Economic, Environmental and Social Impacts of Changes in Maintenance Spend on Local Roads in Scotland

15 Conclusions and Recommendations

15.1 Economic analysis

The economic analysis was based on a sample of 8 Local Authorities and the results of those analyses scaled to provide the information for the whole of the Scottish Local Road network.

The effect of the maintenance funding reductions on network condition was assessed by WDM Ltd using a proprietary analysis model that had been used for similar analyses in 2010. No analysis of the sensitivity of the results from the model has been undertaken. The results from the analyses suggest there would be little benefit in increasing the sample size of Authorities until more reliable data for the analyses can be obtained.

In practice, budgets have since been further reduced for both networks compared with those used in the Scenario. The implication is that there is already a long term disbenefit to society if current investment levels continue.

A subjective analysis identified the potential reductions in road maintenance budgets of 20% and 40% would lead to reductions in carriageway structural maintenance of 34% and 68% respectively. This subjective analysis was based on limited information from individual Authorities and it is recommended that improved budget information is obtained to re-examine the likely impact of maintenance funding reductions on the funding for carriageway structural maintenance.

Network condition was predicted to deteriorate with the current level of funding (Scenario 1) and increased funding in years 11 to 20 of the analysis period, after reductions of 20% (Scenario 2) and 40% (Scenario 3) in years 1 to 10, was insufficient to achieve the condition predicted for the end of the analysis period from maintaining the current level of funding.

The results of the economic analysis show that reducing the road maintenance budget has an overall negative Net Present Value, as user costs increase more than the savings achieved in works costs. However, considerable assumptions and approximations have been made in the analyses and it cannot be assumed the overall impacts shown for the budget reductions will be fully achieved in practice.

The results of the analyses show for every £1 (undiscounted) saved by reducing maintenance budgets, there is an increase of more than £2 in non-works costs from the wider impacts of the reduced maintenance. The ratio is £1 to £1.67 for discounted costs with the 40 percent overall reduction in maintenance funding.

Furthermore even though Scenarios 2 and 3 restore the budget to current levels by 2025 and include a further 2.5% per year increase over current spend the condition of the network does not recover to the same level achieved under Scenario 1 (maintain current level of spend) at the end of the analysis period.

The non-works costs are dominated by the vehicle operating costs (which are themselves dominated by fuel costs), which account for the largest variation between the different scenarios (Scenario 3 being the most expensive and Scenario 1 being the lowest cost). However, the variation in vehicle operating costs is small, around 1%. No models of the change in vehicle operating costs for the levels of condition expected on the Scottish Local Road network were identified. The HDM-4 model was used to estimate these costs through the analysis period for 4 vehicle types and to undertake a sensitivity analysis on the effects of fuel costs over the 20 year period. Vehicle operating cost is the major cost component of the total Net present Value over the analysis period. Improved model analyses would therefore provide greater insight and reliability in the predicted consequences of the reduced maintenance funding. A sensitivity analysis of the vehicle operating costs examined the effect of removing traffic growth and the real increases in fuel costs forecast in STAG. These changes were sufficient to show an overall reduction in Net Present Value from reduced maintenance funding. The level of vehicle operating costs is approximately halved and, although the increase in vehicle operating cost between Scenarios 3 and 1 remained at approximately 1%, the actual increase was not sufficient to remove the savings achieved from the reduced maintenance budget. Further sensitivity analyses would help develop a more robust picture of the overall effects of the changes in maintenance funding.

Scaling the results of the vehicle operating cost from the analyses of the sample Local Authorities to the whole network analyses used the percentage of the network in 'red' condition, as given by the 2010 SRMCS report. A further sensitivity test on the approach adopted for scaling the results to the whole network used the percentage of the network in 'red + amber' condition. The effect was to reduce the scaled vehicle operating costs by approximately 13% but the increase in the costs caused by the maintenance reductions remained at approximately 1% for the 40% reduction in funding (Scenario 3). The change reduced the overall increase in the Net Present Value but still showed an overall increase in the Net Present Value resulting from the reduced maintenance funding.

