Written evidence submitted by Midlands Connect (SRI0040)

In our response we have set out several recommendations for the committee to consider and we are happy to discuss these further with the committee.

Our response and recommendations primarily focus on the changing nature of how we view and use our road infrastructure, the importance of aligning road investment with the priorities across other sectors (such as energy and environment) which will be integral to future success, and making the best use of the expertise which exists at a regional level in particular to ensure the process of scheme development is as timely and cost-effective as possible.

Summary of recommendations:

Strategic planning

-         The long-term strategic planning functions of RIS should urgently align with strategic planning activities being undertaken by the seven established Sub—national Transport Bodies (STBs) in England – ensuring a multi-modal approach as well as wider synergies with other important sectors such as energy, digital and climate resilience being driven at regional levels.

-         Oversight and accountability of RIS by the ORR should include this need for alignment to strategic planning activities.

Funding

-         Consider exploring opportunities for flexible approaches to funding which allow for alignment with other strategic investment and third-party funding opportunities. 

-         Consider opportunities for regional allocation within the overall RIS national budget to support strategic prioritisation and greater integration with wider transport infrastructure needs.

-         Consideration should be given to ensuring RIS can take advantage of contributory funding, for example developing a process which allows funding to be fast-tracked or reserving a percentage of the RIS funding pot for responsive development which combines public and private funding and delivers better results for consumers, businesses and the taxpayer.

Business case development

-         The appraisal method for road schemes should place greater emphasis on Strategic Cases thus considering wider economic/social/environmental benefits and the overall value for money - moving away from a BCR “only” approach.

-         Consideration should be given to the impact that inflation is currently having on business cases and viability of schemes.

Roles and responsibilities

-         Consider reviewing how ORR describes the roles of STBs, including their strategic contribution and additionality they bring to the RIS process.  

-         Review how national schemes incorporate regional perspectives in scheme development and ensure benefits are achieved nationally and regionally.

-         ORR should consider introducing the right measures to ensure NH actively engages and reports progress on their engagement with STBs, responding to their STP priorities, as they shape future RIS programmes. 

1. Introduction

Thank you for the opportunity to feed into the strategic road investment inquiry.

Midlands Connect is the Sub-national Transport Body (STB) for the Midlands region. Established in 2014 our voluntary partnership stretches from Lincolnshire in the East to Shropshire in the West. As such, we have a clear mandate from government to plan for and advise on the strategic connectivity needs of the people living, working in and visiting the Midlands. This region is home to almost 11 million people and over 840,000 businesses and 5.3m jobs (2017).

Sitting in the middle of the country, many journeys need to travel through the Midlands as well as to, from and within the area itself. We recognise that our transport networks are vital not just to the region but to the economic prosperity of the UK, therefore we need to plan the improvements that will maximise benefits nationally as well as regionally.

Whilst this inquiry focuses on the road investment programme it is vital to highlight that Midlands Connect, as well as other STBs and our local authority partners, are shifting in our approach to transport planning. We recognise that responding to strategic priorities such as decarbonisation, levelling-up and economic growth requires us to develop an integrated transport infrastructure where we are moving people and goods by the most efficient and sustainable means. At its heart this means that we must move away from planning and funding road and rail investment in silo’s.

The comments set out in response to the questions on the RIS programme below fall into the following overall areas:

1. The future role of roads

Roads are an important part of the network, but who uses them and how they are used in the future must be the subject of greater discussion, particularly when we consider the urgent need to decarbonise our transport system. We are aware that these are questions which National Highways themselves are considering and await the publication of their long-term Masterplan (potentially due in the next couple of months). We hope this will show alignment with our own ambition and approach.

As Midlands Connect, we are focusing on the opportunities for integration with other modes, and thinking more long-term about the types of vehicles which will be using the network, considering the needs of active and public transport as well as alternative options for the movement of goods and the role that technology can play on the network.

