury to keep hold of its money for longer.

Meanwhile, cancellation of schemes that have been developed and are ready for construction continues to result in millions of pounds of sunk costs.

Skanska had a design and build contract and will have to be paid for (at least) the design work it has done, which appears to be complete.

National Highways has merely said:

We thank Skanska for their valuable contribution in progressing the project and continue to work with them on other schemes currently in construction.