07 January 2011

Broken Roads are Bad for Business

Badly maintained local roads are costing the economy in Britain £4.1bn a year in wasted staff time, production delays and damage repairs, according to a new report carried out by YouGov for the Asphalt Industry Alliance. The report reveals that 55 per cent of small and medium sized enterprises (SMEs) in England and Wales are losing on average £13,600 each per year.

The new report, The Economic Impact of Local Road Condition, reveals that bad local roads are hitting over half (55 per cent) of SMEs on the bottom line, not only in obvious ways such as accidents and vehicle damage but also through decreased productivity and increased business costs. 48 per cent of businesses report that poorly maintained roads waste their staff’s time - on average each affected business reported losing 216 hours a year, the equivalent of one member of staff being absent for five weeks of the year.

Local authority roads account for over 95 per cent of the country‘s network. Local authority highway departments, facing a shortfall in funding of £800 million², are finding it increasingly difficult to meet the costs of maintaining their roads in an acceptable condition. This problem is made worse by the diversion of funds, allocated by central Government to highways maintenance, to other Council services.

There are 4.3 million small and medium-sized enterprises in England and Wales, employing 12.3 million people. SMEs are regarded as the “engine of the economy” and have a combined annual turnover of £1,350 billion³. The report reveals that poor road condition directly affects these businesses, and indirectly influences the success – or otherwise – of the local economy, in the following ways:

• EMPLOYMENT: 15 per cent of businesses in England and Wales that have been in their current location for more than five years have considered moving or have moved their premises to an area with better-maintained roads. In the North, the Midlands and Wales this figure rises to 20 per cent, or one-fifth of SMEs.
• INCREASED BUSINESS COSTS: Over half (52 per cent) of SMEs reported that poorly-maintained roads have increased their business costs. Costs incurred included increased journey times; damage to vehicles; increased fuel costs; and costs of accidents as a result of poorly-maintained roads.
• DECREASED PRODUCTIVITY: 48 per cent of SMEs stated that poorlymaintained roads make their businesses less productive. Productivity issues included wasted staff time; delays in delivering products and services; delays in deliveries from suppliers; and delays in shipping goods within the company.
• REDUCED COMPETITIVENESS: one-third (34 per cent) of SMEs felt that the state of their local roads made them less competitive than their rivals. Competitiveness was affected through having to increase the price of products and services and through having to increase waiting time for delivery of products and services. Nearly six in 10 SMEs have been negatively affected by the credit crunch. Of these one-quarter said that improving the condition of local roads would help them to recover from the recession.

Investing in road maintenance has positive effects for a local area. Members of the public, who were also polled by YouGov for the report, said that the condition of local roads affected their decisions on where to shop (33 per cent); where to go for days out (39 per cent); and where to buy a house (45 per cent).

The Asphalt Industry Alliance, an industry group which campaigns to raise awareness of the need for sustained investment in road maintenance, is calling for:

• A new approach to funding roads maintenance, including sustained, longer term budgets which would allow for more cost-effective planning of maintenance;
• Better protection of road maintenance budgets at local level; and
• Easier access to emergency funding to deal with damage caused by extreme weather conditions.

 
QPANI Regional Director, Gordon Best, said ““QPANI fully support the Asphalt Industry Alliance in their call for a greater priority to be given to the funding of roads maintenance across the UK. Although this report does not cover Northern Ireland it demonstrates that there is a sound economic argument for properly funding local road maintenance as a key measure to help the economy emerge from recession. Improving the condition of local roads would take the brakes off our SMEs and help them to drive the recovery forward. In terms of Northern Ireland the facts highlighted in the Report are probably worse as the roads in Northern Ireland are less maintained than those in GB. This figure is confirmed in the Roads Service 2009 – 10 Annual Report (page 64) that states that we spend £4,400 per km in Northern Ireland on maintaining our road network, considerably less than that equivalent spend in England and Wales. The statistics shown in the GB report, if applied to Northern Ireland, would indicate that our under funded roads maintenance is costing the economy here at least £80million per year”. Mr Best added “the continued under spending by the Executive on the maintenance of our roads network means that the recent freezing conditions will have a more serious impact on the medium to long term condition of our roads. The facts are the Executive and the Regional Development Minister say they do not have the funding to carry out what all professional opinion say is required to maintain our roads network in a safe and satisfactory condition. This figure is £112 million per year. We are no where near that figure, as over the last two years we have spent in and around £75 million  and £85 million respectively and the under spend over the past 10 years now stands at approximately 500 million. Unfortunately with more low temperatures expected this year some tough decisions may have to be taken particularly with regard to the condition of our rural road network which according to the 2009 - 2010  Annual Report states that many of the rural roads have not been maintained in over 100 years . Will we have to close many of our rural roads because we don’t have the money to maintain them? Will we see slippery road signs going up on many of our roads as the skid resistance has deteriorated and no money to resurface them? How many more accidents will occur because of potholes or reduced skid resistance?   What will be the impact on our economy?

ENDS

To view the full AIA Report click http://www.asphaltindustryalliance.com/images/library/files/AIA_YouGov_Report_final.pdf