Pothole to Proof: What the new maintenance funding formula rules mean for local authorities

Local highway maintenance has never been a quiet service. It’s where public expectation meets network reality and where the most visible defects often compete with the most important preventative work.

DfT’s latest approach to maintenance funding reflects that reality: more long-term certainty, but also clearer expectations about transparency, planning and performance. The headline message is simple: Councils are being asked to show more consistently how funding is used and what outcomes are achieved, with incentive funding linked to meeting those expectations.

This is being presented publicly as a way to ensure money goes into fixing roads and tackling potholes, rather than being redirected elsewhere. But the deeper story isn’t “potholes”. It’s confidence in decision-making, confidence in governance, and confidence that investment turns into better network conditions over time.

The new rules sit alongside a strengthened regime of transparency reporting, updated ratings, and incentive funding requirements, an approach DfT says responds to national scrutiny calling for better understanding of local road conditions and more robust monitoring of funding.

It’s also now more of a public conversation. The government has introduced red/amber/green ratings across local highway authorities, with performance visible to residents and members. Whilst there are some questions about how Authorities have responded, generally this is seen as a positive for raising awareness with local Members and communities.

For local authority teams, this visibility matters because it changes the nature of the challenge: it’s no longer just about delivering the work, it’s about being able to explain the work, defend prioritisation, and demonstrate that today’s decisions support long-term outcomes.

What DfT is actually asking for?

The formal DfT requirements come down to four themes that most high-performing authorities already recognise: transparency, spend integrity, a credible long-term plan, skills and learning. Yes, there are other factors such as capacity, approach to asset management and delivery contracts, but fundamentally, longer-term planning and suitable funding are key.

So, what do these mean in practice?

Transparency means publishing a clear report so residents can see what is being spent and what outcomes are being achieved. Spend integrity means demonstrating that highways maintenance funding is spent on highway maintenance. A credible long-term plan means maintaining an up-to-date asset management policy and strategy that supports whole-life cost thinking and longer-term outcomes, rather than focusing only on reactive response. Skills and learning mean evidencing professional development across highways teams, with additional emphasis on preventative practices where it has been lacking.

This isn’t meant to be just “more reporting”; it signals a shift toward planning rigour and professional standards being part of how government judges network stewardship.

Support, not just scrutiny

One of the more constructive elements of the approach is the explicit focus on support for those who need it most. DfT is backing targeted help for the lowest-rated authorities and industry reporting highlighting a programme of peer challenge offered via the Local Government Association for red-rated councils.

That’s important because any accountability framework needs to improve outcomes without widening gaps between authorities with mature systems and those under historic pressure, capacity limits, or data constraints.

The risks and the opportunity

The risk for Councils is to treat this as a one-off publishing exercise. The opportunity is to embed a way of working where the transparency report becomes the natural output of good governance, clear contracts and sustainable budgets and programmes.

In our experience, the strongest response typically involves four practical moves.

FIRST, create a clear “maintenance story”. Marketing a simple narrative that connects what the network needs, how priorities are chosen, what the programme will deliver, and what outcomes residents should expect. This helps align Officers, Members, Contractors and Communities behind the same logic, and reduces the risk that priorities are driven by the loudest issue rather than the highest risk.

SECOND, tighten programme governance so that evidence is easy to access. If evidence is hard to assemble, it usually means governance is too fragmented. Authorities that can evidence spending, decisions and outcomes quickly tend to have clear ownership, consistent definitions, and performance information that’s usable, not just reportable.

THIRD, use the moment to accelerate preventative maintenance. DfT’s broader funding narrative explicitly points to moving away from expensive short-term repairs and toward proactive, preventative maintenance. Preventative approaches aren’t always glamorous, but they’re how you reduce repeat defects and build resilience into the network over time.

FOURTH, Structure delivery contracts to drive initiative and innovation. Harness the expertise from Supply chains and sharing best practice across contracts. A well-developed synergistic contract that works for both Contractor and Council will support input to earlier planning, preventative measures and focus more on asset improvement rather than just transactional service delivery. Well-run procurements and the type of contract are critical here.  

From compliance to confidence

We see these policy changes as a prompt to strengthen confidence across the sector. Not confidence in a document, confidence that highways services have a clear plan, have established the governance to deliver it, have the skills and capability to improve year-on-year, with the right contracts in place to drive innovation and shared learning.

Done well, these principles can help shift the conversation away from reactive firefighting and toward long-term stewardship where councils can show residents not just what was fixed this month, but how the network is being cared for over the years ahead.

If you’re a local highway authority looking at the new requirements, the most useful question isn’t “how do we complete the template?” It’s “how do we make this part of what we do on a regular basis each and every year?”

At Founds Group, we’re leading the way with some Authorities who have adopted this approach, and we are always happy to share practical approaches and support in peer learning to help teams turn compliance into long-term improvement with transparency, good governance and preventative planning at the core.