Update: Shropshire Council has agreed to persue this strategy.
Do highways chiefs dream of tarmac sheep? There is certainly a lot of dreaming going on in Shirehall.
In the May elections, the Conservative group promised an extra £10 million a year for highways for the next four years. At the time, the council said it would find the extra money from grants, extra government funding, cuts to other budgets and the council’s diminishing reserves. The council has “found” this year’s £10 million by raiding the broadband, commercial and drainage budgets.
Even so, ten million pounds proves to be little more than a drop of a rainwater in a flooded pothole. Highways chiefs estimate it will cost £600 million to bring Shropshire’s highways up to scratch. In your dreams on getting that much. Instead, Shropshire Council is aiming to “investigate a highway investment strategy of between £60m and £120m” over the next five years. That is still dreamy stuff in when local government finances are stretched and getting more so.
Where will the £10 million for this year, 2021/22, come from? The council’s plan is to cut £2 million from drainage infrastructure projects, which it says are delayed, leaving just £643,000 for this financial year. Another £2 million will come from the broadband budget, where there are again said to be delays. The council will slow commercial investment in facilities such as business parks – a whopping £3.347 million has been taken from this year’s budget.
Shropshire Council seems to be raiding the capital budget for revenue. Building a new road or bridge is a capital cost, resurfacing and other routine maintenance tasks are revenue costs (see note).
The council is indicating it will restore these budgets the following year (2022/23). That money is expected to come from “reprofiling of capital programmes”. In plain English, the council will once again rob Peter to pay Paul, take money from other vital projects to pay for long overdue road maintenance.
The council paper suggests borrowing could be used to refund these capital programmes as well as to fund further highways investment. Currently, local government borrowing costs are at a low interest rate of around 2.8% but any borrowing is a tax on future budgets unless it generates additional revenue to the council. The paper suggests that £6 million a year revenue will be needed to service a debt of £100 million. Nothing is said about how the council will raise this money – certainly not from the shopping centres.
Something needs to be done about the state of roads. Shropshire Council approved the plans to seek between £60m and £120m for road maintenance on Thursday.
Capital funding is used for structural renewal of highway assets such as roads, footways, bridges, drainage and lighting. Maintenance (revenue) expenditure is for reactive purposes and covers repair of worn or damaged roads and facilities, either short term patching or a permanent replacement. It also includes the cost of lighting, footway repair and cyclical maintenance such as cleaning activities (of assets such as the drainage system), grass cutting and vital services such as snow and ice clearance, and salt spreading.