Councils risk losing up to a third of their funding if they neglect to fix potholes in local areas.

Under new rules announced on Tuesday, councils across England could lose £525 million from their £1.6 billion budget for the following year if they cannot prove they are filling in potholes.

Councils will also be ordered to publish reports proving they are spending their allotted highway budgets on patching up roads, as well as long-term plans for road maintenance.

This follows the Government bringing in a traffic light grading system for local highway authorities to assess the state of their roads – with red-rated authorities receiving more cash to deliver smoother roads.

Labour will furnish the 13 red-rated areas with £300,000 worth of expert support to help councils fix roads.

With Labour facing a hammering at next month's local elections, roads and buses minister Simon Lightwood said the Government is 'making sure every pound goes straight into fixing roads and tackling potholes, not being spent elsewhere'.

This follows the Government pledging £7.3 billion to repairing Britain's roads, with funding delivered to local councils over a four-year period.

But Richard Holden, shadow transport secretary, said that Labour councils have been 'failing drivers for years'. 

He said: 'Ten of the sixteen worst-performing councils on pothole repairs are Labour-run. In Birmingham, 2.5 per cent of roads needing repair were fixed; in St Helens, Islington, and Milton Keynes, the story is the same. 

'Labour have lumped cost after cost onto drivers – the fuel duty rise, pay per mile, or new parking taxes – yet people see no improvement in the roads they rely on every day.'

The Conservatives have vowed to supply specialist road-repair machines to councils across the country – and set up a single national platform for drivers to report potholes, instead of the current patchwork of local sites.

The Daily Mail has been campaigning for an end to the pothole plague, which is costing drivers millions in repair bills.

Last week, this paper revealed that potholes are threatening the delivery of urgent medical supplies such as overnight blood donations.

And the Mail has also found that motorists have been increasingly attacking workmen trying to fix roads as anger mounts over Britain's record £19 billion pothole backlog.

Workers are being sworn at, spat at and even punched amid growing delays in fixing potholes, industry leaders have warned.

Pothole damage costs the average driver around £500 in repairs, with the number of insurance claims to fix vehicles soaring in recent months.

Tesco Insurance, for example, settled 12 per cent more pothole damage claims in January 2026 than in the entire second half of 2025.

And it was estimated last month that the cost of fixing pothole-plagued local roads in England and Wales had risen to a record £18.6 billion.

Edmund King, AA president, said that fixing potholes remains 'the number one motoring issue for drivers' and that it is 'right that councils are being scrutinised over their repair plans'.