Highway robbery – abusing Designated Funds

TAN has discovered that National Highways is syphoning off money from a dedicated fund for environmental and safety improvements (called ‘Designated Funds’¹) to use it as sweeteners or greenwashing for new roadbuilding schemes. National Highways is also raiding the “ringfenced” funding to pay for mitigation that should come out of the scheme budgets. In one instance, it appears National Highways has used the prospect of funding from this special fund to buy the silence of environmental bodies when a scheme was going through the planning system. Either way it is misusing public funding and trying to deceive decision makers.

Designated Funds were first introduced into National Highways’ five-yearly budget in 2015, as a separate cash pot to address historic issues on the strategic road network. They were meant to retrofit improvements to the existing network to reduce community severance (so building bridges and underpasses for instance) and environmental impacts such as air and noise pollution (so installing noise insulation for example). They could also be used to “deliver additional improvements” to new road schemes².

Under the 2020-25 Road Investment Strategy (RIS2) the government-owned company was allocated £870 million of Designated Funds to spend on activities that “go beyond the routine operation, maintenance and enhancement of its infrastructure”³. Ultimately it spent £869m⁴ as follows: Environment and Wellbeing – £422m; Users and Communities – £143m; Innovation and Modernisation – £157m; and Safety and Congestion – £147m.

Sweetening the Lower Thames Crossing

Perhaps National Highways’ most blatant misuse of Designated Funds as a sweetener for roadbuilding is to gain local support for the £16bn Lower Thames Crossing. A page on the scheme’s webpages states that “The Lower Thames Crossing is delivering an ambitious programme of wider investment in local communities and the environment [through] National Highways Designated Funds and the Lower Thames Crossing Community Fund⁵”. It is unclear whether the ‘Community Fund’ is also funded out of the Designated Funds budget, or the scheme budget, but either way taxpayers’ funds are being used by National Highways to attempt to buy support for this controversial project. The projects funded with LTC Designated Funds are often completely unrelated to the LTC or mitigating the harms from the existing roads network (the original purpose of the Designated Funds), such as buying or maintaining defibrillators, funding dance classes, supporting LGBT asylum seekers, buying play equipment for local schools, or restoring a tithe barn. All likely worthy causes but what have they to do with the scheme or mitigating the harm it causes?

A document on “Benefits and Outcomes⁶” submitted as part of the scheme’s planning application mentions “Designated Funds” 25 times, and claims that “Over £30 million of designated funds have been allocated to Lower Thames Crossing”, despite having to make clear that these benefits technically “fall outside of the remit of the DCO [planning application]”.

Buying off opposition to road schemes

Another abuse of designated funding is to use them to buy the silence of potential opponents of road projects. Due to its extremely high environmental impact, the A66 Northern Trans-Pennine project might have been expected to attract significant opposition from official environmental bodies like National Landscapes and Natural England and environmental charities. The mega-project would cross the North Pennines National Landscape, two of our most highly protected habitats (Special Areas of Conservation, SAC), increase air pollution at sensitive and rare habitats, destroy over 18,000 trees, and harm the habitats of many endangered species including barn owls, red squirrels, brown hares and otters.

However, barely a squeak was made at the examination from the watchdogs (except for Natural England who spoke up at the end about the impact of air pollution on rare blanket bog). Local people were also surprised that local and national conservation and river protection charities did not engage.

All became clearer when we learned that whilst progressing the project, National Highways was simultaneously negotiating with ten statutory environmental bodies and charities, offering up to £18 million from Designated Funds for several nature conservation projects, which were coincidentally close to the A66 project (but not part of the planning application as mitigation). TAN has since learned that after gaining planning approval, National Highways has not funded the conservation work. However It is clear that dangling £18 million of funding in front of cash-strapped environmental groups served its purpose during the examination, by neutering objections and scrutiny at a critical time when bodies and charities should have been speaking up.

Simister Island Interchange and the Haweswater Underpass

National Highways’ £340 million M60 Junction 18 Simister Island Interchange project will create extra capacity at the interchange between the M62, M60 and M66. As of July 2025, the project has funding pledged by the government but is awaiting a decision on its planning application.

