Highways (Financing) Bill
Thursday 15th October 2026
(3 weeks, 1 day ago)
Commons ChamberRead Full debate Highways (Financing) Bill 2026-27 Read Hansard Text Read Debate Ministerial Extracts
16:31 - The House divided: - Ayes: 76 / Noes: 231 - Question accordingly negatived.
Madam Deputy Speaker (Caroline Nokes)
The reasoned amendment in the name of Mr Richard Holden has been selected.
The Parliamentary Under-Secretary of State for Transport (Justin Madders)
I beg to move, That the Bill be now read a Second time.
I realise that the Bill may seem rather dry at first glance, as it primarily covers how we finance major road building. Financial frameworks, licences and regulators might not get the hearts of the public—or, dare I say, even of hon. Members—racing, so I hope the House will allow me to start with why all this matters, not just for the future of this Government’s second largest infrastructure asset, but for the future of the country. Members from across the House will, I am sure, know the importance of the strategic road network—4,500 miles of highways that frankly punch above their weight. It represents less than 3% of our road network by length, and carries a third of motor vehicle miles and two thirds of lorry miles. If trade is the lifeblood of our economy, the strategic network represents our national arteries, transporting almost all the goods that we rely on for our way of life. Indeed, it does even more, by unlocking house building, connecting people with opportunity, and underpinning the integrated transport network that we want to build.
Mr Mark Francois (Rayleigh and Wickford) (Con)
The Minister mentioned roads unlocking house building. Labour wants to build 100,000 houses in south Essex, from Grays to Shoeburyness, so why did it cancel the widening of the A12 some months ago? Last week, it cancelled upgrades to the A127, too. It makes no sense to build all those houses, but if we are going to do that, it is insane to cancel the road upgrades that we need to accommodate that building. Why did Labour do that? None of this is joined up, is it?
Justin Madders
I will happily address why certain schemes have been cancelled. It is because the Conservative party put far more schemes into the programme than it put in funding for, so any understandable frustration ought to be directed at the right hon. Gentleman’s colleagues. Much of the strategic network is over 45 years old.
Mr Francois
I am sorry, but the Minister cannot get away with that. Labour cancelled the widening of the A12, which had been planned for years, and it cancelled the upgrades to the A127. Please answer my question. How can Labour propose building 100,000 houses while cancelling strategic road programmes? It does not make sense.
Justin Madders
The bottom line is that the previous Government committed to far more schemes than there was funding for, so we had to evaluate which were the least value for money and the least advanced. It is nothing more than that. The right hon. Member may be frustrated, but perhaps the previous Government should not have made promises that could not be delivered.
Demand will only go in one direction. Road vehicle mileage is set to rise on the strategic road network by 12% over the nine years to 2035. Climate change continues to bare its teeth across our transport infrastructure, and our strategic roads are no exception. All those challenges bear down on a network that holds up our economy every day. That is why I am proud that the Government published the third road investment strategy earlier this year. It committed not only £27 billion to future-proofing our roads, and to resurfacing a quarter of our entire network, but to three major enhancement schemes in the north of England, on which it will work even closer with local leaders. It proved to MPs like me that road investment can address regional inequalities, and is compatible with our promise of greater devolution. When we talk about growth and power in every postcode, that is exactly what we mean.
That is the context in which I present the Bill. I have mentioned what we have already delivered, but in truth, much more needs to be done. Delivering the roads this country needs to connect our ports, our major cities and our communities requires substantial investment over many years, and across several Parliaments. Public investment will, of course, continue to play a vital role, but we can go further when private investment is harnessed to meet public goals. When Government and the private sector come together in partnership, and when we balance certainty for private investors with safeguards for the public interest, we give ourselves more tools to build the modern infrastructure that Britain needs. The Bill creates such a tool, and does so in two ways.
Dr Peter Prinsley (Bury St Edmunds and Stowmarket) (Lab)
I welcome the measures in the Bill to invest in our road system, but will the Minister comment on the technological advances to vehicles over the next decades? Most vehicles will eventually become self-driving. That will mean much less congestion, and vehicles will communicate with each other, so there will be much simpler junctions and fewer accidents. What account are the Government taking of the technical changes to vehicles?
Justin Madders
We are working on projections and what we know about the road network now, and overcapacity at Dartford in particular needs to be addressed. On whether automated vehicles reduce congestion, we need to see what happens in practice.
The regulated asset base model will be applied to trunk roads in England. That model is not new—it was used to fund the Thames tideway tunnel and Sizewell C—but this is the first time it will be used on a road network. For our roads, it starts by granting a licence for a specific highway project to a private investor. The framework for that licence is set in this Parliament. The framework starts with construction and goes through to operation and maintenance. Any infrastructure project under this model will therefore start as it should, with a sound legal and regulatory foundation.
The Office of Rail and Road will then act as the independent economic regulator. It will have a wide range of powers in the public interest, including monitoring performance, obtaining information, issuing penalties and, if necessary, taking enforcement action and revoking a licence. These public interest safeguards are vital and will never be compromised. There can also be no disparity between the operation of a privately funded highway and one managed by National Highways, so I can assure the House that the Bill means that roads operated under the new licensing regime can be held to the same standards as the rest of the strategic road network. Even when difficulties arise, the framework ensures that road users are protected and there is continuity of service on the network.
Finally, the Bill allows a private operator to make a regulated return on their investment. Any charges or tolls will be levied under strict conditions set out by the Office of Rail and Road, which will be required to consider the interests of road users. Let me be crystal clear: the Bill is not and will never be national road pricing by the back door, and it is not and will never be a way to charge motorists across the wider network. The provisions in the Bill apply only to roads brought in under the financial and legal framework that we are debating today.
Let me be clear: that framework is not open ended. Licences may only be issued for new road projects, capacity enhancing improvements or the continued operation of a previously licensed road, and any road specified in a licence must be a trunk road in England. This is about strategically important routes, not minor improvements to the road network. Government policy is that tolling will normally be used only for costly river and estuarial crossings, and nothing in the Bill is set to change that.
I will now turn to the second major feature of the Bill. Some of the legislation governing toll collection dates back to the 18th century. It is high time that was updated, so that we can unleash the benefits of modern technology on our roads. Many of us have at some point experienced long queues at toll booths. It adds unnecessary delay to journeys, and drivers will rightly wonder when regulations will catch up with technology. Free-flowing tolling systems do not require vehicles to stop at traditional booths, and by allowing payment after use, they ease congestion and shorten journey times. The Bill does not mandate a certain approach to toll collection, but simply allows new technologies to be adopted and creates a modern statutory framework for enforcement practices. I have little doubt that drivers will welcome measures that can remove friction from their journeys.
It is no secret that our desire to push forward with this legislation stems from the lower Thames crossing. That crossing will almost double road capacity across the Thames to the east of London. It will improve journey times and it will tackle chronic congestion at Dartford, which is bursting at the seams. Its 2.6-mile dual tunnels under the Thames will be the longest road tunnels in the country, and the largest in Europe by diameter, and it will set the standard for carbon-neutral construction. In short, it is exactly the sort of ambitious and world-leading infrastructure project that Britain should be building.
We have been clear that the regulated asset base model is our preferred financial approach for the lower Thames crossing, but the Bill is not about the lower Thames crossing’s design, nor does it grant development consent. That work has already been done. It simply creates the financial framework that can deliver the lower Thames crossing, as well as appropriate future road projects.
I finish by reminding colleagues what lies at the heart of the Bill: recognition that too many people, in too many places, remain held back by poor connectivity, and a recognition that each congested road and every delayed journey stifle productivity. The Bill does not ask the House to choose between public and private finance as a matter of ideology, but it puts another tool at our disposal for delivering the infrastructure that Britain needs. This financial model will not be used in every case, but it does set out one practical approach, guided by a financial framework set by Government. There will be a compliance regime enforced by an independent regulator. Private capital is provided by investors, and public safeguards are protected at every stage. That is the balanced model that this Bill will deliver, and I commend it to the House.
Madam Deputy Speaker (Caroline Nokes)
I call the Shadow Secretary of State.
Mr Richard Holden (Basildon and Billericay) (Con)
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House, while recognising the urgent need to deliver the Lower Thames Crossing, declines to give a Second Reading to the Highways (Financing) Bill, because it has no confidence in the Government’s ability to deliver the project on time and on budget, given its record of cancelling major road schemes across the country; believes that, without withdrawing from the Aarhus Convention, the costs of the Lower Thames Crossing, and therefore potential costs to its users under this Bill, risk spiralling further out of control; further believes the scope of the Bill should be strictly limited to financing the construction of the Lower Thames Crossing, and rejects the sweeping powers the Bill would grant Ministers to impose new road-charging schemes across England through secondary legislation; and also believes that the Government should not be permitted to introduce additional road-charging schemes across England without parliamentary approval and corresponding reductions in fuel duty to offset those charges.”
We are here today primarily to debate the measures to deliver the lower Thames crossing, an infrastructure project that, I think it is right to say, has support from Members across the House. It will deliver the jobs, growth and economic opportunities that local communities in the region, including my own constituency of Basildon and Billericay, are crying out for. However, I am afraid that that is not all that we are here to debate. Labour could have brought a project-specific piece of legislation to the House that would get this project over the line, but instead we are here partially to challenge this Labour Government as they open the door to a road charging scheme to hammer motorists.
The Minister has said that the Bill concerns only existing big toll roads, but we say that that is obviously not the case. In fact, motorists all over the country could be forced to stomach another blow to their wallets and to fork out their hard-earned cash, as the Bill’s sweeping powers mean that anything new on the road—a new smart motorway camera, perhaps, to replace one of those that currently does not work on 400 miles of our road network—can be swiftly followed up with a new toll. The Minister said that the Bill applies only to trunk roads, but clause 81 allows the Minister the “power to direct” any road to be made a trunk road, which opens up the entire road network of the country.
Sir Christopher Chope (Christchurch) (Con)
On that point, does my right hon. Friend agree that it would be sensible for the three London bridges that are in disrepair to be designated as trunk roads, so that they could be repaired under the provisions of this legislation?
Mr Holden
My hon. Friend makes an important point. My understanding is that in relation to other legislation put forward by the Government concerning those projects, the local councils told the Government that the funding that they were putting forward under their own schemes—not including this legislation—was not suitable, particularly for the Hammersmith project. There are lots of options available, and my hon. Friend raises an important one, given the importance of those river crossings to the people of London and the wider country.
In truth, we all know that Labour does not care about motorists. If it did, the Secretary of State would be in her place. Where on earth is the Secretary of State? We are discussing legislation that will enable the biggest road infrastructure project that this country has done in decades, but where is she today? Too busy to bother about motorists.
Jen Craft (Thurrock) (Lab)
Will the right hon. Gentleman clarify where the Conservative Government were over the past 14 years when it came to building this project? People in my constituency have been on tenterhooks for years and have suffered the uncertainty of being told that it will happen, and then that it will not.
Mr Francois
As a south Essex MP, I had my first briefing on the lower Thames crossing about a decade ago. The estimated cost at that time was between £2 billion and £2.5 billion. After, I think, five rounds of consultation, partly at the behest of environmental activists, which have delayed the whole thing for years, we now have a bill of between £9 billion and £10 billion. Under the first plans, the project would have been paid for by the state, but now Government policy is that 90% of it will be paid for by the private sector. I have asked the Transport Secretary three times which banks or companies will pay for it. Does my right hon. Friend know, because she will not tell me?
Mr Holden
My right hon. Friend makes an important point. We do not yet know who will fund the project. Would the Minister like to intervene on me to say if any companies have been lined up and who is looking forward to funding this project under the proposed legislation? He does not want to at the moment, so I do not think my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois) will be getting an answer to his question today.
Mr Holden
I have just given way several times, so let me make a little progress before I give way again.
The Secretary of State is too busy to bother about motorists until they become useful cash cows for Labour’s ballooning welfare budget, which shows no sign of changing under the new Prime Minister, no matter how many pints he poses with. The Transport Secretary could not even be bothered to mention fuel in her speech at the Labour party conference, even though diesel has just hit £2 a litre for the first time ever. To be fair, she did mention drivers once, but only to tell us that railways are the drivers of change—whatever that means.
Make no mistake: Labour does not care about Britain’s motorists, unless it is making a tax, a charge, a new fine or a new yellow box junction. Labour—its Government, its Back Benchers and its councillors—will never stop trying to fleece motorists. This Bill proves that in spades with its open-ended approach to what could happen. There are new sweeping powers in the Bill for road charging right across England, with next to no future parliamentary approval. It is not even as if the Secretary of State has been out there banging the drum for Britain’s automotive sector; otherwise, we would have seen the changes to the zero emission vehicle mandate that so many in the industry, and some Labour Back Benchers, are demanding. In fact, we have seen Labour turn the screw on this issue even further since it came to power.
We know that some Labour Ministers—such as the hon. Member for Stockton North (Chris McDonald), who is a Minister in the Department for Business, Innovation, Science and Trade—are on the side of motorists. However, the Department for Transport has shown absolutely no indication that it is on the side of Britain’s car industry or those who work in it in good jobs, often with trade union representation, up and down the country. It is not on the side of those who go out and drive for work or for leisure day after day.
What have this Government done? They have been busy merrily cooking up a story with the Treasury and pressing ahead with plans to put an extra 6p per litre on fuel in the new year. They have been busily slicing out road scheme after road scheme and road upgrade after road upgrade. So much for the road investment strategy that the Minister talks about! Under this Government, how can we have any confidence that they will deliver the scheme at all? We have just seen the A303, the Blyth relief road, the A31, the A10, the A12, the A17, the A454 and the A127 growth corridor cancelled, as my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois) just mentioned, as well as many more. The Government have cancelled their own growth corridor!
The Transport Secretary—although she is not here—expects us to swallow the idea that the Government will suddenly be on the side of motorists and road users with this new scheme, which opens the entire road network to potential road charging. As soon as any new enhancement is put in—it may be a central reservation enhancement—it can be opened up to potential road charging.
I read the other day, to my amazement, that National Highways has banned diesel from construction sites on the lower Thames crossing. Are this Government absolutely mad? Are they trying to keep the costs of this project down?
Mr Holden
My right hon. Friend makes a good point.
The Government have devised a new cunning plan. They are not just banning diesel—oh no; they are banning hydrotreated vegetable oil. You heard that right, Madam Deputy Speaker: they are going to wipe out vegetable oils being repurposed as diesel from the sites. The sites will have to be all electric. How much cost will they ram through on to this scheme? In the end, who will pay for that? It will not be the private company that runs the scheme; it will be everybody who crosses the Thames. That is what the Government are doing: driving in costs from day one. This is the biggest road scheme that this country has done in decades, and the Secretary of State is not even here to talk about it.
Jim Dickson
The shadow Secretary of State keeps mentioning the fact that the Secretary of State is not here. Is he aware that one of the first things she did on assuming her role was to agree the development consent order for the lower Thames crossing? The last Government failed to do that over 14 years, because they were not prepared to stand up to the environmental groups who slowed the thing down and allowed dither and delay.
Mr Holden
The last Government fought tooth and nail through the courts to deliver the scheme and get the planning consents all the way through. I think the hon. Member should take note of that. This is not something that this Government have dreamed up overnight and delivered. They are ramming costs right into the heart of the scheme, and it is his constituents who will pay for it in the years to come, because of the way in which it will be constructed.
This is neither the time nor the place for one of Baldrick’s cunning plans. Does the Minister know how much this scheme is going to cost? If not, why not? Why on earth will any private sector company look at investing in the scheme if it has an open-ended cost? The Government say that they want to deliver growth, but instead they spend their days screwing over motorists, cancelling road schemes and calling Heathrow expansion a “hypothetical” or “a matter for London”.
Labour is not a serious party intent on delivering growth. They are only fit to whack up the welfare budget and leave the rest of us to pay for it. My party has set out a clear plan to tackle some of the costs of infrastructure, including leaving the Aarhus convention, which we discussed at the Conservative party conference.
Dr Prinsley
Is the shadow Secretary of State opposed in principle to the concept of tolls for any of these projects?
Mr Holden
I thank the hon. Member—my occasional squash partner—for asking that question; he often beats me at squash. We are not opposed to tolls, per se—we have had them on the existing lower Thames crossing at Dartford for years—but we took them away on the Severn bridge, which is important for our connectivity to Wales. We are totally against opening up the entire strategic road network to charging, which is what this piece of legislation does.
Mr Francois
For the record, the first Dartford tunnel opened in 1963, under a Conservative Government, and the Queen Elizabeth II bridge at Thurrock opened in 1991, under a Conservative Government. Is not the risk that if the lower Thames crossing is 90% funded by private finance, which I am not opposed to in principle, the toll charges could be so ruinous that it will be very difficult for ordinary motorists to afford it? We would have some confidence if we knew who was going to fund the scheme, but until we know that, we are going to be worried, aren’t we?
Mr Holden
Nowhere in this legislation is there any talk of the exact price that people will have to pay to cross the river. There is no idea of who is going to build the crossing, the cost of it or how much people will have to pay to cross. Huge numbers of open-ended questions are left by this piece of legislation.
As I was saying, my party has outlined plans for how we will reduce the cost of infrastructure, including leaving the Aarhus convention, so that we can tackle the rules that allow costly or protracted legal challenges. The Minister smirks, but that is costing his Department hundreds of millions of pounds a year. If his Government pulled out of the convention, they could deliver some of the road projects that they have just cancelled. That is exactly what we should be doing. At the moment, every man and his dog can challenge the Government on any important piece of road infrastructure being built in the country—or, in Jolyon Maugham’s case, every man and his fox—and use those rules to delay projects and cost the taxpayer. Costs are capped at £5,000 for an individual and at £10,000 for a campaign group, but this situation costs the taxpayer hundreds of millions of pounds a year. That is where the hon. Member for Dartford (Jim Dickson) should look to save money for his constituents when they cross the road in the future, and it is why it took so long for this legislation to come forward—because it took so long for the planning to happen.
What plan have the Government set out? Is it for this country to be a world leader in greenwashing road building and making roads more expensive than anywhere else in the world? We have a Government run by a man whose only care for transport is whether it is in Manchester or not. I have no doubt that if the LTC was somewhere in Manchester, the Government would fall over themselves to get it built, rather than having no answers to the big questions that we have.
Daniel Francis (Bexleyheath and Crayford) (Lab)
Will the right hon. Gentleman give way?
Mr Holden
I have read the Bill. Clauses 33 and 81 could lead to road charging schemes right across the country. The Minister seems not to have read his own Bill. What safeguards are there? How much will his plans to ban diesel add to the cost of construction? Does he know? Would he like to tell us? No, he is not going to say.
The shadow Ministers, my hon. Friends the Members for Mid Buckinghamshire (Greg Smith) and for Bognor Regis and Littlehampton (Alison Griffiths), will take the Government to task on the Bill and go toe-to-toe in Committee, defending motorists against unlimited tolls and endless charges. That is why we have tabled our reasoned amendment that calls on the Government to see sense, keep costs for motorists down, get this project built and deliver the growth that we desperately need in this country.
Mike Reader (Northampton South) (Lab)
As many Members will know, I joined the industry 20 years ago as a civil engineer. Throughout my career, I have been very fortunate to work on a lot of major infrastructure projects, including the lower Thames crossing, the A303 and some of the big National Highways frameworks, such as the specialist professional and technical services framework and the regional delivery partnership—the delivery integration partner framework. I now chair the all-party parliamentary group on infrastructure, so I come at this Bill as someone who has priced and bid for major contracts and has seen what happens when the money just is not there.
However, I thought I would start my contribution to this debate with a safety moment. Members who have been around the sector will know that safety culture is absolutely critical to delivering our road network and doing so safely, and a safety moment that has always stuck with me is one from National Highways. It is about a lady who I am going to call Jane. Jane had had a busy day at National Highways; she jumped in her car, was driving home, and was involved in a very low-speed traffic collision. When she hit the car in front, her airbag went off and caused her lanyard to be forced through her chest, and she ended up in hospital. That is always a good reminder—when you leave today, if you are rushing to your car to drive home, remove your lanyard, not only for your security but for your safety.
Let me now turn to why this Bill matters to Northampton. Why is an MP for Northampton talking about a scheme in Essex and Kent? Well, Northampton sits at the heart of the logistics network: some 2,640 logistics businesses operate out of Northamptonshire, and 35,000 people in my county work in haulage and logistics. Every day, goods move between warehouses in my constituency and the channel ports, many of them crossing the Thames via Dartford, and when Dartford jams up, those costs are felt in my constituency and across the midlands. I support this Bill—I think it is the right thing to do to deal with that problem—but I agree with the Road Haulage Association and many hauliers that we must also consider the cost for freight operators. When the licensing agreements come forward, we must consider the considerable business and fuel costs that many businesses in my constituency are facing.
Planning has long been the biggest barrier to building roads. In particular, the development consent order process for the lower Thames crossing has been torturous—unfortunately, I know that at first hand. The second biggest barrier, though, has often been money. The Treasury can only fund so many projects at any one time, and every project competes for the same pot. This Bill brings in the private capital to build things that would otherwise sit in the queue. I have long argued that private finance works in this sector; when the Silvertown tunnel opened last year, it showed that modern public-private partnerships can deliver for taxpayers, and I still believe that.
However, having spoken to the Minister previously responsible and now to the current Minister, I want to be straight with this House. This is an ambitious thing that we are doing. I do not believe that the regulated asset base model is used elsewhere in the world for road infrastructure; traditionally, we see it delivered through concessions or availability-based public-private partnerships. I was initially concerned, so rather than shouting at the Department about where the money is coming from, I went out and spoke to industry. Through the Global Infrastructure Investor Association and some of the big advisers to the investment community, I spoke to investors about this project, and they said that this is actually quite an exciting opportunity, particularly because it should reduce the cost of capital. Creating a regulated return reviewed by an independent regulator should deliver cheaper finance and, importantly, more competition for that finance, so it is completely right that the Department cannot say who is funding this project yet, because we need to run the competition to get that funding in the first place. The more certainty we give to the market through a model such as this one, the better our chances of securing that finance at a much lower cost.
Mr Francois
The hon. Gentleman has obviously spent a lot of time looking into this matter, and I commend him for that. As a result of his discussions, could he estimate when we might know who the funders will be—is it another year or two? When will it be? As he has obviously spoken to the Road Haulage Association as well, what does he think the initial toll will be for a lorry going through the tunnel?
Mike Reader
I would not want to speculate on the Government’s timetable. What is important is that the Bill goes through, and then we will go through the licensing arrangements to find the right partner to deliver this project, as well as the finance, obviously. However, the delays that happened under the previous Government—the first failed development consent order, where they completely ignored the local community, and the second DCO ending up in the courts because of challenges brought forward by the environmental lobby, as my hon. Friend the Member for Dartford (Jim Dickson) said—were not dealt with, and I am really disappointed that the Opposition are playing that card now when they campaigned against the Planning and Infrastructure Act 2025, which brought forward many measures that would have solved the problems that the lower Thames crossing had.
The question of risk is another important one. A RAB model moves construction risk on to the people who are financing, building and delivering the scheme, but the treatment of risk in the delivery of a major infrastructure project can make the difference between success and failure. The question is: who holds that risk? The Competition and Markets Authority’s review of the civil engineering sector rightly identified that the transfer of risk from tier 1s, from financers, and into the supply chain can make a big difference to a project’s solvency and how it is delivered, particularly for major projects. We have to make sure that the licensing arrangements established by this Bill make provision for Government to require equitable risk management and risk treatment within the delivery of projects, as well as prompt payment through the supply chain, so that when billions of pounds of investment are involved, that money flows through quickly into the supply chain and does not get stuck at tier 1 level.
I have a couple of questions for the Minister to round off my speech—I am very grateful for his and his predecessor’s engagement on this Bill. The Secretary of State told the Transport Committee that the process for setting tolls in the first settlement period, which would answer the question asked by the right hon. Member for Rayleigh and Wickford (Mr Francois), would be set out as the Bill progresses. Will the Minister confirm that that is still the case? The standard licence conditions will be set by the Secretary of State without parliamentary procedure, so will the Government commit to publishing the core principles for investor returns and price reviews before any licence is granted?
The Bill puts new requirements on the Office for Rail and Road. I have had relatively good experiences with that organisation, but this is a new skill and capability that it needs to have, so what are the Government going to do to strengthen the ORR’s capability to manage these contracts effectively?
Turning to existing roads, to address the point made by the shadow Secretary of State, the Government have already confirmed in a written answer that they have no plans to use these powers to toll roads that are currently free. I welcome that, but since there is confusion, could the Minister put that question beyond doubt in his closing remarks from the Dispatch Box?
Some will say that this is a pay-per-journey model that will change Britain’s roads, but I do not believe it is. It is a way of getting the biggest schemes—the schemes that get stalled for years, if not generations—off the drawing pad and into delivery. I fully support the Bill.
Madam Deputy Speaker (Caroline Nokes)
I call the Liberal Democrat spokesperson.
Olly Glover (Didcot and Wantage) (LD)
I start by welcoming the Minister to his place. He has been blessed with the opportunity to bring another scintillating transport Bill to this House, which has clearly excited a very large number of hon. Members.
Starting with the Minister’s comments about the lower Thames crossing, which is clearly a major reason why this legislation has been laid, he is quite right to say that there is a clear need to relieve pressure on the Dartford crossings that connect the two ends of the M25 across the Thames. However, it is interesting that we seem to be assuming that traffic growth is inevitable, which is an assumption that the Government were not quite so willing to make when they opposed passenger growth targets in the Railways Bill. I make that point purely because although we of course need to cater for future increases in road demand, there is also a lot we can do to transfer that demand—both passenger and freight—to other transport modes, particularly for long-distance traffic.
In that context, while the lower Thames crossing has merit in that it will relieve the existing Thames crossings, the Government appear to be repeating the mistake of many past Labour and Conservative Governments by seeing road building as the sole answer and neglecting rail infrastructure. The channel tunnel is one of the engineering wonders of the world, yet it continues to be under-utilised, especially for rail freight—in fact, largely the rail freight does not exist, beyond lorries going on LeShuttle or whatever it is called this week. Channel tunnel use charges are one of the barriers; another is the capabilities of the UK rail network within Kent. There are well-developed plans for upgrades to the Kent conventional rail network to accommodate W12 loading gauge freight trains, and intentions to create a freight hub served by High Speed 1 at Barking, which would benefit from acceleration.
As drafted, the Bill would also give the Government significant powers to impose road tolls and charges on major roads. Introducing a new financing model for the strategic road network, while the local roads that make up 99% of the country’s roads in terms of length are facing an £18 billion repairs backlog, is an interesting choice by the Government, but let us engage directly with that choice.
There are examples of the concept of tolls and charges working well both here and abroad. Many choose to use the M6 toll road instead of the M6 despite there being a fee to pay, because it reduces some of the “road to hell” experience that the M6 often is for many. In France, motorway tolls are common, if not universal, and many European countries use a vignette system, where a driver pays for a sticker, or a digital version of that, to go on their vehicle, which enables them to use motorways and trunk roads. The advantage is that people who want to use motorways and trunk roads pay a little bit more for those roads, but people who use their car only for very local purposes do not have to pay that cost.
Olly Glover
Not all French motorways are tolled. Certain sections of them are—often the busiest sections. I will come to what the right hon. Gentleman said about what the Bill does and does not do.
The Liberal Democrats’ position is that there needs to be close attention to the detail and scrutiny of the way in which charges and tolls—like those in Europe and on the M6, which I mentioned—are implemented. However, the Bill leaves all of those questions of operation, management, oversight and regulation of tolls and charges largely undefined; they are often relegated to secondary legislation. The Government must ensure that road users are not held to ransom by licence holders, who must be properly regulated. We have seen disastrous effects in other sectors when these things have been got wrong.
The Minister and the hon. Member for Northampton South (Mike Reader) gave good examples of how a regulated asset base approach, and indeed private finance initiatives, can be used for good, but of course there are many bad examples as well. I am not sure whether too many people believe that the water industry’s use of the regulated asset base approach has been enormously successful. We certainly need regulation of private investors and to ensure that the triggers for the special administration regime defined in the legislation are not too weak. Of course, there are also many examples of public private partnerships and private finance initiatives that have not ended well, particularly with hospitals and the London underground.
Mr Francois
The hon. Member is making a very thoughtful speech. I was recently on a private holiday in Texas, being driven by a friend. In that state, there is a number of toll roads, so people have a chip attached to the windscreen that allows them to transition from public roads, as it were, to toll roads and back again, with that chip recording what they have to pay as they go from one to the other. The technology to do this already exists—I saw it with my own eyes. We are just a bit worried that the Government might be a bit too keen to adopt it.
Olly Glover
The right hon. Gentleman is right to say that if we are to go down that road, it needs to be transparent and done in a way that gives confidence to consumers. Car drivers and road users are consumers, and we should think of them in the same way we do customers on the railway or on planes. If such a thing is to be done, it must be done with great care and thought. That is why we need to scrutinise the legislation carefully.
Ruth Cadbury (Brentford and Isleworth) (Lab)
Such schemes are hardly new: in London, we have had the congestion charge for many years now—[Interruption.] We have it elsewhere, too; drivers in and around our major cities are used to a charge they have to include in their budgets.
Olly Glover
Yes, London is another example of where some of these things are already happening, but the fact that they have been controversial at times is exactly why they need to be done with thought and, ideally, in a manner that avoids some of the interminable cultural wars that we must always have on every topic these days. Instead, they should be done with consensus and based on sound reason and analysis.
We are not satisfied that the Bill as drafted provides that transparency and accountability, so we will not take a view on it as a whole today. We hope that the Government will be more receptive to some of our ideas to improving the Bill at later Commons stages than perhaps they have been hitherto.
Daniel Francis (Bexleyheath and Crayford) (Lab)
I have listened to the debate, and I think Opposition Members have amnesia over some things that have happened over the years. The A282 Trunk Road (Dartford-Thurrock Crossing Charging Scheme) Order 2013 and the Silvertown Tunnel Order 2018 are measures that directly impact my constituents every single day, and they happened under their watch. Conservative MPs in my part of south-east London go around campaigning, saying, “How dare you increase the Silvertown charges this year?” But it was their legislation that insisted that that happened; they really do forget what happened under their watch.
I should have started by declaring that I am an officer of the all-party parliamentary group for better roads and the chair of the all-party parliamentary group for wheelchair users. I also drive a Motability vehicle on behalf of my daughter, as I will refer to later.
My constituency of Bexleyheath and Crayford sits less than 3 miles from the Dartford Crossing, and for businesses—particularly industrial businesses—in Crayford and Slade Green, it is an essential link. A number of those businesses are located around Thames Road in Crayford. Over 20 years ago, as Bexley’s then cabinet member for transport, I worked to ensure that funding was forthcoming from the then Labour Government and Transport for London to upgrade Thames Road in Crayford to a dual carriageway. Unfortunately, one part of the scheme was never completed, which leaves a pinch point at the Cray Mill railway bridge on Thames Road that carries the North Kent railway line. The road is constricted due to that single carriageway to pass through the bridge arches, and that pinch point can cause long queuing during busy periods. I will continue to raise that matter with both my local authority and the Government.
Similarly, a couple of miles down the road in the constituency of my hon. Friend the Member for Dartford (Jim Dickson) at the Littlebrook interchange, there are further delays for my constituents as vehicles approach the Dartford tunnel to travel north across the Thames. Those issues are resolvable through engineering, but the congestion at Dartford each day is a lot harder to resolve. The delivery of the lower Thames crossing will reduce the number of vehicles—particularly lorries that have crossed the channel and need to cross the Thames—and will therefore relieve that congestion. I warmly welcome that the lower Thames crossing will double road capacity east of Crayford.
For my businesses, the lower Thames crossing will deliver reduced costs and opportunities to grow. I am amazed that later today the Conservatives will vote on a reasoned amendment calling for the Bill not to progress, as that would leave the scheme without a funding mechanism. This afternoon, the Conservatives will actively try to stop a Bill that supports growth and investment for businesses in my constituency and across south-east London and the Thames estuary. I say to Conservative Members that if they have concerns, the time to try amendments is in Bill Committee and on Report, rather than trying to kill the Bill in its entirety this afternoon.
