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Highways Agency – PEST analysis

Introduction
The strategic road network in England consists of motorways and major ‘A’ roads. It CURRICULUM TOPICS
• External environment
represents only 3% of all roads in England yet carries a third of all road traffic and two thirds
• PEST analysis
of all heavy freight. The network is valued in excess of £84 billion and is vital for commerce • Public sector organisations
and industry as well as day-to-day social activities. It connects towns and cities with ports and • Use of technology
airports and is a key part of the transport infrastructure providing access to and from
factories, shops, hospitals and services. GLOSSARY
Infrastructure: the basic systems
The Highways Agency was established in 1994. It is an executive agency of the and services, such as transport and
power supplies, that a country or
Department for Transport and has responsibility for the operation of the strategic road
organisation uses in order to work
network in England, within the context of the government’s aim of a sustainable transport effectively.
system which will support economic growth. The Agency’s aim is: ‘safe roads, reliable Executive agency: an
journeys, informed travellers’. Its functions include tackling congestion, providing accurate organisation that operates to
deliver an important aspect of
information for drivers and improving safety. government policy. Executive
agencies report to central
The task of maintaining and operating the strategic road network is challenging. Since the government departments who set
their budgets and policy priorities.
first motorway was opened 50 years ago, the volume of traffic has increased massively.
External environment: factors
Vehicle use has risen by more than 80% since 1980 and today’s motorways carry more
outside the business over which it
freight and passengers than was ever envisaged by planners. has little control.
Political factors: changes
The Highways Agency operates within a complex external environment. The arising from government initiatives
or public opinion.
government’s transport policy sets the overall agenda, but several other external factors
impact on the Agency’s operations. PEST analysis is a useful tool to analyse these external Traffic congestion: build up
of traffic leading to slow moving
forces and help inform future strategy and set priorities. This case study looks at the political, or stationary vehicles, causing
economic, social and technological factors that impact on the Highways Agency. hold-ups and delays.

Political factors
The Highways Agency works in the interests of the public and not for private financial gain –
this is the same for all publicly-funded bodies. Its overall remit is set by Parliament with
transport policy the responsibility of the Department for Transport. Political factors
therefore play a key role in shaping its activities and priorities.

Ministers are held to account in Parliament for the performance of the Department and its
agencies, including the Highways Agency. The Agency has a duty to spend money wisely and
cost-effectively and through Parliament, the Agency is ultimately accountable for its work to
the public. Taxpayers’ money maintains the road network and taxpayers have a right to know
how their money is spent.

The government sets the policy framework for the Highways Agency, therefore the Agency can
be affected by political changes of direction. For instance, a change of government policy
could switch some resources away from roads to rail transport.

The Highways Agency implements and informs government policy:

• One key priority is tackling traffic congestion. This affects the part of the Agency’s aim
to deliver ‘reliable journeys’ and is an issue that affects both private road users and the
economy as a whole. The Highways Agency is working to increase the capacity of the
existing motorway network. It has tested a system called Active Traffic Management (ATM)
on the M42 near Birmingham. ATM uses modern technology to allow motorists to drive on

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the hard shoulder during peak periods. This improves the flow of traffic and increases
capacity when the road is at its busiest. The results have been good and drivers can
predict with more confidence how long their journeys will take. For example, someone
commuting to work every day can be sure they arrive on time. Businesses can improve the
www.thetimes100.co.uk productivity of their commercial vehicle fleets. For example, a national distributor needs
to be able to promise its customers such as major supermarkets, that products will arrive in
time. A vehicle is not being ‘productive’ when it is sitting in a traffic jam. The fact this
GLOSSARY
system has proved effective has influenced the government to use it on more motorways.
Hard shoulder: a surfaced
Improving road safety is another priority. The Department for Transport has national targets
verge running along the edge of a to reduce the number of people injured or killed on roads.
motorway for emergency stops.
Productivity: the amount of
goods or services produced by a
fixed level of equipment and
people. Most businesses and
governments seek to increase
productivity.
Economic growth: the value of
goods and services produced by
an economy increases over a
period of time. deploying Traffic
Officers to clear
Recession: a period of negative incidents quickly to
economic growth, leading to reduce chance Highways Agency
higher unemployment and business of a ‘secondary’ meets targets by:
failure. incident
Fiscal stimulus: increasing
public expenditure to boost
demand and to attempt to shorten
the length of a recession.

