Capital Funding

Department for Transport Capital Funding

The Department for Transport (DfT) provides the main source of capital funding for local highway authorities to fund their highway maintenance operations. The funding is determined and allocated through a number of established funding mechanisms.

The majority of capital funding comes from the Highways Maintenance Block. This funding stream is allocated using a needs-based funding formula which determines the maintenance grant for each local authority and is based on the assets for which they are responsible.

The DfT also provides funding through competitive bidding and incentivised processes such as the Incentive Fund. The Incentive Fund was introduced in 2016 to financially reward councils that demonstrate they have implemented robust asset management processes and deliver value for money highway services.

For further information on Government funding and how it is allocated for highway maintenance, please follow this link:-

Highways maintenance block: formula allocations 2025 to 2025 - GOV.UK

Local Highways Maintenance funding in 2025/26

On 20 December 2024, Government announced the 2025/26 highway maintenance funding allocations for all eligible highway authorities and mayoral combined authorities. The allocations include an additional £500 million of funding, of which Hampshire County Council will receive £14.099 million if certain requirements are met.

Government stated in the announcement that 25% of the additional funding for 2025/26 will be contingent on local highway authorities demonstrating that they are complying with certain criteria aimed at driving best practice and continual improvement in the highway maintenance services provided.

To ensure that all additional funding is received, and to provide taxpayers with information on how the funding is being used, local highway authorities are required to publish a Transparency Report.

Department for Transport - Transparency Report

The Transparency Report aims to provide an overall picture of highway maintenance spending and road condition, as well as details of how the shift to long-term planned maintenance is being implemented. Sections of the report also include setting out specific plans for highway maintenance activities in 2025-26, outlining how disruption caused by utility companies’ street works is being minimised, and demonstrating how innovation is being used to assist in delivering a more effective highway service.

A report template has been provided by the Department for Transport to try and ensure consistency of reporting between local authorities. The report for Hampshire County Council can be viewed using the following link:

Department for Transport - Hampshire County Council Transparency Report 2025

In addition to the Transparency Report, local highway authorities are required to provide further technical information to the Department for Transport that demonstrate a range of best practice criteria is being followed. This forms part of the Government’s Incentive Fund element.