As the Bill progresses, issues will need to be looked at. I know that my constituents and businesses would want us to look at mechanisms in clauses 7, 8, 24, 25 and 26 to ensure consistent tolling arrangements between the lower Thames crossing and those existing ones at the Dartford crossing. In particular—I am afraid this is a mouthful—schedule 3 to the A282 Trunk Road (Dartford-Thurrock Crossing Charging Scheme) Order 2013, which was passed under the previous Government, outlines that a vehicle exempt from vehicle excise duty due to carrying disabled people does not pay the toll. That normally relates to Motability vehicles. I am clear that we need to ensure consistency in the legislation for both the Dartford and lower Thames crossings for Motability users.
We also need to look into the detail of clauses 33, 87 and 92 as the Bill progresses in order to protect consistency and the current tolling arrangements. Clauses 87 and 92 allow arrangements that would see the removal of toll booths at other toll roads and crossings, such as the M6 toll or the Mersey tunnel. I warmly welcome that, as it would relieve congestion. As the hon. Member for Didcot and Wantage (Olly Glover) said, these removals are happening more and more in France. I had a moment of panic this year, when I was on a toll road without a toll booth, and I realised I had not paid. That is happening more and more, and there are lessons that we need to learn from our French counterparts on this matter.
Relieving congestion is of real benefit to business. The Bill is not all we need, but it can be a catalyst for beginning to look at the interoperability of toll systems. Currently, a business in Crayford that wants to cross at Dartford, then use the M6 toll and then maybe use another toll somewhere else, will have to set up several accounts across different toll roads. We have to look at the cost for businesses, including the amount of work in their internal accounting systems. We must look at the interoperability arrangements, both for businesses and for disabled people. At the moment, people need a separate Motability account on every single toll road. Dartford and Silvertown are free, but people have to register at Silvertown and do not have to register at Dartford. For the M6 toll and the Mersey tunnel, people have to register and pay an annual charge. It is hugely confusing for disabled people that different arrangements exist at each toll road.
I warmly encourage the Government to work on interoperability, both for business and for disabled people. I know that conversations are already being had between the operators of the Dartford crossing and the M6 toll road about interoperability, bringing those systems into one arrangement and encouraging that across all toll systems in the country. I am sure that businesses in Bexleyheath and Crayford would welcome those toll roads and crossings being brought together into one system, as would Motability users.
I support the Bill. It will bring benefits for my constituents through the delivery of the lower Thames crossing, and I hope it will start the conversation on interoperability, which will support Motability customers and businesses, reducing complexity for them and helping to encourage growth in our economy. I warmly welcome the Bill, and I look forward to hearing the Minister’s comments.
Sir Christopher Chope (Christchurch) (Con)
It is a pleasure to follow the hon. Member for Bexleyheath and Crayford (Daniel Francis). The different varieties of charges and how they are enforced is a problem not just for people with disabilities, but for general motorists. As I understand it, almost half of the income from the current Dart charge is from penalties. That income is almost as great as the income from the charge itself. It shows the level of confusion that is caused to those who use that crossing.
I had the privilege of being the duty Minister in October 1991, when the Queen Elizabeth II bridge was opened by Her late Majesty. That was an occasion that I will never forget, with fly-pasts and the QE2 underneath the bridge. It was a great celebration of private enterprise at its best, because Members may recall that that bridge was built in only three years and two months. It cost £120 million and was delivered on time and to budget. The way it was financed was set out in the Dartford-Thurrock Crossing Act 1988. In responding to this debate, I hope that the Minister will explain why a similar proposal is not being applied to the lower Thames crossing.
I checked out the remarks that I made as the Minister when the bridge opened in 1991, 35 years ago this month. In those remarks, I made reference to the fact that we were working on the lower Thames crossing. We recognised 35 years ago that there would be a need for an additional lower Thames crossing. The idea then was that the income from the tolls on the Dartford crossing would eventually be used to help fund the lower Thames crossing.
I am supportive of my party’s reasoned amendment, because it shows a certain scepticism about all these promises that are made. We should recall that, at the time of the opening of the QEII bridge, I promised—it was a repeat of a promise that had been given by a previous Conservative Minister—that the tolls would cease to be payable once the costs of the bridge had been paid for. The legislation provided that there was a maximum period of 20 years through which the tolls could be paid in order to fund the bridge.
In the end, I think the period of the tolls should have been about 12 years, because the bridge should have been paid for by then. There was then an extension of one year for tolls in order to ensure that we had sufficient income to pay for the ongoing repairs and maintenance costs. That should have been the end of the financial burden on motorists using that crossing. Of course it was not, because then the Treasury got involved and said, “No, we need to keep the income coming in from the crossing. How do we justify that?” Well, the justification was that by continuing to have tolls on the crossing, we would be able to fund the lower Thames crossing.
That continued for a bit of time, and then the Labour Government decided that they did not want to have the income from the tolls dedicated to a future road project across the Thames, and that the money would go into general taxation; we lost the allocated resources that should have been there to fund the lower Thames crossing, and the money that continues to be paid by those who use the Dartford crossing just goes into general taxation. Is it any surprise that people are sceptical about promises that are made when legislation like this Bill is being debated?
The Minister says that the Bill will not be used as a vehicle for toll roads across the country. Frankly, from my own perspective, I once argued that the best way for us to promote important highway infrastructure in this country is by building roads for prosperity. “Roads for Prosperity” was the title of a 1990 roads White Paper that led to an enormous expansion of our road network, which I was lucky enough to be involved in during my time as the Roads Minister.
Mr Francois
My hon. Friend brings valuable ministerial experience to the House. I think it is fair to say that the lower Thames crossing has a very long and checkered history, just as HS2 has a very long and checkered history—in both cases, under Governments of different colours—but he is absolutely right: in south Essex, the scepticism about future tolls on the lower Thames crossing is largely based on the fact that the tolls on the QEII bridge are still in operation.
Sir Christopher Chope
I thank my right hon. Friend for that observation. That is why we need to be very sceptical about what the Government are proposing.
Let us look at the issue of the lower Thames crossing. I read that it is going to cost £10 billion, and people will ask how we are going to raise that money. It seems to me that it will not be difficult to get the capital from the private sector, if a return can be obtained on that capital. Indeed, when Sir Nigel Broackes, who was the boss of Trafalgar House, was bidding for the Dartford crossing, he obtained the capital from the Bank of America. I do not think there is any doubt that the money will be forthcoming, but what will be the cost of the whole project? Will it have a finite cost of, say, £10 billion? If so, over how long a period will the Government allow the operator and the construction vehicle to have that paid back? Will the tolls be designed to pay back the cost of the tunnel within 20 years, 30 years or 50 years? The answer to that question will determine the level of the tolls. Are they going to be affordable? My view is that it is reasonable that this infrastructure be paid for by the people who will use it. I do not have a quarrel with that.
Ruth Cadbury
It is been interesting to listen to the former Minister, who has had a distinguished career. I cannot speak about the former funding of the Dartford crossing, but does he not recognise that under this RAB model, which is overseen by the Office of Rail and Road, as are other RAB projects, funding is in effect hypothecated to the scheme? That is clear and transparent, unlike the situation that he mentioned, in which drivers did not know whether the funding that they provided was being merged with general taxation income. On how long this will last, surely that depends on the risk, and the length of time for which investors are prepared to take on the licence, when they bid to Government.
Sir Christopher Chope
I hear what the hon. Lady says, but the question I am asking is: why can we not have dedicated legislation for the lower Thames crossing, as we did for the Dartford-Thurrock crossing? In the primary legislation that went through this House, it was specified that there should be tolls only for the length of time it took to repay the costs of construction. Subsequent Governments changed that in the way that I have described, because any legislation can obviously be changed by a subsequent Parliament.
Ruth Cadbury
I appreciate the hon. Member’s response, but as this Bill makes clear, the funding through the RAB model of the lower Thames crossing and other schemes is not only for construction, but for ongoing maintenance, necessary improvements and so on. It is a long-term scheme, and is not merely for the cost of the construction.
Sir Christopher Chope
I understand that, and one of my concerns is that we may find that the tolls continue far into the distant future, when there will no longer be a need for tolls to pay for the maintenance of the infrastructure. In a sense, the model espoused for the lower Thames crossing project could have exactly the same consequence for motorists, which is that they will end up paying a lot more than the cost of the tunnel. I hope that the Minister can explain why we could not have had specific, ringfenced legislation on this, instead of a general Bill. If we could have had that, we could have made a lot more progress.
I am delighted that my right hon. Friend the Member for Basildon and Billericay (Mr Holden) is saying that we Conservatives would like to leave the Aarhus convention, because it inhibits progress on such projects. I remember all the difficulties we had with the European Union when I was the roads Minister; EU legislation was preventing the completion of the M3 through Twyford down. That environmental interference ultimately cost our economy a significant amount of money, but when anybody uses the M3, they see that it just blends into the landscape and is a really well designed project.
The question I put to my right hon. Friend, rhetorically, was: why did we not do something about the Aarhus convention when we were in government? On this, as on a lot of things, I am delighted that the leader of the Conservative party is showing herself to be a real Conservative. I fear that that we are still suffering from the hangover of a so-called Conservative Government who did not get to grips with issues such as the Aarhus convention, so I am very much with my right hon. Friend on that.
I intervened about the scope for extending the Bill to projects not currently a part of the main highway network or trunk road network. If we want to deal with the problems to do with London bridges, we will have to find some way to fund bridge repairs. I have an interest: my home in London for many years was just south of Waterloo Bridge. Recently, we heard rumours that the bridge may have to close because of cracks in it. If it is closed, that will be the third unusable central London Thames crossing. That is intolerable. Surely, we must find a way of funding the repairs and the reconstruction necessary to keep those London bridges open. My grandchildren talk about London Bridge falling down and all the rest of it, but we are not talking about London Bridge. Three other key bridges in London are either already closed or about to be closed. What are we going to do about that? I would be interested if the Minister is prepared to say, “Yes, I agree that the model set out in the Bill could be applied to the bridges in London that are in desperate need of repair.”
Daniel Francis
I hear what the hon. Member says, but the 2018 changes, made under the previous Conservative Government, introduced tolling at Blackwall and Silvertown. They were voted for by Conservative MPs who now run around south-east London blaming that on the Mayor of London. Can he assure us that if we were to take these matters forward, the Conservatives would take ownership of the changes, rather than pointing the finger at other people, as they are now doing?
Sir Christopher Chope
I cannot, obviously, make an assurance like that; it was a rhetorical question. All I can say is that I think people should take responsibility for their decisions, and we should face up to the fact that if there are costs associated with bits of infrastructure that cannot be funded out of general taxes, we should be prepared to ensure that they are funded by the users. To close down a thoroughfare across the Thames, with no solution or plan for what will happen, is totally unsatisfactory. I would like the Mayor of London to take action, because this comes within his responsibilities. He could easily use some of the income from the congestion charge or the ultra low emission zone charge to fund that. It does not seem as though that is happening, which is why I suggested that the Bill be used for this purpose.
Daniel Francis
May I seek clarity on that matter? My understanding is that not all the bridges in London are the responsibility of Transport for London. Some belong to local authorities and some belong to charities; the Mayor of London does not have direct power over them all. Can the hon. Member clarify that, for the record, given that he has just said that this is a Transport for London and Mayor of London responsibility?
Sir Christopher Chope
I am not going to try to clarify that. It sounds as though what I have said is only partially accurate, but in a sense, that reinforces my point, which is that, whoever owns the bridges or has financial responsibility for them, the financial vehicle identified in the Bill could be used to pay for their repairs and maintenance, to ensure they are brought back into use. I do not purport to be an expert on who owns which bridges. I did not know that any of them were owned by charities. The hon. Gentleman seems to say that they are; I am not going to dispute that, but I do not think that alters the principal point I was making.
I am concerned about other provisions in the Bill, and some of those concerns are identified in the reasoned amendment. It brings in massive new powers for the Office of Road and Rail, at a time when I thought the Government were rowing back on arms-length bodies being given such powers; and there are great powers under clause 99 to basically repeal any legislation retrospectively, as a consequence of the measures in the Bill. I could not understand the references to the insolvency legislation in the Bill. How would that fit into what happened with the building of the channel tunnel, for example? That was a private-investor exercise, and ultimately, the initial investors lost most of their money—but that was a result of them taking the risk. Are the Government suggesting, by taking those powers in relation to insolvency legislation, that different arrangements should operate in the future?
I am sceptical about the Bill, but frankly, when I was a Government Back-Bench MP, I proposed that we should privatise the whole of our motorway network, because that would bring good benefits to the taxpayer and ensure that the network was paid for by the people who use it. Earlier this month, I drove back with my wife from Strasbourg—Strasbourg to Christchurch is about 550 miles, and the tolls amounted to over €100. That was a contribution that I made toward the cost of the French motorway system.
If we are true radicals—this may be too radical for my hon. Friends on the Conservative Front Bench—why can we not privatise our motorways? We cannot privatise the whole of the trunk road network because it that would mean dealing with all sorts of rights of way, bridleways and other complications, but the motorway network is set up in such a way that it could be the subject of one of the largest ever privatisations. I go back to my point about the success in the 1980s of involving private capital and entrepreneurial activity in the development of the Queen Elizabeth II bridge. Why do we not extend that more widely across our road network?
Ruth Cadbury (Brentford and Isleworth) (Lab)
It is a pleasure to follow the hon. Member for Christchurch (Sir Christopher Chope), given his deep experience and interesting perspective on bringing in tolls for all our motorways. That may be what happens in certain countries, but I suspect the whole funding of their road network is somewhat different from ours, so I will go back to focusing on the Bill.
I have driven on roads in other countries, and across the bridge to Wales in the past, and it seems entirely natural to me for us to introduce a toll for the lower Thames crossing. It is parallel to the tolled Dartford crossing, and it is hardly going to be the first toll road in the UK. I welcome the Bill, which will enable the funding of the lower Thames crossing to be delivered and maintained through tunnel users paying to use it. It is the first time that a road project has used the RAB model—a model that is already used for energy, water infrastructure and Heathrow airport.
Delivering improved transport infrastructure is core to this Government’s growth mission, so I am glad that the Government are exploring a range of both tried and tested and new methods of working with private sector investors to deliver projects. Those include using RAB for the roads for the first time—as in the Bill—as well as using the community infrastructure levy and further exploring the capture of land-value uplift on new rail schemes. Some of the early private finance initiative schemes in the mid and late ’90s gave public-private funding partnerships a bad name, but I am confident that the relationship between state commissioners and long-term private capital has matured in a way that can only be mutually beneficial.
On the RAB model, however, I do have some concerns. While it provides confidence for investors and a rock-solid return—as the representative of potential investors in the lower Thames crossing told me—there is also a history of gold-plated, over-engineered schemes. Sometimes, as in the case of Heathrow airport, it can be poor value for money, as airlines and businesses that are captive tenants there tell me. All of Thames Water’s bill payers are funding the Thames Tideway tunnel—a project that provides no benefit to my constituency or the health of the River Thames in my constituency, as we are upstream of the intake of the Tideway tunnel.
While there is a regulator in the Bill—the Office of Rail and Road plays an important role—I wonder, as I do with many regulators, whether it has sufficient teeth and funding. Does it have the right powers and sufficient powers over issues such as sustainability, safety, customer focus and local communities? To look again at the example of Heathrow airport, I fear that the Civil Aviation Authority is far too weak in areas other than its core responsibilities of the economy and, of course, air safety.
There is one final issue with the lower Thames crossing that has been exercising both myself and the road haulage industry: the removal of any truck stop or motorway service area from the plans. The Transport Committee produced a report on this matter in 2022, when the hon. Member for Mid Buckinghamshire (Greg Smith), who is now on the Opposition Front Bench, was on the Committee. Our conclusions showed the critical impact of the shortage of safe, secure driver facilities around the south-east, and particularly on routes to and from Dover.
That message was repeated to the Transport Committee in March this year by the haulage industry and driver union representatives. Drivers are required to rest every 4.5 hours and need somewhere to stop and sleep in a place where they and their load are safe, yet we were told that at Medway and Thurrock services, on either side of the Thames, if a driver is not in the motorway service area by mid-afternoon, they would have to go and find an A road lay-by, meaning no toilets, no food and no safety.
Jen Craft
My hon. Friend mentioned Thurrock services. Thurrock is an area that will be heavily impacted by the lower Thames crossing, so I am very glad that she mentions the lack of a service station built into the plans. We already have significant issues with lorry drivers parking in inappropriate places on roads that are not built for that purpose, in order to get the rest that they need because they cannot get into a service station. Does my hon. Friend believe that the lack of a services facility as part of the lower Thames crossing will exacerbate that issue?
Ruth Cadbury
I absolutely believe that it will exacerbate the issue, because the lower Thames crossing will significantly increase vehicle throughput, particularly of trucks and lorries, on what is already a busy part of the network.
The originally proposed MSA or truck stop—I am not sure which—has been removed from the plans, and I am told that there is no plan and no requirement to bring one back. This illustrates a national policy gap. In the French motorway system, there is a full MSA every 50 km and partial ones every 10 km. I am told that it is not too late for proposals, and I really do hope that that is the case, although there would have to be a planning application from a landowner in order to bring one in. I cannot believe that it would not be a profitable opportunity for investors to do that and then in due course to link it into the lower Thames crossing, because of course it is only just along the road from the docks, so there is bound to be demand.
The Opposition amendment says:
“this House…declines to give a Second Reading to the Highways (Financing) Bill, because it has no confidence in the Government’s ability to deliver the project on time and on budget, given its record of cancelling major road schemes across the country”
and risks costs
“spiralling further out of control”.
That is rich coming from the party that oversaw most of HS2’s lifespan. HS2 is so desperately needed by our rail system and northern cities, yet what did the Conservatives do when in government? They started construction before the design was agreed and complete, then halted it and removed about half the length of HS2, thus completely undermining the business case. I could go on.
The lower Thames crossing was commissioned because the Dartford crossing has miles-long queues leading on to it. Extra lanes have been built on the M25, and we have all-lane running on many other motorways, yet on many of them traffic still crawls along at slow speeds due to the sheer level of congestion. While there is no doubt that the lower Thames crossing will relieve pressure on the existing Thames crossings for a few years after it opens, how long will it be until the toll payers are effectively paying to park on the approach road instead to cross to the other side of the Thames?
The DFT forecasts that road traffic will grow by 12% on motorways and 10% on all other roads over the next 10 years. To ensure that our roads do not grind to a halt, I really look forward to a policy that incentivises alternative travel options so that road space is available for those journeys for which there is no choice but to drive. For instance, increasing capacity at the Ely and Haughley junctions, or any number of other rail bottlenecks, would increase rail capacity for freight and passengers at a fraction of the cost of the lower Thames crossing or of opening another lane on a UK motorway.
I do hope that my hon. Friend the Minister and the Secretary of State can provide some assurance to me and this House. Unless there is an overarching transport strategy that supports modal shift, it will not be long before we need an even lower Thames crossing.
Jim Dickson (Dartford) (Lab)
My constituents will be delighted to see this piece of legislation before the House. It is, as others have said, key to unlocking new infrastructure and finally ending the traffic chaos that plagues my Dartford constituency daily. The new lower Thames crossing is planned to be the first new road project funded in this way. The Dartford crossing and the M25 motorway, which along with the A282 provides access to the crossing, cut across the heart of my constituency, providing, as has been said by others, the one crossing over the Thames east of London. This represents a single point of failure, and fail it often does.
The Dartford crossing was designed for 135,000 vehicles a day, but as the Minister has said, the crossing now averages 150,000 vehicles a day and needs to be carefully managed around the clock. When failure happens, it is the residents of Dartford who pay the highest price. When the crossing has to close, which happens regularly, it leaves the town at a complete standstill. Journeys that should take 10 minutes can take four to five hours. Children cannot get home from school, tradespeople cannot get to jobs, and medical appointments are missed. Dartford residents have been waiting for years for this to be addressed.
Earlier this year, on 23 January, an over-height lorry somehow evaded the sensors designed to detect and halt such vehicles and caused significant damage to the roof of one of the tunnels, leading to a closure of more than 30 hours and absolute chaos for residents on both sides of the crossing, as traffic backed up for miles around. Even when there is not a major issue such as a tunnel closure, most days see heavy traffic. For those heading northbound in the evening, 95% of journeys feature delays, with two thirds taking twice as long as they should.
The high amount of slow-moving traffic also has health impacts on Dartford residents, with air quality far below what we should expect. For our country more widely, delays at the crossing affect goods coming to and from ports in the south-east, and the delays are estimated to cost the UK more than £200 million every year in time lost sitting in traffic. It is therefore incredibly welcome that the building of the lower Thames crossing is now proceeding rapidly forward after moving slower than traffic over the Dartford crossing on a bad day under the last Government.
We now see a reasoned amendment to the Bill, which would decline to give it a Second Reading, because the Conservatives do not believe the Government can deliver it on time. That is quite some accusation given their record of—how can I put this kindly—glacial progress on the project. Their 14 years of dither and delay are followed by an active attempt to block progress today. That will go down really well in Dartford, and I have no doubt that Dartford Conservatives will be ecstatic at the antics of their colleagues in the House today.
The new crossing, when finished, will take away more than 10 million vehicles from Dartford, freeing up almost a full lane of traffic. It will be hugely beneficial for the local economy. Thousands of jobs will be created during construction, with half the workforce recruited locally. I hope that that will kick-start a whole generation of new careers in construction for young people across north Kent and Essex. Once built, the new road will increase access to jobs for those living on both sides of the Thames, providing crucial employment opportunities for my constituents and others living nearby.
The campaign to get this piece of infrastructure up and running has been the single biggest priority in my time as Dartford’s MP. I welcome the Bill as a crucial step forward in getting the crossing built and open. I send my thanks to residents, businesses large and small, organisations across Dartford and north Kent, national trade bodies including Logistics UK, local government representatives and colleagues across this House and in the other place for their support with the campaign. I also thank the Secretary of State for Transport and Treasury Ministers, including the previous and present Chancellors, for the planning and funding decisions that they have made.
I appreciate the time the Roads Minister took to discuss the project in the summer and hope that he will indulge me by answering just a few outstanding queries that I have about the operation of the Bill and its impact on the new crossing. Most importantly, on tolls, local residents in Dartford and Thurrock are entitled to discounted use of the Dartford crossing. Will the Minister clarify whether the Bill has any impact on the operation of a future residents’ discount scheme for both the Dartford crossing and the new crossing? It is crucial for my residents that the tolls across the two crossings are set at an equal value and remain affordable via the discount scheme. I would be grateful for any assurance that the Minister can provide on that issue. The arrangement clearly will not work if there is a financial incentive for goods vehicles to use one crossing rather than the other.
It is important to recognise that, at its core, the Bill allows private companies that are licensed by the Government to charge tolls on newly built roads—the mechanism by which we unlock capital to build much-needed new infrastructure. British motorists already pay substantial revenue to the Government through fuel and vehicle excise duties, so does the Minister agree that although it is right to use tolls on new infrastructure in certain circumstances such as this, we do not want to see new toll roads created on currently untolled highways? I am sure that the Minister will give us reassurance on that.
I have some concerns about the vulnerabilities highlighted by the Government’s final stage impact assessment with the Office of Rail and Road, which has been appointed as the independent regulator. How will Ministers address the concerns that have been raised about information asymmetry, such as the concern that in some cases, private firms bidding for and then building and operating the development may possess more detailed information about actual project delivery and operational costs than the ORR, which might allow them to inflate costs, with knock-on inflation in the charges that users will eventually pay? Some reassurance on that would be useful.
Notwithstanding those queries, which I am sure the Minister will answer, I am happy to support this very welcome Bill. I know that it is widely welcomed as the key to unlocking the critical funding needed to build such a vital piece of new infrastructure.
Jen Craft (Thurrock) (Lab)
I am grateful to have the opportunity to speak to this Bill and to talk in particular about its primary focus on the financing of the lower Thames crossing. My constituency will be one of the two areas most impacted by both the operation and the construction of the lower Thames crossing. I will not spend too long dwelling on the question of the road itself. I have been quite vocal in my reservations about the wider scheme—the two Ministers on the Front Bench are nodding along—but that decision has long been taken, and with £1 billion of public money already invested in the scheme, it seems unlikely that it will be reversed. However, the finance mechanisms in the Bill will provide much-needed clarity for the many thousands of people who will be directly impacted by the lower Thames crossing that the project will go ahead. After decades of uncertainty, a number of my constituents will find that most welcome.
I am determined that my constituents will benefit in as many ways as possible from the construction of one of the most significant national infrastructure projects in a generation on their doorstep. However, I seek the Minister’s reassurance on certain aspects of the regulated asset base model that the Bill provides for, particularly how the model allows for an operator to recoup the costs of construction and maintenance via a toll mechanism—mitigating the financial and construction risk of an operator building the lower Thames crossing in a kind of private-public partnership. That potentially creates a natural monopoly, which the Office of Rail and Road, as the regulator, will oversee.
My constituents and I have some probably fairly justifiable concerns about a private enterprise levying tolls, particularly via the use of automatic number plate recognition at tollbooths. Many have had experiences with the current Dartford crossing toll operator in which, when things go wrong, it is hard to get redress. Owing to faulty ANPR, a not insignificant number of drivers have found themselves accruing hefty fines, sometimes into the thousands of pounds, for journeys they have not even undertaken. They can find it very difficult to get redress or to get the fines cancelled or written off. When I attempted to contact the operator of the scheme, I discovered that it was an offshore entity—operating, I think, out of the United States—and it was all but impossible to see transparently who was running the tolls or hold them to account. I would therefore be grateful for the Minister’s assurances around the transparency and accountability of any toll operator for a future Thames crossing, particularly as to how we get redress if things go wrong.
My hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) raised the Office of Rail and Road’s potential lack of teeth. We all know the difficulties that Ofwat has had in regulating the water industry; rightly, there is now a national outcry about the effectiveness of that regulator in holding private companies to account. It is fair to question whether the Office of Rail and Road is sufficiently equipped to hold to account a private toll operator for the lower Thames, particularly when it comes to redress, or to look at how the tolls are operated.
I also seek reassurance around congestion. My hon. Friend the Member for Dartford (Jim Dickson) spoke about the congestion caused by the Dartford crossing. Believe you me, I know that all too well. I am a lifelong resident of the place that I have the honour of representing, Thurrock, and the congestion at the Dartford crossing—or, as we affectionately know it in my patch, the bridge—is legendary. It causes misery for people, particularly when they are crossing from the Kent side to the Essex side. Every day, the tunnels create a back-up of up to four hours for motorists. When something goes wrong, it does not just prevent people from crossing; it causes congestion around my whole constituency. I know of people spending eight hours making a 10-minute journey. People spend hours trying to get home from school because they are stuck in traffic for hours on end. It is complete and utter misery. I am concerned about whether the lower Thames crossing will mitigate that congestion.
My other concern relates to the tolls levied. If there is a disparity between the charge for using the lower Thames crossing and that for using the Dartford crossing, it is fairly obvious which one most people will use. My predecessor, the former Labour Member of Parliament for Thurrock, Andrew MacKinlay, was instrumental in getting a discount for the Dartford crossing for residents of Dartford and Thurrock. That has proved invaluable, and is an acknowledgment of the fact that we probably bear the brunt of the journeys made on the crossing. When it comes to a residents’ discount for the lower Thames crossing, there should be equal consideration given to the impact that the crossing will have on my constituents. I am concerned that people may opt to use the Dartford crossing if it is cheaper than the lower Thames crossing. That would exacerbate a number of the issues we face.
There are wider issues with the Thurrock road network. Junction 31 of the M25, which leads directly on to the Dartford crossing, is a key part of national road infrastructure. When it goes wrong, it absolutely messes with our logistics industry and people travelling to and from work. My hon. Friend the Member for Northampton South (Mike Reader) asked why he should be talking about something that affects a constituency in the east of England. The truth is that the traffic backs up all the way to the midlands, around the south and around the east of England. It is such a tiny junction—it has so much potential to go wrong.
Recently, before the recess, someone spilt a large quantity of oil at junction 31 in the early hours of the morning while we were experiencing a heatwave. That took National Highways close to, I believe, 20 hours to address. The road remained shut for the entire time, and the congestion it caused in my patch was completely insurmountable. I discussed with National Highways and the police afterwards what we can do to properly get to grips with the fact that when this crucial bit of infrastructure goes wrong, it impacts so many people in my patch. One of the things they suggested, which I would be grateful to discuss with the Roads Minister, is potentially having a dedicated traffic police force for the Dartford crossing. I imagine that it would cover the lower Thames crossing as well given its proximity to many crucial parts of our industry.
It is only right that my constituents, who will be most impacted by the lower Thames crossing, must be those who benefit most from it. I would like to flag a few places where the lower Thames crossing project is currently falling short in some of its commitments to ensuring social value in the most impacted communities. I do not believe that these difficulties are insurmountable.
There is a commitment to employ a significant amount of local people in the build and construction of the lower Thames crossing. However, the geographical area for that is far too broad. It encompasses most of the Greater London area. My constituents, who are a small proportion of people within that area, will struggle to get a look in. I would like the geographical area for local jobs to be restricted to those constituencies that are most impacted, namely Thurrock, Gravesham and Dartford.
Similarly, there is a commitment to use and involve small and medium-sized enterprises in its construction. However, a number of small businesses in my patch, including Labour Base Solutions, have been unable to engage with the project so far, despite trying on numerous occasions. They have instead seen that national contractors seem to be getting priority. I would be grateful to discuss with the Minister what he can do to help change that, because this is enterprise, money, industry and growth that should be coming to my area, given that we will be the most impacted.
I believe that the Bill has the potential to go further and to deliver something that is completely key for transport in my constituency: the return of the Tilbury ferry. If my hon. Friend the Member for Gravesham (Dr Sullivan) were here, she would call it the Gravesend-Tilbury ferry, but in my patch we know what it is properly called. This ferry has been running for the best part of 600 years, having been given the charter by Henry VIII to provide a river service. It was, up until its closure—
Richard Quigley (Isle of Wight West) (Lab)
My hon. Friend makes a good point. I have no skin in the game on the ferry’s name, but I could not let the mention of ferries pass without intervening—I am sure the whole House would be angry with me if I did not. She makes an important point that those of us who have to travel by water feel that ferry travel is not part of integrated transport. Does she agree that it should be, especially in her situation?
Jen Craft
I am grateful to my hon. Friend for his intervention. It is a bit like “Beetlejuice”—you mention ferries and he appears; it summons him. He is absolutely correct that ferries should prove a vital part of public transport infrastructure.
Let me turn to the huge and important role that the Tilbury ferry played in our public transport infrastructure locally. It ran continually until 2022 when, unfortunately, due to historic bankruptcy by the then Conservative council, it was unable to pay the subsidy needed to keep the ferry running, and it came to a close. That was an absolute tragedy for my area. Not only did the ferry provide a vital commuter route for a number of people, but a number of my constituents used it to attend schools in Kent, for example—they are now having to make a journey that is about an hour and a half each way, and they are encountering problems at the Dartford crossing that could have been avoided by a quick 10-minute hop across the water.
Gravesend High Street in Gravesham used to lead directly on to the ferry terminal, and those businesses have been hit so hard by the loss of this vital transport link. In my patch, there are fond memories of the ferry, not just for myself and my family but for so many of my constituents. I put a call out for people to share their memories of the Tilbury ferry and to sign my petition, and the numbers hit the thousands within a couple of days. People are desperate to see it return.
The main issue with the return of the ferry is the cost of the subsidy for running it. There is public will to get it back, and there is will from businesses in the area—the Port of Tilbury, Forth Ports, DP World and a whole host of others really want to see it, because they know it provides that link and enables them to encourage people to come and work for them from both sides of the river. Furthermore, if we are trying to get people off our road networks, a large number of people who use the Dartford crossing are projected to use the lower Thames crossing for short hops either side of the river, and the ferry would allow them an alternative, so that they could make that journey in a much more sustainable way, which is much better than adding to the congestion that already exists. It is a much greener way of travelling.
