16/05/2019 from the National Audi Office (NAO) (reply to 16/04/2019 complaint):
Re: HIGHWAYS ENGLAND
Your correspondence has been passed to me as the director for the financial audit of Highways England and I’d like to thank you for contacting us regarding Damage to Crown Property Claims.
It may be helpful if I first outline the role of the Comptroller and Auditor General and the National Audit Office. The Comptroller and Auditor General and the National Audit Office, of which he is head, are completely independent of government and have two main functions. The first is to certify the accounts of government departments and other central government bodies and to express an opinion on those accounts. The second is to carry out examinations into the economy, efficiency and effectiveness with which government departments and other public sector bodies have used their resources. In each case the results are reported to Parliament.
As part of our remit, we may also undertake investigations, which look at potential wrong-doing by public bodies based on allegations provided by the public or whistle-blowers. We do this where we are able to establish, based on the information provided, that there is a case to investigate and that the NAO is the most appropriate body to conduct this investigation.
Based on the information you supplied, we made inquiries with Highways England.
The company explained that they have two main maintenance contract models in use:
the original Asset Support Contract (ASC), which is in the process of being phased out and replaced with the
Asset Delivery model (AD).
In the former contract model, a schedule of rates is included*, and this should be used as the basis for the calculation of costs for claims above and below the £10,000 threshold. The company also explained that individual claims may differ due to differences in each incident, and due to differences in the schedule of rates specified in contracts between areas. Internal challenge of any costs above threshold are based on regional knowledge and an understanding of what is reasonable to claim.
Highways England has confirmed that they have conducted their own review into how their contractors have applied the ASC contract specifications in relation to damage to crown property. I have been told that where non-compliance was identified, Highways England has held discussions with the relevant contractor and ensured that the issue has been rectified. However, Highways England has also told me that it recognises the potential inconsistencies that the ASC contract specifications presented. I have been informed that as part of the introduction of the new AD model, Highways England has worked with the insurance industry and its supply chain to develop a national schedule of rates, and that this is being trialled over a three-month period across several maintenance areas, with a view to national rollout thereafter.
Given the NAO’s statutory remit, we do not typically investigate queries related to issues of this nature and having made these inquiries I do not propose further detailed investigation. In doing so I have been mindful of the extent of taxpayer funding involved in the matter, and our limited resources in prioritising discretionary work.
Nevertheless, I do recognise the potential for issues of comparability and transparency might arise in the pre-reform environment you are describing and have considered the adequacy of Highways England’s response. The course of action Highways England are proposing towards a single transparent schedule of rates, and including additional consultation with relevant parties, seems to me a sensible way forward based on the information available. I would encourage you to engage with this on any matters of relevant detail as consultation progresses.
I also, despite our decision not to perform detailed investigation in this case, propose to follow up with Highways England in six months to assess the implementation of the new schedule of rates, as part of our ongoing audit work.
I trust this is of some help. If you have any further concerns, we recommend that you continue to take these up either with Highways England itself, or the Office of Rail and Road (ORR) in their Monitor role. The ORR’s contact details are available at https://orr.gov.uk/contact-us#enquiries.
Thank you again for contacting the NAO.
National Audit Office – original letter here: NAO response 16052019 GF 1231 19
157-197 Buckingham Palace Road, Victoria, London SW1W 9SP
020 7798 7000 www.nao.org.uk
*Highways England has written that there is NO schedule of rates
Response here – from National Audit Office