Economic factors
A central aim of government policy is to encourage economic growth. In a growing
economy, businesses produce and sell more goods and services. More jobs are created.
The country becomes more prosperous. The Highways Agency supports economic growth,
because an effective major road network directly helps business and industry. Factories need
raw materials, retailers need to keep their shelves well stocked or risk losing business. Even
internet businesses like Amazon need to distribute physical products to customers.

To develop the transport infrastructure, the government is committed to increasing capacity on

some of the busiest roads. Increased capacity means more goods can be carried and people
will experience less congestion. Although this is a short-term cost, it will reap long-term benefits.
The Highways Agency is responsible for spending taxpayers’ money effectively and efficiently
when improving the road network. However, England is a densely populated country and it is
not possible to continue to build more and more new roads as this has financial, social and
environmental impacts. For example, the paths of new roads might have to pass through
countryside or close to housing. The Agency is continuing to deliver conventional road widening
schemes. At the same time, as part of the new National Roads Programme it is also extending
hard shoulder running to more key sections of motorway to help keep traffic moving. This will
provide value for money to the taxpayer and improve the efficiency of the strategic road
network.

In 2009 the UK economy went into recession. Rather than growing, the economy is
contracting. People and businesses have cut back their spending. Many businesses have had
to lay off workers. Although this may result in a short term fall in traffic levels, in the longer
term traffic is still forecast to increase. This will put more pressure on the motorways so the
case for increasing capacity still remains. The recession has other potential implications for
the Highways Agency - by spending money on road improvements the Highways Agency can
have an impact on the business cycle. To stimulate the economy out of recession, the
government needs to encourage people and businesses to spend. It can try to do this by
using a combination of monetary and fiscal measures. A monetary measure involves altering
interest rates; fiscal measures concern levels of taxation and public spending. Many
economists argue that governments should respond to recessions by increasing public
spending. This is known as providing a fiscal stimulus - building Britain’s future.

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The government is using the Highways Agency to boost public spending and stimulate the
economy by bringing forward £400 million of spending on new and improved roads. Up to
£100 million of this money is being put towards bringing forward the project to upgrade the
A46 in Nottinghamshire to dual carriageway standard and provide bypasses for two villages.
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It will now be completed and open to traffic some five years earlier than originally planned.
The Agency will also deliver extra works in order to get motorways ready for more hard
shoulder running schemes and carry out numerous additional smaller road improvement
schemes. GLOSSARY
Social factors: patterns of
change in social behaviour, for
By bringing forward spending on roads, contractors will be hired to do the work. They will buy example in fashions and tastes.
raw materials from other companies and this will help drive the business cycle. Economic
activity is driven by sales – as order books fill up, firms can grow. They then hire workers and
workers spend wages. This has the eventual effect of increasing consumer demand.

Social factors
The Highways Agency’s work is directly affected by social factors. People’s lifestyles,
attitudes and opinions have a direct bearing on traffic volumes. As society changes, the
Agency aims to meet the needs of today’s road users by ‘putting our customers first in
everything we do’.

When motorways were first designed in the 1950s, traffic volume was much lower. Today
most households own a motor vehicle and many people choose to drive rather than use
public transport.

More cars = more car journeys

Why should it take a long time to travel by car because the roads are so busy? All of this
leads to greater congestion and increases the need for more road capacity.

In addition to expanding road capacity, the Highways Agency is taking socially acceptable
measures to help road users make their journeys safely, reliably and without unforeseen delay.
Blackburn

It is:
A56 Halifax Goole

Southport A162 M62

Rochdale M62 Wakefield A1 A160
M6
M61 Immingham
Bolton Bury M66 Huddersfield A180
Scunthorpe Grimsby
Skelmersdale A627(M)
Barnsley M181
Doncaster Cleethorpes
A663
M58 M180
A5036
Maghull
St
Wigan
M602
M60 Manchester A61
M1
Crosby Helens A57 A616
A628
Liverpool
M57 M60 Rotherham M18 A1(M)
Wallasey
M67
M62 Sheffield
A5103