I ask the Minister to seriously consider putting aside a very small proportion of the tolls to be paid on the lower Thames crossing—I am talking about 0.01%, which is less than a penny—to enable the Tilbury ferry to be funded in perpetuity. There is precedent: the Dartford crossing used to fund the subsidy for the Tilbury ferry, until that was given over to the two local authorities at the time, Kent county council and Thurrock council. A levy on the lower Thames crossing would allow the Tilbury ferry to be insulated from potential shocks, such as we saw with the bankruptcy of Thurrock council. It would allow the ferry to keep running well into the future, so that it can serve my children and my grandchildren. It would take people off the already overloaded road network. It would bring life back to Gravesend High Street. It would make sure that people on my side of the river can visit their relatives, go to their hospital appointments, go to work, go to school and just enjoy a really nice day out, and it would prove to people in my patch that we can have nice things and we do deserve them.
This ferry is a crucial part of our infrastructure, and given that people in my patch will be bearing the brunt of the construction and operation of the lower Thames crossing, I believe that they deserve this. I ask the Minister to seriously consider allowing this piece of infrastructure to fund a critical part of the local transport infrastructure and to help me bring back the Tilbury ferry for good.
Mr Mark Francois (Rayleigh and Wickford) (Con)
May I begin by apologising to the hon. Member for Thurrock (Jen Craft) for missing a bit of her speech? I nipped upstairs briefly to see the Children’s Parliament in action in Room 14. It is something our great friend Sir David was passionate about, so I hope the House will forgive my absence; no disrespect was intended. If it helps her, I have heard anecdotally that there is a lot of support for bringing back the Tilbury ferry—if I say that, perhaps she will forgive me.
There has been some debate about whether or not the Conservative party was committed to long-term infrastructure projects. Just for the record, in 1963, the first Dartford tunnel opened; I think Sir Alec Douglas-Home was Prime Minister at the time. In 1986, the first section of the M25 was opened by Margaret Thatcher. In 1991, the Queen Elizabeth II bridge opened, and in 1994, the channel tunnel opened, both during the premiership of John Major. We can trade historical dates, but I think those four examples show fairly conclusively that the Conservative party has been committed to major infrastructure down the decades.
On the lower Thames crossing, as I said in an earlier intervention, the truth is that this has a long and complex history. I know that it has been very controversial in Thurrock and in what is now South Basildon and East Thurrock. This really had a genesis, I think, under the Blair and then Brown Governments, so it goes back a very long way, and it is a fact that the project has been delayed by multiple consultation exercises over a period of years. But we are where we are, and because of the points raised by my hon. Friend the Member for Christchurch (Sir Christopher Chope) about the history of tolls on the QEII bridge, and whether or not they would ever be cancelled, I hope the Minister will understand that there is understandable scepticism—certainly in south Essex—about what would happen to tolls on the lower Thames crossing.
For the record, I have asked the Transport Secretary three times on the Floor of the House over the last year or so which financial institutions are now going to finance the 85% to 90% residual cost of the lower Thames crossing. I heard what the hon. Member for Crewe and Nantwich (Connor Naismith) said about the negotiations still being ongoing, but given the history of the whole project, I hope the Minister can understand in all seriousness why some people in south Essex are sceptical that the Government cannot yet tell us which companies or financial institutions would, in fact, pay for it.
When the Minister winds up, will he answer three very specific questions about the lower Thames crossing? First, given all of this complex history, what is the Government’s latest estimated year in which the crossing will open to traffic? Secondly, what is their latest estimate of the toll for a family car when the crossing opens? Thirdly, what is their latest estimate the toll for a 38-tonne lorry when the crossing opens? I would be grateful if the Minister could at least attempt to answer those three specific questions in his winding-up speech. I want the crossing to go ahead, but I want to know when, and I want to know what it is going to cost my constituents to drive through it, be they a private motorist or a lorry driver.
The Bill is about highways financing. I have dealt with the Minister before in a different context when he had a different job, and he has always struck me as a reasonable man—let’s get that on the record—but I wonder if he can understand the frustration in south Essex over the recent decision to cancel the proposed upgrades to the A127. Those upgrades included a scheme to straighten out what is now, in effect, the chicane at the old Fortune of War roundabout, and to add a third lane to the A127 in the Southend-bound direction between the Halfway House, as it is known, and the site of the old Fortune of War. Both those schemes would have increased flow and capacity on the A127. Some months ago, the incoming Labour Government cancelled the proposed widening of the A12, which had been in gestation for almost as long as the lower Thames crossing. I hope the Minister will understand why this has caused immense frustration in south Essex.
A different Department, the Ministry of Housing, Communities and Local Government, wants to build 100,000 houses from Grays to Shoeburyness. That is its departmental objective. The Department of Health and Social Care has a particular challenge at Basildon hospital, which is pretty much maxed out as it is. According to the NHS’s own planning metric, it works on a basis of 2.4 additional potential patients per dwelling. The plans say there will be 28,000 additional houses in the Basildon borough, and 35,000 in Thurrock, thanks to Reform and Labour; that is 63,000 in total. When we factor in the 2.4 multiplier, that is 151,200 additional patients—at least by my maths—for a hospital in Basildon that is completely maxed out today as it is.
Mr Francois
I see the hon. Member for Thurrock nodding assent.
That hospital is rated “inadequate” by the Care Quality Commission. It is part of the Mid and South Essex foundation trust—along with Broomfield hospital in Chelmsford, and Southend hospital—which is a failing organisation. How can we build all those houses when there is no real plan of any kind to expand capacity at the hospital? Now we are cutting road programmes on the A127, which is one of the two fundamental east-west arterial roads between London and south Essex, and the A12 obviously feeds into to that area from the north.
The point that I am seeking to get across to the Minister is that none of this is joined up: one Government Department wants to build a vast number of houses; another Government Department is responsible for healthcare but has no idea whatsoever how to cater for what could be a quarter of a million extra people, if we use the NHS metric; and the Department for Transport is cancelling road upgrades that were supposed to increase capacity. At the morning and evening peaks, the A127 and the A13 are at 99% capacity as it is. I have seen the heat maps; the busier the road, the darker the red, and both those roads metaphorically glow scarlet in the morning and evening peaks. We have three different Government Departments with conflicting objectives, but my constituents in south Essex and other people who live there have to bear the consequences.
I have dealt with the Minister before on a constituency case, which I will not go into now, and he was very reasonable and listened. My plea to him this afternoon is: please accept what I am saying as true; please do not cancel anything else in Essex; and, for God’s sake—whatever you do—do not cancel the upgrade to the Fairglen interchange at Rayleigh on the A127, because if you think I am upset now, you want to see me then!
Those are the points that I wanted to make. Some are directly about the lower Thames crossing and some are about other issues, but I think my fundamental point about these key infrastructure projects is: it’s all got to be joined up. We cannot tolerate a situation where we have three Government Departments—I know the Minister is only responsible for one of them—pulling in three totally different directions. I hope that is not an unreasonable point to make in a debate of this kind. With that, I rest my case.
Tristan Osborne (Chatham and Aylesford) (Lab)
It is a real pleasure to speak alongside Kent colleagues, including my hon. Friend the Member for Dartford (Jim Dickson), to see my hon. Friend the Member for Gravesham (Dr Sullivan) in her place, and to hear from Members from across south Essex, whose constituents will directly benefit from the lower Thames crossing. Anyone who has travelled down that stretch will know that the lower Thames crossing will be a vital part of the north Kent infrastructure. When there are problems with the Dartford bridge, disruption can spread all the way down into south-east London and Kent, including into Medway, which I represent.
I want to speak to four elements of the Bill: first, the benefits of the new crossing, including the direct investment it could bring to Essex and Medway, in my local area, and why that is so critical; secondly, the vehicle that will be used by the Government to deliver the project, learning from the National Audit Office review of the Sizewell programme and others about some of the cost considerations of which we need to be mindful; thirdly, the Opposition amendment; and, lastly, the importance and necessity of delivering the project on time.
As many hon. Members will be aware, the Dartford crossing was originally conceived to cater for 136,000 vehicle movements, but it is currently catering for over 150,000. We know from projections that freight movements are due to increase over the next 15 years. As has been mentioned by the right hon. Member for Rayleigh and Wickford (Mr Francois), we are due to see an expansion in population across all of the south Essex and north Kent corridor over the next 15 years as part of the urban sprawl that is moving east of London. He mentioned capacity issues on many road networks. In my area, there are issues on the A229, which crosses from Maidstone into Medway, and with the Medway tunnel—a particular focus that I will come to. We know that there are also constraints on some of the roads connecting Gravesham and Dartford, particularly around Galley Hill.
Mr Francois
For the record, I am completely opposed to the urban sprawl. The Government are trying to impose far too many houses on south Essex. The figure of 100,000 homes that I mentioned is nearly 7% of their entire target of 1.5 million homes—and that is in one half of one county. Nevertheless, if the hon. Gentleman will believe that I am being honest in arguing on behalf of my constituents, I am prepared to believe that he is being honest in arguing on behalf of his.
Tristan Osborne
Housing targets are not unique to this Government—indeed, they have existed in previous iterations throughout the last several decades. Housing has been built in south Essex under the previous Government, and I am sure that permissions were given under Conservative-controlled councils. Similarly, in my area, the then Conservative-led Medway council delivered housing projects. We have to be realistic, because infrastructure is needed to cater for these future developments.
The crossing is necessary because of the capacity issues that have just been raised. The impacts of a blocked crossing have profound implications, including for people trying to get to health appointments and inconvenienced residents. Town centres are blocked, in the case of Dartford and Thurrock. There are also implications for the freight and logistics industry, which have been so eloquently expressed by colleagues from around the country, because the south-east is the key link to European trade.
I am very proud that this Department, led by the current Secretary of State, sought on day one of taking office to give the consent order for this programme. That clearly shows the direction of travel and the focus of a Government to deliver some of these really big infrastructure projects. Alongside Sizewell C and other Government programmes, we know that private investment, working with the Government, can deliver significant projects going forward. We know that projects that cost around £10 billion are Government mega-project schemes, so I ask that this scheme be considered on the Government programme of mega-projects. There has been deliberation about whether HS2 is a mega-project, which has caused some delays, especially around the Euston development site; that was covered in the NAO report.
I know that tolls are a sensitive topic. I agree with my colleagues that there needs to be some consideration of whether those who live in the direct surrounds of not only Dartford and Thurrock, but around the new site in Gravesham and Medway, and on the other side in south Essex, should be considered for toll relief to ensure that they get a fair discount.
Dr Lauren Sullivan (Gravesham) (Lab)
Gravesham will bear one part of the length of the tunnel, so it is important that the people who will be the most affected are able to hold to account toll regulators. There must be accountability for ensuring that toll roads are properly cared for and enhanced for local residents.
Tristan Osborne
I absolutely agree. I know that a number of points have been made to the Minister today about what the tolls might look like, the duration of the programme and the finance involved. Ensuring that there is parity with the Dartford crossing so that people can make a market choice will have to be considered in the round, and I look forward to future representations on that matter.
My residents can see the massive investment benefits of a new crossing: new businesses opening, new residents having potential connections with HS1 through Essex, and the creation of some form of corridor between the Medway towns and Southend. Previously, we overlooked each other on different sides of the river, but the connection will allow us potentially to get to each other’s conurbations in 10 to 15 minutes—those journeys would previously have taken 45 minutes to an hour. The relationship between businesses, including small businesses, has not been discussed today, but this connection has the potential to be a significant multiplier for a lot of businesses across south Essex and north Kent.
I accept that the Bill protects those who will use the road. The Office of Rail and Road will become the independent regulator, and I understand that it needs to be given robust powers around licence conditions. From HS2, we know that previous regulatory regimes have not necessarily been that efficient, so I ask that the Minister learn from some of the NAO reports, which have highlighted where some regimes have failed in the past. The licence holder must share information with the regulator and the Secretary of State. If the company behind the road ever gets into financial trouble, a special administration regime should and must keep the highway running. That means investors would get the certainty they need to commit the capital, and drivers would get a regulator watching over what is built and what is charged. Given some of the high-profile issues with major Government programmes previously, I believe that transparency is absolutely necessary.
There are practical measures in this Bill too. For example, it allows barrierless charging on toll roads. Remote payments mean smoother journeys—I can testify to that for many roads around the country—as well as less congestion at Dartford. However, we need to see continued improvements to the M2, including at junctions around the A229, particularly at Blue Bell Hill; I know that Kent county council has made that representation.
I turn to the reasoned amendment. It starts by recognising the “urgent need” to deliver the crossing after 14 years of numerous development consent orders and court appeals, dither and delay. It has taken this Government to make progress and get the spades in the ground. However, the reasoned amendment asks the House to deny a Second Reading to the one piece of legislation that provides a funding route, questioning whether the project can be delivered
“on time and on budget”.
Many Opposition Members have raised that question this afternoon. I point Members to the structure of the Bill, which puts the independent regulator in charge of scrutinising the costs, and I encourage them to pick up some of these issues in Committee if they do not believe that the Government have a robust understanding. However, rejecting the Bill on the basis set out in the reasoned amendment would cause the delays that Opposition Members are complaining might occur.
It would be remiss of me to not mention that there are other crossings nearby that could be subject to considerable congestion as a result of this project. The Medway tunnel, a key crossing in the Medway conurbation, is putting in a bid to the structures fund to ensure support for its 150,000 crossings per day through increased investment. It was constructed privately through KCC and the Rochester Bridge Trust—an historical anomaly; ownership was transferred to the council some 15 years ago. I encourage Ministers to look closely at the Medway tunnel’s bid, because any impact on the second crossing will have profound consequences for other crossings in Medway. If we do not get Department for Transport funding for improvements to the Medway tunnel, that could cause significant problems for the three MPs who represent that area.
Lastly, the lower Thames crossing has a long and chequered history. As has been said, previous Conservative Governments opened parts of it, and Labour Governments are now progressing with the next stage of it. However, we should all be proud that this is a great British project that could deliver jobs and opportunities for many thousands of my residents, and there could be knock-on benefits for tens of thousands of people across the rest of the country. Every delay to this legislation moves the date of those benefits back for families who have already waited too long, and for people who own homes and businesses in the area and are looking forward to this infrastructure project getting started. I urge the House to reject the reasoned amendment tabled by the Opposition, and give the Bill its Second Reading. Let’s get on with building this crossing.
Peter Dowd (Bootle) (Lab)
I thank the Minister for setting out in a clear and unambiguous fashion the nature and content of the Bill’s 104 clauses and three schedules. I know that the Under-Secretary of State for Transport, my hon. Friend the Member for Wakefield and Rothwell (Simon Lightwood), will be equally clear when he winds up. I also thank—very belatedly—Winston Churchill, who in 1929 provided £2.5 million for the first Mersey tunnel crossing, the Queensway crossing, which was opened by His Majesty King George V. Frankly, that was the last time that the Tories did anything worthwhile for Merseyside.
My hon. Friend the Member for Widnes and Halewood (Derek Twigg), who is sitting behind me, is used to the question about the development of a Mersey crossing. There are also the two toll tunnel crossings we have had since the early ’30s and 1971. There is a history of toll roads in this country; many of them have been on Merseyside, including the two tunnels under the Mersey and the two bridges across the Mersey. What is wrong with that? What is wrong with legislation that will allow the Office of Rail and Road to be the independent regulator? What do the Tories have against that, or against providing a licence regime for construction and operation of the proposals? What problem do they have with laying out highway authorities’ functions in relation to licence holders, or with ensuring fair charges for cars and transparency in service standards? I do not see anything wrong with that at all. What about the Bill’s provision for transfer schemes, to allow property, rights and liabilities to be transferred, as well as a special administration regime and backstops? I cannot quite see what the Conservatives find wrong with that.
My hon. Friend the Member for Thurrock (Jen Craft), who is no longer in her place, referred to a ferry crossing. There has been a ferry across the River Mersey since 1150—a long time. King Stephen was the monarch at the time; the period was called the anarchy. The Tories know all about that; we had 14 years of anarchy under them.
I do not want to take up much of the House’s time—[Interruption.] I am listening to the Whips as well; I pay clear and unambiguous attention to the Whips. I want to ensure that when projects are introduced and developed, communities are part of that. My experience with National Highways—in relation to the A5036, for example—has not been as good as it could have been. I hope that when and if schemes are developed—whatever the nature of the scheme, be it toll or otherwise—the agencies that have a part to play in them will act with integrity, honesty and passion. If they do not, hon. Members across the House will ensure that they do.
Greg Smith (Mid Buckinghamshire) (Con)
How we pay for infrastructure is a matter that the House needs to take extraordinarily seriously. When the Government announced that they would bring forward measures set out in the King’s Speech on using private finance to build new roads, Labour Members should not have been surprised. After all, the Prime Minister was one of the most effective defenders of PFI schemes in the NHS during his previous time in government, and as Mayor of Greater Manchester his effusive praise of the investment from Manchester City shows his willingness to back private finance. It should therefore come as little surprise that the Government are interested in how we can leverage private funding for our roads. The Minister set out in his opening remarks that this is the biggest change in this area since the 18th century. Well, the Bill does indeed once more open the back door to highway robbery.
Having reflected on the debate and listened to the contributions of hon. Members from across the House, I think that most hon. Members recognise the importance of finding innovative methods to build infrastructure. Members from across the House can look at examples of cost overruns on infrastructure—particularly on the lower Thames crossing—that has used private money and incentives to increase road capacity and improve the experience for drivers. As the Government’s own slightly outdated figures in their impact assessment set out, the vast majority of miles travelled across our country are travelled in our cars, and over two thirds of freight is transported on the strategic road network. That point shone through in many of the contributions.
We started with the hon. Member for Northampton South (Mike Reader) and his public service safety announcement. He was followed quickly by the Lib Dem spokesman, the hon. Member for Didcot and Wantage (Olly Glover), who, in true third-party style, could not muster up a speech without a European comparison. He was followed quickly by my hon. Friend the Member for Christchurch (Sir Christopher Chope), who brought us his memories of 1991 and Her late Majesty, focused on a case of private enterprise at its very best: the QEII bridge. He then shared ideas with the House, based on his ministerial experience. His points on London’s bridges were particularly well made.
Charlie Dewhirst (Bridlington and The Wolds) (Con)
The issue with London’s bridges is highlighted by Hammersmith bridge, which has been closed since 2019. Is it not time for the Government to get a grip on Labour-run Hammersmith and Fulham council and the Labour Mayor of London, and get that bridge reopened?
Greg Smith
I am grateful to my hon. Friend for that intervention. Many moons ago, he and I were Conservative councillors in the London borough of Hammersmith and Fulham. I remember in 2014, when I was leader of the opposition on that council—we had a small electoral mishap, and the Labour party had taken control of the council once more—trying to call out the Labour-run council for failing to take the steps necessary to put a plan in place to fix Hammersmith bridge. Today, it remains closed to traffic. That is a bridge owned by the London borough of Hammersmith and Fulham—it is Labour-run, and it is a Labour failure to get that bridge open again.
Daniel Francis
We were all very interested to hear the view of the hon. Member for Christchurch (Sir Christopher Chope) that charging should be spread across London river crossings. What is the shadow Minister’s analysis of the proposal that the cost of river crossings be spread more widely among taxpayers in London?
Greg Smith
I think I am grateful for that intervention. My hon. Friend the Member for Christchurch put some ideas in front of the House that are not necessarily shared by the Conservative Front Benchers. However, his fundamental point—that we have London bridges closed to traffic, and Labour councils such as Hammersmith and Fulham are failing to fix them—desperately needs to be addressed in the interests of motorists in London, and in particular the residents of the London boroughs of Hammersmith and Fulham, and of Richmond.
Mr Louie French (Old Bexley and Sidcup) (Con)
On the point of charging Londoners for driving, over the past two years, we have seen the Mayor of London introduce the Silvertown tunnel charge, and for the first time, there is a Blackwall tunnel charge. The price for drivers has already risen. The Government have even increased the Dartford crossing charge by around 40%.
Greg Smith
I am grateful to my hon. Friend for that point. We will come on to those charges later. One thing that has shone through in this debate is that no one can tell us—unless the Minister pulls a rabbit from a hat in his wind-up and gives us a figure—what the charge will be to use the lower Thames crossing once it is built.
Daniel Francis
I am aware that my neighbour the hon. Member for Old Bexley and Sidcup (Mr French) has not been here for the debate. We have discussed the fact that the charges at Blackwall and Silvertown were introduced, as a result of the 2018 order, under the Conservative Government. The increases were made under that order, introduced by the previous Conservative Government. Can the shadow Minister confirm that all those measures were introduced not by this Government, but his?
Greg Smith
The hon. Gentleman wants me to get on to road charging, but I do not think that the Labour party wants me to go through the record of the Labour Mayor of London; he introduced the ULEZ and hiked the congestion charge to unaffordable levels.
To move on to another London Member of Parliament, the Chairman of the Transport Committee, the hon. Member for Brentford and Isleworth (Ruth Cadbury) said that she wanted more powers for the ORR on sustainability, as if banning diesel and HVO in the construction of the lower Thames crossing was not bonkers enough. However, I agree with her about HGV driver facilities. I remember in the last Parliament serving alongside her on the Transport Committee when we did an important report on that and visited Thurrock services. The lorry driver was not what I would classically call delighted when the whole Select Committee was shown the shower facilities that he was using at the time to see that the tiles were falling off and everything was not fully in order.
My right hon. Friend the Member for Rayleigh and Wickford (Mr Francois) injected some common sense into the debate, asking serious questions steeped in the history of the project that affects his constituents. He mentioned their scepticism about the cost and the opening date of the lower Thames crossing. We also heard thoughtful contributions from the hon. Members for Chatham and Aylesford (Tristan Osborne), for Bootle (Peter Dowd), for Bexleyheath and Crayford (Daniel Francis), for Thurrock (Jen Craft) and for Dartford (Jim Dickson).
The shadow Secretary of State for Transport, my right hon. Friend the Member for Basildon and Billericay (Mr Holden), raised a fundamental question during his opening remarks: is this the right type of legislation? Why on earth have the Government drafted the Bill in a way that could feasibly allow charges be to be imposed simply for using roads beyond the tolls? Why is that a concern? Well, to quote clause 3 of the Bill:
“A licensing authority may grant a licence to a person authorising the person to charge tolls in respect of the use or keeping of road vehicles on a highway specified in the licence, in return for the person securing works involving…the maintenance, operation or improvement of a highway specified in the licence which has been…constructed in pursuance of the licence or another licence under this section”.
I fear we risk smuggling in charges on drivers through the back door, and are opening the door to the tolling of the M25 and beyond.
At a time when drivers are getting squeezed at the pump and the Government are cancelling multiple schemes, we must be completely clear that the Bill as it stands is not acceptable. That is why my right hon. Friend the shadow Secretary of State tabled our sensible reasoned amendment. We cannot pass a Bill that could impose costs on drivers without a requirement to deliver significantly increased capacity and new schemes.
The Government say that only new big roads will be included, but they have failed to explain why the Bill allows new infrastructure to fall within the scope of tolling. The use of the term “infrastructure” may paint a picture of an entirely new road scheme, but what is there to stop it being something as small as a new set of smart motorway cameras? The Government may protest that that is unfeasible. If so, why will they not amend the Bill to make that abundantly clear? They should put it on the face of the Bill.
By going well beyond the scope of the lower Thames crossing, the legislation puts in place a scheme that is not fit for purpose. If we do not limit its scope, I fear that the words of the president of the AA will be ringing in the ears of drivers. He has said that drivers already pay for roads through £34 billion in fuel duty and road taxes, so extra charges across the road network would be a “toll too far”. As I said earlier, no one can tell us what the tolls for private motorists and HGV drivers will be.
We want the Government to bear down on the costs of building, which make such projects so expensive. That is why we announced at the Conservative party conference that we would leave the Aarhus convention and tackle the rules that allow costly and protracted legal challenges. If we want to achieve low toll prices for drivers and incentivise private investment to build the project at a lower cost, we must reduce the regulatory burden on those involved, as opposed to imposing burdens such as banning diesel machinery. We should use equipment that is cost-effective to get the best deal for motorists, rather than trying to achieve ideological purity.
It is not merely the costs that we have to consider; there is also the structure of the scheme. As has been noted, the RAB model used by the Government will be dependent on the work of the Office of Rail and Road. At a time when the Government are trying to restrict the powers available to the ORR to uphold competition in rail, the organisation that will regulate the scheme will have to have regard to matters including efficiency and economy, the ability of licence holders to finance their licensed activities, safety, impacts on the wider strategic road network, sustainable development, competition and regulatory best practice. It is one rule for road and another for rail, with no consistency from this Government. That really matters.
As the Government’s own impact assessment sets out, using the RAB model for the strategic road network would be a new application of the model. In the literature about the scheme, one of the central principles is the need for a regulator that can control costs and serve drivers. The ORR may be able to achieve that, but we are going in blind. We need complete clarity from the Government about how the scheme will actually work, in addition to answers to the fair questions that have been raised by Members from across the House about the tolling regime. We cannot treat drivers like a piggy bank.
At the Labour party conference, the Prime Minister told the country that people “need breathing space now”, and that he was “determined to provide it.” If Labour MPs want to follow the Prime Minister’s words, they must send a clear message back: unless this Bill clearly prohibits charging drivers for using existing roads, it cannot be allowed to pass through this House.
The Parliamentary Under-Secretary of State for Transport (Simon Lightwood)
I thank right hon. and hon. Members from across the House for their thoughtful and constructive contributions to today’s debate. The House has heard a range of views this afternoon. Some Members have spoken about the opportunities that the Bill presents, and others have rightly pressed the Government on how users will be protected, how local communities will be treated, and how we can ensure that major infrastructure is delivered in a way that provides value for money.
Before I turn to some of the specific points, I want to return to the more fundamental question: why is the Bill needed? The answer is straightforward: the Government believe that we should have a wide range of tools to deliver nationally significant infrastructure, and that we should avail ourselves of those tools to offer the best deal for taxpayers and to help us provide the connectivity that our economy needs. The immediate context for this legislation is the lower Thames crossing, and the House knows the importance of that project. Dartford is operating well beyond the volumes that it was designed to carry. It has become a critical pinch point on the strategic road network, affecting commuters, businesses, supply chains and communities across large parts of the country. The lower Thames crossing will provide additional capacity, greater resilience and a new strategic connection across the Thames.
Simon Lightwood
I have a lot to get through, and I have heard a lot from the right hon. Member already. [Interruption.]
The Bill provides the statutory framework needed to support the Government’s preferred financing approach for delivering this project. It does not grant development consent—
Madam Deputy Speaker (Judith Cummins)
Order. The right hon. Member knows very well that it is at the Minister’s discretion whether he gives way.
Simon Lightwood
The right hon. Member had numerous opportunities to intervene, which were accommodated by the Under-Secretary of State for Transport, my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders).
As I was saying, the Bill does not grant development consent, alter planning requirements or remove scrutiny; it provides a financing framework for delivery. However, this Bill is not simply about one project. At its heart, it is about ensuring that the Government have another option available when that is the right solution for delivering nationally important infrastructure. This infrastructure very likely could not exist without this new mechanism or something like it.
It is worth remembering what this Bill is and is not. The Bill does not create the concept of privately financed toll roads. Parliament has already provided a route for private companies to finance, construct and operate toll roads through the concession arrangements under the New Roads and Street Works Act 1991. That route remains available today, and in the right circumstances it can work effectively. The M6 toll is an example of that approach. The principle that private capital can play a major role in road infrastructure is therefore not being invented by this Bill, but the Bill creates a different model.
For some roads, a concession arrangement may be entirely appropriate. Where users have clear alternatives, commercial incentives can play an important role in protecting users’ interests and encouraging good performance. Some infrastructure, however, performs a very different function. Some roads are nationally significant strategic assets that form critical trade corridors and support economic activity far beyond the communities through which they pass, and for many users there may be limited practical alternatives. In those circumstances, the Government believe there is a strong case for independent regulation sitting alongside private investment.
That is why the Bill places the Office of Rail and Road at the heart of that framework. The ORR will oversee performance, scrutinise costs, protect users’ interests, monitor financial resilience and hold operators to account. It will have substantial enforcement powers, including to intervene where performance is inadequate. The Bill also provides important safeguards to ensure continuity of service if a licence holder encounters serious financial difficulties. The purpose of the Bill is not to enable private charging where none has existed before; it is about expanding the Government’s toolkit to better address the range of possible circumstances.
Furthermore, the Bill will help modernise the way tolls are collected and enforced on existing toll roads. Some operators have already moved on free-flow tolling, but the legislative framework has not kept pace. In some cases, existing arrangements are not working as effectively as they should, while in others the necessary powers simply do not exist to enable such a transition. It is right that the law keeps pace with advances in technology, and this Bill provides a clear route for operators to move to a modern tolling system while ensuring that enforcement remains effective.
That brings me to the predominant theme in this debate. Today we have heard just how important local services are to communities across our nation. This Government back local people to make the right decisions for their communities, and we are striving forward with ambitious plans for devolution that will drive growth in every postcode. Fundamentally, this Bill is designed so that users make a contribution towards the costs of major infrastructure from which they derive substantial benefits. Toll revenue should meet the efficient costs of constructing, operating and maintaining the infrastructure for which users are being charged. It would not be right to expand this proposition to a form of centrally imposed local taxation.
I thank my hon. Friends the Members for Thurrock (Jen Craft) and for Gravesham (Dr Sullivan). The Prime Minister has personally committed the assistance of No. 10 North to the campaign of my hon. Friend the Member for Gravesham to find a suitable way to bring back the Tilbury-Gravesend ferry, and we remain open to working with local leaders on similar issues.
The clear theme in this debate has been whether this framework will provide regulation strong enough to protect users and avoid the failings seen in other sectors, including the water sector. We have learned those lessons and the Bill equips the ORR to be a strong and effective regulator from the outset. The ORR already has substantial experience of overseeing road and rail. Its new chief executive, Paul Smith, brings extensive regulatory experience from the UK’s aviation, energy and payment sectors, as well as from senior regulatory roles in Australia. Under this framework, the ORR will monitor licence holders’ financial resilience and long-term performance closely, and the regime will incentivise the right behaviour. Where an operator falls short, there will be meaningful consequences. Ultimately, the ORR will have the ability to suspend tolling while issues are resolved. The Bill also provides a clear backstop for this nationally important infrastructure where necessary.
Dr Lauren Sullivan
Gravesham will be one half of the centre point. Yes, it is a nationally significant infrastructure project, but the people of Gravesham need to ensure that there is accountability, so that the things we saw and learned in Dartford do not happen there. Will there be local representation and local voice, so that the ORR can look at what can make it work better?
Simon Lightwood
There will indeed be a stakeholder group and opportunities for people to feed into that.
My hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury), the Chair of the Transport Committee, was right that transport works best when there is a clear sense of direction and purpose. The Government are committed to providing that through a coherent programme of investment, reform and delivery that will create a more reliable, integrated and sustainable transport network. Indeed, that is exactly why we published our “Better Connected” strategy in April, which set out for the first time a single vision of how roads, rail, buses and active travel should work together to serve the people and places across England.
I want to address directly the reasoned amendment before the House, because it goes to the heart of what the Bill is and what it is not. To be honest, it is as if the Opposition have pleaded with ChatGPT to find any conceivable reason why they could disagree with the Bill. The first thing to note is that while the immediate context for the Bill is, of course, to aid the delivery of the lower Thames crossing, the Bill is about far more than that, so I will not be talking about the budget or project timelines. I will not dwell on the frankly shocking hypocrisy of the Conservative party, which oversaw ballooning costs to HS2, lecturing this Government on financial management. There are other times and places for that kind of discussion. Let me simply say this: the project is progressing, with construction activity already under way. Decisions on the project continue to be subject to rigorous scrutiny, with value for money remaining at the heart of decision making. The project already has its necessary planning approvals, which included the approval to charge tolls for use. In bringing forward the Bill, Parliament is not changing that approved scheme; it will just be providing another option in a suite of tools that the Government have to fund major road projects.