This approach is recognised in our existing RIS priorities and will be informed even further by our work over the next year on Economy and Freight, strategic land-use, developing plans for a future recharging and refuelling network and network resilience. These are all areas that are vital from a transport perspective but will only be successful if they are aligned with the strategic planning activities for sectors such as energy, digital and the environment.

For example, a future recharging and refuelling network will be dependent on integration with the energy grid and a clear understanding of energy requirements, and digital technology provides opportunities to manage the day-to-day resilience of the network. To manage the more frequent extremes of weather we are beginning to experience we need to align approaches and share expertise with bodies such as DEFRA.

In addition, we should note that the oversight of RIS by the Office for Rail and Road (ORR) appears to primarily focus on deliverability and project management and does not incorporate these wider strategic priorities and/or alignment with STBs priorities. This is an area we would welcome further clarity moving forward.

2. Funding for roads

Directly linked to the strategic positioning of roads within our transport system and moving towards a more integrated approach to planning our transport infrastructure, is the need for greater certainty on funding options and timescales for development, and the ability to consider road investment alongside other transport mode funding (particularly rail) and infrastructure development (for example energy and digital).

Alongside this we are aware that future developments (particularly if we consider infrastructure requirements for economy and freight) may require partnership with the private sector, and this will require greater flexibility in our approach. We have set out in this response some of the current challenges of timeliness of RIS planning and delivery and the mismatch with commercial developments, and therefore we must develop solutions to overcome this.

One potential option could be looking at regional allocations both to ensure that each region gets its fair share of funding in the RIS programme, and to help STBs and regional authorities identify and put forward their priorities more effectively and strategically, and link this to land-use planning and strategic developments. It will also help with identification of some smaller scale and technology based and multimodal schemes along with the more strategic high value schemes.

3. How we value schemes

In recent years the approach to appraising business cases has been developed to provide greater balance in decision-making between the financial cost and strategic benefit of transport schemes. Despite this, the reality is that the Benefit Cost Ratio (BCR) approach places greater emphasis on the overall value for money of a scheme and is weighted towards supporting schemes in densely populated areas.

This creates a range of challenges in the Midlands, and elsewhere, because the BCR approach disproportionately affects rural and less densely populated areas where the return on investment will always be less and can overlook the transformational impacts of a scheme and their potential to support future growth and overall contribution to the regional and national economy.

The appraisal methods for road schemes should also place greater emphasis on Strategic Cases thus considering wider economic/social/environmental benefits and the overall value for money - moving away from a BCR “only” approach. As we move towards net zero the RIS programme should be able to capture how road investment will play a role in achieving Net Zero. Having the tools and measures in the appraisal method to measure success on deliverability and affordability will no longer suffice.

Finally, the current economic climate and inflationary pressures mean that schemes will struggle to deliver a positive value as the strategic benefits of a scheme cannot be increased in the same way. 

4.              Role of STBs in the RIS process

We consider that we have a positive relationship with the NH Midlands team. We engage on a regular basis and our work and business cases are well-received and held up as examples of good practice.

However, we do consider that there is room for improvement. We go into this in greater detail in the questions below but the three areas where this should be examined are:

Working to each other’s strengths. As the STB for the Midlands, we consider that our expertise is in building the strategic regional case, understanding the needs of communities and businesses and the growth opportunities that infrastructure investment can deliver, and which may not be easily measured through existing measures.

We know that our work is well-respected however there are a number of examples where aspects of our business case have been re-done when the project moves over to NH.

Reviewing how regional expertise is valued in nationally important projects. Our experience is that once projects become viewed as nationally significant, for example the A5 corridor, they are assessed from a national network rather than a regional perspective. This means that the regional benefits can be lost from the conversation (for example importance of connecting strategic economic and growth sites) and regional stakeholders are outside of the loop.

We do not disagree with schemes moving to being nationally significant, however NH should continue to work with and bring in the regional expertise to ensure schemes work for all.

