22.The strategic road network (SRN) is a network of motorways and trunk roads consisting of around 2% of England’s roads and carrying a third of its traffic. The Highways Agency (HA) is the executive agency of the Department for Transport (DfT) responsible for the maintenance, operation and enhancement of the SRN on behalf of the Secretary of State.
23.In June 2013, Investing in Britain’s Future [Command Paper Cm. 8669] announced the Government’s spending plans for roads up to 2020-21. Details of how this would be delivered were firmed up in Action for Roads [Command Paper Cm. 8679], published by the DfT in July 2013, alongside proposals on how to reform the existing institutional set-up to ensure delivery of the investment package whilst maximising efficiency. On 29 October 2013, DfT published a consultation document Transforming the Highways Agency into a Government owned company.
24.The consultation put forward proposals for:
The creation of an arms-length Government-owned company and the transfer of powers and duties to allow it to discharge functions that were discharged by the Highways Agency.
New legislation to underpin the long term funding settlement and new Road Investment Strategy (RIS) processes.
Power for the Secretary of State to make transfer schemes which would allow assets and liabilities (including land and contractual obligations) to be transferred to a strategic highways company.
Arrangements for two bodies - a road user watchdog and efficiency monitor - providing independent scrutiny of the company’s performance, advising government and being a focal point for road users.
25.The Government published its response on 30 April 2014 and confirmed its intention to bring forward its proposals. The strategic highways company will be incorporated under the Companies Act 2006 limited by shares where the sole shareholder is the Secretary of State. The Government confirmed its intention to establish a governance framework for the strategic highways company comprising legislation, a licence document containing statutory directions and guidance, a Framework Agreement, a Road Investment Strategy and Articles of Association. Those proposals requiring primary legislation are provided for in this Act.
26.The Transport Select Committee published its report Better Roads: Improving England’s Strategic Road Network (HC 850) on 7 May 2014. The Government’s response was published on 24 October 2014 (HC 715). The name for the new organisation, Highways England, was announced on 8 December 2014.
http://www.publications.parliament.uk/pa/cm201415/cmselect/cmtran/715/71502.htm
27.Section 1 provides for the Secretary of State to appoint one or more companies as a highway authority. Appointment is by order.
28.Subsection (2) provides that a company appointed may only be one that is limited by shares and wholly owned by the Secretary of State – therefore limiting ownership of the company (or companies). Subsection (3) provides further that where the company ceases to be wholly owned by the Secretary of State the appointment automatically terminates.
29.An appointment may also be terminated by the Secretary of State revoking the order under which the appointment is made pursuant to section 14 of the Interpretation Act 1978.
30.A company appointed under this section is to be known as a “strategic highways company” (subsection (4)).
31.Subsection (1)(a) and (b) of section 2 provides that a strategic highways company must be appointed to an area (and that area must be within England) and that the highways within the area in respect of which the company is appointed must be specified (although subsection (2) provides that this may be by name or by description). Subsection (3) provides that the highways specified must be highways for which the Secretary of State (or another strategic highways company) is the highway authority.
32.It is therefore possible, for example, for one company to be appointed for the whole of England, or for two or more companies to be appointed for different areas. The initial policy intention is for the appointment of one strategic highways company for the whole of England.
33.Any order containing the appointment of a single company for the whole of England is not subject to Parliamentary scrutiny. Section 55 provides that an order containing the first appointment of a company in respect of part of England only (ie the first appointment as part of an arrangement for two or more strategic highways companies to be appointed for different areas) is subject to the affirmative resolution procedure. Section 55 provides that an order containing a subsequent appointment of a company in respect of part of England only is subject to the negative resolution procedure.
34.Responsibility for a limited number of highways in Wales is retained by the Secretary of State. Subsection (4) allows for those highways to be included within the appointment.