I am confused, Madam Deputy Speaker, because I do not understand why the Opposition want to withdraw from the Aarhus convention at this stage of the process for the lower Thames crossing. The main thing the convention does is to allow public participation in the planning process and ensure that environmental information is made available. It protects public access to reasoning and decision making during the planning process. That stage has already passed in the case of the lower Thames crossing. Withdrawing from the convention now, on behalf of the lower Thames crossing, would do absolutely nothing. The environmental information has already been produced. It has already been scrutinised publicly and published. That stage has passed, so it would not save money now.
The third thing to note is that, as I have just explained, there are already Acts that have been approved by this place that allow the Secretary of State, and indeed local government, to introduce new road schemes that involve charging or tolling without recourse to parliamentary approval.
Finally and most importantly, I must address what can only be described as misunderstandings contained in the reasoned amendment. It is important that this House takes its responsibilities for clear and fair communication with the public seriously, and I want to address that head-on. The Bill provides a mechanism for new infrastructure to be funded through future tolls in a way that regulates the potential impact on road users and provides certainty for investors. It also allows for existing physical tolls to be replaced by free-flowing virtual toll systems. The Opposition support both those measures as far as I understand. There is nothing else in the Bill: it has got nothing to say about applying new tolls on existing roads; nothing to say about wider road-user charging; nothing to say about low-traffic neighbourhoods, 15-minute cites or who shot JFK! There are no conspiracies here. I know the Opposition like to whip up the culture wars whenever they see the opportunity, but their rantings and ravings about the war on motorists, in this place and outside it, are obviously wide of the mark.
What sensible hon. Members will see in the Bill is a common-sense approach to managing our road infrastructure, now and in the future—nothing more; nothing less. Frankly, our constituents would be better served if we scrutinised what was in the Bill, rather than harping on about things that are not. Ultimately, the debate comes down to a simple question: should the Government have another tool to help deliver nationally significant infrastructure; a tool that enables practical partnership with the private sector that, in the right circumstances, can offer a good deal for taxpayers and users, and that comes with a strong regulatory protection. I believe that the Government should have that tool.
The Bill does not require the Government to use that model in every case, it does not place private finance above public finance, and nor does it ask the House to make an ideological choice between the two. It simply ensures that where private investment can help deliver nationally important infrastructure, with strong, independent regulation and robust safeguards for users, the Government have the option. That is pragmatic, proportionate and, above all, focused on delivery. I commend the Bill to the House.
Question put, That the amendment be made.
Highways (Financing) Bill (Second sitting)
Thursday 29th October 2026
(1 week, 1 day ago)
Public Bill CommitteesRead Full debate Highways (Financing) Bill 2026-27 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 29 October 2026 - (29 Oct 2026)
The Chair
We are now sitting in public and the proceedings are being broadcast. Before we start to hear from our witnesses, do any Members wish to make a declaration of interest in connection with the Bill?
We will now hear oral evidence from the Centre for Policy Studies and Britain Remade. We have until 2.35 pm for this panel. Would the witnesses please briefly introduce themselves for the record?
Ben Hopkinson: I am Ben Hopkinson, head of housing and infrastructure at the Centre for Policy Studies.
Sam Dumitriu: I am Sam Dumitriu, head of policy at the campaign group Britain Remade.
Greg Smith (Mid Buckinghamshire) (Con)
Q
Clearly, this is a Bill of two halves: there is the specific stuff on the lower Thames crossing, and then it is a pretty open-ended book for other projects going forward. Can I have your initial assessment of whether this is the right model to solve both the question of getting the lower Thames crossing built and issues relating to future trunk road projects that may be required or identified in the country? Will it actually deliver value for the motorist and haulage businesses using the scheme? Do we even know that it will deliver to certain metrics? No one can give us an answer yet on what the toll would be on the lower Thames crossing, for example.
Ben Hopkinson: We have quite serious concerns about the regulated asset base model. This will certainly be the first time it is been used for roads. The main issue is that there are quite limited incentives for cost control within a regulated asset base. If you are the private contractor, you have significant incentives to increase the capital expenditure on the regulated asset base to make it as large as possible, because that means you get as large a return on your investment as possible.
The organisation standing in the way of that is the Office of Rail and Road in this case, and it has never overseen a RAB before. It would not even be able to look at other organisations or regulators that have overseen a RAB for roads, because there are none internationally.
We have a better model through concessions. France has built more miles of motorway this century than the UK has in total. It has done that with the private sector working through concessions. Under a concession, there are strong incentives for private contractors to keep their costs as low as possible, because it directly impacts their bottom line, which is completely the opposite for a RAB model.
Greg Smith
Q
Ben Hopkinson: The Bill is focused on delivering a RAB model. It is a completely different set-up to use a concession model. There is a second challenge with RAB in so far as the Department for Transport does not really bear any of the costs either. That is why you get it doing things like banning diesel construction vehicles for the lower Thames crossing. That is a policy goal it has otherwise that does not actually lead to a better overall road. It is an example of “everythingism”, where it has plenty of different goals, none of which is necessarily delivering the best road project for motorists at a very reasonable cost.
Greg Smith
Q
Ben Hopkinson: I do not have a specific number for it, but it is a regulation that might lead to a different form of construction than they would have chosen were they going purely for value for money. Across the piece, the lower Thames crossing has been racked by planning delays, which I am sure we are all aware of. It was designated a national priority project in 2011 and it took 14 years, 360,000 pages and £300 million to get planning approval. That all adds cost. When the project started going through, it was projected to cost about £4 billion. Then international events got in the way and it is now projected to be over £10 billion. Moving quickly saves costs. Our slow planning system has been a real driver of added cost here.
Sam Dumitriu: Cost control is one of the most important issues here. If you look at road building generally, the big problem in the UK is that we have a very large construction cost premium. Britain Remade has looked at 345 infrastructure projects across the world, of which 121 were road projects. On average, the UK pays about 65% more to build a given mile of road or railway. It is a bit less for road on average, but when you look at more complicated projects like the lower Thames crossing, it tends to creep back up.
Many people often dismiss our problems around infrastructure as a problem of too little money going in, but over the past five years or so—a period that includes covid, but also years either side of it—we spent about £308 per head on Government public infrastructure investment. In France it is more like £271 and in Germany about £251. When you account for that cost premium, we end up getting about £180 of what the French or the Germans would get. For me, that is the No.1 problem.
About £300 million has been spent on the planning process for the lower Thames crossing. If you add together the world’s longest road tunnel, which was built in Norway, and a tunnel built 282 metres under the sea, you just about reach that. They are building much more complicated projects for much less. You can talk about how it is more difficult to build due to UK geographical or geological issues, but fundamentally, just those front-loaded costs make it very difficult to build anything cost-effectively. Because of that, there is a risk that this model is adopted as a way of taking some of those costs off the books without the right level of scrutiny.
Greg Smith
Q
Sam Dumitriu: One thing is that a lot of major road projects have been cancelled recently. The first road investment strategy was much more ambitious than the ones that followed. That was partly due to covid, but now we are out the other end, we see reduced ambition on road building. Road maintenance has gone up a bit, which is positive, but at the same time, we are not building the projects.
It is important to look at which projects are appropriate for tolling; bridges and tunnels make perfect sense. In America, lots of additional lanes that have their own toll are built. Based on our geography and the amount of road infrastructure we have, you probably could not do that—when you are adding a super-fast lane on a seven-lane motorway, that works; it does not really work here—but clearly there are lots of bottlenecks and opportunities to finance things via tolls.
The question we have to ask is, as fuel duty revenue declines, because people are switching to electric vehicles, will there be the same impetus to put money into the roads? Currently, motorists do not get a very fair deal: they pay a lot in tax, but they do not see the same return in road building, as the money tends to go into the general pot. You might want to, say, hypothecate that revenue—that is one thing—but road user charging gets around the question of politicians attempting to use infrastructure money generally to put it towards your primary, day-to-day spending, whether that is on the NHS or £100 to deal with the cost of living, et cetera.
There needs to be some way of insulating long-term infrastructure funding from those, and that is the advantage of tolling. The problem is that motorists will only bear or accept it if they are confident that they are not being hit by all these other taxes and are getting something genuinely new in return. I do not see many motorists complaining about the Silvertown and Blackwall tunnels being tolled, because they have new infrastructure and congestion has fallen. It would be different if an existing road were tolled without a noticeable improvement.
Ben Hopkinson: There is nothing inherently wrong with road user charging. It is quite sensible that the people who use and get the benefits of an infrastructure asset pay towards its construction and maintenance. The challenge is that we already have quite high fuel duty, and it is more than solely the combination of carbon output and what we spend on roads and maintenance. If fuel duty were solely for mitigating the externalities of carbon emissions, combined with the upkeep, maintenance and addition of roads, it would be around 35p, rather than the about 52p it is now, so fuel duty is already higher than the economic impacts of roads and emissions.
If you kept fuel duty where it is, or cancelled out the 5p cut—the scrapping of which is perennially promised—and added road user charging on top, that would be quite a significant burden for motorists to bear. But ideally, new infrastructure would be funded through some form of road user charging. The people who drive get the benefits, so that is only fair.
The Parliamentary Under-Secretary of State for Transport (Justin Madders)
Q
Ben Hopkinson: I am well aware that there are safeguards and that the regulator is tasked with ensuring that there are not runaway costs. However, the ORR has never done this before. No regulator has ever done a RAB for a road before. There is a real risk that if it sets the return too high, motorists will pay significantly more, but if it sets the return too low, then no one will want to invest.
While in theory the model makes a lot of sense, I am a little worried about the practicalities of the ORR accidentally setting a rate too high or too low. In other sectors where rates are set by regulators, there are often risks, especially when there are macroeconomic shifts—higher interest rates, for example. Regulators are sometimes slow to update to that. There are concerns there. With a concession model, as used in France and around the world, there are much better incentives for contractors to keep costs down because they are the ones bearing them, not the potential motorists.
Justin Madders
Q
Ben Hopkinson: Well, there is a bit of control. There is also the market pushback; if tolls are set too high, people simply will not use the new asset. In that circumstance, the private constructor bears the revenue risk of it being set too high. There is also the overall agreement that the concessionaire strikes with the state initially.
One other concern that I have about the RAB is that there is not necessarily a sunset clause. In France, it is very common for roads to return to public ownership after about 60 or 70 years. There is a chance here, under the RAB, that there is no sunset and so they are permanently away from state ownership. I know that the Bill does provide for some sunset clauses if they impose them, but that is not the default here. That is another concern that I have about the RAB model.
Justin Madders
Q
Sam, you spoke about the planning delays and have set out the significant costs and delays because of that. In terms of the lower Thames crossing, is it your understanding that those risks are now past?
Sam Dumitriu: In general, it appears so. However, we have seen some cases for example, in energy infrastructure, where you can have a development consent order passed and construction under way, but then encounter further planning-related delays.
For example, the Hinkley Point C nuclear power station is potentially the most expensive nuclear power station that the world will ever see. One of the issues is that, after spending around £700 million on fish mitigations, it is still in the process of trying to get the permit that unlocks the final phase of construction. If it does not get that permit, it then has to apply for a DCO variation, so there can still be planning risk even if you address the up-front challenges. Hopefully some of the changes in the Planning and Infrastructure Act 2025 around environmental delivery plans—if they start being rolled out much further than the initial pilot—and potentially also changes to judicial review, which can delay some of these things as well, will address those.
In terms of the point about safeguards, there is one reason to be slightly less pessimistic than Ben. One advantage with the ORR that you do not have with Ofgem or Ofwat is that in National Highways you have a state-owned body with access to cost information. What you tend to see with these other sectors is more opaque, because it is fundamentally people in industry paying very expensive economic consultancies to produce lengthy PowerPoints to tell you how much something should cost. If you have National Highways building toll projects funded via RAB, you have that information, which should allow you to see through some of the perhaps excessive claims on cost that you can see in other sectors. That is a positive, but you still have the fundamental problem of the RAB, which is slightly less incentive to keep costs down unless you have very good information and a regulator that is very on it.
Olly Glover (Didcot and Wantage) (LD)
Q
Ben Hopkinson: I completely agree that the UK has a long historical challenge with delivering infrastructure cheaply and quickly. HS2 is the most expensive railway ever built, and the Bakerloo line extension will be one of the most expensive underground lines ever built. Tramlines are double the cost here compared to other European countries. We have the most expensive nuclear power plant ever built. There is a real long-term failure to build infrastructure quickly and cheaply.
On the Bill, it is good that we are getting private financing in, and that will help ease some of the burden on the state, when we are already pushed up against our fiscal limits. As I have mentioned, I have a little concern about the incentive structure, especially insofar as the private constructor has incentives to escalate costs as much as they can get away with under the ORR. A concession model might work a little better.
Sam Dumitriu: One of the important things when it comes to infrastructure delivery is ensuring you have a pipeline of projects, you know what you will build next and you can plan appropriately. We have many reasons why, in the UK, those pipelines get knocked about. Sometimes you have a road that you want to build, and everyone wants it built, but someone has brought a lawsuit against the road and it is delayed by a year. That makes planning for that really challenging.
One of the other problems is that sometimes those delays mean that you get pushed into different funding windows—the Treasury can reopen conversations about value for money, especially when in every Budget someone is trying to squeeze things into the fiscal rules and moving things from one period into another period, and cost-saving measures that are really delays. Those things tend to happen, and have happened for ever.
One thing that was really impressive under the last Government was the road investment strategy approach, which essentially said “We will set out a strategic case for all the big roads we want to build, we will give a pot of money and then we will give a delivery body the freedom to execute that.” The freedom to execute was slightly constrained by the planning system and all those delays, but fundamentally that is a very good approach. The challenge comes when the money is not quite there from the public purse, in part because the fiscal situation is tighter, but also because different choices are being made. In that case, private finance can fill the gap and ensure that you have a much more stable pipeline. I am in favour of that aspect and I think that will speed up delivery.
Tristan Osborne (Chatham and Aylesford) (Lab)
Q
Ben Hopkinson: It is a good question. First, in the French example, I am well aware that it is quite expensive to drive on a French motorway. On the other hand, they have many more miles of motorway, and if it is too expensive you can take the equivalent of an A road for certain journeys. Judging by the number of people who drive on French motorways, I think people are generally willing to accept the costs, especially given that they have built many more miles of motorway just this century than we have in total.
I could be proved wrong if it works really well, but the main challenge with the RAB model is the sheer uncertainty of whether the ORR is up to the task and has the right staff in place. It has never done this before. I know there have already been some concerns about capacity issues and general commercial experience within the ORR. I would be concerned if the private sector had large commercial control and contract teams and the public sector did not have them and was out-negotiated. That is certainly possible if civil servants are not able to properly push back on price increases.
I think the fundamental incentives in a RAB model are not right for delivering one-of-a-kind, unique pieces of infrastructure. It works a lot better for infrastructure that has very clear unit costs—for example, the cost of laying 100 metres of pipe. That is good because a regulator is clearly able to understand how much 100 metres of pipe costs to lay and can apply that across its base, whereas the cost of one lower Thames crossing is up in the air. Some additions from the private contractor might seem sensible; they might get away with that. Having a more environmentally friendly construction process certainly seems sensible on the face of it, but that also adds cost. I would want to be reassured that the ORR is up to the task and has both the capacity and the know-how to properly understand the arrangements it is entering into.
Sam Dumitriu: You mentioned price gouging. It is important to work out what the main risks are. Roads are, in most cases, natural monopolies, and the best thing about being a monopoly is a quiet life. It is not necessarily that you have all these opportunities to gouge your customers; it is that the lack of competition means you are not forced to adopt cost-saving measures, or become more customer-friendly and so on. You might have a situation where various people are claiming quite high margins or they are being aggressive in that sense, but the UK has the other problem, where people are not on it around costs. They are not working out what the best structure is to ensure that costs keep falling.
On Ben’s point, one possible way of resolving the issue is quite a radical reform that is probably beyond the scope of the Bill. I have always wondered whether it makes sense for the UK to have Ofgem doing RAB regulation for energy networks, Ofwat doing it for water, the ORR for road and rail and Ofcom for telecoms, or whether it makes sense to have a specialist economic regulator that deals with the costs of natural monopoly networks. That would have a bunch of advantages. It would potentially resolve some of the revolving door problems that you might see. It would also ensure that there is a similar expertise and a standard approach. You do not want varying approaches between all the regulators, because that suggests that they are doing something wrong when you have essentially the same economic problem to solve. As I say, however, that would be far beyond the scope of the Bill.
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
Q
In a situation such as we have at the moment, where diesel is at £2 a litre and the sustainable version another 50p on top of that, costs are going right up not only for the build, but for the corporate budgets of the haulage companies and for everyday individuals, who have to manage their household budgets. If the cost goes up to a level beyond the right balance of pricing that is commercially viable for the operator, or absorbable for the family or the business, what happens?
At the moment, I am worried about a white elephant across the Thames. In such circumstances, in the end all the costs would get absorbed by the taxpayer and this model goes up in smoke. I am keen to hear from you how concerned I should be about that and what alternative models there are elsewhere.
Ben Hopkinson: The ultimate backstop is the Exchequer. Already the Exchequer has had to bear the cost of bringing the lower Thames crossing through planning. I think it is expected to spend about £3.1 billion on the lower Thames crossing even before private investment is brought in. If we have a circumstance where the toll is not paying back what is necessary and the private body that has financed the road falls into difficulty, the Bill states that the Exchequer is able to top up or provide payments, guarantees or low-cost loans. The backstop is therefore ultimately the taxpayer, combined with higher charges for motorists on the road.
Alison Griffiths
Q
Ben Hopkinson: I am not sure if that would be an appropriate thing for the Bill itself, but trying to make the project as low-cost as possible will definitely be appropriate as we go on to construction and working with National Highways and whatever private company wins the contract. That will be about ensuring that the Office of Rail and Road is set up properly to oversee the costs that are being put through.
Sam Dumitriu: It is worth remembering, however, that the families who may pay higher tolls to cross either the Dartford crossing or the lower Thames crossing, in the absence of a lower Thames crossing bear very high costs, too, as does freight traffic between two of our major ports. The crossing is crucial to the whole wider freight economy—there are really big problems there. I think it is worth remembering that the projects should be made a priority and that, ultimately, they need to get built.
Alison Griffiths
Q
The Chair
Order. That brings us to the end of the time allotted for the Committee to ask questions. On behalf of the Committee, I thank our witnesses for their evidence.
Examination of Witness
Thomas McLennan gave evidence.
The Chair
We will now hear evidence from the British Vehicle Rental and Leasing Association. We have until 2.55 pm for this panel. Could the witness please introduce themselves for the record?
Thomas McLennan: Hi, I am Thomas McLennan. I am the director of policy and public affairs for the British Vehicle Rental and Leasing Association.
Greg Smith
Q
Thomas McLennan: Thank you for the question. For wider context, we have more than 1,000 members, and between them there about 4.6 million vehicles, representing about one in 10 cars, one in six vans and one in six trucks on UK roads. Our members own those vehicles, but other people use them. Right at the core of the problem with almost any measure or change of this scale is the technical detail. Perhaps that is not as interesting as the macro questions around how things are funded and so on, but it is what really impacts us and everyday users.
We have seen in a number of major changes in how road funding and wider funding happens, such as the eVED scheme, that the technical detail has not been considered up front. That has led to huge stress for the sector and potentially administration bills in the hundreds of millions of pounds. We want to see, in any change of this scale, especially if it will encompass an expansion of barrierless charging to more current barriered toll operations, that technical detail is guardrailed in right from the start.
At the end of the day, what we want to see is good user experience, as well as good business experience for both our members and their customers. It is in no one’s interest to have a system that is bureaucratic, challenging and leads to abrasion, when you are reducing the barriers to reduce abrasion and exactly that kind of thing. If you are just moving it elsewhere, it does not really meet its purpose. We are keen to see that this is as technically guardrailed as possible to make sure that end customers have a good experience.
Greg Smith
Q
For example, here in London, we have the congestion charge. It is dressed up as an environmental scheme, but we all know it is just road charging. Equally, other schemes are popping up. Arriving at my party’s conference in Birmingham, I remember saying to a passenger in the car, “Quick, panic—look up whether I have to pay a charge for this new clean air zone”—or whatever it might be. Is one of the things you are looking for in that answer something that simplifies the experience of the British motorist across schemes built under this model, as well as everything else?
Thomas McLennan: Short answer: yes. The long answer is that consistency is key. A lot of the burden in this model, and in any of these charging models, falls on the registered keeper. On your point, Greg, of needing a passenger to pay, not everyone has a passenger. There are lots of instances where people do not pay and there are inconsistent lengths of time that you have in which to make that payment—it might be 24 hours or six days. There might be an inconsistency in the ramping up of charges if you do not pay, or in how that charging is structured and the portals that you can use—it is all varied.
If you can create a national framework for individual specificity—I am not saying that everyone has to be exactly the same in what they are delivering, but you need to have the same guardrails and structure that enable someone to have consistency of experience. That would enable fleets to advise their customers, who might be someone running grocery stores across the country or a tourist who is arriving at an airport in the north or the south, and to train their staff to be able to give consistent advice and experience. Having every scheme with its own approach could be deeply challenging.
Greg Smith
Q
Thomas McLennan: That is a very good question. I am afraid we have not done that modelling, but we can look into it. The more pernicious point for us is that the more points of friction you have in your usership, the less likely you are to be able to make the usership work for you. We have unfortunately seen that even in great measures, and in London the level of friction has meant that some car club companies had to fold. It is challenging to operate where you have a split, with every borough having its own rules—all of those interactions have been deeply challenging. With more consistency, we can have a strategic vision on how to deliver within that framework. That is a much stronger approach to enable the investment from ourselves and the customers to be able to keep mobility moving in this country.
Justin Madders
Q
Thomas McLennan: We have had very mixed experiences with barrierless charging, so I do not think we can give a pure vision on that right now. We have had some use cases where currently there is not even the ability to transfer liability to someone who has hired a vehicle—the operator does not allow it. Then there are other instances where you can do bulk uploads, the system works really well and it is effectively smooth sailing.
What we always see is that the removal of barriers means a lot more penalty charge notices. That obviously makes sense, because previously you had to pay to get across, and then the barrier is removed and lots of people do not pay, so there is a sharp increase in penalty charge notices. All of our members have reported that to us.
The question is what happens after that. The inconsistencies mean that you can then have a duplicative effect of enormous administrative burdens on everyone involved, which have to be paid to make that work. We would say that if we are going towards barrierless charging from the get-go, which we understand has congestion benefits and so on, it needs to be done so that you do not shift the burden of someone paying at the barrier downstream to someone then having to figure out how to transfer liability or chase up on that, removing people’s ability to challenge the fines because they have just been paid, and so on. We need to look at all those things in the Bill from the start and structure them there.
Justin Madders
Q
Thomas McLennan: I have a concern that there is too much emphasis on downstream consultation in the Bill. We want to see a requirement to enable things such as the transfer of liability in the Bill because that has not been consistent in the market to date. We need to see that embedded from the start.
The Chair
If there are no further questions from Members, I will thank the witness for his evidence and we will move on to the next panel.
Examination of Witnesses
Will Godfrey and Matt Palmer gave evidence.
The Chair
We will now hear oral evidence from the Office of Rail and Road and National Highways. We have until 3.35 pm for this panel. Will the witnesses please introduce themselves briefly for the record?
Will Godfrey: Good afternoon. My name is Will Godfrey, and I am director of economics, finance and markets at the Office of Rail and Road. I am leading our preparations for the licensing arrangements and the regulatory framework that you have under consideration today.
Matt Palmer: Good afternoon. I am Matt Palmer, and I am the National Highways chief exec for the lower Thames crossing.
Greg Smith
Q
Given the significant new responsibility that the Bill will give to the Office of Road and Rail in particular, is the organisation suitably equipped to take on a new licensing regime? Does it have a skills base that has looked at other parts of the world or other sectors that have adopted a RAB model? Does it have the necessary interactivity with road users to ensure that early projects do not end up with more teething problems than anybody would have wanted? I am not saying that anybody would want teething difficulties, but we know that that happens when big change comes about.
Will Godfrey: We do not underestimate the significance of this work. It is important work, and it builds very significantly on the experience that we have from both rail and road. Our interactions on the rail side cover publicly and commercially funded infrastructure, and managers and operators. I could refer to a number of examples, including the work that we do on price controls on the high-speed link down to the Channel tunnel, and interactions with international passenger operators looking to expand operations there.
On the road side, we obviously have experience as the monitor and the organisation responsible for holding National Highways to account. We are certainly looking to build on the engineering, economics and finance operations. We also have consumer policy experience across both road and rail.
I started out in economic regulation just over 25 years ago. I have worked in the water sector, and I worked in telecommunications for a number of years, including overseeing the arrangements that led to the roll-out of superfast broadband, among other things. A number of colleagues have worked in other sectors, spanning aviation, water and others.
Your question about the risk of teething problems is well placed. I am confident that we have the lead time to build in the necessary arrangements and resourcing to get ourselves ready for the new arrangements. One of the important things to bear in mind is that the regulator’s role takes place once a licence has been awarded. A licence for the lower Thames crossing—the first scheme that will be enabled by the Bill—is some way off yet. The process for awarding that licence currently sits with the Government, but we are in discussion with the Department about our future resourcing to deliver this work.
Greg Smith
Q
Will Godfrey: There are two parts to that question. One is where we are at with, for example, the lower Thames crossing. There is a lot of debate about the risk of cost overruns and so forth, but this is not a new project; it is already significantly advanced. There has been significant work, and perhaps Matt will talk to it in a moment, on preparation—literally the groundwork—to get this project ready, so it is not a completely new project. That comes with the advantage of some teething issues already happening.
In terms of the ORR’s capability, we are working closely with the Department to look at the arrangements that might apply to, for example, licensing. This is an important point I want to stress: the Bill gives us the duties and powers that we want to see, but the really important thing for making a lot of these schemes work is that the licensing arrangements are the right ones, and that you have the licence conditions in place to hold the company to account properly and scrutinise its delivery not just on construction but on operation, its approach to tolling and so forth.
In terms of having the resource in place to do that, I am currently working with a small team. We are looking at the suite of skills and capability that we anticipate needing across, for example, corporate finance, supporting the stakeholder group—that is an important part of the Bill—and the engineering and operations capability. I am confident that we have the lead time to get in place the team that we need. We are in discussion with the Department about the resourcing necessary to secure that.
Greg Smith
Q
Matt Palmer: I am an historic mega-project constructor. I have done many big projects across the world and in the UK. Let’s talk about diesel and its cost. It is part of lower Thames crossing’s requirements, which were set in 2022, for us to construct to carbon neutral, and actually, it ends up with us being in line with the sixth carbon budget. That has been a requirement in our project. We have executed it. It is in part of our development consent order. It is required now by law and by statute through the development consent order. The vast majority of our diesel is being replaced by HVO, for which we are currently paying £1.70 per litre.
Greg Smith
Q
Matt Palmer: We pay £1.70; our contractors do not pay VAT on it. It is marginally over a current diesel cost, but we ran a competitive process and it was competitively bid.
Greg Smith
Q
Matt Palmer: It is comparable to diesel. Actually, the total operating cost of some of our equipment that we are starting to bring out is cheaper. The electric kit is actually cheaper per total operating cost, which is what you would experience in your EV and so on.
Greg Smith
Q
Matt Palmer: No, it does not. That is why we are using HVO and electric.
Greg Smith
Q
Will Godfrey: Matt has covered the construction side of things. Was there a part of your question about licensing arrangements?
Greg Smith
Yes.
Will Godfrey: In terms of the construction of this particular project, as I say, the way you hold the company to account relates to what is in the licence, and it is important to draw a distinction between what is in the development consent order and what is in the licence. The regulator’s role is not to hold the company to account on the DCO—that remains subject to the separate process for the scrutiny and delivery of that.
What the ORR would be doing under these arrangements is holding the company to account on the licence itself. The first price control settlement, if you like, would be set by the Department as part of a competition toward the first licence. Those would set the commercial terms—the expectation around allowed revenue and so forth—and then the ORR would come in as the regulator at the start of the price control and hold the company to account against that, by monitoring and scrutinising the delivery against the relevant milestones on the construction.
Justin Madders
Q
Matt Palmer: The lower Thames crossing has been developed in detail over the last six years. Our development consent order fixes that scope very tightly; we cannot build any more or any less, so the scope is very well known. We are now running at 90% designed, so we literally are fully designed, and it has been competitively bid for. It is operating—we are currently on site with 3,300 people—and operating well against that very defined scope.
It is, I am afraid, just a simple road. My colleagues back at base will kick me for that, but as a project it is a simple thing to build. We are not building a complex signalling system or a control system for a nuclear power station; we are just building a simple dumb asset. As for our ability to control that, control on road construction is historically very good. If you take a similar project, which would be something like Thames Tideway, a similar RAB-based model, it is another simple dumb asset—that is no disrespect to my colleagues who built that. These are simple projects to build. They are large, but they are simple, and we know how to build them in the UK. The cost control on it is predominantly driven by the fact that we know what we are building and what it costs.
Justin Madders
Do have anything to add, Mr Godfrey?
Will Godfrey: I would reiterate the point that the development consent order tightly defines the scope of what is being delivered. As Matt said, the project is already well advanced.
There are a few other points to bring up. Getting the cost forecast right, which underpins the allowed revenue for the first control period, is really important. That is the baseline against which you are holding the company to account. The instruments thereafter are what you specify in the licence, and that is really important to get right. That is not stuff you put in the Bill, but it is really important that you get it right in the licence and that you have the right incentives for the privately financed entity to deliver against that schedule. You need to make sure that the balance in the allocation of risk is right and that end users are ultimately protected from the risks of cost overruns.
As I say, this project is fairly well advanced already; it is not like we are talking about starting one from scratch.
Olly Glover
Q
Will Godfrey: I think the ORR’s role, as envisaged in the Bill, would not be to advise on those questions. That would be more of a question to address to Government. It is perhaps relevant here that it is important to take account of the risk-adjusted cost of financing. You have already made the point about whether things are on the balance sheet or not. Another point to bring in is the certainty around the funding and delivery arrangements. RAB-based price controls are a commitment to a certain cycle of, typically, five-year reviews in which you set the funding requirements, the price control limits and what is delivered in that period. You reset each time but the point is that it is not potentially subject to Government reopening the arrangements for the funding, which is sometimes encountered in other publicly funded arrangements. I think that is as much as I am able to say. That is more of a question for Government.
Olly Glover
Q
Matt Palmer: If you talk specifically about the lower Thames crossing, its strategic case is incredibly strong and it was introduced by Government to be built because of the broader economic benefit for the country. There is a mixture of models that the Government could choose to fund it. There was a discussion about concessions and RAB-based models earlier. They will all carry the same carrot and stick for driving cost performance. In the end, it is the Government’s decision to bring a project forward. If it is of a strategic nature then this Bill will allow you to fund it.
Olly Glover
Q
Will Godfrey: One distinction I would draw with the Railways Bill is that that Bill was so significantly concerned with the creation of Great British Railways, which will be responsible for something like 75% of all traffic on the network—not quite the whole market but a very significant proportion of the market. People are therefore understandably keen to see what arrangements are in the licence for that entity. This Bill is enabling and economy-wide. Clearly, the main project that we are talking about currently is the lower Thames crossing, but in principle several other licensed entities could be out there. That is one distinction that I would draw.
As to whether a particular licence is essential to inform the scrutiny of a Bill, my feeling is that the Bill gives you, as a regulator, the kind of duties, functions and powers that you would expect. On the licence, clearly there is work to be done there, but one advantage is that the licences will be put out to competitive tender. That provides a different level of scrutiny from the arrangements under the Railways Bill, in which the licence is awarded to GBR as the given entity that will receive it.
Tristan Osborne
Q
“There are, however, likely to be gaps such as those relating to construction phase price controls, project specific
I know you said that you had confidence in that area, but that report was published just last month. Can I get some clarity? Are you saying that the report is not entirely right and that you are confident that the three aspects it raised will be covered going forward?
Will Godfrey: We very much welcome that independent review of the ORR. It is always helpful to have that sort of outside-in look and scrutiny.
