DfT tightens outcomes test for extra ‘pothole money’ as councils get £7.3bn

Ministers have announced £7.3bn capital funding for local highway maintenance in England over the next four years, keeping the £500m ‘uplift\from last year, but requiring councils to jump through more hoops to get the extra cash.

The details of the funding from 2026-27 to 2029-30 were announced three days after the Budget, which had stated only that there would be “over £2 billion” in 2029-30.

The money will gradually ramp up, from £1,617m next year to £2,134m, with the largest increase around a quarter of a billion pounds coming in the final year.

The Department for Transport (DfT) said that “as the case in 2025 to 2026, a portion of this funding will be designated as incentive funding”. This ranges from £525m next year to £540m.This funding will “be subject to local highway authorities demonstrating that they comply with best practice in highways maintenance, for example, by spending all the Department for Transport’s capital grant on highways maintenance and adopting more preventative maintenance.”

The DfT said that at least 25% of the extra cash will be dependent on local highway authorities publishing transparency reports, and added that all incentive funding will be withheld if reports are not published.

In 2026-27, a further 50% of the incentive funding will be subject to local highways authorities’ performance. The DfT said further details on the performance-based measure will be confirmed “in due course”.

The Treasury clams a doubling in funding compared with the £1.067bn funding allocated by the previous Government for FY2024/25, to £2.134bn by this Government for FY2029/30.

Chancellor Rachel Reeves said: “We promised to fix an extra million potholes a year by the end of this Parliament – we’re doing exactly that.

“We are doubling the funding promised by the previous government, making sure well maintained roads keep businesses moving, communities connected and growth reaching every part of the country.”

In fact, Labour’s manifesto commitment was to fix a million extra potholes during each year of the Parliament.

Reeves said she was “also turning up the pressure on local authorities by more than tripling the share of local roads funding that is tied to transparency – from 8% to over 30% of the budget, worth more than £500 million.” Councils could only unlock the funding if they publish clear pothole and maintenance data and follow best practice.

RAC head of policy Simon Williams said “We welcome the Government linking additional funding to councils who commit to carrying out preventative maintenance, as this stops potholes forming in the first place and extends the life of roads. It’s also far cheaper than continuously patching pothole-ridden roads only to have to pay far more to resurface them.”