1. Highways Investment Strategy May 2014

2. Background 1,100 km of roads One of the lowest spends in the country Consecutive years of severe weather Significant damage to an already deteriorating highway and drainage network £30m+ backlog Residents’ survey results show very low levels of satisfaction The highest residents’ satisfaction in the country for highway condition is 49% (we are 23% and not the worst!) Condition survey indicates ACTUAL condition in NS not worse than elsewhere in the country

3. Initial conclusions We don’t charge very much (Council Tax, car parking) We don’t spend very much BUT The condition of our roads is good compared with the average and our neighbours YET Resident satisfaction is very low BECAUSE Our residents have higher than average expectations

4. Asset Management Approach Fundamental review in 2010 led to embedding of asset management, change in treatment approach and a significant increase in asset life (equiv. of £1m investment per annum) Our changing approach validated by May 2011 Audit Commission report “Going the Distance” and Highways Management Efficiency Programme report April 2012 “Prevention and A Better Cure” –Reactive vs preventative / structural –“Worst First” vs “Whole Life”

5. Reactive vs Preventative / Structural Reactive maintenance restores the asset to a safe state but does not improve its structure or extend its life Preventative / structural maintenance treatments (such as surface dressing) preserve or extend the life of the asset Public demand is to spend money on immediate and reactive repairs, but evidence shows that spending money on preventative and structural maintenance is much more cost effective in the long term The more the overall network deteriorates, the more the demand for reactive gets out of control; this can lead to a vicious circle of prioritising spend on reactive maintenance and making less and less available for structural and preventative measures

6. Uncontrollable Pressure Each year for last 3 years = c. £250k overspend on potholes / reactive maintenance 2010/11 and 2011/12, pressure funded by Gvt Winter Damage Grant 2012/13 – materialised as overspend plus drainage overspend (£750k) 2013/14 onwards – as network deteriorates – spend on reactive maintenance will increase – Overspend much reduced but partly due to relatively mild winter… This is a financial strategy... Spend money on improvements not on failure demand However in short-term still need to address pressure to reactive maintenance budget

7. “Worst First” vs Whole Life Worst first fixes the roads in the poorest condition and is typically costly resurfacing and reconstruction and means only a small number of roads are fixed Whole life / asset management approach requires intervention at the right time, and over time is more cost effective A road can often be cheaply restored to “nearly new” and its life extended significantly by intervening at the right time. This means more roads are repaired. “Whole life” repairs (such as surface dressing) can appear to be on stretches of road that are in good condition HOWEVER - When total resources are insufficient (as they are now), prioritising “whole life” work will leave some “worst first” roads unrepaired for longer than we would wish Residents’ concerns may push councils towards a “worst first” strategy

8. Issues Highways are vital to the economic, social and environmental well being of the area Highways are increasingly fragile and less resilient Public expectations are high Resources are reducing Short term repairs provide poor value for money Asset management delivers efficient and effective repairs based on evidence Strong leadership and commitment to the principles are required

9. Budget Response Short Term 1.Prevent – additional £180k for gully emptying 2.React – c. £796k to be spent on reactive maintenance (incl. one off £296k). 3.Fix (drainage) – up to £1.7m available over 3 years for drainage schemes Medium to long term 4.Plan and Improve - £4.3m to be spent on preventative and structural improvements (including additional £200k revenue growth, additional NSC capital and additional Gvt grant)

10. Long term investment strategy C. £5.3m per annum needed to maintain “steady state” (in today’s price) assuming Asset Management principles are followed Worst-first approach would add £1m+ p.a. 2012/13 budget = £3.4m 2013/14 budget = £4.3m 2014/15 budget = £4.4m (but see next slide) Options / scenarios for how to close gap in the future ….

11. May 2014 - Update £395K announced following budget in March. Mix of reactive & planned works Pothole challenge fund announced in April 2014. Deadline 22 nd May Further opportunities to close funding gap being explored.

12. Scenario 1 - Do nothing

13. Scenario 1

15. Scenario 2 - £200k revenue growth per annum

16. Scenario 2

18. Scenario 3 (as 2. but with capital injection)

19. Scenario 3

21. Scenario 4 £200k revenue growth in each year (£1m in 2014/15)

22. Scenario 4

24. Compare Options

26. Conclusions If we do nothing, highway will continue to deteriorate Highway will be prone to weather events Revenue budget is likely to be inadequate to meet demand for reactive repairs Any short-term improvements in resident opinion will rely on communication improvements and changing expectations / perceptions in context of continuing deterioration for at least 3 or 4 more years.

27. Conclusions Investment in the highway is a political and public priority Options are just that and they are endless – it’s just a model into which we can input infinite variables Early improvements require significant early investment Challenge is maximising investment in the short term (in the face of reductions in overall funding) How do we make this strategy part of the budget setting process? How do we make this a priority in the current financial climate? ONE FINAL SLIDE...

28. It’s not just about more money Continuing to review the balance between structural, preventative and reactive maintenance, including minimising temporary repairs Balance spend between principal, non-principal and unclassified roads (90% of journeys are made on principal roads) Ensuring that the right choices are made when designing and specifying techniques and materials for the maintenance and repair of highways Maintaining effective coordination of street works and minimising highway openings Enhancing inspections and training Monitoring public satisfaction and improving communication and engagement Providing clarity to the public in relation to response times and treatment of potholes / defects Continuing to monitor and manage contractor performance