On what it describes as gaps, the other point that Dr Richard Judge brought out was that we are not building from scratch, so this is about providing incremental capacity. I think he was right to draw out those areas as ones where you would want to make sure that the gaps have been filled by the time you are past Royal Assent, the first licence has been awarded and you are into the start of the first price control, which is a long way from today. The point I am making is that, from the discussions I have been having with the Department, I am reasonably confident about being able to resource what I would describe as incremental gaps, rather than starting from a blank sheet.
Shivani Raja (Leicester East) (Con)
Q
Will Godfrey: At the heart of the regulator’s responsibilities would be furthering the interests of current and future users. Those are exactly the kind of considerations that would be at the heart of how you approach the regulation, how you set up the instruments—I am referring specifically to the licence—and how you then hold the company to account against that licence.
For the first control period, in the case of the lower Thames crossing, the licence would be awarded by the Department, so the particular tolling structure and the level of tolls would be set through that competition for the first licence. Thereafter, the way that the ORR operates is that the code that the ORR would be responsible for creating on the approach to tolling arrangements will clearly be important once you are past that first point.
My feeling is that the arrangements necessary to provide protections to end users around, for example, tolling and toll shocks and so on feel about right to me in the enabling legislation. What is really important is what goes into the licence and what we put into the code, and then how the company responds. I hope there will be a virtuous circle, in which there is a clear signal of what is expected, we hold the company to account, it delivers and implements it, and we then take the feedback from the market. I do not know if you were anticipating a different concern, but I will pause there in case I have not answered your question.
Shivani Raja
No, that is fine. Do you have anything to add, Mr Palmer?
Matt Palmer: I think it is beyond my scope—National Highways is here as an operator and a constructor. I think Will has probably answered the question properly.
Mike Reader (Northampton South) (Lab)
Q
Matt Palmer: I think all of us recognise that annualised costs on major projects, especially mega-projects, are very difficult to deal with. They drive perverse cost behaviours, where you are trying to fit into a 12-month window, and the Government are currently moving, with the mega-projects piece, towards more of an envelope-type conversation. This is just another extension of that. You end up with a cost envelope that you are working within, with a driven timeframe that you have to deliver to, which then allows the flexibility to execute at the right time—depending on the weather and so on. It is that flex that you need in order to execute efficiently. If you are constraining yourself on cost to a budget every year, which is common, it does drive cost. This model gives you the flex that allows you to drive an efficient construction project.
Mike Reader
Q
Matt Palmer: The base cost of the scheme—the cost without inflation—has been fixed since 2020. The great thing about a development consent order is that the scope is fixed. We are still building 52 bridges, 22 km of road and 4.3 km of tunnel. The cost difference between now and previously is essentially driven by inflation. You have got great cost control sat there inside the direct consent order. Our contracts with our contractors then drive to that same scope and control, and there is a pain/gain share: they get into pain if they exceed and they get incentivised to deliver below, which is normal with any project of this scale.
Mike Reader
Q
Will Godfrey: I hope my earlier answers go to some of that. If your question is specifically about the scope of what you were just asking Matt, it is important for us that the arrangements around what will be LTC Co. and its relationship with its contractors, and in turn what it is allowed to charge to end customers, is not a simple pass-through-type arrangement. That is really important.
You need to make sure that there are the right liability caps in relation to the pain/gain sharing. Are those at the right level? Has LTC Co. or any company licensed under these arrangements—let us concentrate on the LTC example—got the right incentives to be able to control the relationship with the contractors? Through the licence and the price control arrangements we need to create arrangements in which there remains that discipline to control those costs, so it is not a set of arrangements in which, beyond a certain threshold, end users are ultimately on the hook for cost pass-through.
The importance that the Bill places on efficiency in the economy and that being at the heart of our duties is something that we would take really seriously and very much welcome. It gives us the authority to be able to act on getting to those kind of price control licence arrangements. Of course, as I said earlier, the first price control arrangement would be set by the Department through that first competition for the first licence. In terms of how we operate on it thereafter, we would look to make sure there is not just a simple mechanistic pass-through in the event that costs overrun, whether for inflation or other cost shocks.
Douglas Lumsden (Aberdeen South) (Con)
Q
Will Godfrey: I think “without any level of scrutiny” is something I would take issue with, certainly as I would see the arrangements working. We have had good discussions with old colleagues of mine at Ofwat about the arrangements they had, for example, for the Thames tideway tunnel. There, both the rhythm—by which I mean the frequency of reporting, monitoring and scrutiny of costs during construction—and the importance of having a dependable, expert, independent technical assurer on the costs are really important for making sure you have that right level of visibility and scrutiny. I would question the nature of unchecked costs. I am not denying that cost pressures would arise, but that is the whole point of having arrangements like an independent technical assessor.
Douglas Lumsden
Q
Will Godfrey: I will go to both costs and schedule. There are instruments that you can bring in through a licence—such as cost-sharing rates. The point I was trying to make earlier is that you do not necessarily design a price control—at the moment, if there is a cost shock, it just goes through to end-user prices, so cost-sharing arrangements are one example. You can also bring in thresholds to make sure that the company is incentivised to remain on schedule as well.
Douglas Lumsden
Q
Will Godfrey: Before we get to that point, it is worth bearing in mind whether there are other potential investors willing to buy out the company that is struggling. There may be particular reasons why—maybe it was not well managed or well financed. There is the potential in principle for someone to come in through normal mergers or acquisitions and take responsibility. In the event that the company is really struggling against a particular settlement, that is a challenge for a regulator to manage. There are certain provisions on the limit, where things ultimately are pushed to the point of non-recoverability, which are envisaged within the Bill.
One of the jobs of the regulator is, first, getting that first price control settlement right. As I say, at the moment that is being set by the Department, but getting that projection on the allowed cost is key—get it right at the start. Then, that rhythm of regular monitoring is really important to make sure that you anticipate that point. What you do not want to be doing, particularly with a construction project like this, is to get to that point with some element of surprise. What you need to do is keep that regular rhythm of monitoring and scrutiny, so that you can act before you get to that point that the company has nowhere to go.
Douglas Lumsden
Q
Will Godfrey: At certain points it is possible that a regulator could introduce things like cost limits, beyond which there was then a redetermination of a price allowance, but not necessarily one that was a simple “costs have overrun by CX, therefore tolls increase by the same amount.” It would not be an automatic pass-through; it would be subject to that efficiency and economy test.
Jim Dickson (Dartford) (Lab)
Q
Matt Palmer: We are moving at pace. The Chancellor at the last autumn Budget—not this one—announced funding to get us to private finance, and we are well into that. We are moving at pace. There is a misunderstanding that we have not started. We have very definitely started: 2,000 people are on site, we have 14 sq km of land and there is a lot of mud at the moment, I am afraid. We are moving well and at pace. Our target is to get a tunnel boring machine, which will be the largest in the world at the time, in the ground in 2028, which will line up roughly with when we go to private finance. All of that is contingent on the fact that we need the legislation through to allow us to get the equity to move on thereafter.
Jim Dickson
Q
Matt Palmer: The logic is that the economic benefit of the scheme is great. Not only does it solve the problem in the local area; it is a national-level project, so we move at pace, we start the construction and we take a lot of the difficult, time-consuming activities like land assembly—putting plots of land together—and that is what we are doing at the moment. All of that enables a much more stable platform for investors to come in.
Alison Griffiths
Q
Matt Palmer: In construction in the UK, about two thirds of our constructors use HVO as standard. For a project, you will find that a number of constructors bid with HVO—it is just in the costs. That is the case with lower Thames crossing. Two thirds of our contractors bid with HVO.
Alison Griffiths
Q
Matt Palmer: But we have never—what I am saying is that we went to market and asked them to build us a project. They did that with HVO as the base bid. We did not see the cost with diesel.
Alison Griffiths
Q
Matt Palmer: We did not go out with a diesel-based product because the market typically comes forward with an HVO product.
Alison Griffiths
Q
Matt Palmer: I think I have explained myself. They are comparable. £1.70 is what we are paying. I have been clear that that is what we are paying for HVO at the moment.
Alison Griffiths
As I say, when I asked each of these sources specifically about construction projects—I have not asked them about retail; I asked them about construction—they have been clear that there are substantial additional costs to using HVO. I just wanted to make sure that that was clear.
The Chair
If there are no further questions from Members, I thank the witnesses for their evidence.
Examination of Witnesses
Roger Forsdyke and Andrew Truscott gave evidence.
The Chair
We will now hear evidence from Wates Construction and John Laing. We have until 4.10 pm for this panel. Could the witnesses please briefly introduce themselves for the record?
Andrew Truscott: I am Andrew Truscott. I am the chief executive officer of John Laing, which is a global investor in infrastructure projects. We are a 178-year-old UK business. Our specialism is investing in greenfield projects, by which I mean projects that go through the construction cycle. We have delivered about 180 greenfield construction projects across the world over the last 25 years.
Roger Forsdyke: My name is Roger Forsdyke. I am UK operations director for Wates Construction. Wates is a business privately owned and incorporated in 1897, and has been working in infrastructure and house building since then.
Greg Smith
Q
Andrew Truscott: We applaud the use of RAB in this regard. Why? This is a complicated project. Listening to the previous panel, the feature of RAB that feels very relevant to LTC is the ability to have intra-cycle changes, subject to the way that, in particular, traffic operates in the future.
I am speaking purely from an investor perspective, so please excuse me; I look at Tideway as a really well delivered project, from an investor perspective, and a similar model was used there. The model used at Heathrow has also been relatively successful. Being totally transparent, when we first started talking to Government about this project, I felt that a more traditional concession model might be more appropriate, but the way in which the project is now being procured, and in particular the addition of the bridge, means that the RAB model looks really very interesting and, I would probably argue, more attractive from an investing perspective.
Greg Smith
Q
Andrew Truscott: Yes: uncapped construction cost risk being transferred on to an investor. I am being overly simplistic, so please excuse me, but that is something that we would not do, and I would argue that we are a relatively good proxy for investors of our type. Some work and some thought need to go into how to manage that cost overrun risk.
Echoing the comments from the previous panel, this is a well thought through project. We applaud the way it has been developed. Hopefully it can be delivered on time and on budget, but of the 180 projects that we have delivered, I can probably count on the fingers of one hand how many actually have been. As a contractor, an investor or a Government, all stakeholders have to be prepared for the expectation of cost overrun. Asking an investor to take uncapped cost overrun into its accounts does not necessarily mean that it is a terrible outcome; it just means that I cannot price equity.
Greg Smith
Q
Andrew Truscott: Plan for the worst, and really plan for the worst around cost inflation. It was interesting listening to the Chancellor yesterday. Every element of the supply chain and the cost is increasing globally for all these sorts of projects. Plan for the worst and plan for an expectation that, unfortunately, even though it is not the intention, you will end up with a project that costs more than you expected it to on day one.
Greg Smith
Q
Andrew Truscott: Again, I will focus on cost for a minute, and then I would love Roger’s view because he is at the coalface; I am just a simple investor in my ivory tower.
What is important is that there are mechanics in the construction process or the construction phase that incentivise contractors to stick to budget as much as they can. Again, credit to the way in which the Bill is written and the way LTC is being procured—this idea of cost sharing and certain elements of cost being shared between contractor and Government and rolled into RAB. Having those sorts of features that really—no disrespect to Roger—hold the contractor’s feet to the fire in terms of cost control are very sensible. These projects can be delivered on time and on budget. We have just finished the North East Link project in Melbourne where we tunnelled under the Yarra, which is quite a complicated river. We did it on time and on budget.
Greg Smith
Q
Roger Forsdyke: It is about responsibility for outcomes, and Andrew is right: put it where the responsibility lies. As a contractor, we are in control of only some of the process. I often think the contractor is being presented with all the risk, when the design, the planning and the procurement are in some other court.
For me, the most important thing is to get the planning done, so that you do not start before you are ready. A lot of projects start under pressure, without the outcome and the scope having been fully detailed and the risk apportioned correctly. You have to look at the stages that we need to go through so that, when we put a shovel in the ground, the scale and scope have been determined. In the majority of cases, cost overruns come from uncertainty, which is often there before we start work; things have not been properly nailed down with the appropriate parties. Yes, hold the contractor’s feet to the fire, but there are other parties and elements: the designers, the ecology—all the other things that go into a proper, well-delivered project. There needs to be some measure of accountability there also. Often, at the other end of the contract, we find that being transferred—not necessarily fully realised—into the contractor’s risk. That is where you get problems.
Greg Smith
Q
Roger Forsdyke: Potentially. It is a question of appropriateness. If it is blanket HVO—well, there is some plant, some stuff, you need to use diesel for, so it is a question of appropriateness for me. There is an uplift in use of that type of fuel—HVO. If that is a key stakeholder requirement and the public purse can afford it, it is something that should be done, but those are decisions outside a contractor’s position.
Greg Smith
I appreciate that that is outside the contractor’s position. That is why I came with the question.
Roger Forsdyke: That is not a variable cost to me; it is just an additional cost. The risk comes from variable costs that I cannot control.
Greg Smith
Q
Roger Forsdyke: I think you have answered your own question.
Greg Smith
Fair enough.
Andrew Truscott: There is only one thing I would add, and this is a bit naughty, so apologies. You are building a road; people have diesel cars that drive on the road. One of the things that we at John Laing do is this. We own toll roads; we own availability roads all around the world, and we couch our stage 1 and stage 2 emissions on each of our roads with a path to net zero in 2050. The one thing we cannot control is the vehicles that run on the roads that we build. We can control the operations and we can have input into the way they are built, but ultimately these are polluting events, because people drive diesel and petrol cars on them.
Olly Glover
Q
Andrew Truscott: My biggest concern about this project is the ultimate cost to the end user. That is a piece of maths that we all, collectively, need to get right, because we cannot end up with a wonderful project that unfortunately saddles the user with an uneconomic toll for the next 50 or 60 years. How can we manage that? We can manage it by, obviously, trying to keep the cost of construction as low as we possibly can. Other things in our toll roads and our businesses globally include dynamic tolling, where we encourage road use by differentiated pricing depending on the time of day—I would love to explore that with the Government at the right time—and differentiation for different types of vehicles. I think there is a way of getting the end users’ experience to be a little fairer than if there was just a flat toll.
In terms of the overall costs and delivery, obviously, the cost of financing at the moment is as high as it has been in my career. That is a factor that we all have to be aware of. I am sure you guys all know this, but infrastructure is a diversifier in pension fund portfolios. We are a spread to the risk-free investor. That is how we calculate our returns, so unfortunately, as risk-free rates go up, the expectation of the returns on our capital also goes up.
Innovation around how we can collectively deliver a financing package against that backdrop that is as cheap and deliverable as possible is also quite important. How do we do that? Certainty of outcome, high-quality regulation and ensuring that everybody who commits capital understands the limits of their capital and is therefore able to calculate their returns accordingly.
Olly Glover
Any thoughts from you, Mr Forsdyke?
Roger Forsdyke: Not on the subject of financing; it is outside my experience.
Tristan Osborne
Q
Andrew Truscott: I would slightly reject your first statement, if I am honest. As an infrastructure investor, we provide, candidly, the lowest cost private capital that is available across the world. If you are attracting John Laing and people like us, I can guarantee that you are getting the lowest cost of equity capital that you can possibly attract and therefore the risk transfer needs to be accordingly appropriate.
I will slightly repeat my opening comments: when we first started interacting with DFT about this project, I was quite nervous about the RAB model. I am not a RAB nerd; there are lots of RAB nerds, and I am not one. RAB can be incredibly complicated, and it can take a huge amount of time to drill down. There is not a regulator. There is an awful lot of work that needs to be done. Am I nervous that that is going to take longer than it should do or could do? Yes, I am, but again, credit to DFT and the Treasury, they seem to be well on track. Maybe the better answer to your question is that we as investors will need absolute certainty—and I mean absolute certainty—about what that regulatory model is, who the regulator is and how that regulation is going to work before we will put in a dollar, a pound, or a euro—whatever currency you like.
Alison Griffiths
Q
Roger Forsdyke: It is really interesting that you say that from your experience it is the commercial pressure. The most important thing in the tendering process is to have measurables beyond just the cost. If it is first past the post, you are destined to push the price down to the lowest-quality bid, which often creates the problems you are describing and that we described earlier. You have to look at how you will measure the quality of the tenders in real terms, beyond the cost of the lowest bid. I do not think that is regularly done effectively, so you end up with cheap materials, optimistic programming, optimistic budgeting and all those things just to get to a price that is probably optimistic in the first place. That echoes what Andrew said.
Alison Griffiths
Q
Roger Forsdyke: I think so. If you have gateways where you build the price through detailed submissions, you can then control it. You do not want uncontrollable cost and excellent quality, but you need to create some gateways through the process so that you can control the quality as you go through. That is my experience. Those sorts of two-stage processes create the best outcomes.
You then have to make sure there is no undefined scope. As you cross the line to secured and the responsibility moves to the contractor, you do not want any change. That is sometimes very hard to achieve, but it is a really important step. It is often, “Oh, we just need to get started,” and the pressure of starting often means that the project will start prematurely, before the scope is defined. That is where the optimism bias goes in—the provisional sum might be light or whatever—and then you end up with escalation, notwithstanding the delays to resolving the issues themselves.
Andrew Truscott: I do not have a huge amount to add, because Roger has put it beautifully. I will just say one thing, and he can kick me under the table: contracting is a hard business. They do billions of pounds-worth of revenue for 2%, 3% or 4% margins—it is hard—and there is therefore little scope in their business models for mistakes. They will always enter into these sorts of projects with an expectation that mistakes do not land at their desk, because otherwise they go bust, and they have done globally.
Again, credit to the way LTC is being procured. I think separating church and state a little bit—separating equity and financing from contracting, rather than having one single proposal—is arguably a way of getting more certainty around deliverability than amalgamating all those elements into one. Where we have seen material cost overruns, it tends to be in the big projects where one single solution is given to a customer. We have been looking at a lot of US projects recently in the road space where single projects— equity, traffic and revenue, as well as construction—are lumped into one big unit and presented to a customer, who then tries to aggregate and always aggregates to lowest cost, and that is not always the right solution.
I am giving my previous panellists an awful lot of credit today, which is wonderful. I think disaggregating elements could be a way of managing that risk and that cost and delay overrun quite well.
Jim Dickson
Q
Andrew Truscott: Hopefully not.
Jim Dickson
In terms of investor attractiveness, how would you rank the scheme globally against other schemes of similar size, or other comparable schemes? Do you think we are set to have a competitive and very interested set of players looking to bid?
Andrew Truscott: It is a really good question. I will try to keep my answer brief, because I could bore you for about a month on this.
The short answer is that the big attention for the main global contractors—of which there are, let us be honest, a handful—is currently on the US. The US is undergoing a big programme of what they are calling managed lanes projects, which are about upgrading existing roadways to be either tolled or semi-tolled or managed. I am sure you have not seen Ferrovial or Cintra—all the big Spanish contractors are very focused on the US. Australia is sporadic but yes, there are some large projects—not necessarily transportation projects—that are attracting interest from investors and contractors in Australia. In Europe, you can count it on the fingers of one hand. Actually, that is where LTC may get more attention, as a consequence of the lack of other available opportunities.
However, this is a big project. This is a big equity cheque and there will be an awful lot of investors who say—well, I am certainly yet to meet the investor who will be able to write a single cheque for the entire amount. My guess is that this will come down to pools of consortium of capital, very much like those that ended up being on Thames Tideway, who come together because the amount of capital required is just so huge.
Do I expect it to be competitive? Unfortunately, yes. Do I expect you to have 10 to 15 single-asset bidders all vying to buy 100% of the equity? Not in the slightest.
Douglas Lumsden
Q
Andrew Truscott: Not for the contractor; for the investor. Sorry—if I said “contractor”, I meant “investor”. Apologies. I do not care about the contractors. [Laughter.]
It is not because we do not understand and price risk; that is what we do for a living. It is just that I cannot go to my investment committee and, when asked, “Okay, Andrew, what is the maximum amount of equity you are going to put into this project and therefore what is the return you are expecting to get on it?”, give the answer, “I don’t know.” That is not a conversation—well, it could be a conversation, but it would be the last conversation I have with my investment committee.
Douglas Lumsden
Q
Andrew Truscott: Again, I am getting well over my skis, so apologies, but it is about being smart. I am not just suggesting that this all lands on the country balance sheet, whether it is the National Wealth Fund taking excess risk above a certain threshold and therefore becoming an equity investor as a consequence, but it would be sensible to be smart and think innovatively about how to cap the number, so that I can then go to my investment committee and say, “This is the amount of capital we’ll commit, with any excess being provided by somebody else in exchange for an economic interest.” Rather than trying to give answers, I would say that being thoughtful and innovative about how that cap can be constructed is definitely worth putting on the agenda.
Douglas Lumsden
Q
Andrew Truscott: I think it will.
Douglas Lumsden
Q
Andrew Truscott: I cannot speak for the entire investment community, but I can repeat what I said earlier. I think we are fairly typical—I mean, we are brilliant, but we are fairly typical—and an uncapped equity commitment is almost impossible for us to write.
The Chair
If there are no further questions from Members, I thank the witnesses for their evidence. We will move on to the next panel.
Examination of Witness
Justin Madders MP gave evidence.
The Chair
We will now hear oral evidence from the Minister. We have until 4.30 pm for this panel. Will the Minister please briefly introduce himself for the record?
Justin Madders: Good afternoon. I am Justin Madders, the Parliamentary Under-Secretary of State in the Department for Transport.
Greg Smith
Q
Justin Madders: We are pretty clear that it is not a backdoor to road pricing. The hon. Member may have an amendment that he thinks will deal with that, but I can assure him that we have gone through extensive discussions with the Office of the Parliamentary Counsel on this. I refer him to Logistics UK’s evidence this morning. They said that they thought the Bill was relatively strongly drafted in terms of closing the loopholes.
It is probably worth saying that, as the hon. Gentleman will know, the Bill’s intent is also important. My statements on the record on Second Reading, probably a number of times in Committee, I imagine, and today will all be relevant should, at some point in the future, a future Secretary of State want to do something that is clearly outside the scope and intention of the Bill. I will say, again, for the record, that this Bill does not provide a backdoor for widespread tolling.
The Bill is creating an additional financing option for major strategic road infrastructure, specifically for trunk roads in England. It is deliberately a framework because, rather than legislate for one individual project, it is possible that there may be more suitable projects in the future, but that does not mean—I want to be clear—that this will become the default model for road investment. Any future use would need to meet the requirements of the Bill and be considered on its own merits. As Steve Gooding from the RAC said this morning, I am happy to confirm that, at the moment, there are not any other schemes that are being considered for use under this Bill.
It is important to say that the Bill narrowly defines when a licence can be granted: for a new road, a capacity-enhancing improvement or the continued operation of a road that has been previously licensed under this regime. This is about major strategic infrastructure; it is not about, as in the example the hon. Member gave, putting in tolls when a new camera or something is introduced. That clearly is not the case. Some of the evidence earlier also suggested that our geographical constraints would make that very difficult anyway, even if that was what we wanted to do, which, I will state again for the record, is not the case.
Greg Smith
Q
Justin Madders: I am afraid I am going to disappoint you. We are not going to give figures for tolls for a nine-year window in advance, because that will be part of the ongoing analysis and development of the project and part of the discussions with potential investors. We are clear that the Bill will set out the framework for how that will work. It is about the economic and efficient costs of provision. It is very clear that we believe tolls must remain affordable and they must represent good value for road users. Future projects would be undertaken on the same basis, so although I cannot give any figures in pounds and pence, I can give assurances that there will be sufficient restraints in place to ensure that this is not an unlimited blank cheque for increased tolls for evermore.
Greg Smith
Q
Justin Madders: I thought the evidence from National Highways was very clear on that. It is saying that there is not an increased cost as a result of that. It also said very clearly that this was a requirement set in the development consent order in 2022, when your party was in government. I am not entirely sure where you are going with this.
Greg Smith
Q
Justin Madders: I would gently push back and say that, rather than evidence from people who are not working on the project, or from ChatGPT or whatever the source—
Greg Smith
The market, Minister.
Justin Madders: We had very clear evidence from National Highways that this is not having an overall impact on costs. I am happy to provide further information. I will ask it to put something in writing about the detail of that. You will be aware that this Bill is scheme agnostic, so it is not appropriate for such restrictions to be placed in the Bill, but I am happy to facilitate a further conversation, because I understand you are concerned about that.
Jim Dickson
Q
Justin Madders: I understand why you ask that question. The Bill sets the framework for the RAB model, and that will establish the independent regulator. Its remit is clear, and it is there in the first few clauses of the Bill: to take account of the interests of road users. There will be fair pricing, transparency and long-term sustainability as a result of that. You will also be aware that there will be a stakeholder group in which users will have the opportunity to feed in. We have a pretty robust set of reassurances that I hope will satisfy you and your constituents.
Olly Glover
Q
Justin Madders: First, as it made clear, the Treasury will not fund the totality of the project, so we have to look at other models. There are different views about how that would work. If we want to compare it to the private finance initiative, which has been the major funding source for a number of crossings in recent years, costs under the RAB model tend to be lower.
Clearly, we have an independent regulator that will, as I have explained and you have heard in evidence, be able to limit cost recovery, to make sure it is economic and efficient. There will be regular requirements set out to review that under the licence. Ultimately, the Government will not be left, as they would be under PFI, with repaying a debt over many years. That might be off the balance sheet, but it still ends up coming to the taxpayer.
Olly Glover
Q
Justin Madders: As this is a road, the Office of Rail and Road seems to be the appropriate regulator.
Olly Glover
Q
Justin Madders: There is a different approach because this is a different situation. This is the regulated asset base model, which is about a long-term investment, balancing the interests of users and investors and having a strong regulator that understands the sector. As we have heard, the ORR is already working on it. That is absolutely the right balance to make sure this delivers for everyone.
Olly Glover
That is an interesting answer, because railways also have both users and investors, but perhaps that is a debate for another day. I will happily let other people come in now.
Tristan Osborne
Q
Again, speaking to the investor spokesperson today, they said that regulatory certainty was absolutely critical for them. I want to understand the operational capabilities, the engagement between the DFT and the ORR, and whether or not we will have that structure and that robust regulatory regime in place, and how confident you are about that.
Justin Madders: I am confident about that, because that is what the Bill intends to do. It sets it out very clearly. We have heard from the investors that that certainty will be a very attractive opportunity for the long-term investment we are seeking to deliver. There will be a need for some additional capability and capacity in the ORR, but I was very impressed with the evidence we heard today. It is very much on top of this, but there is much more to be done, and the Bill will enable it to do that.
Douglas Lumsden
Q
Justin Madders: I am not too familiar with the factors he takes into account when investing, but my advice from officials is that the soft market testing that has been taking place has shown a lot of interest in this. He also said in his response that there would be quite a lot of people who would be looking to invest in this. That conversation is ongoing.
Having the legislation on the statute book will actually help give more certainty to investors. Clearly one of the reasons why the project has already started is to de-risk it to some extent. All the indicators I am getting are that we are putting this in a strong position to attract investment.
Douglas Lumsden
Q
Justin Madders: I do not think that this is covered by the Bill anyway, but I will certainly take it away to see if there is anything to reflect on. I assure you that this would not be proceeding if there were no interest in investment.
Mike Reader
Q
Justin Madders: I think it will. Obviously the Treasury decision on how this is going to be funded is driving us in a direction where we have to secure private investment. I think the model gives us the opportunity to give the investor certainty over a long period. Clearly, guardrails in there will protect users as well, but as I say, the indications I have had so far are that the long-term nature of the project and the way in which it has been de-risked make it an attractive proposition.
Mike Reader
Q
Justin Madders: As I probably made clear, the Bill is scheme agnostic, so an amendment to require a certain type of fuel would not really help us at all. Look, we have had quite a lot of evidence and, as a Committee, we should take confidence in the measures that are in place to ensure that the costs are kept under control.
Mike Reader
Q
Justin Madders: I suppose, to pick up from one of the witnesses, I will reference the fact that the road investment strategy—which was started by the previous Government —has set us up with a very sustainable model to develop these large projects over a longer term, giving confidence to the supply chain to keep control of costs and to deliver on time and within scope. I think that National Highways is now very well skilled at doing that, which should give us all confidence.
Mike Reader
Q
Justin Madders: The tolls will ultimately be part of part of the licence, which is covered by the Bill—
Mike Reader
Q
Justin Madders: That will be part of the licence conditions, and probably a little too specific for the Bill. Obviously, there are safeguards in the Bill about the things that will need to be considered by the operator.
Mike Reader
Q
Justin Madders: Yes, we are happy to do that.
The Chair
As there are no further questions from Members, I thank the Minister for his evidence. That brings us to the end of the sitting. The Committee will meet again at 9.25 am on Tuesday 3 November to begin line-by-line consideration of the Bill.
Ordered, That further consideration of the Bill be now adjourned.—(Michael Wheeler.)
Highways (Financing) Bill (Third sitting)
Tuesday 3rd November 2026
(3 days, 8 hours ago)
Public Bill CommitteesRead Full debate Highways (Financing) Bill 2026-27 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 3 November 2026 - (3 Nov 2026)
The Committee divided: - Ayes: 4 / Noes: 13 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 12 - Question accordingly negatived.
The Chair
Good morning, everyone. Will everyone ensure that all electronic devices are turned off or switched to silent mode? We now begin line-by-line consideration of the Bill. The selection list for today’s sittings is available in the room and on the parliamentary website. That shows how the clauses, schedules and selected amendments have been grouped together for debate. A reminder that the Member who has put their name to the lead amendment in a group is called first. Other Members are then free to indicate that they wish to speak in that debate by bobbing. Please bob on each occasion on which you wish to speak during proceedings.
At the end of the debate on a group of amendments and new clauses, I will call the Member who moved the lead amendment or new clause to speak again. Before they sit down, they will need to indicate whether they wish to withdraw the amendment or new clause, or to seek a decision. If any Member wishes to press any other amendment in a group to a vote—that includes grouped new clauses and schedules—they need to let me know. The order of decisions follows the order in which the amendments appear on the amendment paper.
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
On a point of order, Mr Dowd. I apologise, but I am struggling to hear you. I am partially deaf, so I just wanted to ask that everyone speaks as clearly as possible. Thank you so much.
Greg Smith (Mid Buckinghamshire) (Con)
I beg to move amendment 46, in clause 1, page 1, line 15, leave out lines 15 to 18, and insert—
“it is the Lower Thames Crossing.”
This amendment would restrict the application of the Bill to the Lower Thames Crossing.
It is a pleasure to serve with you in the Chair, Mr Dowd, on the first day of line-by-line consideration of this important Bill. Whenever I sit on a Bill Committee, I seem to be opposite this Minister. We spent many happy weeks together on the Employment Rights Bill earlier in the Parliament. I look forward to the next few weeks.
I genuinely believe that a lot of the Bill has cross-party consensus, certainly between the Government and His Majesty’s loyal Opposition. However, as we explored in some of the evidence sessions the other day and on Second Reading, there are some question marks over many aspects of the Bill. We will no doubt explore those in future debates in Committee and later in the passage of the Bill in our House and the other place. For now, however, my proposition through this amendment is that we should seize on where we have agreement in order to get progress on a project that I think all parts of the House wish to see built, namely the lower Thames crossing. The amendment therefore seeks to restrict the Bill to just the lower Thames crossing.
In other parts of the Bill, we have genuine consensus, such as on the provisions for barrier-free tolling on roads such as the M6 and the Mersey tunnel, but that could easily be brought forward in separate legislation. The real purpose of the amendment is so that the Government can get on with the lower Thames crossing, which we very much want to see happen, particularly Labour Members in the direct locality of the crossing, as well as a number of Conservative Members from Kent and Essex.
If we can do that, I think we will see speed that we do not often see in infrastructure projects in the United Kingdom. Last week, we heard evidence about the differentials between us in the United Kingdom and our nearest neighbours in France and how they get stuff built faster and cheaper. For once in this Parliament, why do we not grasp the nettle, take what we agree on and move forward with it, having the debate on the other aspects further down the line?
One of the arguments I make is something I have seen throughout my political career in this place, in local government and as an activist: the importance to trial a new model to prove that it works. This is innovation for the lower Thames crossing, so let us test it, try it and work out the gremlins before the Government, whoever that might be at that point, come forward with other projects that could be financed and secured through the RAB—regulated asset base—model and the innovations in the Bill. I will ask the Minister a few questions on that.
