National Highways misusing Designated Funds, says TAN

National Highways should be investigated for misusing Designated Funds, says the Transport Action Network (TAN).

The campaign group has written to John Larkinson, Chief Executive of Office for Rail and Road (ORR), urging him to investigate how the funds are being used. It also calls on him to press the Government to make clear that National Highways  must use the Designated Funds for the “correct and intended purposes” in the draft RIS3.

National Highways launched its Designated Funds programme in 2015 to give “extra value to our stakeholders and communities”. Funding is allocated to four streams: Safety; Environment; Customer and Communities; and Innovation and Research.

TAN told Larkinson: “Although we are very supportive of the founding principle of Designated Funds, we are concerned that 10 years after their creation they are often not being used for their intended purposes.

“As these funds totalled £870m in the second Road Period (2020-25) and £89m in the 2025-26 Interim Settlement period, this is a substantial amount of public funding and it is important that it is spent correctly.”

TAN claims National Highways is using Designated Funds to “buy support” for controversial road projects. It cites funding projects “entirely unrelated to the criteria for Designated Funds” such as dance classes and LGBT asylum seekers near  the Lower Thames Crossing, and cricket clubs near the A428 Black Cat project.

National Highways has also used Designated Funds to pay for mitigation and compensation schemes for new road projects, rather than paying for it out of the scheme budget, “artificially suppressing and misrepresenting a scheme’s costs”,  writes TAN. It points to the safety measures and conservation projects on the A417 Missing Link.

TAN further claims that National Highways has used the “prospect of funding from Designated Funds to incentivise potential opponents of road projects to not challenge or scrutinise controversial road projects during DCO [development consent  order] examinations, such as the A66”.

It is hard to see how many projects funded through Designated Funds accord with its original purposes, writes TAN.

One example of misuse is the M60 Simister Island scheme, according to TAN. “Here the motorway is being widened and the Haweswater underpass (a potentially key active travel route, linking communities with schools and green space) lengthened  as a result.

“The underpass is clearly part of the scheme, so National Highways should be funding improvements to the underpass within scheme costs. Despite widespread support for this, including from Transport for Greater Manchester, National Highways  has refused to include it in the scheme design, and has done little more than suggest Designated Funds might be used for this some time in the future, with no guarantee these will be available. This is unacceptable on many fronts.”

According to the draft RIS, Designated Funds will continue as ringfenced funding streams, though the DfT says it is re-examining their “purpose and role”.

This reflects the fact that many of the things that have historically been delivered through the funds have become legal commitments or are otherwise now ‘business as usual’ – for example, the application of Biodiversity Net Gain (BNG) principles to highway development projects in England. The introduction of BNG means that developers are required to achieve a mandatory 10% increase in habitat quality and quantity for new road construction and infrastructure projects to support environmental  recovery, using the Biodiversity Metric to measure and enhance natural habitats.

The DfT also stresses it wants to ensure that funds remain focused on their core purpose: improving the experience for all users of the SRN, supporting innovation, and addressing the impacts of the SRN on neighbouring communities and the  local, natural and historic environments, including dealing with legacy network issues.

The Office for Rail and Road raised doubts regarding Designated Funds in its advice on the interim settlement, with a suspicion of funds being diverted, as subsequently argued by TAN.