The agency will become a government-owned company by this time next year tasked with managing and operating England’s motorway and strategic A-road network.

The government said the move will save £2.6bn over the next decade.

The reformed agency will benefit from guaranteed long-term funding meaning “the new company and its suppliers will have the confidence to recruit skilled workers on longer-term contracts that will save the taxpayer money.”

The government is also setting up two new bodies to hold the company to account – one to protect the interests of motorists and other road users, and another to oversee the roads network and watch over costs and performance.

McLoughlin said: “The reformed Highways Agency will be more transparent and more accountable, driving down costs as it increases efficiency.”

Alasdair Reisner, Chief Executive of the Civil Engineering Contactors Association said: “In the past, the roads sector has suffered from boom-and-bust conditions that are hugely damaging to the smooth delivery of projects.

“These reforms will not only make the Highways Agency more efficient, but will also mean greater funding certainty for the construction sector.”

The Department for Transport will publish a long-term ‘Roads investment strategy’ later this year.

This strategy will set out a clear vision for the new company that will include a new plan for investment and performance requirements.