Given that so much of the media and debate narrative has been about the lower Thames crossing, what other projects do the Government think might come forward or could be financed through the model proposed in the Bill, other than the lower Thames crossing? If literally nothing else is on the table, why are we legislating in this place for something that no one has the first clue about what it might be for? We can all gather around the point on the lower Thames crossing, but we may have divergence on other projects, in particular if no one can name a single one of them.
The framework brought forward by the Bill is open ended. The public we serve in all our respective constituencies would expect us to have far greater clarity on precisely what any law that we pass in this place is for. My constituents and those in the constituency of every other right hon. and hon. Member can understand and get behind the lower Thames crossing; it is far more difficult to get behind an abstract, which they cannot see, touch, breathe or smell, and so on. I put it to the Minister, therefore: accept the amendment and let us get an Act on the statute book that can move forward at pace—that favourite political phrase, at the moment—to get the lower Thames crossing built.
Alison Griffiths
My hon. Friend makes such an important point. During the evidence sessions, the Minister was categorical that his intention was not for any other road to be covered by this, so I join my hon. Friend in asking the Minister why he would not agree to the amendment, since he is so adamant about no other need for the clause.
Greg Smith
I am grateful to my hon. Friend for reasserting my argument. I hope that the Minister can answer the question. Some speculation has been that the Government want to avoid a hybrid Bill on the lower Thames crossing, and believe you me, Mr Dowd, I see the pitfalls of hybrid Bills in my own constituency, with 35 km of a certain railway being built through the middle of it, but I do not see a real argument why a hybrid Bill would be necessary. Why can we not talk explicitly about the lower Thames crossing in this piece of legislation?
I know the Minister to be a reasonable man, with whom we share agreement on this particular point of the lower Thames crossing, and on a determination to get on with it, so I gently ask him why we cannot have this piece of legislation on something that all parties can get behind. Later, we can have the debate on the other matters, which will take more time to get right with parliamentary scrutiny, but meanwhile we can move forwards.
The Parliamentary Under-Secretary of State for Transport (Justin Madders)
It is a pleasure to see you in the Chair, Mr Dowd. I thank hon. Members in Committee for attending. I hope that we will all learn a little as we go along. I start by recognising the desire of the shadow Minister to reach consensus wherever possible. As the Committee goes on, I am sure that he will find that he is in agreement with me 90% of the time. If not, the Committee will ensure that we are in agreement with the Government position.
The hon. Member makes a lucid argument, which I am here to address. The amendment’s intention is very clear: it would restrict the Bill’s application to the lower Thames crossing. I understand the shadow Minister’s desire to seek clarity on what other projects this legislation might be used for, and it is the case that the Bill has very much been made with a single project in mind—the lower Thames crossing. However, I think that naming the project in the Bill would undermine our attempt here to set up a framework for potential future uses.
It is clear that under the intended operating model, ownership and operations of the Dartford crossing would transfer to the new regulated private sector entity, which would be responsible for operating and maintaining both the Dartford crossing and the new lower Thames crossing, ensuring a consistent and reliable service. It is important to have both crossings covered, because that will ensure that they are operating in an integrated way. The amendment specifically refers to only the lower Thames crossing, but restricting the Bill in that way would undermine the Government’s intention. Were the legislation used only for the lower Thames crossing, that would undermine its purpose of building a framework for major road infrastructure, and we should not unnecessarily constrain future Governments where this financing approach may be appropriate.
The shadow Minister tempts me to come up with a shopping list of potential projects, but the truth of the matter is that, at the moment, the lower Thames crossing is the only suitable project. It is probably worth flagging that the New Roads and Street Works Act 1991, which was passed under a Conservative Government, created a power to create tolling roads and I think only one project has ever been built under that legislation. That is not to say that the same will happen here, but getting the lower Thames crossing right will give us confidence moving forward, if a suitable project arises in the future. We do not want to constrain future Governments in this way.
It is also worth bearing in mind what the shadow Minister said about the amendment having potential procedural consequences, such as the potential risk of hybridisation, which is of course a matter for the House. As the shadow Minister said, the amendment would risk hybridising the Bill, meaning that it would introduce additional parliamentary stages and considerable delay to the delivery of the lower Thames crossing. Hybrid Bills are often used for projects that do not have planning consent, and which need planning consent via Parliament, but that is not the case for the lower Thames crossing.
As we all know, the lower Thames crossing has finally got planning consent, and it already has a very long history. As we discussed on Second Reading, we know that the original work to address the capacity issues around the Thames goes back as far as 2009. Risking hybridisation of this framework Bill would put at risk the timetable for this legislation, and therefore the financing and, ultimately, the delivery of the new crossing.
The 2025 autumn Budget confirmed the importance of harnessing private investment to build the lower Thames crossing, unlocking the next stage of delivery for one of the UK’s most important infrastructure projects, but I am afraid that the amendment would risk the opposite happening. Of course, the Conservatives’ reasoned amendment on Second Reading recognised the urgency of this particular project, so I gently suggest that, were we to accept amendment 46, the progress that has been made would be put at risk of further delay. I invite the shadow Minister to withdraw the amendment.
Greg Smith
I hear and understand the points that the Minister has made, but the key word he used in his response was “risk”. Although I accept that such risk can exist, I cannot and do not accept that it cannot be mitigated or worked through. The most powerful question all of us have to ask, particularly when Members find themselves in a ministerial position and wanting to make progress on manifesto commitments or on other things the country needs—and that the Government perceive the country needs—is not one about procedure. We must ask: how? How do we make this happen without a hybrid process? How do we make this happen in the fastest possible way?
From the research I have done, though the risk exists that some would argue that a hybrid process would be the only way forward, I can see that there are pathways to doing it as more straightforward legislation, with a usual Second Reading, Bill Committee, Report and Third Reading before we get to the other place. Therefore, we will press this amendment to a vote. We want to show our commitment to building the lower Thames crossing but not write a blank cheque for other schemes.
Greg Smith
I certainly will. I am always happy to give way and have a discussion on these matters—that is fundamentally what we are here to do in line-by-line scrutiny.
Jim Dickson
It is a pleasure to serve under your chairship, Mr Dowd. The Minister has made it clear that it is incredibly important that the mechanism we are setting up today not only works to get the lower Thames crossing constructed but integrates the work at the Dartford crossing, so that tolling is equalised and traffic is hopefully distributed properly across both crossings. The lower Thames crossing is there to take the pressure off the Dartford crossing, which is a single point of failure that leads to costs not only for the economy but for my residents in delays, air quality and all sorts of adverse life consequences. Does the hon. Member not understand that, if we limit the Bill to the lower Thames crossing, there is a possibility that we will not be able to undertake the integration between the two entities, and that the point of what we are doing in this Bill Committee will therefore be lost?
Greg Smith
I hear the hon. Gentleman’s point. In theory, it is in exchanges like this that we—the four of us from His Majesty’s loyal Opposition and the crowds from the Government side, as fits our current Parliament—can work to improve the Bill, if there is a willingness to do so. I understand his point, and I would be very open to something that connects things by limiting the scope to the lower Thames crossing and the existing Dartford crossing, which affects his constituents so considerably. We have heard from the hon. Gentleman in other debates on that point.
The wider point still stands. The Bill is writing an open-ended, unpredictable future under this model, beyond the projects that all of us can get behind and support and that our constituents will understand. No matter where they are in the country, many people wish to get down to Kent, perhaps to Dover to get on a ferry and go to France, and they will find themselves behind the wheel—worse still, with the kids in the back screaming—because of the delays getting to the Dartford crossing. Therefore, everyone can get behind the need to get this project done, but let us restrict it to this project, albeit with—I state this for the record very clearly—integration with the existing infrastructure for the Dartford crossing. The very worst thing we could create with any new project, of which the lower Thames crossing is a good example, is an unintended impact on existing road networks, crossings, tunnels and so on.
The integration has to be there, and I fully accept the hon. Gentleman’s point on that. However, the core principle of this amendment—it will be no surprise that we fully expect to lose the vote given the current parliamentary maths—is to put down a marker of our support for the lower Thames crossing but also our scepticism about the way this model could be applied to other unnamed schemes in the future.
Zöe Franklin (Guildford) (LD)
I beg to move amendment 37, in clause 1, page 2, line 3, after “strategic” insert “and local”.
This amendment expands the general duty of the ORR so that it must consider and avoid adverse impacts on local roads, as well as the strategic road network.
The Chair
With this it will be convenient to discuss the following:
Amendment 47, in clause 1, page 2, line 5, leave out lines 5 and 6.
This amendment would remove the ORR’s duty to have regard to contributing to sustainable development when carrying out its duties under the Act.
Clause stand part.
Amendment 48, in clause 2, page 2, line 39, leave out lines 39 and 40.
This amendment would remove the Secretary of State’s duty to have regard to contributing to sustainable development when carrying out its duties under the Act.
Clause 2 stand part.
Amendment 68, in clause 103, page 67, line 18, leave out lines 18 to 21 and insert
“after the Secretary of State has published its guidance to the ORR under section 1(5).”
This amendment prevents the Act from coming into force until the Secretary of State has published the guidance to the ORR on how it must undertake its regulatory functions under the Act.
Zöe Franklin
It is a pleasure to serve under your chairmanship, Mr Dowd. Clause 1 obliges the Office of Rail and Road only to
“have regard to…avoiding adverse impacts for the strategic road network”.
That creates severe statutory asymmetry that will potentially leave council-maintained local roads completely unprotected. The amendment would correct that omission by elevating local road protection to an equal statutory footing, requiring the regulator to actively evaluate and mitigate traffic displacement, road surface wear, and congestion on local surrounding roads caused by potential toll avoidance. Surrounding A roads and B roads managed by local highways authorities face accelerated asphalt degradation when heavy commuter and freight traffic diverts from tolled highways and creates potentially massive uncompensated repair backlogs for local council tax payers. We all know the challenges that our local roads face under our local highways authorities.
Steve Gooding, director of the RAC Foundation, cautioned the Committee that drivers faced with a toll will naturally choose local, free alternatives, creating negative traffic impacts across adjacent networks. That must be taken into account. The evidence of Ralph Smyth, from the Transport Action Network, highlighted that creating private toll infrastructure without a statutory duty to protect adjacent road networks breaks the integrated transport planning and leaves local highways authorities without recourse.
Why does clause 1(3)(b) explicitly protect National Highways’ strategic network from adverse impacts while leaving local council roads to absorb the traffic gridlock and financial fallout of toll evasion and avoidance? Will the Minister accept amendment 37 to ensure that the regulator has an explicit statutory duty to protect local communities and local highways authorities from toll diversion impacts? I intend to push the amendment to a Division.
Greg Smith
In this group I wish to speak to amendments 47, 48 and 68, tabled in my name. I will also speak to amendment 37, tabled by the Liberal Democrat spokesman, the hon. Member for Didcot and Wantage.
His Majesty’s official Opposition have considerable sympathy with amendment 37. The unintended consequences that we sometimes see from infrastructure projects must not be brushed to one side; they must be taken seriously. I was in a small hamlet in my constituency at the weekend. The unintended consequence of something as simple as a road diversion in Oxfordshire—I have to say it, as the Liberal Democrat spokesman, the hon. Member for Didcot and Wantage, is an Oxfordshire MP—forced a considerable volume of traffic through that small hamlet, causing considerable distress in narrow rural lanes. The same could happen from any major infrastructure scheme.
We have heard in the oral evidence sessions and on Second Reading about the concerns that traffic displacement immediately surrounding the lower Thames crossing can be a serious problem for communities and for people trying to get their kids to school, get to work and go about their daily lives. Those local roads are the very veins that flow the traffic to the newer infrastructure projects as they are built. They are the roads off which people predominantly live—nobody lives on a motorway, on a bridge or in a tunnel. Therefore, without due regard for how we ensure vehicle movement through those roads from people’s houses, businesses, schools, hospitals and doctors’ surgeries to those new major infrastructure projects, such as the lower Thames crossing, nothing will work. This is almost the very definition of needing joined-up Government, joined-up planning and joined-up approaches to anything that we build in this country, including the lower Thames crossing and the other potential future unnamed projects that the Bill would allow for. The official Opposition have considerable sympathy with amendment 37. If the Liberal Democrats push it to a Division, the Conservatives will vote for it.
Moving on to the other amendments in group 2, amendment 47 would remove the Office of Rail and Road’s duty to have regard to contributing to sustainable development when carrying out its duties under the Bill. The amendment is not an attack on the environment or anything like that; it is about getting the balance right between getting infrastructure built and doing it at the lowest possible cost. We saw in the oral evidence sessions, and I have certainly seen in my research, that one of the things wrapped up in sustainability is—through separate order but fundamentally coming back to the wording in clause 1—the banning of the use of diesel plant in construction. White diesel runs between 20p and 25p a litre cheaper than hydrotreated vegetable oil, which is the current primary alternative that can be used instead of diesel plant—although, it has to be said, it is not a drop-in fuel; it requires mechanical changes to fuel filters and other parts of the vehicle to be operational. Banning the use of diesel plant will just drive up the cost, which ultimately be borne by payers of tolls.
Greg Smith
I will in one second; I will finish my point. The hon. Gentleman knows I will always give way where I can. The cost will ultimately be borne by toll payers on the lower Thames crossing and in any other scheme that could be built under the Bill. That is a position that I do not think any of us really want to see. We know from other debates that there seems to be either an unwillingness or an inability to name what the toll on the lower Thames crossing will cost, but we can be sure that the clauses on sustainable development and the duty for sustainable development that the Opposition are seeking to remove, such as clause 1, can only possibly drive the cost up.
Jim Dickson
I hear what the hon. Gentleman is saying, and it is absolutely in the interests of my constituents for tolls to be as low as possible, and therefore for cost to be controlled through the project. However, is he mindful of the evidence that the National Highways executive director for the project, Mr Palmer, gave when the Committee spoke to him on Thursday? He said that the cost of HVO and electric plant together was comparable with that of continuing with diesel, and that in any event, that element of the project cost is extremely marginal to the overall cost of delivering the lower Thames crossing. Attempts to prevent measures that will make the project sustainable and
“the greenest road ever built”,
which my constituents care about, are therefore pretty futile, given the overall size of the project.
Greg Smith
The hon. Gentleman may not be surprised to hear that we will not find consensus on that point. I accept that Mr Palmer gave us his view of the world, which was that there was no differential in price. However, any simple look at the market prices of white diesel and HVO shows that the differential very much exists. That is not even a point of debate; it is in the market price. Also, later in the Committee’s oral evidence session, we heard evidence that the building of the road pales into slight insignificance compared with everything that will use the road. Operational vehicles powered by either petroleum or diesel will still be the vast majority of vehicles using the lower Thames crossing, which clearly has not been taken into account.
Alison Griffiths
In the evidence session, we heard from Mr Palmer that he had not taken different quotes from organisations looking at the differential cost between HVO and white diesel; all the quotations were based only on HVO. Therefore, his assertion that they were comparable in price was based on his view alone.
Greg Smith
My hon. Friend is absolutely right. It struck me that in his answer, that witness did not necessarily say that there is no differential in cost, but that his duty was simply to get a quote for HVO, so he would not take a quote on any other fuel source. That goes contrary to my view of the world, and my belief that we would all be better served if we as Members of Parliament, and politicians at large, did not just accept what we were told, and instead properly challenged and looked at the consequences of everything. There is a failure to challenge and say, “Hang on—isn’t white diesel 20p or 25p a litre cheaper?” If I were in the Minister’s place, I would push back on National Highways over that to ensure value for the toll payers of the future.
Mike Reader (Northampton South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Dowd. Does the hon. Member understand how construction procurement works? National Highways would not have specified a particular fuel type; it would have specified an outcome, and the contractors appointed would have chosen how to meet that. That outcome was set out in the development consent order signed under his Government. Is he suggesting that the Government should interfere in the activities of contractors working on the lower Thames crossing? Given that fuel cost is less than 1% of the Bill cost, does he really think this is an issue we should be focusing on?
Greg Smith
I know the hon. Gentleman has a background in this field, and I respect his point of view. I accept that fuel is a small part of the Bill cost, but small parts, if allowed to persist unchallenged, eventually become large costs for the toll payers.
On the point the hon. Gentleman made about the DCO, as I put my hands up to in the Committee’s oral evidence sessions, the previous Government got things wrong. We Conservatives paid a heavy price for that in July 2024, just as the Labour party paid a price for getting things wrong in government in previous general elections. Under our new leadership, we are putting our hands up to some of those mistakes and challenging some of those parts of the past that we think should be put right. The DCO that he referred to was signed under the last Conservative Government, but I would put it to any incoming Government—the Government in which the hon. Gentleman serves as a Back Bencher in particular—not just to accept that and say to the contractors, “Just follow everything that went before. Don’t question it. Don’t look at it again”, but to ask questions and say, “Will this deliver ultimate value for future toll payers on the lower Thames crossing?”. That is not interfering with contractors; it is actually setting contractors free to be able to come to market without the restrictions that clause 1 places on them in this instance and that the DCO placed on them in other instances. It would enable them to offer better value to future toll payers in this scheme and to the taxpayers of this country in other schemes.
Mike Reader
Is the hon. Member suggesting that we should go back and change the DCO to remove the climate targets? I decided after the evidence session to speak to some planning lawyers, and they told me that that would add at least five years to the delivery of this programme. Is he advocating for stalling the lower Thames crossing for another five years?
Greg Smith
No, I do not think we should stall the project. I was very clear in my comments on group 1 that the Conservatives want to see the lower Thames crossing built. We want to see it as a major road building priority for this country, and therefore anything that adds delay is something that we do have to think very seriously about. However, I do not believe it is beyond the wit of any of us to find a way to lower costs without having to relitigate and relegislate on absolutely everything. We should apply a bit of common sense, which is precisely what amendments 47 and 48, by removing that duty from both the ORR and the Secretary of State, would do in this instance.
I very much hope the Committee will consider those amendments in the spirit in which they are intended of delivering value and speed on this project. Indeed, while HVO is in fairly plentiful supply in this country, even with the global challenges we face at the moment, it is not in as plentiful supply as white diesel.
Amendment 68 was tabled in my name and that of my hon. Friend the Member for Bognor Regis and Littlehampton. It would prevent
“the Act from coming into force until the Secretary of State has published the guidance to the ORR on how”—
how is the critical word here—
“it must undertake its regulatory functions under the Act.”
I have noticed from having debated other Bills in Committee during this Parliament that there seems to be a bit of a theme of kicking many features of intended legislation into the long grass for future publication; it happened with the Employment Rights Bill, as was. Governments from time immemorial have done that, so it is not a point I make just to the current Government, but I invite the Committee to reflect on it more widely.
Our constituents send us here to do things in their best interests and in the best interests of our country, yet too often, including in the Bill, we are in a place where we straightforwardly say that we are going to pass a law but too much of it has to come later. Too much of the regulation that will actually shape the Bill will come far down the road so we cannot be confident as Members of this place, whether we sit on the Opposition Benches or the Government Benches, precisely what it will look like.
I ask the Minister to give examples of how duties will be applied and whether they could actually form an override of the main task of delivering and regulating roads built under this scheme, including the lower Thames crossing. I confirm that we will support amendment 37, and I hope that the Committee can back amendments 47, 48 and 68.
Justin Madders
I thank hon. Members for their contributions, and I welcome the hon. Member for Guildford to the Committee and thank her for moving her amendment. The concern she raises through the amendment is that the impact of licensed roads on the surrounding network should be properly considered. However, that does not mean that we need to extend the Office of Road and Rail’s general duties in clause 1, nor does it mean that the licence holder would be free to disregard the impact of its activities on surrounding local roads, because clause 1 reflects the scope of the licensing regime concerning trunk roads. The Bill deals with the impact on local roads in other, more appropriate ways elsewhere, for example under clause 4.
Before a licence can be granted, the licensing authority must consult appropriate persons exercising functions in relation to highways. That enables local highway authorities to feed in their views where roads may be affected. The relationship does not end once the licence is granted; clause 8 also allows the ORR to require the licence holder to co-operate with other highways authorities as part of the licence. The framework for the Bill provides a route for local road impacts to be addressed, without extending the ORR’s overarching duty beyond the roads it is regulating. Local roads are considered as part of the Bill, which provides appropriate ways for their interests to be considered without extending the overarching statutory duties beyond the scope of the licensing regime. The existing provision provides the appropriate balance between ensuring that the wider impacts are considered and giving the ORR a clear and workable statutory duty.
In terms of the specifics of the lower Thames crossing, it is difficult to see what this other local road crossing the Thames would be and how it would be affected. As my hon. Friend the Member for Dartford has explained so clearly, that is one of the reasons why this project is crucial. I would therefore ask the hon. Member to withdraw her amendment.
I turn to amendment 47 from the shadow Minister, the hon. Member for Mid Buckinghamshire. It would remove the ORR’s duty to contribute to sustainable development when carrying out its duties under the Act. We have deliberately designed those duties as a balanced package. The ORR’s principal focus remains the interests of road users, alongside the efficient and economic delivery of highways and the ability of licence holders to finance their activities. Sustainable development is one of the wider considerations that the ORR must have regard to when carrying out those functions—it does not override the principle considerations.
This is not a novel duty; it is an approach consistent with established economic regulatory regimes in the energy and water sectors, where sustainable development forms part of the wider statutory framework within which independent regulators operate. Projects put forward under this legislation will involve significant infrastructure works, including the construction and improvement of roads. This can have significant environmental and wider impacts, therefore it is right that sustainable development, including the consideration of environmental impacts, is expressed in the duties in the Bill.
Douglas Lumsden (Aberdeen South) (Con)
It is a pleasure to serve under your stewardship, Mr Dowd. Can the Minister give us any idea of how much the sustainable measures are actually costing on the project?
Justin Madders
I do not have any particular details on that, so I will write to the hon. Member. The requirements on sustainable development originate from the Environment Act 2021. I know he was not here at that time, but that was a piece of legislation brought in under the then Conservative Government. Under section 19 of that Act, Ministers are required to have due regard to the Government’s environmental principles policy statement when making policy. Those principles ensure that environmental considerations are built into policy making from the outset, as is the case in this Bill, so we are not breaking new ground or doing anything different from what has been done before on sustainable development.
There are real factors to bear in mind in delivering major infrastructure, and it is right that we consider them as part of our consideration of the Bill. I am sure that my hon. Friend the Member for Dartford, whose constituents are affected by this Bill, would want the local environment to be considered.
I turn now to amendment 48. I think the general thrust of the arguments here will be the same, because the approach we are taking is consistent with established economic regulatory precedents, as seen in the energy and water sectors. The Secretary of State’s primary focus remains the interest of users of trunk roads in England, particularly the efficient and economic delivery of highways and the ability of the licence holder to finance its activities. As I have already stated, sustainable development does not override those considerations. Decisions under this framework should take into account the wider public interest factors set out in the clause and not focus on any single consideration in isolation.
To respond to the questions that the hon. Member for Mid Buckinghamshire asked about diesel, as we have already heard, the evidence is clear that this is at best a marginal issue in terms of costs. As my hon. Friend the Member for Northampton South suggested, reopening this question could lead to significant delay on the project.
Of course, the DCO has been settled for a considerable period. It has brought significant benefits already, in particular large landscape-scale environmental enhancements of semi-natural habitats, woodlands, species-rich grasslands, open mosaic habitats, and wetlands. This approach will support a greater, more diverse range of wildlife than areas such as agricultural land or amenity grasslands. By making LTC a tunnel and extending it, the project will avoid protected wetlands on the banks of the River Thames, helping to reduce impacts on environmentally sensitive habitats such as the marshes special protection area and Ramsar site. That will be of benefit to the wider community, and the suggestion that we withdraw that element of the Bill is regrettable.
Amendment 68 is in this group of amendments, but I do not think the shadow Minister spoke to it, so I seek your advice, Mr Dowd, as to whether we are dealing with it now.
Justin Madders
Did you? I must have missed that.
In effect, amendment 68 would force the Secretary of State to publish guidance for the ORR under section 1(5) before the Act came into force and would simultaneously remove the Government’s ability to make regulations ahead of particular clauses coming into force.
Amendment 68 would mean that the vast majority of the Act cannot come into force until the guidance of section 1(5) is published, but there would be nothing meaningful to issue guidance about until the Act is in force, because the bidding would not have happened, we would not know who the investors would be, and therefore we would not know what the ORR would have to provide guidance on. In those circumstances, the Secretary of State could not meaningfully provide guidance.
I turn now to clause 1 stand part and the overall duty that will guide the ORR in carrying out its functions under the Bill, which we have probably already covered in some detail. The ORR must act in a way that it considers best supports the interests of users who use highways covered or potentially covered by the licensing regime. That includes future users, which is important because the ORR might make decisions about a road before construction works or improvement works have been completed.
When carrying out this duty, the ORR must consider the efficient and economical construction, improvement, operation and maintenance of those highways. It must also consider the need for licence holders to be able to finance their activities required under the licence. Of course, those are not the only considerations for the ORR. It must also have regard to safety, as I have said, as well as sustainable development, competition and the effects of its decisions on the wider strategic road network.
The clause also reflects the principles of good regulation. ORR’s regulatory activities should be transparent, accountable, proportionate and consistent, and they should be targeted only when action is needed. ORR must also have regard to guidance issued by the Secretary of State.
Clause 1 places road users at the heart of ORR’s role, while ensuring that it takes account of safety, efficient delivery, financial viability and the wider public interest. That is an important framework, and I commend the clause to the Committee.
Jim Dickson
It is clearly incredibly important to all users of this future infrastructure and the present Dartford crossing that the ORR is as capable and fully equipped as it can be to carry out its duties. Up to now, the ORR has been more equipped on rail than on road, even though it has considerable responsibilities for roads at the moment. A recent report commissioned by the Department for Business and Trade indicated that the ORR needed to increase its skills and capacity in order to do this work. Will the Minister reassure my constituents and all other future users of the infrastructure that the ORR will be fully equipped, have full capability and be able to discharge its duties under the Bill?
Justin Madders
I can give my hon. Friend that assurance. It is vital that the duties set out in clause 1 can be delivered to the best of the ORR’s ability. The whole purpose of the RAB model is that we have a functioning and effective regulator, so resourcing it is vital.
Greg Smith
The Minister is making an eminently sensible point about the ORR’s ability. Given that the Department for Transport, in relation to the Railways Bill, is playing down the ability and role of the ORR, will he assure the Committee that the framework being set out is deliverable by the ORR and that it is a capable organisation to take on this important work, when the other arm of the DFT is suggesting that it is not for railways?
Justin Madders
I am grateful for the shadow Minister’s question. The Bill’s purpose is to give the ORR the powers and ultimately the responsibility to regulate this model. It will be able to levy the licence holder to finance that particular work. A great deal of preparatory work is already going on to ensure that the ORR is capable of delivering the important functions set out under the Bill.
Alison Griffiths
The Minister just made the point that the ORR is not yet capable of delivering this. What is the plan from the Secretary of State and the Minister to deliver an ORR that has that capability? We also heard in evidence last week that the ORR does not believe that it is ready for it either.
Justin Madders
I am grateful for the hon. Lady’s question. There is a plan in place, but it would be a bit ridiculous for us to have everyone ready now when the legislation has not been passed. I assure her that a number of considerations are already taking place about having the right skills. We heard evidence last week that there is confidence that the right skillsets and people will be in place to provide the important functions that the ORR will have to deliver under the legislation.
Clause 2 sets out the overarching duty that will guide the Secretary of State when exercising functions under the Bill. It mirrors the duty placed on the ORR in clause 1 and ensures that both key decision makers operate within a consistent statutory framework. As the Bill gives important functions to the Secretary of State and the ORR, it is therefore important that decisions made by each are guided by the same overarching objectives and principles.
The clause requires the Secretary of State, like the ORR, to act in a way that furthers the interests of road users. In doing so, the Secretary of State must balance a range of important considerations, including efficiency, safety, sustainability and the impact of decisions on the wider strategic road network. These duties are underpinned by established principles of good regulation, helping to ensure that decisions are transparent, accountable, proportionate and targeted only when action is needed. I therefore commend the clause to the Committee.
Zöe Franklin
I thank the Minister for his comments. However, I remain unconvinced about local authorities not having that statutory duty, so I wish to press the amendment to a Division.
Question put, That the amendment be made.
Greg Smith
I beg to move amendment 82, in clause 3, page 3, leave out lines 19 to 26.
This amendment would ensure that licences could only be granted for the construction of new roads.
The Chair
With this it will be convenient to discuss the following:
Amendment 44, in clause 3, page 3, line 20, at end insert
“, provided that such improvement creates at least one additional continuous traffic lane along the entirety of the specified highway section.”.
This amendment sets a strict physical threshold for what legally constitutes "increasing capacity", preventing minor roadworks, junction tweaks, or smart motorway conversions on existing roads from being used as a pretext for introducing tolls.
Amendment 81, in clause 3, page 3, line 31, at end insert—
“(3A) Where a highway specified in a proposed licence is to become a trunk road, the licensing authority must consult any relevant local highway authority, mayoral combined authority or combined county authority before granting the licence.”.
This amendment would require consultation with relevant local and mayoral authorities before granting a licence for a road that is to become a trunk road.
Clause stand part.
Greg Smith
The amendment would ensure that licences could only be granted for the construction of new roads. The key word is “only”.
I would be grateful if the Minister could explain in detail why the Government think a licence should extend beyond simply the construction of a new road, and how the Bill prevents modest works being used to justify a toll-backed licence. This goes to the crux of what we are debating today and of what we are being asked to consent to, on behalf of all our constituents who are motorists and who use the strategic road network; I am sure they will enjoy the new lower Thames crossing once it is constructed, but they are concerned that some of the drafting of the Bill opens a back door and a pathway to enabling things that most people, looking through any lens of common sense, would consider to be minor to allow for increases in tolls or, indeed, new tolls.
I do not think that anyone who backed the lower Thames crossing would necessarily be willing to back something that did not itself support, say, a major new piece of road infrastructure, be that the lower Thames crossing or anything else. We explored that point a lot in last week’s oral evidence sessions and on Second Reading. I commend the Minister for his clarity at the Dispatch Box on Second Reading and in his oral evidence in the Boothroyd Room last Thursday about how the Government have—that favoured political phrase—“no intention” of delivering new tolls for other projects. That perhaps includes things as simple as new cameras, line painting that makes the road a bit clearer or smart motorway provisions—not that I believe there is anything smart about smart motorways.
The Government say they do not intend to use any of those mechanisms to introduce new tolls. We therefore have to ask ourselves a question, which is why the Opposition tabled amendment 82. If what the Minister has said is a clear signal and there genuinely is absolutely no intention—for the record, I believe the Minister—why not put it on the face of the Bill? Let us say clearly and unequivocally that the Bill is only about the construction of new roads in the United Kingdom—well, I am sorry to say to my hon. Friend the Member for Aberdeen South that Scotland is not included in the Bill’s scope—
Greg Smith
Or Wales.
Can the Minister rise to the challenge? Can he make a legislative commitment in line with his words at the Dispatch Box and in oral evidence, and accept amendment 82? If the Government are reluctant, or straightforwardly do not want, to accept the amendment, I fear those questions are forever going to persist in the minds of British motorists and of all road users, be they driving a car themselves or reliant on a car’s passenger seat to be taken wherever they want to go. That is an important point of principle on which the Minister must surely accept the view out there in the country, and the view of His Majesty’s loyal Opposition. He should put it on the face of the Bill.
Douglas Lumsden
I am struggling to understand something about the Bill. If an improvement is made on a small section of a 100-mile road, is it clear whether tolls could be introduced for the whole road or just for the section that was improved?
Greg Smith
I am grateful to my hon. Friend for that question, which is really one for the Minister. He highlights one of the key points that the public out there—all our constituents—will be asking about what this really means. As best, the current scope of the Bill allows for a bit of a lawyer’s paradise and for the issue to be argued over for many years and decades to come; at worst, it straightforwardly allows precisely the fear that my hon. Friend outlined.
