Highways Agency Annual Report and Accounts 2011-2012

SECTION 2: Summary of our Performance
Case Study:
Spend Recovery
Audit
In May 2011, the
Department for
Transport and its
Agencies underwent
an independent review
of historic spending to
ensure all recoverable
amounts were identified.
In the Agency the review
sampled 383,000 invoices
totalling some £17
billion of expenditure
since 2002. Only 17
items were identified for
recovery action, totalling
£48,000. The results
provide assurance as to
the robust processes and
controls that we have in
place in the Agency.
Net Resource Expenditure
(not including non-allocated income)
Major Improvements
Maintaining the Network
Technology Improvements
Traffic Management
Smaller schemes and R&D
Running Costs - Programme
Running Costs - Admin
and other structures (over 700
renewal schemes delivered in
the year). It also includes the
associated upkeep of fencing,
drainage, lighting and signage,
and the cost of keeping the
network open in winter.
Public Finance Initiative (PFI):
The Agency has 12 PFI contracts,
11 of which are for the design,
build, finance and operation
of sections of the network
including the M25 widening and
maintenance for 30 years. The
expenditure is included in the
Major Improvements segment
and details of these contracts
are included in Note 18 to the
accounts. Approximately 40 per
cent of the Agency’s resource
DEL expenditure (excluding
depreciation) relates to the service
payments on these contracts.
Major Capital Improvements:
During 2011-12, £831 million
was invested in major projects
on the strategic road network
including the completion of
major investments on the A3 at
Hindhead, on the A1 between
Dishforth and Leeming and on
the A46 between Newark and
Widmerpool. New schemes were
also started on the A23 between
Handcross and Warninglid, on the
M62 between J25-30 and on the
M4/M5 interchange.
Resource DEL (excluding
depreciation)
The positive variance of 4 per cent
reflects:
• higher income than budgeted.
• early action taken to reduce
activity and spend levels in a
controlled way slightly ahead of
the reducing funding levels over
the Spending Review period.
• a reduction in administration
expenditure.
• programme prioritisation,
including activity being taken
in-house.
Resource DEL depreciation
The final depreciation charge
against the infrastructure asset
was less than budgeted. As well
as the level of expenditure on
capital renewals, the depreciation
charge is impacted by the
condition of road surfaces and
indexation of the network
valuation. Both of these factors
are difficult to predict accurately
Outturn against budget: The outturn against the budget is summarised as follows:
Budgetary Performance 2011-12
Actual
£m
Budget
£m
Variance
£m
Resource DEL (excluding depreciation) 1,095 1,145 50
Resource DEL depreciation 788 870 82
Resource AME 492 651 159
Total Net Operating Cost 2,375 2,666 291
Capital DEL 1,315 1,288 (27)
Capital AME (33) - 33
Total Capital Budget 1,282 1,288 6
Total Budget 3,657 3,954 297
in advance and both have moved
in a way that generates a positive
variance.
Resource AME
The main item within this budget is
the write-down of the infrastructure
asset to reflect the difference
between the actual cost of
construction and the standard
replacement cost.
Highways Agency Annual Report and Accounts 2011-12