Status of STBs. We consider that STBs have a strategic role to play in the decisions about the SRN and MRN. Whilst relationships with NH are broadly positive an area for improvement is with the ORR.

In our experience ORR do not view STBs as a strategic partner in this process, which therefore keeps us distanced from decision-making processes.

RESPONSE TO INQUIRY QUESTIONS

Q1. How effectively the RIS2 enhancements portfolio has been managed to date?

We have no comment to make on the management of the portfolio however we would broadly agree with the analysis set out in the NAO report.

Q2. Whether risks to the enhancement’s portfolio for the remainder of the RIS2 period are being well managed?

N/A

Q3. What the impacts of delays and cost overruns are on the overall programme, and whether the revised programme can be delivered to schedule and on budget?

Summary of RIS2 schemes in the Midlands that align with our previously completed study work, and current status.

We have set out above the current position of the RIS2 schemes for the Midlands and the impact that delays are having. We have significant concerns about the impact this has for the Midlands and deliverability for a number of reasons:

Impact on schemes

• Viability of schemes. The expectation is that inflationary pressures will continue to have a negative impact, at least in the short-term, on the overall budget for schemes and/or the Benefit Cost Ratio which could mean that schemes do not meet the threshold for progressing. The more RIS schemes are delayed the greater these pressures will be. Also, there is a limited capacity in the supply chain to deliver these schemes. This means any delayed schemes have a knock-on effect on the viability of the future schemes as well.

• Timeliness and opportunities for co-funding. The M54-M6 scheme is an example of the significant length of time it takes for schemes to go from initial planning through to delivery, during which time business cases will have been re-developed and circumstances will have changed.

In addition, the timescales for securing RIS funding mean there are few opportunities for making the most of contributory funding for example from commercial developments. Going forward part of our strategy will be to identify opportunities for co-funding from other government departments in order to work towards more integrated travel options, however if RIS timescales are so stretched it could make co-funding extremely challenging.

• Long-term delay of RIS schemes. Potential for further impact on the RIS3 pipeline if RIS2 delivery continues to overrun both in time and budget and therefore potential for a significant backlog of roads projects to develop as schemes are pushed to RIS3 and even to RIS4.

Impact on strategic priorities

Opportunities for economic growth. The road schemes we investigate and put forward are based on significant levels of evidence gathering which look at existing activity on key travel corridors and the potential for economic growth (and therefore potential for jobs and skills growth) and the impact that activities such as commercial development and housing will have on road capacity. In short, we put forward priorities which will support economic growth and levelling up, and where possible we identify opportunities for better integration with active and public transport to support decarbonisation.

Delays in the delivery of RIS schemes will mean that we are not able to effectively address these challenges. One major international business on the A50/A500 corridor has noted plans to build a new factory in the area however the ongoing impact of congestion is a factor weighing against this development progressing. The lack of ability to respond to these needs is therefore negatively influencing economic growth and employment opportunities.

Q4. What progress is being made on planning for the next Road Investment Strategy?

Midlands Connect has a pipeline of 11 RIS3 and 9 RIS4 schemes which are listed in the appendix. These schemes were identified as part of the development of our Strategic Transport Plan (STP) published in March 2022 and represent our regional partnerships priorities for the Midlands[1]. 

Our preparation for RIS3 has been underway for over three years. In particular over the last year all Enhanced Strategic Cases have been created based on our technical work and inputs from partners and stakeholders (both local authority and NH). These documents summarise the case for investment and the potential value for money that investment in an indicative scheme at each of the priority locations could offer to the national economy. This has included engagement with.

Our work presents clearly the strong case for investment and provides a basis for National Highways to begin their more detailed scheme development, appraisal and internal decision-making processes. Our understanding is that the case making work undertaken by Midlands Connect fits neatly with their processes and can provide a robust base for which detailed design and development work can progress from, with less early consideration of strategic rationale required with our schemes.