35.Subsections (5) and (6) provide that in the event of a strategic highways company ceasing to be the highway authority for one or more highways (whether by virtue of a variation or termination of the strategic highways company’s appointment) the Secretary of State will automatically become the highway authority for those highways.
36.Part 1 of Schedule 1 contains amendments to the Highways Act 1980 to allow one or more strategic highways companies to become highway authorities instead of, or alongside, the Secretary of State. (Otherwise, the Secretary of State is in law the highway authority for the strategic roads network even though his functions are in practice exercised by the Highways Agency.)
37.Where a strategic highways company is appointed, the amendments will have the effect that, for the most part, the powers and duties of the Secretary of State, in relation to the roads included in the appointment, will transfer to the strategic highways company. These include the duty to maintain public highways; powers to construct, maintain and improve highways for which it is responsible; powers to acquire land for the purposes connected with carrying out the functions of a highway authority; and powers to enter into agreements with local highway authorities. A company will also be responsible, where it is the highway authority, for determining whether an environmental impact assessment is required for schemes pursued under powers in the Highways Act 1980. The Secretary of State retains order making powers on the classification of a highway including whether a road is trunked.
38.Paragraph 43 inserts a new section 175B into the Highways Act 1980. It requires consent to be obtained from the strategic highways company for the construction, formation or laying out of any access to or from a trunk road in England. This new power allows the strategic highways company to ensure that access to its network does not interfere with the safety of road users or have a negative impact on the network (for example, by increasing congestion). Where the Secretary of State is the highway authority, these aspects can be managed by the Secretary of State who may give directions restricting the grant of planning permission by local planning authorities for development affecting the strategic road network. These powers of direction will not be available for a strategic highways company to use directly; new section 175B provides a means by which it will be able to safeguard road safety and the integrity of the road network.
39.Paragraph 68 makes strategic highways companies subject to the Public Records Act 1958. Among other things, this will ensure that documents produced by the company are properly considered for transfer to the National Archives or destroyed.
40.Paragraph 69 amends the Parliamentary Commissioner Act 1967 to add strategic highways companies to the list of Government Departments and public bodies which the Parliamentary and Health Service Ombudsman may investigate. Under current arrangements, complaints made against the Highways Agency may be escalated to the Ombudsman, and this provision allows that arrangement to continue in respect of strategic highways companies in future.
41.Paragraphs 70 to 100 amend the Road Traffic Regulation Act 1984 to make a strategic highways company a traffic authority for all highways for which it is responsible, and to enable the company to exercise all the functions of a traffic authority. So, for example, a strategic highways company will be able to make Traffic Regulation Orders in the same way as local traffic authorities; or to charge for the removal, storage or disposal of vehicles in the same way as other traffic authorities.
42.Paragraph 101 amends the Transport Act 1985 so as to replace a reference to the Highways Agency with a reference to strategic highways companies in connection with functions of the Passengers’ Council under that Act.
43.Paragraph 102 amends the Dartford-Thurrock Crossing Act 1988 so that powers exercised by the Secretary of State in his role as ‘crossing operator’, will transfer to a strategic highways company on its appointment. This will allow a strategic highways company to regulate the use of large vehicles and vehicles carrying dangerous goods and to recover stationary vehicles. A strategic highways company will also be able to appoint traffic officers and carry out maintenance works affecting the Thames and will have a duty to provide certain services to cyclists.
44.Paragraph 103 amends the Road Traffic Act 1988 to allow the Secretary of State to delegate the function authorising the use of special vehicles on the highway. Special vehicles are those vehicles that do not, or cannot, comply with the Road Vehicles (Construction and Use) Regulations 1986 and cannot therefore be lawfully used on the road. Section 44 of the Road Traffic Act 1988 enables the Secretary of State to authorise the use of special vehicles on the road and to make that authorisation subject to certain conditions. Due to the size and nature of abnormal and indivisible loads, they are not capable of being split into component parts and carried on separate vehicles and so special arrangements must apply. The Highways Agency authorises vehicles to carry such loads on behalf of the Secretary of State for motorways and trunk roads in England, Scotland and Wales and the ability of the Secretary of State to delegate this function will enable the new company to continue to carry out this function in the future.