Let us just have clarity. It is a simple amendment. We are not asking for the world. We are saying we are broadly with the Government on introducing this model for the lower Thames crossing, but there has to be that legislative certainty that does not allow for mission creep from where the current Minister sees the world, under this legislation, compared with where any future Government might wish to try to take it. The Opposition do not believe that tolls should apply beyond the construction of wholly new roads. There should not be the mission creep that is currently allowed, which is why my hon. Friend the Member for Bognor Regis and Littlehampton and I tabled amendment 82.
Also in this group is Opposition amendment 81, which would
“require consultation with relevant local and mayoral authorities before granting a licence for a road that is to become a trunk road.”
There is considerable concern in the country about this issue, particularly from councils and a number of mayors. There is certainly concern from the Mayor of Cambridgeshire and Peterborough, who is arguably the best mayor in the country at the moment—he is a very old and dear friend of mine, if I need to declare an interest. Whenever I try to do the journey from Buckinghamshire to Suffolk, where my in-laws are, I am frustrated by the fact that, the minute I hit Cambridgeshire, the traffic stops and everything seems completely dug up. I will immediately phone him to have a go, but he will continually push back and say, “But the Government haven’t given me any highways powers or authority!”, whereas we know that other mayoralties in the country have them.
Olly Glover (Didcot and Wantage) (LD)
It is a pleasure to serve under your chairship, Mr Dowd—I hope you are not too distraught about not having been in the Chair for some of the other very exciting transport Bill Committees that we have had this year.
I want to start by addressing amendment 82, tabled by the shadow Minister. We understand where he is coming from, because the Committee heard evidence from Steve Gooding of the RAC Foundation about the danger of clause 3 being used as a Trojan horse for widespread road pricing, which is something that the Minister has assured us will not happen.
Our amendment 44 takes a different approach to the problem of excluding non-new roads altogether. As I said on Second Reading, we feel that the idea of tolls and fees is reasonable in principle, and it is used quite widely in Europe, but the safeguards must be clear. That is why our amendment 44 would require a strict threshold for applying tolls to existing roads, which we are defining as a continuous extra lane, to show a genuine improvement in the road’s capacity and to justify any introduction.
I agree with the shadow Minister on clause 3, in that so much of the Bill relies on us to take it on trust that the Government will do the right thing with the extensive powers that it creates. There was a good article in The Economist a few years ago about the problem with the good chaps theory of government, which has been an historic feature of the British so-called constitution. The problem is that it is difficult to take things on trust and rely on the current generation to do the right thing and interpret a Bill as it was intended, because a Bill cannot force the hand of a future Government, but future Governments do need to work to the legislation that has been passed. We therefore have some concerns about that and would be interested to hear the Minister’s comments.
We support the shadow Minister’s amendment 81. It is sensible to require consultation with the relevant local and mayoral authorities and important to involve them in any major changes to their areas that could increase local traffic flow and the burden on the local community, so we would support the amendment if it were pressed to a Division.
Subject to what the Minister says, at this point we would be keen, with your permission, Mr Dowd, to press amendment 44 to Division.
Alison Griffiths
I will speak to amendment 82, standing in the shadow Minister’s name and my name.
On the face of it, clause 3 looks quite straightforward. The licence would be granted for “works involving”—not delivering, just involving—
“the construction of a highway specified in the licence”.
However, granting a licence for being involved in the work set out in subsections (1)(b) and (1)(c), which our amendment 82 would remove, would make the ORR responsible for determining what is fair and transparent in terms of a toll that could be charged in future for that work. Again, to be clear, the clause does not talk about delivery; it just talks about involvement, so there is a total lack of clarity.
The ORR will rely on a code that has not yet been written and that will not come before this House, so we will have no say in what it looks like. As far as I am aware, there will be no cost-effectiveness constraints on the licensee, so the toll could be considerable. Nor does the toll need to end when the costs have been recovered. Paragraphs (b) and (c) create the prospect of a never-ending toll upon our constituents for what could be a pretty unspecific piece of work.
To return to the points already made by the shadow Minister, a licence should be granted only for the construction of new roads. If we want to look at future roads, the code should be subject to a parliamentary vote at a later stage. Obviously the Committee has voted against this, but to return to our earlier discussion, we would prefer to be looking at two specific roads: the lower Thames crossing and, potentially, the associated Dartford crossing. Without those constraints, however, this piece of legislation is very problematic. I support the amendment.
Douglas Lumsden
Last week, we heard that the Bill is potentially a Trojan horse. We could have narrowed its scope earlier to just the lower Thames crossing with amendment 46, but that was ruled out. We also have issues with what constitutes an “improvement…increasing the capacity”. We have heard that that is not necessarily a new road, or even a new lane built along the whole length of the highway; it could just be smart cameras or other little improvements that increase capacity slightly.
We have had some assurance from the Minister that this will not be a Trojan horse Bill and that it will be used only for the lower Thames crossing, but as we know, Ministers change, Governments change. We are meant to put that all down to trust. The amendment therefore makes it quite clear that this has to be a new road, and the measure would only be able to be used on that new road.
As things stand, I think we are leaving too much down to interpretation—leaving too much to having faith in Governments that may come and go. This is probably the most important amendment that we will look at today, so I think it is vital that it is included in the Bill to make it as clear as possible that the Bill applies just to new roads. It even should apply just to the lower Thames crossing.
Justin Madders
I thank hon. Members for their contributions on this group. Without doubt, the scope of the licensing regime is an important subject, including which road schemes can be brought in and—as amendment 81 refers to—how local authorities should be consulted.
Turning to amendment 82, I thank the shadow Minister for raising the issue of the circumstances in which a licence can be granted for improvements to existing highways. He asked why the licence would extend beyond the construction period. The simple answer to that is that the model is deliberately designed around the whole life cycle of major infrastructure, not simply the point at which it is built. That is why the Bill provides not only for construction, but for qualifying capacity-enhancing improvements and the subsequent operation and maintenance of infrastructure within the regime.
In particular, things such as the lower Thames crossing, a very expensive project, will need consistent and persistent maintenance and repair. That matters because one of the benefits we seek from this model is strong long-term management of assets. The regulatory framework provides ongoing oversight, with incentives to manage operating costs and maintenance investment efficiently over the life of the infrastructure. Removing capacity-enhancing improvements would unnecessarily restrict the framework. It would mean that the model could not be used for major upgrades to existing road infrastructure, simply because the project involves improving an existing road rather than constructing an entirely new one. For example, a significant reconstruction of an existing bridge to add capacity, or a new tunnel that increases the capacity of an existing highway, could be excluded from the regime.
Douglas Lumsden
I asked this question of my hon. Friend the Member for Mid Buckinghamshire and I will ask the Minister the same. When this Bill comes into play, if an improvement were made on one small section of a road, could a toll be introduced for the whole length of that highway, or could it be introduced only for the small section where the improvement was made?
Justin Madders
That would be where clauses 1 and 2 come in, which should give the hon. Member sufficient reassurance. It is important to say—I will use scouse terminology, if you do not mind, Mr Dowd—that I think the arguments coming forward are a bit jarg. I do not know if that is a phrase the Committee is familiar with, but it is a bit of a scaring-the-horses moment—a bit of a ride on the ghost train. Unfortunately, that is what we have come to expect from the Opposition. They are trying to create a scare story where none exists. I have to be clear, as I was on Second Reading and in the evidence sessions, that improving an existing road does not mean that the road will automatically be brought into the regime or be subject to tolls.
Justin Madders
I will just finish.
Establishing and structuring a RAB arrangement comes with significant costs, so for small-scale improvements such as the setting up of a speed camera, it is just not going to be financially viable for anyone to consider it. In practice, it simply would not be justified, or work, in any way. We are clear from the evidence that we heard last week that the model will make sense only for projects of sufficient scale, where the benefits of bringing in long-term private investment justify those costs.
Members should be clear that I know that what I say on the record is relevant to the intention of the Bill, and that that will be something that any future court will take into account.
Justin Madders
I will now give way to the hon. Member for Bognor Regis and Littlehampton.
Greg Smith
I am grateful to the Minister for giving way. I understand the arguments he is putting forward, and I reiterate that I believe his intent—but we are not being asked to put his intent on the statute book; we are being asked to put the words that are printed in the Bill on to the statute book. Therefore, to the question asked by my hon. Friend the Member for Aberdeen South, is it conceivable, under the Bill as currently written, that if, at some point down the path, a new road licensed under this Bill that carries a toll has another enhancement built into it under a new licence—a bridge, a crossing or whatever it might be—that enhancement could have a new and separate toll added just for that small section, compared with the entire length of the original road?
Justin Madders
We are very clear that the clause is about the specified highway. It is about the trunk road. It is about the protections in clauses 1 and 2. I will simply push back that, if there was some secret plan to expand road tolls, there is already legislation in place that would allow us to do that. The New Roads and Street Works Act 1991, which was passed by the hon. Member’s party in Government, created the powers to introduce road tolling. If there was a secret plan to do that, we would not need to bring forward legislation. This is about setting up a new regulatory model to bring in investment for particular projects.
Alison Griffiths
I refer back to the intervention that I was going to make earlier, which was about clarity. The Minister said several times that he was being very clear, but I would gently suggest that the legislation is not very clear. That is the point that several of us are making: we are in danger of passing legislation that may not deliver what is perhaps intended by the Minister at this stage. It is at a point where a future Government, perhaps not as benign as others, might abuse the wording of the legislation. We are really just looking to ask the Minister to be clear in the Bill, not just in his words.
Justin Madders
I am grateful for the hon. Lady’s question and her description of “benign”, which I will frame and put on my wall at home.
The Bill is clear. There are reasons why we have to look at the existing network, particularly when we consider what is happening in the lower Thames crossing. The simple economics of this would not be attractive to investors if we were going to broadly open up road charging across the country—as I say, there is already legislation that would enable us to do that. The clause is about setting up a specific financial model, which will have strong regulation and will enable capacity-enhancing improvements to be made to the road network. As I say, it is very clear that there are sufficient protections already within the legislation to avoid the situation that Opposition Members are concerned about.
Turning to amendment 44, I thank the hon. Member for Didcot and Wantage for raising the question of capacity-enhancing improvements. We will be clear that this framework is intended for major road infrastructure, not for minor changes to the road network. There are practical constraints on the use of this model. Again, as I have referred to, clauses 1 and 2 require the ORR to act in the “interests of users” of the highway specified in licences or proposed to be specified. Clause 2 requires the Secretary of State to act in the
“interests of users of trunk roads in England.”
Both have regard to the principle that regulatory action should be proportionate and targeted only where it is needed. I am not entirely sure that the amendment would deliver the changes that the hon. Gentleman proposes. I am concerned that, while he is talking about an extra lane, he has not put any de minimis length on that, which might give a future non-benign Government encouragement to take it further than is our intention.
We have to be clear that establishing and structuring a RAB arrangement carries substantial costs. It must be sufficiently large and economically viable for that financing approach to make sense. We heard evidence that the geography of this country is such that simply adding lanes on here and there is not a viable option. I therefore suggest that the hon. Gentleman not press his amendment to a Division.
The shadow Minister spoke to amendment 81. I hope I never have a call from him when he is feeling frustrated—I am not sure how that would go for either of us—but he made an important point about ensuring that local and mayoral authorities are notified where there may be a proposed scheme. It is of course the case that the Bill already ensures that the relevant authorities are consulted. As set out in clause 4, before any licence can be granted, the licensing authority must publish the proposal, which must also be shared with the relevant bodies, expressly including the strategic highways company and any other appropriate bodies exercising highway functions. At least 28 days must be allowed for representations from those bodies.
Different projects will affect different places and different authorities. Therefore, the right consultees will depend on the project. As we have seen in recent times, the structure of local government can change, so it would not make sense to hardwire into legislation that particular types of authority should be consulted, because that could become outdated.
Greg Smith
Is the Minister seriously suggesting that we might move on from either a local authority or mayoral model? Those are the two that we have at the moment, and no one is suggesting anything else, so it is hard to see how it could possibly be the case that we move on from the environment, which we are trying to lock into the Bill with amendment 81, of local authorities and/or mayors.
Justin Madders
Of course the answer to that is that we cannot predict the future. In 2010, the idea of a mayoral combined authority was nothing more than a glint in George Osborne’s eye. It is about future-proofing the legislation: it does not make sense for us to come back at a later stage to add in extra consultees, because the Bill already has the correct powers to ensure that the licensing authority must consult appropriate bodies. That makes the framework flexible enough to respond both to the circumstances of individual projects and to changes in local government structures over the life of the legislation, which will be significant, because of the LTC project.
Clause 3 is at the heart of a lot of the debate today. The clause establishes what a licence is, what it can authorise and the circumstances in which one can be granted. The purpose of the licensing regime is to provide the framework through which private investment can support the delivery of strategic road infrastructure. In simple terms, clause 3 allows a licensing authority to grant a person a licence giving them the right to charge tolls on a highway specified in that licence. But that right is not freestanding; it is granted in return for the licence holder securing specified works to the highway.
The works fall into three main categories. A licence may support the construction of a highway; it may support the improvement of an existing highway, where the purpose is to increase its capacity; and, where a highway has already been constructed or improved under this licensing regime, it may provide for its maintenance, operation or further improvement. If another highway is specified in the licence, the licence may also authorise the licence holder to charge tolls in respect of that highway. That is an important point about the structure of the regime. Clause 3 is not simply a general power to allow private companies to charge motorists; the authority to charge tolls is tied directly to the licence holder securing the highway works specified in the licence. In addition, clause 3 does not allow the model to be applied indiscriminately across the road network.
We have heard the concern about the measure meaning a change to existing roads. A small improvement to an existing road, such as a smart motorway camera, does not automatically mean that that road will be brought into the regime or become subject to tolls. A highway can be included in a licence only if it is, or is to be, a trunk road in England, or part of one. The licensing regime created by this part is therefore deliberately confined to that network.
Clause 3 also sets out who may grant the licences. When the regime first begins, both the Secretary of State and the ORR will be licensing authorities. This is known as the “initial period”. Put simply, it is the period for dealing with the first licence under the Bill. Once the first licence has been issued, the initial period will end and the ORR will become the licensing authority. The end of the initial period will be specified by the Secretary of State in regulations.
It is important to say that there is an additional safeguard during that initial period. The ORR cannot itself grant a licence without the Secretary of State’s consent. Where the Secretary of State gives that consent, the decision must be published in a way that the Secretary of State considers appropriate to bring it to the attention of people likely to be affected. Where the Secretary of State grants the licence directly, a copy must be provided to the ORR as soon as reasonably practicable.
Clause 3 should also be read alongside the safeguards in the rest of the licensing framework. In particular, clause 4 requires consultation before a licence can be granted. The proposal must identify both the works to be secured and the highway on which tolls would be authorised, and there must be at least 28 days for representations. A licence cannot be granted unless that consultation requirement has been met.
That is an important safeguard because bringing a road into this regime is of course a significant decision. Before a licence is granted, those likely to be affected have an opportunity to understand what is proposed and make representations. The licensing authority must go through that process before deciding whether the licence should be granted.
It is also important to be clear that, whether we are talking about a new road or a capacity enhancing improvement, the regime is confined to the trunk road network. A highway can only be included in a licence if it is, or is to become, a trunk road in England.
We will come later to clause 81, which makes the necessary changes to the existing trunking provisions in section 10 of the Highways Act 1980 so that a new highway built under this licensing regime can become a trunk road. It does not create a blanket new power to designate any road as a trunk road; rather, it enables the existing process to work for the new type of highway.
Alison Griffiths
I thank the Minister for giving way. This should be the easiest intervention to reply to—I only wish to ask him to speak more slowly so that I can understand what he is saying.
Justin Madders
Apologies to the hon. Member.
Taken together, these provisions mean that the Bill can support both new strategic roads and significant capacity enhancing improvements, while remaining firmly focused on the trunk road network. The licensing authorities will also exercise their functions within the overarching statutory duties we have just debated. Those duties put the interests of road users at the centre of decision making, while requiring consideration of matters including efficiency and economy, safety, the wider strategic road network, sustainable development and competition.
Greg Smith
I am grateful for the Minister’s response, particularly on amendment 82. However, as the debate has moved on, the official Opposition are actually no further forward on the clarity we seek. The Minister likes to paint a picture of us looking for a scare story or something that would be more befitting of trick-or-treating last Saturday night; that is not what the Opposition are seeking to do. We are seeking clarity. We are seeking, through the usual procedures of this House, to check that the Bill in front of us does what it says it is going to do, without having an unintended negative consequence.
In the answers the Minister has given about whether we should restrict the measure to the construction of a new road in its entirety, we still do not know the answer to whether it is feasible, to the point my hon. Friend the Member for Aberdeen South made, that a licence could be granted for a subsection of a road that already has a master licence for the entirely of its run.
In his response, the Minister made reference to the installation of smart motorway cameras. I accept the point on a simple set of cameras. What is still unclear is whether a motorway that is part of the strategic road network, and is not currently designated as a smart motorway—the M40, which runs in part through my own constituency, is an example—could suddenly find itself with a licence, and therefore a toll, if it is permanently changed to an all-lane running motorway by turning what we currently know as the hard shoulder into a permanent running lane. I categorically do not want that scenario, but as this Bill is drafted it is unclear at best whether that would be permitted.
Therefore, without repeating it, I come back to the core argument that, for the Bill to work as I think the Minister intends it to, it should restrict the operation of a new licence to the construction of new roads, as amendment 82 makes clear.
Olly Glover
I beg to move amendment 45, in clause 4, page 4, line 27, at end insert—
“(c) publish an independent assessment evaluating whether alternative transport investments, including rail and bus connectivity, could fulfil the transport requirements of the proposed licence.”
This amendment would require the Secretary of State and the ORR to evaluate whether alternative transport investment, including rail and bus, is needed and suitable before granting a license to upgrade or build new highways infrastructure.
The Chair
With this it will be convenient to discuss the following:
Amendment 78, clause 4, page 4, line 27, at end insert—
“(v) any mayoral combined authority, combined county authority or local highway authority whose area includes, or is likely to be affected by, a highway specified in the proposed licence.”
This amendment would require licensing authorities to send a copy of the notice to mayoral combined authorities, combined county authorities or local highway authorities who may be affected.
Amendment 87, in clause 4, page 4, line 27, at end insert—
“(c) prepare, consult upon, and publish a report assessing—
(i) the anticipated impact of the specified highway on traffic volumes, congestion, and highway wear across local road networks maintained by adjacent local highway authorities; and
(ii) the specific traffic management, infrastructure, and financial mitigation measures required to address any adverse impacts identified under subparagraph (i).”
This amendment requires the licensing authority to publish a comprehensive local road impact and mitigation report prior to granting any licence, ensuring that traffic displacement onto surrounding local council roads is fully evaluated and mitigated in advance.
Clause stand part.
Olly Glover
I want to be clear at the beginning that we are keen to press amendment 87 to a vote.
Amendment 45 would mandate an independent modal shift and alternative transport assessment before any new highway tolling licence could be granted. It would prevent multibillion-pound road schemes from proceeding in isolation without evaluating whether rail passenger, rail freight or bus upgrades could deliver better value and lower carbon emissions. There is a clear need to reduce pressure on the Dartford crossing and improve connectivity in the south-east of England via the lower Thames crossing. But so far, the Labour Government appear to be looking only at roads-based means to do so.
I grew up in Staines, which is very close to junction 13 of the M25 and which road nerds will know is the busiest segment of motorway in Europe. When I was growing up and the M25 was new, it had three lanes, which then increased to four and eventually to five. Seeing the M25 permanently under upgrade was the accompaniment to my youth and adolescence. Do people who use that section of the M25 now find it a joyous driving experience, one that is entirely bereft of stress and complaint, or do they still consider it to be what Chris Rea once called a “road to hell”? They still consider it a road to hell, because while the M25 is of course a useful asset, one of the challenges of increased road investment is that very often that capacity gets absorbed and it does not address some of the wider transport challenges.
There is a clear need to improve rail connectivity in the region alongside the lower Thames crossing project. There is currently no Kent to Essex rail connection and very limited provision for channel port freight to move by rail—only by road. There are developed proposals on the table to upgrade the Kent railway network and the Barking freight terminal via High Speed 1 as part of the plan to significantly increase rail freight through the channel tunnel.
As Ralph Smyth from the Transport Action Network argued in front of the Committee last week, granting certainty to a major private road scheme can make it significantly harder for regional mayors or local authorities to promote sustainable alternatives like rail, tram or bus upgrades. Ben Garratt of Logistics UK noted that while road capacity is needed at Dartford, rail freight connectivity to ports plays a vital role in national supply chain resilience and must be integrated into transport planning.
Why should Ministers grant a potentially century-long highway licence without first publishing an independent evaluation of whether rail or public transport investment could solve the bottleneck? If we are to move towards achieving our environmental goals and providing good transport for those who cannot, will not or cannot afford to drive, serious investment in other infrastructure and public transport is needed alongside improving the road network.
Amendment 87 would make it mandatory to publish a local road impact and mitigation report. Toll-avoiding traffic that diverts into surrounding residential streets and local A roads could cause severe congestion, noise, air pollution and safety hazards for nearby communities. The amendment would force the licensing authority to assess the exact financial cost of extraordinary road wear imposed on “adjacent local highway authorities” such as Kent, Essex or Surrey—or whatever they are called now as part of local government reorganisation. As Declan Pang, the director of policy at the Road Haulage Association, warned us last week, traffic displacement and unmitigated local congestion can drive significant indirect costs across local economies and businesses.
I will turn briefly to Opposition amendment 78, which we support. It would require licensing authorities to send a copy of the notice to mayoral combined authorities, combined county authorities or local highway authorities. That would go some way towards addressing some of the deficiencies of clause 4, which leaves it quite open as to which organisations need to be consulted. Clause 4 does not explicitly list local highway authorities, local planning authorities or emergency services—among others—as mandatory statutory consultees. In his comments, I hope the Minister will address why clause 4 is so open and why it does not explicitly name local highway authorities and emergency services as mandatory statutory consultees.
Greg Smith
I will start with amendment 78, which was tabled in my name and that of my hon. Friend the Member for Bognor Regis and Littlehampton. The hon. Member for Didcot and Wantage hit the nail on the head regarding why we tabled this amendment. We have come back to what I fear will be a familiar theme as we go through the clauses of this Bill in Committee: the openness, at times fuzziness, of the drafting, which leaves too much open to the imagination.
Ill-defined legislation that then gets caught up in the courts forever, with lawyers forever arguing over what was really meant, gives none of us, certainly none of our constituents, our local authorities or those areas of the country that have mayors—mine does not—the clarity that they need and want from this Bill. So amendment 78 really is a very clear and straightforward amendment. It was not tabled with any intent to undermine or derail the Bill, or push it off course, but to give the Government an opportunity to lock in something that gives clarity to the important institutions out there that we and our constituents rely on to deliver local services.
Local authorities and councils—in my case Buckinghamshire, which is also the highways authority covering my constituency—and in other parts of the country, mayors like the Mayor of London, where we are right now, and as per my earlier reference, the Mayor of Cambridgeshire and Peterborough, should be locked into the process. I cannot see a single argument why the Government would not want that clarity in the Bill. If they have an in-principle opposition to that, there needs to be a very clear and compelling reason not to simply include the status quo of local authorities, mayors, mayoral combined authorities and the emergency services, as the hon. Member for Didcot and Wantage said, in the Bill. I cannot see us moving away from a local authority and mayoral model, but in any future Government—we cannot predict changes—I am sure it will not be difficult to update the legislation to bring those authorities and institutions into effect.
Shivani Raja (Leicester East) (Con)
Does my hon. Friend agree that if a proposed highway scheme touches an area or impacts local traffic nearby, the local authorities covering that ground need to be kept in the loop? The amendment simply ensures that local highway authorities, combined authorities and mayoral authorities get a copy of the notice right at the start. It ensures that local councils responsible for the surrounding roads are not left out of the loop so that they can plan for traffic and protect local roads for the local people.
Greg Smith
I am grateful to my hon. Friend for that intervention, which goes to the heart of what we are talking about here: projects not on the strategic road network but that are important to local people—roads or indeed other forms of transport, as the Liberal Democrat spokesman spoke of—will be integral to getting traffic flows and people on to the new schemes that the Bill would enable. Not shutting out and turning our back on the other authorities that are part of the all-important jigsaw puzzle of our road network in its entirety, which feeds into and feeds off the lower Thames crossing or other schemes that the Bill would enable, surely has to be all important.
Alison Griffiths
I listened to the Secretary of State for Housing, Communities and Local Government in the Chamber yesterday espouse the future of her devolution programme, which of course encompasses many strategic authorities and regional mayors and is at the heart of the Government’s programme. It seems inconceivable that this Bill specifically excludes them. I urge the Minister to join us in a spirit of cohesion and future clarity. Let us show our constituents what we can do when we work together. We can improve legislation, and the Minister would be working hand in glove with the Secretary of State to deliver that, so I encourage him to support us.
Greg Smith
My hon. Friend adds to the argument for amendment 78. For the sake of the record, I should say that those mayoral combined authorities are not excluded; they are just not explicitly included and named in the Bill as important stakeholders in our road system that will ensure that any new scheme functions properly and well, and does not lead to the unintended consequences I spoke of earlier. I look forward to the Minister’s reply.
Olly Glover
I did not seek to say that we should not have more cars or support private road users, merely that the reason a lot of people choose to drive is that it has been the relentless direction of policy going back decades. The rail network has significantly contracted, and a lot of investment has gone into motorways. Does the hon. Member accept the clear statistics showing that far fewer young people are learning to drive and they need alternatives? We cannot rely on continuing to promote the private motorcar over everything else.
Greg Smith
I am not sure the private motorcar has been promoted over everything else. I accept the challenge the hon. Member lays down about the issues young people have securing a driving test in a timely manner, but the statistics out there absolutely show that—whether it is people commuting to work, travelling for leisure or a holiday, getting kids to school or whatever—the majority of miles travelled across the totality of the country are by private car. That is why the Bill seeks to ensure that the lower Thames crossing is built and there are potential future capacity increases elsewhere: so that the vast majority of our constituents—outside of the country’s major cities, like London, which have tube networks and more frequent bus services—can use their cars. We take issue with amendment 45. I will reflect, when we break for lunch, on whether to report to my hon. Friend the Member for Spelthorne (Lincoln Jopp) that the Liberal Democrats have called the junction to Staines on the M25 a “road to hell.”
Amendment 87, which would provide for a comprehensive assessment of the impact on local roads, has more to be said for it. I will not repeat the arguments I made earlier about the importance of the local road network supporting any new infrastructure. There is some merit in the amendment, which was tabled by the hon. Member for Didcot and Wantage. This is something we should all reflect on. We must try not to look at the road network as if it can be compartmentalised into the strategic road network and local roads, but to see the two as part of a single ecosystem that cannot be separated.
Justin Madders
I turn first to amendment 45. I thank the hon. Member for Didcot and Wantage for raising whether alternative transport investment should be considered before a licence is granted. I have to say that I have never been entirely clear whether the Liberal Democrats support the lower Thames crossing. The hon. Gentleman’s comments push him more into the “no” territory, but as the Bill progresses we will no doubt see whether they can support it.
Olly Glover
Given that the Minister was putting words in my mouth, let me clarify my view. We do support the lower Thames crossing, because the Dartford crossing is under pressure and there is no resilience when it closes, but that does not mean that we support only the lower Thames crossing. The problem with policy over decades—I disagree with the shadow Minister on this—is that it has been roads, roads, roads, and motorways, motorways, motorways. It should be not either/or, but both.
Justin Madders
I appreciate the hon. Gentleman’s clarity. I understand his argument, but it is probably a bit late now. The assessment on alternative transport options belongs in the scheme appraisal and the business case process, not in this Bill, which is about whether to grant a licence in the first place.
The Association for Consultancy and Engineering was clear in its written evidence that schemes must be
“sufficiently developed before financing and procurement decisions are taken.”
As the hon. Gentleman knows, for the lower Thames crossing, the development consent order has already been issued, and all the issues that he talked about were considered. It has been approved, and construction is under way.
The Bill is not about which road should be built; it is about creating an additional financing and regulatory framework, which can be used where there is a need for a road scheme. It is not about putting roads ahead of rail or bus transport. That will be considered through the earlier business case process. Requiring that to be assessed again once the licence has been granted would duplicate the work and add delay. As hon. Members have said, there is an urgent need for this scheme to proceed, so I ask the hon. Gentleman to withdraw the amendment.
On Opposition amendment 78, we debated a similar point when we discussed amendment 81. The shadow Minister did not press that amendment to a vote, but given the gusto with which he advanced his argument today, he may press amendment 78. I will not repeat the point that have been made, but clause 4(1)(b)(iv) requires that consultation includes
“such other persons (including persons exercising functions in relation to highways) as the licensing authority considers appropriate.”
So the assurances that Opposition Members seek are there in black and white.
If we are too prescriptive, we may not cover every type of authority. At the moment, we know exactly what the local authority structures are but, as we have seen in recent years, that can change, so it would not be prudent to hardwire that into primary legislation. The Bill rightly allows the licensing authority to identify and consult the appropriate bodies exercising high-risk functions for the scheme. That makes the framework flexible enough to respond to the circumstances of individual projects and changes to local government structures over the lifetime of the legislation.
On amendment 87, I understand the concerns of the hon. Member for Didcot and Wantage. We absolutely recognise that major road schemes can have impacts on surrounding local roads, and they need to be properly considered—indeed, the lower Thames crossing is proceeding because we want to improve the conditions on the local roads—but I do not believe that the amendment puts the consideration in the right place.
Licences granted under the Bill are about bringing qualifying trunk road projects within the new financing and regulatory framework. It is not the process through which the underlying impacts of a road scheme are first identified and addressed. Those impacts, including changes to traffic and congestion, should be considered through the development and planning of the road scheme. As the hon. Gentleman knows, for the lower Thames crossing, traffic forecasts were assessed and considered as part of the development consent order, which is the appropriate stage for such considerations. Carrying out that work again would delay the project and duplicate work that has already been completed.
Clause 4 sets out the requirements that must be met for consultation before a licence can be granted under the Bill. It ensures that the grant of a licence is subject to a clear, transparent and accessible consultation process, giving those likely to be affected a proper opportunity to make representations before the licence is granted. I therefore commend the clause to the Committee.
Highways (Financing) Bill (Fourth sitting)
Tuesday 3rd November 2026
(3 days, 8 hours ago)
Public Bill CommitteesRead Full debate Highways (Financing) Bill 2026-27 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 3 November 2026 - (3 Nov 2026)
The Committee divided: - Ayes: 1 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 1 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 10 - Question accordingly negatived.
The Chair
I remind the Committee that with this we are discussing the following:
Amendment 78, in clause 4, page 4, line 27, at end insert—
“(v) any mayoral combined authority, combined county authority or local highway authority whose area includes, or is likely to be affected by, a highway specified in the proposed licence.”
This amendment would require licensing authorities to send a copy of the notice to mayoral combined authorities, combined county authorities or local highway authorities who may be affected.
Amendment 87, in clause 4, page 4, line 27, at end insert—
“(c) prepare, consult upon, and publish a report assessing—
(i) the anticipated impact of the specified highway on traffic volumes, congestion, and highway wear across local road networks maintained by adjacent local highway authorities; and
(ii) the specific traffic management, infrastructure, and financial mitigation measures required to address any adverse impacts identified under subparagraph (i).”
This amendment requires the licensing authority to publish a comprehensive local road impact and mitigation report prior to granting any licence, ensuring that traffic displacement onto surrounding local council roads is fully evaluated and mitigated in advance.
Clause stand part.
Olly Glover (Didcot and Wantage) (LD)
It is a pleasure to serve under your chairship, Ms Lewell. I think where we got to before we adjourned was that we would withdraw amendment 45, but press amendment 87 to a Division, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 87, in clause 4, page 4, line 27, at end insert—
“(c) prepare, consult upon, and publish a report assessing—
(i) the anticipated impact of the specified highway on traffic volumes, congestion, and highway wear across local road networks maintained by adjacent local highway authorities; and
(ii) the specific traffic management, infrastructure, and financial mitigation measures required to address any adverse impacts identified under subparagraph (i).”—(Olly Glover.)