Throughout this process Midlands Connect has had a positive relationship with the National Highways team for the Midlands who, in response to our STP RIS3 priorities are currently evaluating our priority proposals considering their merit/viability for inclusion in RIS3.

It is important to highlight that as part of our work in identifying key infrastructure enhancements, we have undertaken specific work to understand the future need/demand for freight movements which will support the Midlands’ economy, increase exports and accelerate its transition to net zero.

Strategic connections to international gateways. The Midlands produce 22% of England’s exports, sending goods to 178 countries. Before the Covid-19 pandemic, the West Midlands was one of the fastest growing regions for goods exported and it’s hoped that, as the recovery happens, exports will grow rapidly again. Our plan recognises the importance of improving access to international gateways, including major seaports, airports, and the exciting opportunities offered by the creation of new developments such as inland ports and freeports (East Midlands Airport and the Humber). Seizing these opportunities and cementing our place in the international economy is fundamental to our long-term, post-Brexit economic strategy. We have identified and developed strategic cases for strategic corridors which link the Midlands to our ports/airports/freeports such as the A50/A500[2], the A5 and the A46.

Alternative fuels/decarbonisation. Heavy goods vehicles account for 21% of surface transport emissions in the Midlands, compared to 17% nationally. Helping to advance the shift to alternative fuels for freight and logistics through the development and provision of energy hub networks is an important element of our programme. As part of this work we have an action plan to create a recharging and refuelling network that will help us meet carbon reduction targets and the needs of our businesses, thereby accelerating the decarbonisation of road freight in the Midlands. Through the H2GVMids partnership, we are also working alongside industry partners like Toyota and Arcola Energy to prepare the ground for green hydrogen fuelled 44 tonne trucks. The project identified all the necessary infrastructure, including hydrogen refuelling stations, developing the business case and delivery system, and establishing a trial lease system for truck operators.

Q5. What lessons from RIS2 need to be incorporated into RIS3 to ensure it is achievable and delivers on policy objectives?

We consider that we have a strong working relationship with NH in the Midlands which enables us to feed into the RIS process, ensuring it meets wider economic, social objectives.  It also allows us to develop our business cases and provide analysis of our regional requirements in a way which supports the NH process.

Despite this positive working relationship, we do consider that the overall development process for RIS schemes is lengthy and tends to be undermined by uncertainty particularly on which projects/programmes will ultimately form part of the RIS. There are, however, opportunities for addressing this.

Overlap between STBs and NH business case work. Whilst we know that NH think highly of the business cases submitted by Midlands Connect, we believe that some of the early stages of their Project Control Framework repeat elements of our own studies.

Example: NH completed a ‘Strategic Network Needs Assessment’ for the A46 Evesham (M40 J10 to M5 J9) in Autumn 2022. The scope of this (establishing the scale/nature of the problem faced) mirrored our previously completed work on this corridor. Their consultant initially appeared unaware of our work and confirmed that ours was more advanced and should continue.

This will not be an isolated occurrence and therefore seems to be an opportunity to clearly define the roles of Sub-national Transport Bodies (STBs) to reduce both the timeline and cost of scheme development. One suggestion could be requiring STBs to focus on gathering the strategic regional evidence for schemes, and NH developing the technical requirements. There should also be greater visibility of the requirements that NH need to meet for their business cases so all STBs can work towards this.

In addition, once schemes are identified as being nationally important they are picked up by national development teams and viewed through a national lens. We agree and welcome schemes being recognised as nationally important, however we are concerned that the regional perspective and engagement is lost at this point. This means that the regional benefits can be lost from the conversation (for example importance of connecting strategic economic and growth sites) and regional stakeholders are outside of the loop.

Recommendation: Consider reviewing how ORR describes the roles of STBs including the strategic contribution and additionality they bring in the RIS process.  