45.Paragraphs 104 to 109 make a number of consequential amendments to highways-related provisions of the Town and Country Planning Act 1990 to ensure that, where appropriate, they apply to a strategic highways company.
46.Paragraph 110 to 112 amend the Environmental Protection Act 1990 placing the duty to keep land and highways clear of litter on a strategic highways company for special roads (motorways). Local authorities are responsible for this on trunk roads unless the trunk road has been specified as one where the duty has transferred to the Secretary of State. The policy intention is that the strategic highways company is responsible for such specified trunk roads.
47.Paragraphs 113 to 124 amend the New Roads and Street Works Act 1991 to ensure that existing provisions work properly where a strategic highways company becomes a street authority by virtue of its status as a highway authority. In particular, paragraphs 114 to 115 enable the company, where it has entered into a concession agreement in its capacity as highway authority under section 1, to apply a toll with the consent of the Secretary of State in the same way as a local highway authority would do.
48.Paragraphs 125 to 128 amend the Transport Act 2000 to allow the Secretary of State to apply a road use charge on trunk roads where he has appointed a strategic highways company to be the highway authority, in order to preserve the existing arrangements. They also enable a strategic highway company to carry out functions in relation to trunk road charging schemes, such as the installation and maintenance of equipment for the scheme.
49.Paragraphs 129 to 151 amend the Traffic Management Act 2004. Paragraph 130 enables the Secretary of State to delegate his responsibility for deciding the uniform for traffic officers to the company. Paragraphs 135 to 147 amend the existing network management duty which applies to local highway authorities so that it applies to a strategic highways company as well as local highway authorities.
50.Paragraph 152 amends the Civil Contingencies Act 2004 with the effect that a strategic highways company is responsible under that Act as a “category 2” responder required to co-operate and share information in emergency planning arrangements.
51.Section 22 of the Planning Act 2008 sets out the circumstances in which highway-related development is a nationally significant infrastructure project (NSIP) and so subject to the development consent regime under that Act. One of the conditions is that the Secretary of State is or will be the highway authority for the highway. Paragraph 153 amends section 22 to provide that such development will also be an NSIP if a strategic highways company is or will be the highway authority.
52.Section 3 provides that each strategic highways company must have a Road Investment Strategy comprising a statement of the objectives to be achieved by the strategic highways company and the financial resources which will be provided by the Secretary of State to achieve those objectives. Under subsection (5), the Secretary of State must have regard to the effect of the Strategy on the environment and safety of users of the highway in setting or varying a Strategy. Subsection (6) requires the Secretary of State and the strategic highways company to comply with the Road Investment Strategy.
53.Schedule 2 describes the procedure for setting and varying a Road Investment Strategy. Paragraph 1(2) contains a transitional provision to the effect that the procedure does not apply for the first Road Investment Strategy, so long as the Secretary of State publishes it within a year of section 3 coming into force.
54.Part 1 governs the procedure for setting a Road Investment Strategy. It describes the steps that the Secretary of State takes and those steps the company takes in response. The Secretary of State’s initial proposals must specify objectives to be achieved by the company, the financial resources to be provided by the Secretary of State and the time period which is to be covered by the proposed Road Investment Strategy. The Secretary of State may only finalise a Strategy if satisfied that appropriate consultation has taken place. It is anticipated that some or all of that consultation may ordinarily be undertaken by the strategic highways company.
55.Part 2 governs the procedure for varying a Road Investment Strategy which has been settled and published. The procedure is similar to that described in Part 1, except that there is a specific requirement on both the Secretary of State and the strategic highways company to have regard to the desirability of maintaining stability and certainty in respect of Road Investment Strategies.