One contentious issue for the project is the need to extend the Haweswater underpass under the M60, potentially a key active travel route, linking deprived communities with schools and green space either side of the M60. The structure of the underpass (the deck overhead) will be significantly altered and, because the motorway will be widened, the underpass lengthened.

Despite this, National Highways claims that the underpass is not part of the project. However, during the examination hearings it said it was exploring using Designated Funds to support “some” improvements to the underpass.

However, in July 2025 National Highways confirmed it hadn’t allocated Designated Funds, and that it would make a “bid” to itself for cash in the financial year 2026-27, reiterating “that there is no guarantee that funding will be made available, and the improvements are outside the scope of the Scheme”⁷.

Not only is there no guarantee of funding, there is no designated funding for 2026-27, as it will be in RIS3, which has not yet been set. But National Highways’ tactic is clear: to remove the costs of works on the underpass from the scheme to reduce its headline cost and to promise potential jam tomorrow for things it has little interest in delivering. We made clear in our submission to the M60 Simister Island examination that National Highways has a legal duty to improve the underpass and active travel. Also, that this work is clearly part of the scheme, and should be funded out of the scheme budget not out of Designated Funds.

A428 Black Cat to Caxton Gibbet

National Highways is also using Designated Funds elsewhere on its new roadbuilding projects, to bring down the scheme costs and buy local support, such as on the controversial A428 Black Cat to Caxton Gibbet scheme in Cambridgeshire⁸. Here it has funded a local cricket club and solar panels on a village hall. Although these projects are very worthy, it is hard to see how they relate to the road project. If a project were related to the scheme, for instance road safety measures⁹, this should have been funded as part of the scheme costs, not out of the Designated Funds.

Keeping scheme costs down

There are examples elsewhere of National Highways using the Designated Funds to pay for mitigation and compensation projects that should have come out of scheme budgets.

However, there is also often a lack of clarity around which budget National Highways is using. For instance, National Highways paid Wigan Council £2m out of Designated Funds to rewild an open cast mine close to the M6 Junction 21a-26 ‘smart’ motorway. It is not clear whether this was to compensate for the scheme’s environmental impact or was an additional benefit¹⁰.

This is important as National Highways had a RIS2 target of no net loss of biodiversity¹¹ and so every scheme it built was meant to leave nature in the same or better state once it had finished. Designated Funds are not there to enable National Highways to game this target by paying for compensatory measures which should come out of the scheme budget, to allow the true cost of the scheme to be understood. They are meant to be there to repair past damage or to provide extra nature improvements over and above the target.

On the £500m A417 Missing Link scheme in Gloucestershire¹², National Highways used Designated Funds for safety improvements at Birdlip, with cash from the Safety and Congestion fund¹³, which both the company and its contractor¹⁴ explicitly linked to the project. It also used them for “two key projects being managed by the National Trust that will deliver benefits for people, nature and cultural heritage”. These are all potentially useful activities but National Highways is clearly using Designated Funds to improve the public image of projects and to reduce scheme costs.

Regulator scepticism

In its advice to government for the 2025-26 “interim period” (between road investment strategies)¹⁵ the Office of Rail and Road (ORR) criticised National Highways for not having “identified and planned projects for delivery in 2025-26 to ensure efficient use of [designated] funds”. The regulator also said that the company should specify the key outputs from activities funded during the year, which it said was needed to “ensure that these funds are not diverted to cover overspend in other areas without appropriate transparency and reasoning”.

Looking ahead to RIS3

In the first instance, the government needs to confirm its support for the continuation of Designated Funds in its next roads investment strategy (RIS3) for 2026-31. However, it should also be clear about the purpose of the Designated Funds, which is to address historic issues created by the strategic roads network, to drive innovation and improve safety. It then needs to allocate sufficient funding and ensure that National Highways spends the money as it is supposed to.

The government and ORR need to stop National Highways raiding Designated Funds to keep scheme costs artificially low, or bribing environmental bodies and community organisations into supporting controversial projects. There needs to be far greater transparency about how taxpayers’ money is being spent with independent verification that the projects invested in have delivered the Designated Funds’ purposes to reduce the impact of the existing strategic road network.

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