We would also note that whilst we enjoy good communication with NH, we frequently receive negative feedback, particularly from councillors and MPs, about the level of information they receive on the delivery and/or cancellations or delays in committed schemes with minimal notice. For example, the A5 Dodwells – Longshoot scheme was cancelled and Midlands Connect and relevant local authority stakeholders only found out after the event and had no input into the decision-making process.

Recommendation: Review approach to communicating updates on schemes with key stakeholder groups and provide the opportunity for clear explanations on the outcome of scheme decisions.

Q6. Whether the Government’s current and forthcoming roads investment programme is meeting the current and future needs of consumers and business?

We have noted in this response the specific impact that delays in the RIS programmes are having on consumers and businesses across the Midlands. From this we have the following comments as to whether RIS is meeting these needs.

Purpose of RIS. RIS was originally set up to ensure that the strategic development of our SRN and MRN responded to regional requirements. Our understanding is that the RIS 3 funding pot is to a large degree allocated for RIS 2 legacy schemes and major maintenance of the assets, which means there are minimal opportunities for further improvement in the foreseeable future. Whilst we appreciate the circumstances, we are concerned that we are simply accumulating a backlog of schemes rather than developing our road network to meet the current and future needs of consumers and businesses. This is particularly critical given the potential for road-use to develop over coming years as we think more critically about areas such as decarbonisation, active travel and the need to support regional growth.

Mismatch with local development timescales and missed opportunities for contributory funding. Our experience has identified missed opportunities for development of the SRN when commercial development is taking place and contributory funding is available. Missed opportunities occur because RIS timescales are too long and unworkable from a commercial development perspective which needs to proceed at a relatively quick pace. This means that a minimum product will often be delivered with the contributory funding rather than a project which meets a more strategic need. It also means that minor improvements dilute the business case for strategic intervention and pushes any strategic work further down the line.

Example:             

A5 at Gibbet Hil. Whilst this is a scheme put forward for RIS 3 consideration, the A5 scheme at Gibbet Hill has s106/278 contributions available for a junction improvement. This is a small part of the overall scheme and if they take place the junction improvements are likely to dilute the case for a larger scheme.

Example:

A1/A52 junction at Grantham. Improvements at the A1/A52 junction at Grantham have been identified as a priority for RIS 3 by Midlands Connect. The improvements will support local growth as well as maintain the strategic performance of the A1 and A52 and maximise the benefits of the Grantham Southern Relief Road for the town. These improvements are also needed to support commercial developments in the vicinity of the junction which the developers are likely to contribute. This means there is an opportunity to use the developer’s contribution along with RIS funding to deliver a more strategic scheme for the A1/A52 junction that caters to the longer-term needs, as well as delivering safety improvements which would be ideal for this important interchange. However, there is a mismatch between the timescales of when the scheme becomes crucial from development purposes and when at the earliest it can be delivered through RIS funding. This may result in a small mitigation scheme being delivered at this location that would then weaken the case for a strategic scheme in the future.

As well as being inefficient these situations cause dissatisfaction amongst all stakeholder groups.

Recommendation: Consideration should be given to ensuring RIS can take advantage of contributory funding, for example developing a process which allows funding to be fast-tracked or reserving a percentage of the RIS funding pot for responsive development which combines public and private funding and delivers better results for consumers, businesses, and the taxpayer.

STBs and ORR relationship. Within this process we would note that Midlands Connect and other STBs do not appear to have a significant relationship with the ORR. This may be because their oversight seems to primarily focus on project management and delivery, rather than whether schemes meet the strategic purpose for which they were intended. We have already suggested that the ORR should have greater strategic oversight of the RIS programme. As STBs we have a mandate from government and the Department for Transport to plan and advise on the strategic connectivity needs of our regions, therefore we consider that ORR should review the status of STBs and engage with us as a strategic partner in the process.

Q7. Whether the Government’s roads investment programme aligns with other policy priorities, such as decarbonisation, levelling up, productivity and growth?