• providing motorists with better traffic information – both before and during their journeys –
Warrington Stockport
Birkenhead Widnes
M56 A1
M53 Runcorn A556
A550 M56
A41
M6 Chesterfield
A5117 M1 Lincoln
Chester
A55
A46
A483
Newark-
on-Trent
Stoke-

to help them plan routes and make choices about when to travel
Nantwich
on-Trent
A500 Nottingham
A46 A1
Newcastle- A38
under-Lyme A50 A52
Derby A52 Grantham
A5 M6 Stone A5111
Uttoxeter A6 A52
A50 A453
Oswestry
A483
Stafford Burton
upon Trent Loughborough King’s
M1 Lynn
A46
A5 A38

• aiming to influence people’s travel behaviour. It is working with large companies to

A47 No
A458 A5 A5 A5148 A42
Cannock A1 A47
A46 Wisbech
Shrewsbury A449 Lichfield
Telford
M54 A5 M42
Leicester Peterborough Swaffham
Stamford
A49 Brownhills Tamworth A47
M6 Toll A11
Wolverhampton Walsall Wigston
Hinckley
M6 Nuneaton
Dudley M42
Birmingham A446 M69 A5
A1(M)
Stourbridge M5 M6 Market
A452 Harborough Thetford
M6 M1 Kettering

encourage their staff to share car journeys to and from work

M42 A45
Coventry A14
Kidderminster A14
A14 A1 A11
M42 Rugby
A45 Huntingdon
A46 M45 A45
Bromsgrove Royal
M40 Leamington Wellingborough A14 A14 A14 Bury
A49 Redditch Spa A1 Newmarket St Edmunds
Warwick A428 A14
Leominster M5 Northampton
Worcester A5 A45 Cambridge
Bedford A11
A46 Stratford- A14
upon-Avon
M40
A421 Ipswich

• patrolling the motorways 24 hours a day working hard to reduce the traffic hold-ups
A5
Evesham
Hereford Banbury A43 A421 A1
A46 Milton A12
Keynes M1

A449 M50 M5 M11

A49 A5 A120
Luton Bishop’s
Ross-on-Wye A40 Stevenage Stortford A133
A40 Cheltenham Colchester
A40 Dunstable A120
A34 A1(M)
Gloucester Hertford
Aylesbury
Clacton
A417 Hemel St Albans
Oxford

caused by incidents by clearing them as quickly as possible

Hempstead
M10 Hatfield
Harlow
Chelmsford
Cirencester
A12
A405 M25
High A1 M11 Brentwood
M1 Billericay
M25 Enfield
M40 Wycombe Rayleigh
A419 Beaconsfield Watford
M48
M5 M25 Edgware
A40 Ilford
Hendon
A404 A308(M) Basildon
M4 Dagenham M25 Southend-on-Sea
Newport Swindon Maidenhead Slough
M49 A13
M4 M4 A1089
Avonmouth
M4
A34 A404(M) LONDON Tilbury Sheerness
CARDIFF M32 A46 Reading M4 A282
A3113

• carrying out more roadworks at night when the traffic is quietest and delays can be limited.
M4 A30 Gravesend
A4 A2 Herne
A316
Staines A282 A2 A249 Bay
Bristol M3 A20 Whitstable
Newbury M3 Esher M25
Croydon M20 Chatham
Bath
Weston-super-Mare Camberley A3 M2
Woking M25
A36 M26 Canterbu
A34 A23
Basingstoke Farnborough M25 Maidstone
Sevenoaks A2
Aldershot Tonbridge
Andover Guildford A21 M20
Warminster Reigate
A303 A3 A23 M23
A303 M3 Ashford
A36
Crawley Royal
Bridgwater Tunbridge A2070 F
Wells
Salisbury
Winchester
A3
Taunton
A23 A21
A36 Eastleigh Petersfield

M27 Southampton A259

A303 Yeovil
M271 M27
Horndean A3(M)
M5 A31 A27 Lewes A259
A27 Havant A24 A27
A27 A27 Hastings
A26 A27
Fareham
Ringwood M275
Chichester
Br

It is also responding to another major public concern: the impact of human activity upon
Honiton A35 Gosport
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Bognor
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Poole Portsmouth
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A30 Regis
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Ryde
av
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Bere Regis
en

A35
Ch

Exeter Dorchester
ris
Bo

Newport
tch
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A38 Weymouth

the planet. The Highways Agency adopts an environmentally friendly approach to traffic
management. By keeping the traffic moving, emissions can be reduced as drivers do not have
to constantly accelerate and brake. The Agency also protects wildlife that lives near the road
network such as bats, otters and birds. It often uses recycled materials in its road building
schemes and is one of the biggest tree planters in the country.