56.Section 4 requires the Secretary of State to direct a strategic highways company to prepare route strategies. The company must comply with such a direction and publish route strategies in such manner as it considers appropriate. Route strategies provide the evidence base for operational or investment decisions for the strategic road network and section 4 ensures that this practice will continue.
57.Section 5 contains high level general duties which a strategic highways company must observe when exercising its functions. Subsection (1) provides that the company must co-operate so far as reasonably practical with other bodies which exercise functions which relate to highways or planning. Subsection (2) provides that the company must have regard to the effects which exercising its functions may have on the environment and road safety.
58.Section 6 allows the Secretary of State to direct or guide a strategic highways company in the way it carries out its functions. The company must comply with any directions and have regard to any guidance when exercising its functions. The Secretary of State must publish all directions and guidance in such form as he considers appropriate.
59.Section 7 allows a strategic highways company to authorise another person to exercise its functions, so long as the functions are specified in regulations made by the Secretary of State. Functions delegated in this way may be exercised by both the authorised person and employees of that person (section 8(1)) and may continue to be exercised by a strategic highways company notwithstanding the delegation (subsection (3)(a)). Powers or rights of entry and powers or duties to make subordinate legislation (e.g. certain orders under the Highways Act 1980) may not be delegated (subsection (6)).
60.This section sets out further details as to the basis on which functions which are delegated under section 7 are exercised. Subsection (2) provides that where a delegated function under section 7 is exercised by a company, anything done by it or its employees in connection with the actual or purported exercise of the function is to be treated as having been done by the company subject to the exceptions set out in subsection (3). Subsection (4) provides that Schedule 15 to the Deregulation and Contracting Out Act 1994, which imposes restrictions on the disclosure of information in respect of functions which are delegated under that Act, applies in respect of functions which are delegated under section 7.
61.Section 9 provides for the Passengers’ Council (which is generally known as Passenger Focus) to carry out activities to protect and promote the interests of road users in relation to those roads managed by a strategic highways company.
62.Subsection (3) permits the Secretary of State to make regulations (following consultation with the Passengers’ Council) which narrow the scope of the functions conferred on the Passengers’ Council by this section. This power is subject to the negative resolution procedure.
63.Subsection (6) provides for the Passengers’ Council to be able to carry out equivalent functions in respect of local highway authorities and their performance, subject to agreement with the relevant local highway authority.
64.Section 10 provides for the Office of Rail Regulation (ORR) to monitor how a strategic highways company carries out its functions. Those activities may include investigating and publishing reports or giving advice on how the company has achieved its objectives under a Road Investment Strategy and the effect of directions and guidance given to it by the Secretary of State.
65.Subsection (3) provides powers for the ORR to direct a strategic highways company to provide information to enable it to carry out its monitoring duties.
66.Subsection (8) requires the Secretary of State to lay before Parliament any report published by the ORR under section 10.
67.Subsection (9) inserts a new section 15A into the Railways and Transport Safety Act 2003 allowing the Secretary of State to make regulations to change the name of the ORR.
68.Section 11 allows the ORR to take enforcement action against a strategic highways company if it fails to meet the requirements set out in a Road Investment Strategy or fails to comply with directions (or have regard to guidance) issued by the Secretary of State under section 6. The ORR may require the company to take steps to remedy a contravention or require it to pay a fine.
69.Section 12 sets out the monitor’s high level general duties in relation to its roads functions. It is required to exercise these functions in a way that it considers is most likely to promote the performance and efficiency of strategic highways companies. It must also have regard to the further factors listed in subsections (2) and (3).
70.Section 13 provides for guidance to be given to the ORR. Subsection (1) allows the Secretary of State to guide the ORR as to the way in which it is to carry out its monitoring activities under section 10. The Secretary of State and the Treasury, acting jointly, are required to give the ORR guidance on the circumstances in which fines should be imposed on a strategic highways company (subsection (2)). The ORR must have regard to guidance given to it under this section and the Secretary of State must publish the guidance in such form as he or she considers appropriate.