As the regional STB for the Midlands, we consider that our role is to identify the opportunities within the region where improvements to the transport infrastructure will address these strategic priorities. These mirror the challenges set out in our Strategic Transport Plan of Fairer, Greener, Stronger and which all projects aim to respond to.

The business cases we develop all seek to address these priorities. In addition to our specific RIS workstream we are undertaking two projects which could have implications for NH work. Firstly, we are beginning a workstream on network resilience with a view to understanding the priority interventions required regionally to respond to climate change. Secondly, we have begun an extensive piece of work to understand the future of freight movements both nationally and regionally, with a view to eventually recommending integrated mode solutions for our transport network which will allow goods to be moved effectively and sustainably.

In relation to the existing RIS programme we would make the following comments:

Overall alignment with policy priorities. We recognise NH’s ambition is to align the road investment programme with key national priorities and we have observed (though our own interactions and discussions with wider stakeholders) that NH is beginning to incorporate wider priorities into their work and consider the future usage of the road network, whether network resilience, EV charging requirements or integration with other modes of travel.

Whilst we do not consider that this is fully embedded in their approach, we understand that they are due to shortly publish their long-term masterplan for the road network and expect this will set out how they intend to respond to policy priorities over the long-term.

Timeliness of RIS programme. Many of the schemes within the Midlands portfolio already seek to respond to these national policy priorities, whether delivering greater connectivity to support access to job, education and services, supporting regional growth or making the network resilient.

The appetite to address these issues already exists, but if schemes cannot be progressed in a timely manner, and aligned with national priorities, then we will not be able to respond effectively to these issues on the road network. As noted already the speed of delivery is a concern and the mismatch between local/commercial funding opportunities and RIS funding can have a potential negative impact on schemes.

Valuation of schemes. Policy priorities such as decarbonisation, productivity and levelling up are all areas which lead to the strategic need for schemes. These are all factors which form part of the business case however the Benefit Cost Ratio places greater emphasis on value for money than on strategic need. Whilst value for money is of course important it does mean that there is a challenge for schemes which are less able to demonstrate an economic benefit but are still of strategic and local importance. This is even more so in rural areas where the business case may be less able to demonstrate value for money but has the potential to deliver a wider range of benefits such as distribution of economic benefits, and access to work, education, health and leisure.

Example: Uttoxeter scheme, junction A50/500. This was a scheme reviewed in advance of RIS 3 proposals but discounted because the BCR was not good enough. The costs of this scheme are high and the benefits that could be included were not sufficient to provide a positive score. This is an example of a scheme where a strategic view should be taken of the merits and agglomeration potential, rather than purely on BCR. We are aware that NH are now looking at this in the context of a wider scheme however there is no assurance that this will proceed.

A decision-making process which places strong emphasis on value for money will therefore always struggle to respond to these strategic priorities. This is further exacerbated by the current inflationary pressures which means that it is challenging to demonstrate the value for money of schemes, and the strategic benefits are not rising in parallel.

Oversight of RIS. We would also note that oversight of the RIS programme by the Office of Rail and Road (ORR) appears to focus primarily on the timeliness and delivery of the schemes and does not have an explicit link in monitoring whether strategic priorities objectives are achieved. As with the valuation of the schemes this again points to a lesser emphasis being placed on whether a scheme is meeting it strategic objectives.

Q8. How RIS3 should take account of technological developments, and evidence on ways of increasing capacity on the Strategic Road Network (such as smart motorways and potential alternatives to them).

Midlands Connect is looking at the opportunities for technology solutions for both the MRN and SRN. We have already completed a MRN route study which has identified the opportunities for integrating technology-based interventions to make road users journeys more efficient. This year we will be looking at the opportunities of using technology to improve operational resilience particularly in terms of pre-trip notification of maintenance works and alternatives methods of travel which people can use, and reactive planning for incidents on the network.

Appendix: Midlands Connect RIS3 and 4 priorities

February 2023

Endnotes