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GLOSSARY
DAB: Digital Audio Broadcasting,
also known as Eureka 147, is a
digital radio technology for
broadcasting radio stations, used
in several countries, particularly in
the UK and Europe.
VMS: Variable Message Signs.
The main purpose of VMS on the
Agency’s network is to
communicate information and
advice to drivers about
emergencies, incidents and
network management, aimed at
improving safety and minimising
the impact of congestion.
The Times Newspaper Limited and ©MBA Publishing Ltd 2009. Whilst every effort has been made to ensure accuracy
of information, neither the publisher nor the client can be held responsible for errors of omission or commission.
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Technological factors
Using technology helps the Highways Agency respond to challenges posed by political,
economic and social factors:
• The Agency uses an array of technology to monitor and control road traffic. CCTV is used
to monitor conditions on the road network. Control room staff across the country use
sensors in the road surface and over 1,200 CCTV cameras to quickly identify any
emerging problems. Information is shared with broadcasters such as the BBC to keep
drivers informed. In the event of an incident or breakdown, control room staff can quickly
direct Traffic Officers to the scene.
• Over 1,200 kilometres of the motorway network are now covered by the Motorway Incident
Detection and Automatic Signalling (MIDAS) system. This consists of sensors in the road
surface, spaced at intervals of around 500 metres, which can detect slow moving or queuing
traffic. The electronic signs on the road then automatically display reduced speed limits and
messages such as ‘QUEUE AHEAD’. The idea is to warn drivers that there may be slow
moving traffic ahead so that they can slow down and avoid having an accident. On some
motorways this is taken a stage further by setting compulsory variable speed limits. This system
helps to keep motorists driving at a speed which the system has calculated as the best speed
to keep the traffic flowing. In the Active Traffic Management system it is also used to calculate
the best time to open up the hard shoulder as an extra lane to help keep the traffic moving.
• At the end of March 2009, over 85 busy junctions also now have ramp metering, which
uses traffic lights on entry slip roads to control the flow of vehicles on to the motorway. It
lets vehicles onto the motorway a few at a time to prevent traffic building up. The Agency
is investigating other locations where ramp metering can help to reduce congestion.
• By giving road users the latest information on traffic conditions they can choose to take
another route, allow extra time and/or delay their journey. The Agency helps by giving
motorists the most up-to-date information where and when they want it: via its own DAB
digital radio station, Traffic Radio, which is also available online, information points at some
motorway service stations and via its Traffic England website or the ‘mobile-friendly’ website.
• On the road itself, the Variable Message Signs (VMS) system displays live messages to
road users telling them how long it will take them to drive to certain key motorway
junctions in the current traffic conditions.
Conclusion
A PEST analysis is a useful technique for reviewing the external forces that impact on an
organisation. The technique offers a structured basis for reviewing the organisation’s strategic
direction and for considering future priorities.
In the case of the Highways Agency, as a government agency, political factors play a key role
in shaping its activities and priorities. It acts in the public interest, has priorities shaped by
government targets and is accountable to Parliament. Economic factors influence its spending
decisions, social factors shape the demand for the Agency’s services and technological
developments can offer innovative solutions to some of the challenges in managing a modern
road network. By understanding these factors in the external environment, the Highways Agency
can shape its activities appropriately. This is reflected in the current programme of ‘managed
motorways’ which brings together many of the innovations to maximise use of the
current infrastructure.
Questions
1. Describe the main external factors that a business organisation needs to be aware of.
2. What are the main advantages for the Highways Agency of using a PEST analysis?
3. Analyse the impact of each of the elements in the PEST analysis on a private sector
business (of your choice). What differences (or similarities) might there be compared to
the Highways Agency?
4. In your view, why does a PEST analysis help to shape strategic direction? Does this really
matter in the public sector?