71.Section 14 places a duty on the Secretary of State to prepare and publish reports periodically on the exercise by a strategic highways company of its functions.
72.Section 15 allows the Secretary of State to make schemes transferring property, rights and liabilities when a company is appointed, or ceases to be appointed, as a strategic highways company. Subsection (1) allows flexibility for the transfer of assets between the Secretary of State and a company (or in reverse), between companies if needed where there is more than one company or to a proposed strategic highways company having the effect that assets can be transferred at the time of appointment or very shortly before appointment to ensure that the company is operationally capable from the day of appointment.
73.This Schedule contains further provisions governing transfer schemes made under section 15.
74.Paragraphs 1 and 2 set out how a transfer scheme may specify or identify property, rights and liabilities to be transferred. They also provide when the scheme may come into force and define what may be transferred under a scheme. Paragraph 3 allows a scheme to create new rights and liabilities as between transferors, transferees and third parties. Paragraph 4 provides for a scheme to oblige a transferee or transferor to enter into agreements, or execute instruments, in favour of certain others.
75.Paragraph 5 provides that transfer schemes made under this Act shall have the effect of vesting property, rights and liabilities in the transferee without the need for any further formalities.
76.Paragraph 6 provides for the transfer of any statutory powers or duties the transferor may have in relation to property, rights and liabilities transferring under a scheme.
77.Paragraph 8 allows the transferor and transferee to modify a transfer scheme by agreement after it has come into force. Where the agreement relates to a contract of employment or adversely affect the interests of a third party, the agreement will only be valid if the relevant employee or third party is party to it.
78.Paragraph 9 contains provision for continuity of employment rights for employees of the transferor who become, by virtue of a transfer scheme, employees of the transferee. It also provides safeguards in relation to the pension entitlement of employees transferred under a transfer scheme. Sub-paragraph (2) makes it clear that transferred staff retain the terms and conditions under their existing contracts of employment. Sub-paragraph (3) sets out what happens if an individual objects to the transfer of their employment contract under a transfer scheme before it takes effect. The contract of employment will be terminated immediately before the point at which the transfer has taken place but the employee is not to be considered to have been dismissed for any purpose. Sub-paragraph (4) preserves an individual’s right to terminate their contract of employment where there is a substantial detrimental change in the individual’s working conditions, other than the change of employer.
79.Paragraph 10 provides for circumstances in which compensation may be payable to third parties as a result of provisions in a transfer scheme.
80.Paragraph 11 provides a power for the Secretary of State to require a company to provide him or her with information which he or she needs in order to be able to make a scheme. The company may be subject to a notice and ultimately a court order if it does not comply with a request for information.
81.Section 16 allows the Treasury to make provision about the tax consequences of a transfer of property, rights and liabilities either under a transfer scheme or occurring by virtue of section 263 of the Highways Act 1980 (which will have the effect that where a company becomes a highway authority the highways in respect of which it is appointed will vest in the company). The intention, broadly speaking, is to ensure that a transfer is “tax neutral” – that is, that no charge to tax arises merely because of a transfer.
82.This section provides the Secretary of State with authority to provide financial resources to any person for the purposes of transport services by land in England. This power will be used in particular to provide funding to a strategic highways company, and also (inter alia) to provide funding to the Office of Rail Regulation and the Passengers’ Council in respect of their functions under the Act as monitor and watchdog respectively in connection with the performance of a strategic highways company. Financial assistance may take the form of grants, loans or guarantees (subsection (3)). The power conferred by the section supersedes an earlier power in the Ministry of Transport Act 1919, to which a consequential amendment is made in subsection (7).
83.Section 18 provides for the Secretary of State to amend by regulations other legislation so as to transfer additional functions concerning highways or planning from the Secretary of State to a strategic highways company. This power is subject to the affirmative procedure.