There was insufficient skid resistance data available to assess the impact on the number of skidding accidents from reduced maintenance funding on the Local Road network.

The increase in maintenance during the last 10 years of the analysis period increases the associated delays to road users at roadworks but over the analysis period, the total costs of delays to road users for the scenarios for reduced funding are less than for the scenario that retains the 2010 level of maintenance funding.

With reduced maintenance funding there is increased risk of failure of the infrastructure. Analysis of the consequences of an earthwork failure in Scotland has suggested an increase of 7 times the costs from the reported incident would generate the same economic impact as a 20% reduction in maintenance funding. Evidence from Perth and Kinross Council suggests that infrastructure failures result in at least one main route closure per year, with the current level of maintenance funding.

Based on the analysis of the depreciated replacement cost of footways from 9 Local Authorities the condition of the footway and cycle-track assets is likely to be deteriorating at current levels of expenditure and therefore will be subject to increased deterioration under reduced budgets.

Reducing the lighting budget will likely result in fewer lit street lights (since lower cost lighting technologies have an initial investment cost). Reducing street lighting has an effect on amenity and a measurable increase of between 10% and 30% in the number of accidents. At a 10% increase in accidents, a reduction in lighting costs is economically beneficial, whereas if the increase in accidents is 30% then there is an overall increase in cost.

The literature review highlighted the related benefits of street lighting from reductions in crime, easier mobility and improved commercial viability. These will all off-set any increase in the number of accidents but there is no reliable quantification of the overall effect.

The effects of carbon emissions from vehicles under normal running and while passing roadworks, and from changes in the amount of maintenance carried out have been assessed for each Scenario. The results suggest little difference between the costs of CO₂ emissions for the 3 Scenarios.

An estimate of the cumulative depreciation cost of the local road network, by WDM Ltd, has suggested that with the current level of funding the depreciation of the network will increase by nearly 20% over the analysis period and by nearly 25% if the maintenance budget is reduced by 40% (Scenario 3).

15.2 Qualitative analysis

Based on the literature review and discussions at a stakeholder workshop (see Appendix M), the user group most affected by a reduction in road maintenance would be pedestrians, especially those with mobility and visual impairments. Pedestrians would be affected in every aspect including noise and vibration, global air quality, visual amenity, cultural and landscape, physical fitness, accidents, security, community and comparative accessibility.

The effect of maintenance budget reductions on the condition of footways and cycle-tracks was not assessed in this study. A related study, based on the valuation of the footway asset, has highlighted the investment needed for footways. It was considered unlikely that the budget needed would be allocated under any of the funding scenarios considered in this study so it is likely that the condition of footways and cycle-tracks will continue to deteriorate.

The literature review and the Workshop held during the study highlighted impacts of maintenance funding that cannot currently be quantified and do not, necessarily, fit the current STAG criteria. These include:

• Improved footway condition to encourage walking and, hence, healthier lifestyles
• Increases in the number of cyclists (e.g. this will support the Cycling Action Plan for Scotland (Scottish Government, 2010a))
• Avoidance of the 'broken windows' effect (i.e. general deterioration of the locality when the area does not appear to be looked after)
• Reduced compensation costs from lower claims following accidents
• Reduced health service costs from the reduction in accidents
• Increases in house prices and commercial activity in areas with well maintained roads
• Reduced litter on well maintained roads

Examples were identified where proactive funding could also lead to lower long-term costs (e.g. health budget used to fund winter maintenance, to help reduce the number of accidents, and streetworks planning to complete all activities at the same time and avoid re-visiting the site for a longer period of time). The study has confirmed the lack of robust quantified benefits from maintenance. It is recommended that further work is used to develop approaches that can be adopted to better quantify the consequences of alternative levels of maintenance funding.