Plan to spin off Highways Agency into state-owned company criticised by Transport Committee

In two new reports looking at proposals for improving transportation in England the select committee said that future investment decisions should be taken on the basis of passenger and freight demand by route or region as a whole, rather than by looking at road or rail needs in isolation as is done at the moment. Noting that the decision to change the Highways Agency's status to that of a government-owned company (GoCo) had already been taken, committee chair Louise Ellman said that "a far stronger system of regulatory oversight than is currently proposed" was needed.

"The strategic road network (SRN) is a crucial part of our national transport system but has suffered from inconsistent funding and policy over the past 20 years," she said.

"If the traffic forecasts are correct, then government will need to increase investment in the road network substantially over the next decade – a period when we also know that tax revenues from fuel duty are bound to decline as vehicles become more fuel efficient. Against that backdrop the committee recognises the need for a consensus around how to raise the money required to modernise the UK's road network," she said.

Transport expert Jon Hart of Pinsent Masons, the law firm behind Out-Law.com, said that it would be "a shame" if the criticisms included in the committee's report were to "take the gloss off the really important step that the Department for Transport (DfT) has taken with Treasury in ring-fencing the Highways Agency's funding stream to enable better forward planning" in the roads sector.

"There is a lot to be done in providing for a proper national roads specification much like that which Network Rail has to work with and getting the right forum for listening to road users," he said. "However, this element of budget certainty for the Highways Agency must be recognised as a big step forward."

"Quite where long-term funding is coming from remains another matter. The committee notes that there remain no easy answers in respect of road user charging – perhaps not surprising given the imminent elections," he said.

DfT confirmed last month that it was taking forward proposals for reform of the Highways Agency, originally published as part of a report on England's roads in July 2013. The Highways Agency is currently an executive agency which is part of the DfT, but is due to be converted next April into a publicly-owned corporation with its own five-year 'roads investment strategy' budget, similar to the model already in use on the railways.

In its latest reports, the Transport Committee considered a proposed planning policy framework for nationally significant road and rail infrastructure projects, as well as the strategic road network in England more generally. It was particularly critical of the government's plans for the Highways Agency, saying in its report that the benefits of setting up the new GoCo seemed "achievable through better management of the current agency and its relationship with the DfT".

The government's plans for regulatory oversight of the new Highways Agency were also "inadequate", the committee said. The DfT has announced that it will work with Passenger Focus and the Office of Rail Regulation to set up two new bodies: one to protect the interests of motorists and other road users, and one to oversee the roads network and watch over costs and performance. However, the Transport Committee said that effective oversight could only be provided by a body with the powers of a full regulatory authority.

In its report on the proposed National Policy Statement on National Networks, the Transport Committee said that the DfT had to be more specific about the types of transport scheme that would be needed in the future, such as better road and rail connections to ports and airports or enhancements to promote regional economic development. It should also be more "candid" about whether the benefits of proposed major transport schemes outweighed the adverse impacts on local networks and localities, and estimate the impact on UK carbon emissions of meeting projected demand for growth in road traffic by building more road infrastructure as part of future forecasts.