This amendment requires the licensing authority to publish a comprehensive local road impact and mitigation report prior to granting any licence, ensuring that traffic displacement onto surrounding local council roads is fully evaluated and mitigated in advance.
The Chair
With this it will be convenient to discuss the following:
Amendment 49, in clause 6, page 6, line 3, at end insert—
“(4) The ORR must review each licence it issues at intervals of no more than five years, or at such shorter intervals as the ORR considers appropriate.
(5) The matters the review must examine include, but are not limited, to—
(a) whether the licence holder is abiding by the terms of the licence,
(b) the satisfaction of road users with the services provided by the licence holder,
(c) whether the tolls charged represent value for money for road users,
(d) the financial performance and resilience of the licence holder, including the returns generated from toll revenues, and
(e) the impact of the operation of the highway and the tolls charged on traffic volumes and congestion on surrounding roads.
(6) The ORR must publish the results of the review required under subsection (4).”
This amendment would require the ORR to review each licence every 5 years to ensure that the licence holder is providing a good service.
Clause 6 stand part.
The Parliamentary Under-Secretary of State for Transport (Justin Madders)
It is a pleasure to see you in the Chair this afternoon, Ms Lewell. You missed some exciting debates this morning; I hope we can maintain the standard this afternoon.
The clauses in this group relate primarily to the licensing regime. They are about making sure that the regime works, not just when the licence is granted but throughout its life. The Bill provides a clear process for applications, the duration of licences and continuing regulatory oversight to ensure that licence holders are properly held to account.
Clause 5 makes provision for applications for licences under the new licensing regime. It allows the Secretary of State to make regulations setting out how applications must be made. Those regulations may cover the form and manner of an application, the information and documents that must accompany it, and any application fee. The Secretary of State must consult the Office of Rail and Road before making such regulations.
The clause also enables a licensing authority to require an applicant to provide any further information or documents that it reasonably needs to determine the application. That will help to ensure that licensing decisions are made on the basis of sufficient and relevant information. Once a decision has been made, the licensing authority must notify the applicant as soon as is reasonably practicable. If the application is refused, the notice must explain the reasons for that decision and give the applicant at least 28 days in which to request reconsideration. That ensures that the applicant understands the basis for the refusal, and has an opportunity to ask the licensing authority to reconsider it.
If the licensing authority upholds its decision not to grant a licence after the reconsideration period, the applicant may appeal to the Competition Appeal Tribunal. Clause 5 establishes a clear and transparent application process, while providing flexibility to specify detailed requirements in regulations and appropriate safeguards where an application is refused. I commend the clause to the Committee.
Clause 6 makes provision for the duration of licences granted under the Bill. A licence may be granted for a specified period. Where no period is specified, the licence will remain in force until it is revoked. That allows the duration of a licence to reflect the circumstances and requirements of the particular project.Where a licence has been granted for a specified period, the ORR may extend that period with the approval of the licence holder. This ensures that a licence cannot be extended without the agreement of the licence holder.
The clause also requires the ORR to give the licence holder appropriate notice of its intentions. At least one year before the end of a specified licence period, the ORR must tell the licence holder whether it proposes to extend the licence.This requirement provides the licence holder with certainty and sufficient time to plan for the extension or expiration of the licence and the future operation of the highway.Clause 6 therefore establishes a clear and flexible framework for the duration and extension of licences, while ensuring that licence holders receive suitable notice before a time-limited licence is due to expire.I commend it to the Committee.
I will turn briefly to amendment 49 once we have heard from the shadow Minister.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve with you in the Chair this afternoon, Ms Lewell. Let us see if we can rise to the Minister’s challenge of maintaining this morning’s quality of debate.
Amendment 49, tabled in my name and that of my hon. Friend the Member for Bognor Regis and Littlehampton, essentially requires the ORR to review each licence at least every five years and to publish that review. The review would include compliance, user satisfaction, value for money, financial performance and resilience, toll returns and—continuing a theme of some of the amendments we discussed this morning and that flows through the entire Bill—the effects on surrounding roads off the trunk road network and the strategic road network that are the feeders to the new infrastructure: the lower Thames crossing and potentially others that the Bill enables.
I put it to the Committee and particularly to the Minister: why should a long-term licence not be subject to a mandatory review period published at least every five years, although I am open to other suggestions on the period? This is something that will impact motorists from across the whole country, particularly in the case of the lower Thames crossing. The hon. Member for Dartford has already expressed concerns about the impact on local roads. If a licence is granted for much longer than that—and I cannot see how it would not be, in order to bring realistic commercial payback under the tolling arrangements—what if it is a complete disaster? What if things do not pan out as everyone expects them to?
We do not want things to go wrong, but let us face it: sometimes they do. Often they do not go wrong due to any eventuality that has been foreseen. We would not have done it in the first place if there was a plan that saw things going wrong. But when things do go wrong, we need clear answers from those accountable to those paying the tolls on these roads, and indeed to the Government who will have set up the scheme in the first place. That goes in many respects to the conditions that the Minister spoke to in clause 6 around timely notice.
I gently say to the Minister: yes, it is important for an operator to get timely notice of any change, whether that is termination of a licence as it comes up to its expiration or an extension, but what is missing in clause 6 is anything that addresses the point about things going wrong. What if the Government need to step in and salvage a pretty horrendous situation that we might conceive of in future?
Jim Dickson (Dartford) (Lab)
The hon. Member is making a good case; clearly, things need to run well in the interests of road users, the infrastructure provider and local residents. However, clause 11 already provides for the modification of the licence after the grant, which surely includes most of the things he is calling for—that is, an ability to issue a notice and to say that the licence needs to be modified for some reason to do with the operation of the infrastructure.
Greg Smith
I am grateful to the hon. Gentleman for that intervention. He is right that there are measures in clause 11 that would address that issue, but we are currently discussing clauses 5 and 6, and the Minister’s comments reflected the fact that clause 6 only refers to extensions of a licence as opposed to reviews of a licence.
I cannot imagine that any of us, whatever walk of political life we find ourselves in at any one moment, would not want to have a statutory review period, so that all of us can question whether a contract is working as well as we want it to. Frankly, there are many projects I can think of that I wish we had had review periods for in the past, because we might have been able to pick up things that were going the wrong way.
If the Minister and the Government do not wish to have a five-year review period, I would welcome suggestions about what sort of review period would be acceptable to them. If they do not want a review period at all, there needs to be a pretty good case for that.
Shivani Raja (Leicester East) (Con)
My hon. Friend makes a compelling point. Once a company gets a road licence, it should not just be left to run it indefinitely, without any checks. A review every five years would force the regulator to consider the facts, including whether drivers are getting value for money and whether tolls are pushing extra traffic on to surrounding local streets. Publishing those findings would keep the operators accountable to the public.
Greg Smith
My hon. Friend makes the case incredibly well. This discussion is about transparency; it is about openness. It is about saying to those who in the future might receive a licence to run the lower Thames crossing or any other piece of road infrastructure that might be financed through this model that they are still accountable to the public and to the Government, be that the current Government or any future Government.
Such reviews will give us transparency and a clear light on what is going on, so that—to go back to the earlier debate today—any future schemes, which no one can name yet, that might be financed under the scheme created by the Bill could be improved upon by reviews of the operation of the lower Thames crossing in the future. Let us not put a date on when it will actually get built; every state project ends up being built more slowly than originally intended. But five years into the operation of the lower Thames crossing, why would all of us collectively—as parliamentarians or as the general public—not want to know how it was going?
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
I was also reflecting upon the fact that the tolling is almost open-ended. From a competitive perspective, in any regular private sector organisation it would be expected that at the end of a licence or a contract, there would be a competitive tender period. If a road has already been built and, as we now know, the maintenance of that road will then become part of a tolling operation, surely we should consider regularly—my hon. Friend said potentially every five years, but I am open to other suggestions—and on a competitive basis which company should operate it going forward, because once a road is built there is no reason why it should be the original road builder that does so.
Greg Smith
My hon. Friend makes some interesting suggestions. I challenge the Government to reflect upon—[Interruption.] One Government Back Bencher is leaving already, it seems.
Greg Smith
It’s getting closer! [Laughter.]
Maybe the Government can go back and reflect on that, and before Report, when the Bill returns to the whole House, they will have a sensible suggestion or counter-proposal on the table for how we properly monitor and review the operation of these licences.
Justin Madders
I am grateful to the shadow Minister for his contribution. I enjoy when he and the hon. Member for Bognor Regis and Littlehampton riff off of each other—it is like a remake of “Dempsey and Makepeace”; I hope they put themselves forward for the leading roles. To be fair to the shadow Minister, I think that he is coming from the right place on this. It is important that we have assurances that the licences work and deliver the appropriate standard of service, and I agree that we need to hold licence holders to account, but I will explain why I do not believe that amendment 49 is the right vehicle for doing that, if Members will pardon the pun.
First, I do not think that we should fix a five-year review cycle in primary legislation. The appropriate level and frequency of any regulatory scrutiny could change over the life of a licence. A newly established licence may require a different approach from a mature licence, and different projects may present different issues. If this amendment was accepted, we may not actually have the lower Thames crossing operational five years into the licence. When we looked at how best to frame this, because the shadow Minister raised an important matter—
Greg Smith
The amendment is very clear in saying, “review each licence”. That is not to say, “treat each licence as if they are identical,” because of course as time passes there might be different regulatory set-ups or safety standards that a new licence is granted under. We are very clear that each licence must be reviewed every five years, as opposed to—as I think the Minister is trying to argue—treating them all the same.
Justin Madders
The hon. Gentleman may unwittingly be making my point for me, which is that we want to have regular consideration and an ongoing process from the regulator. We looked at how existing licencing regimes work, including, for example, the Civil Aviation Act 2012. As I am sure he realises, there is no review period specified in that Act, because in practice the Civil Aviation Authority regularly reviews and updates the licences that it has issued. The fact that there is no specified review period has not hindered it in carrying out that role. It is apparent from how the Civil Aviation Authority operates that it takes a proactive approach; that is what we are trying to do here. It does not wait five years to spot a problem and deal with it, but deals with problems as they arise. I am sure that the hon. Gentleman will see that as a preferable approach to waiting five years between reviews.
Secondly, a number of the issues listed in the amendment are already reflected in the ORR’s statutory duties. Clause 1 puts the interests of road users at the heart of the ORR’s role. It also requires the ORR to have particular regard to efficiency and economy, and the ability of the licence holder to finance its activities, as well as to have regard to matters including safety and impacts on the strategic road network. Under clause 1(5), the Secretary of State can provide guidance to the ORR about how they would like it to interpret or carry out its duties, and the Secretary of State can update that if they are not satisfied with that interpretation. Those duties are continuing duties under clause 1; they do not suddenly trigger after five years or at any other arbitrary point.
Compliance with the licence is also already covered by the Bill’s regulatory regime. Part 4 gives the ORR powers for monitoring and information gathering, and provides for enforcement when licence conditions are not met. Clause 7(5) requires the ORR to keep tolling conditions imposed on the licence in clause 7 under review. As my hon. Friend the Member for Dartford said, clause 11 gives powers to amend licences. The shadow Minister talked about the absolute disaster scenario, which we hopefully will not see, but clause 12 gives powers to revoke licences. Therefore, there would be no need to wait five years, and I think it is clear that the flexibility and ongoing review that the Bill sets out is the correct approach.
Douglas Lumsden (Aberdeen South) (Con)
The amendment is asking for a couple of specific things to be in the review:
“the financial performance and resilience of the licence holder, including the returns generated from toll revenues, and…the impact of the operation of the highway and the tolls charged on traffic volumes and congestion on surrounding roads.”
In the interest of transparency, does the Minister not think that it would be good for the general public to see the main criteria in the amendment?
Justin Madders
I was about to sit down, but there are publication requirements in clause 78, which will deal with a number of the issues that the hon. Member referred to, so I request that the Committee reject the amendment.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6 ordered to stand part of the Bill.
Clause 7
Tolling and other mandatory conditions
Olly Glover
I beg to move amendment 39, in clause 7, page 6, line 11, at end insert—
“(c) a condition requiring the holder of the licence to compensate affected local highway authorities for extraordinary maintenance costs, traffic management or congestion mitigation arising from any increased traffic as a result of vehicles avoiding tolls on the chargeable highway.”
This amendment ensures that local authorities are compensated for the knock-on costs of increased traffic on local roads as a result of drivers aiming to avoid the toll road.
The Chair
With this it will be convenient to discuss the following:
Amendment 40, in clause 7, page 6, line 11, at end insert—
“(c) a condition requiring the holder of the licence to establish a scheme for issuing automatic partial or full refunds of tolls to users in the event of significant traffic delays as a result of roadworks on the specified highway.”
This amendment would ensure that license conditions must include automatic refunds for drivers who face severe delays as a result of roadworks.
Clause stand part.
Amendment 72, in clause 103, page 67, line 18, leave out lines 18 to 21 and insert—
“after the Secretary of State has published a report setting out the proposed licence conditions including proposed arrangements for setting toll levels and approving any increases.”
This amendment would prevent the Act from coming into force until after the Secretary of State has published a report setting out the proposed licence conditions including tolling arrangements.
Olly Glover
It is a pleasure to serve under your chairship, Ms Lewell. Amendment 39 would create a mechanism for compulsory compensation for local councils as a result of additional traffic due to people avoiding tolls.
Local council taxpayers must not be forced to subsidise private toll road profits by picking up the repair bill for local roads damaged by heavy diverted traffic. As Declan Pang of the Road Haulage Association noted in front of the Committee last week, local A and B roads are heavily used by small businesses and hauliers, and severe wear caused by toll evasion can hurt the wider local economy.
Placing compensation in clause 7 would make it a binding legal condition so that private operators cannot bypass or negotiate away the wider impacts. One of the reasons I have tabled the amendment is because of the problem with the current roads funding formula. It is based overwhelmingly on miles rather than use levels. Higher use of existing roads would not necessarily lead to more funding for local authorities as a result, so we need a mechanism to deal with that.
Amendment 40 would, in effect, extend the delay repay concept from the railway to toll roads. It would mean an automatic toll refund scheme that issues partial or full refunds to drivers trapped in severe congestion, roadworks or operator-induced disruptions would come into existence. Motorists paying premium commercial tolls expect a reliable, free-flowing journey and should not be charged full price when the operator fails to maintain traffic flow.
Drawing on European tolling models, the Italian network has a motorway refund system, which creates a direct financial incentive for operators to clear incidents and manage roadworks efficiently. Currently, operators do not always manage to do that here. We are not necessarily saying that that is the right system for the UK context, but it is an illustration of what is possible and an example that the Minister may wish to consider.
As Edmund King told the Committee last week, if drivers pay a higher toll under an independent business model, it must work both ways, giving drivers money back when the road fails to operate properly. I look forward to hearing the Minister’s comments.
Greg Smith
I largely wish to comment on amendment 72 in my name and that of my hon. Friend the Member for Bognor Regis and Littlehampton, but before I do so, I will speak briefly to amendments 39 and 40.
The hon. Member for Didcot and Wantage makes a good point about the increased use of local roads that feed vehicles on to new infrastructure, such as the lower Thames crossing, or indeed bring motorists—be they private motorists or haulage operators—off those pieces of new infrastructure. The current modelling that finances local highway authorities—predominantly councils—up and down the land has no mechanism whatsoever for acknowledging the point that the hon. Member makes. When traffic flows are massively increased on an existing road, those surfaces very quickly degrade and start to resemble the surface of the moon. I am sure we all see that in our own constituencies. It something that drives all of our constituents—and me—absolutely potty on a daily basis.
I see that in my own constituency, where we have seen a large amount of big infrastructure being built over recent years, such as East West Rail. That happens where compounds are put in for heavy goods and groundworks vehicles. The traction zones where those vehicles are accelerating to pull out, or braking to come in, as they go to site, move earth away and bring aggregate in, very quickly degrade.
It makes sense to take into account where an existing local road—one that is owned by a local highway authority and is the responsibility of local council tax payers—is suddenly asked, as they will be in the case of the new lower Thames crossing and potentially other schemes in the future, to be used for infrastructure projects. There should be a flow of funding, either from the licensee or from the Government through the Department for Transport, and ultimately the Treasury, that ensures that council tax payers in local areas are not asked to pick up the bill—as my council has been asked to do for roads broken by HS2 construction—for the construction of the lower Thames crossing and other schemes under the Bill. Indeed, they should not be asked to pick up the bill for the ultimate operation of them, either. I have some sympathy for amendment 39 tabled by the hon. Member for Didcot and Wantage.
Amendment 40 is a more problematic proposition. I do not disagree with the sentiment. No one can tell us what the toll on the lower Thames crossing would ultimately be, but we can presume it to be commensurate with the M6 toll, where an average vehicle pays £7 or £8. Therefore, it makes eminent common sense, and is surely reasonable, that someone would be entitled to some sort of compensation, or money back, if they paid the toll but then got snarled up in a traffic jam and just sat in a queue that they could have sat in on the original M6 anyway. I have sat in a jam on that road many times over my life.
The problem with the proposition that the hon. Member for Didcot and Wantage has put forward is how that would be determined. With trains, delay repay is very straightforward: what time does the train ultimately pull into the destination station? That is very clear: it is either on time or a number of minutes late. Certainly, since Chiltern Railways was nationalised, I have been on late trains from my constituency every single day, but that is beside the point.
However, how is that level of delay really determined in a private vehicle? Everyone’s journey will be slightly different. What is to stop someone from deliberately driving slowly in order to avoid paying the full toll, artificially making their journey seem longer? Is it for the ORR to determine whether someone has had a longer than usual journey? How will they determine that without—and I do not want to sound all conspiracy theorist—some level of state snooping on people’s exact movements in order to determine how long that journey actually took them?
Olly Glover
The shadow Minister gives me an opportunity to say something I omitted from my notes—despite everyone’s obsession with Google, it is incapable of formatting a document properly when it is printed, but that is for another day. The Italian model calculates a base amount for roadworks, plus an extra amount for time lost. One qualifies after any delay on a trip up to 30 km, after a 10-minute delay on trips of 30 to 50 km, or after a 15-minute delay on trips over 50 km. I do not know how they determine that. It may be through some sort of monitoring system, and we already have that in many formats, such as automatic number plate recognition. The Italians are not generally well known for welcoming state surveillance. That is just one mechanism, and I am sure that many options are available using 21st-century technology.
Greg Smith
I am grateful to the hon. Gentleman for that clarification. I am sure that the Italian model works well to make the number of minutes delayed commensurate to the compensation paid, but he himself acknowledges that he does not know the manner in which it is determined. I would be happy to work with the hon. Gentleman to look at options—
Greg Smith
There are no coalitions here. There is only one audition going for the next general election, and it will not be looking toward our side of the House.
If there is a sensible solution that does not involve state snooping on our motorists as they use this new infrastructure, the principle that someone has paid their money and should expect a quick journey time is a fundamentally good one, and it should apply.
Amendment 72 would prevent the Bill from coming into force until after the Secretary of State has published a report that sets out the proposed licence conditions, including—this is the $64,000 question, though I hope not literally—tolling arrangements. Throughout the debates so far, a number of questions have been asked about that. I understand the technical nature of the answers, but bluntly, that does not cut it with our constituents. No one can answer how much it will actually cost motorists to use the lower Thames crossing or how the tolling mechanism will be regulated to give clear, unambiguous rules about how a toll must be set and if there will be any caps on it, so that drivers, motorists, private cars and hauliers alike can have confidence in what is coming.
That is simply what amendment 72 seeks to do. The public should know how tolls will be set and how any increases—an equally important point—will be approved before the regime starts operating. It is not good enough for the road to be built and for people to then find out that they cannot afford to use it. Why should Parliament commence the Act before those conditions are published? If the Minister can come back with some clear guidance and rules around that, we will be much closer to full-throttled support for what he is trying to do. We want the lower Thames crossing, but we do not want it at a rate that nobody can afford to use.
Alison Griffiths
When I spoke earlier to amendment 82 to clause 3, it was with this exact issue in mind. We failed to get that amendment passed, so the improvement and maintenance of these roads will be paid for through tolling. However, we know that the “fair and transparent code” the ORR will decide on will not be put to a vote in Parliament. It therefore becomes even more important that on the tolling for these roads, we require a report from the Secretary of State that sets out the conditions and proposed arrangements for toll levels and the approval of increases. Without that, there is no control or stopgap for these tolls. The tolling does not end when costs have been recovered by the operator, so we could have a very open-ended tolling situation.
Given that it is going to one operator, we do not know how cost-effective maintenance will be. Will they be required to go out to tender on this? If a report is coming to the Secretary of State before we set tolling, that will create a position where we have greater control.
Jacob Collier (Burton and Uttoxeter) (Lab)
I am trying to understand the Opposition’s position, because it seems that they want the Government to intervene in setting the tolling price, but they have also called for a strengthened and independent regulator. I am trying to understand their proposed position.
Alison Griffiths
We are looking for clarity and making sure that our constituents are looked after in this process. At the moment, our constituents are left liable for whatever costs are coming down the track, with only the ORR’s code, which this place will have no say in, to set what those costs will be. Given that the Government do not wish to put in place a limit on the length of a licence, all these things concurrently are creating a situation where constituents, quite rightly, may be wondering what exactly it is that they are paying for.
Shivani Raja
We are generally in agreement that it is essential that both transparency and cost control sit at the heart of this framework. Drivers and local businesses deserve to know exactly what they are being asked to pay before any tolling arrangements are introduced. We cannot expect motorists to accept potentially significant and unexpected costs without first having a clear understanding of what those charges will be, and how they will be determined.
Amendment 72 is about ensuring proper scrutiny before decisions are made and effectively locked in. By requiring licence conditions and proposed toll levels to be published before the Act comes into effect, Parliament has the opportunity to examine the arrangements and understand the potential impact on roads users and motorists.
Ultimately, people deserve transparency, accountability and certainty. We must ensure that the interests of drivers and local businesses in all our constituencies are properly protected, and that no one is left facing unexpected costs without having had the opportunity to understand them.
Justin Madders
I thank the hon. Members for Mid Buckinghamshire and for Bognor Regis and Littlehampton for their amendment.
The hon. Member for Didcot and Wantage tried to make a noble case for something that this Government are already dealing with through the record funding for highways maintenance that we have announced and are already delivering on. I understand the thrust of his argument about compensation to local highway authorities for displaced traffic. The right approach is to undertake an assessment of the whole strategic road network, to understand what improvements and likely increases to overall capacity could achieve more widely. Then, we should assess the impact if we do not proceed.
Of course, the whole thrust of the Bill is to reduce congestion, not increase it. As my hon. Friend the Member for Dartford has said on many occasions, we know that his part of the country is already at bursting point. We know what happens when things go wrong at that vital section of the strategic road network. There are already local problems as people try to find alternatives to avoid the congestion it has caused. That is clearly not because people are trying to avoid the toll, which has been in place for many years; it is actually about the lack of reliability at that vital pinch point. The answer is not to compensate people for delays caused by trying to avoid that unreliability; the answer is to make the Dartford crossing more reliable so that people actively choose that road.
Olly Glover
The Minister, as he has in a few of his speeches, is talking as if the Bill is only about the lower Thames crossing, but it is not. It is much broader than that, as he has acknowledged, although it is focused on the lower Thames crossing. If the Bill was just about the lower Thames crossing, I might well agree with his argument, as there are no alternatives in that particular case. But as drafted, it is not just about the lower Thames crossing, is it?
Justin Madders
The hon. Gentleman is absolutely correct that the Bill is scheme-agnostic, but as the lower Thames crossing is the only scheme we currently have in mind, it is helpful to draw examples from that for why the amendment is not acceptable.
It is probably also worth pointing out that I am not aware of any other such toll schemes operating in this country at the moment. Is it his position that this compensation measure should be extended to the Mersey tunnels or the Mersey Gateway crossing, for example? My local transport authorities might be interested to hear that, and they might wonder where the funding would come from.
As I have said, the whole purpose of the Bill is to create the regulated asset base model that will fund the crossing. It will be a separate income stream from the general roads budget, and those who benefit directly from the new infrastructure will pay for it. It will improve the reliability of the whole network, which is the correct approach and is far more effective than trying to compensate people for an already overstretched and failing network.
Greg Smith
I genuinely do not think the Minister and I are that far apart, because I do not disagree with anything he has just said about getting the new infrastructure to work in the interests of motorists. Where I think he has perhaps missed the point that the hon. Member for Didcot and Wantage and I have made is that, in order to get traffic flows on to that new infrastructure, in many cases it is conceivable that local roads will see a much higher level of use than they do today. Therefore does the Minister acknowledge that getting new infrastructure up and running well, in the interests of motorists at a price they can afford, will have an impact on the rest of the road ecosystem, mainly falling on those local authority-owned and financed roads?
Justin Madders
I understand the hon. Member’s point, but I cannot say I agree with it because the traffic is already on the local road network. The whole purpose of the Bill is to take that traffic away. It is worth reiterating that we do not intend to do a deal at any cost. We need to do the right deal for road users and make sure this legislation has the necessary protections in place for them. Heaping more costs on to the project by bringing in a wide and broad compensation package would have unintended consequences.
The hon. Member for Didcot and Wantage mentioned the perceived unfairness of the road maintenance formula, which the Department is committed to reviewing, but I cannot accept his amendment and I say the same about amendment 40. That would insert a mandatory licence condition requiring an automated refund system to be provided by a licensee. As I have already stated, the amendment would be contrary to what we are trying to achieve. The shadow Minister talked amusingly about people driving deliberately slowly to try to get a repayment. I am not sure people would be that Machiavellian, but maybe those are the circles he mixes in.
It is fair to say that road users rightly expect well-maintained roads, and they expect operators to minimise disruption in line with their network management duties. However, safe roads require maintenance, and maintenance sometimes requires roadworks. An automatic refund requirement would disincentivise operators from undertaking necessary maintenance and roadworks. It would give them a financial incentive to postpone what might be necessary maintenance. The better approach is to hold operators to account for how they manage expenditure and deliver the service, rather than create an incentive to put off essential work.
Olly Glover
I am grateful for the Minister’s comments. On amendment 40, the Minister said that delay repay could incentivise toll road operators to do less maintenance, but I disagree. It would incentivise them to do maintenance efficiently and at appropriate times, such as overnight, rather than making a case for recreating the Conservative party’s cones hotline of the 1990s. One sometimes sees plenty of cones and lane closures out there with very little work taking place.
In light of the shadow Minister’s offer to work collaboratively on a proposal, and of my offer to help him with his conspiracy theories of state suspicion, I will leave amendment 40 for another day. However, I will press amendment 39 to a Division.
Question put, That the amendment be made.
Justin Madders
I beg to move amendment 1, in clause 8, page 7, line 23, leave out paragraph (l).
This amendment removes paragraph (l) from clause 8(2) because the provision is considered unnecessary.
Justin Madders
Amendment 1 is a small amendment to remove an unnecessary paragraph from clause 8(2). Paragraph (l) currently specifies that a licence may have a condition prohibiting transfer of the licence unless it is done under the provisions set out in clause 14. That is not necessary, as compliance with the provisions is already required by clause 14 itself. This is therefore a minor tidying-up amendment to remove an unnecessary provision, which I hope the shadow Minister will be able to support.
Clause 8 allows a licensing authority to include additional project-specific conditions in a licence, which will sit alongside the conditions that must be included under clause 7. That flexibility is important because each project will be different, and the licence needs to reflect the particular road, works and arrangements involved.
Conditions may set out what the licence holder must, may or must not do. They may also control how the licence holder carries out its activities. For example, conditions may cover the use of land, the licence holder’s financial arrangements, and requirements relating to the design or operation of the highway. A licence may also require the licence holder to follow directions from the Secretary of State or the ORR on matters specified in the licence. Conditions may cover the provision and publication of information, co-operation with highways and planning bodies, and the referral of particular matters to the ORR for a decision. A licence may also require the licence holder to meet costs incurred by the Secretary of State in carrying out functions connected with the licence.
The list in clause 8 is not exhaustive, and it is not designed to be. That ensures that a licence can include any other appropriate conditions needed for the project. I think the overarching principle is pretty clear from the list in subsections (2)(a) to (2)(k), but I will give the Committee a bit more detail.
Paragraph (a) is about making sure the licence holder is financially stable and resilient. It gives the ORR the option to lay out things such as the level of debt the licence holder can have.
Paragraph (b) is about making sure that all the things a licence holder must or may do in respect of the road are spelled out in the licence, such as that it must construct the road, for example.
Paragraph (c) is about how the licence holder does the things that are spelled out in the licence. For example, that might be abiding by the planning conditions laid out in the planning permission for a scheme.
Paragraph (d) is about detailing the consents that the licence holder will or will not need for certain actions.
Paragraph (e) makes it clear that the licence holder must abide by directions from the Secretary of State or the ORR.
Paragraph (f) makes sure the licence holder refers appropriate matters to the ORR.
Paragraph (g) makes sure the licence holder is clear that it has to pay the Secretary of State for any costs incurred by the Secretary of State on its behalf.
Paragraph (h) makes sure the licence holder co-operates with National Highways or a local highway authority, for example, when fulfilling its duties under the Highways Act 1980, to give one example.
Paragraph (i) is about the information that a licence holder may be required to share with the ORR or others.
Paragraph (j) is about making sure that land acquired for the building of any scheme under the RAB model—for example, land acquired for environmental mitigation of the lower Thames crossing—is used for its intended purpose and not for some other purpose. For example, if the land was designated for environmental mitigation but the licence holder tried to build a housing estate on it instead, that would be a breach of the licence.
Lastly, paragraph (k) is probably the easiest to explain, because it is there to ensure that the licence holder abides by the licence, particularly in making sure that the correct standards of road construction and operation are used.
Clause 8 therefore provides the flexibility to tailor each licence, while ensuring that the licence holder’s responsibilities are clear. Because the licence will change over time, depending on the stage of the project, the clause needs to reflect that. For example, the road that the licence holder is required to construct will be complete at some point, so a construction condition will then no longer be needed. As I have said, the clause is not an exhaustive list but is designed to ensure that a licence can include any appropriate conditions needed for an individual project. I commend the clause and amendment 1 to the Committee.
Clause 9 enables the Secretary of State to determine standard conditions for licences granted under the Bill. These conditions will provide a clear, consistent baseline across the new licensing regime to give licence holders, investors, the ORR and road users certainty about the core obligations that apply while avoiding unnecessary repetition in individual licences. These standard conditions must be published and provided to the ORR, and they will then be incorporated into each licence by reference, unless the Bill provides otherwise. Conditions published after a licence is granted will not apply to the licence automatically.
Clause 9 also preserves appropriate flexibility. The licensing authority may exclude or modify standard conditions when granting a licence, where that is justified for the project. Clause 10 requires publication, consultation and protections against undue competitive disadvantage before the licensing authority may do so. Clause 9, therefore, provides a combination of regulatory consistency and proportionate project-specific flexibility.
Clause 10 sets out the safeguards that apply where a licensing authority proposes to exclude or modify a standard condition when granting a licence. Before excluding or modifying the condition, the authority must publish a notice setting out the proposed change, its effect and the reasons for it. The notice must be sent to the other licensing authorities, each relevant strategic highways company and any other appropriate persons, and at least 28 days must be allowed for representations. The licensing authority may proceed only if it considers that the change will not unduly disadvantage either the licence holder concerned or any other licence holder in competing with others. If it proceeds, it must publish the final change, explain its effect and reasons, and state how representations were taken into account. This clause therefore ensures that project-specific flexibility is exercised transparently, proportionately and without distorting competition.
I commend these clauses to the Committee.
Greg Smith
I am grateful to the Minister for his explanation of these clauses and Government amendment 1. He will be pleased to know that His Majesty’s loyal Opposition do not object to Government amendment 1. We might ask why such an obvious duplication in the Bill was not picked up before it was published, but we will perhaps leave that for another day.
Speaking more widely to clauses 8 to 10, though probably more in the realm of clause 8, I would be grateful if the Minister could visualise some of the scheme-specific variations that he spoke of. With only the lower Thames crossing really in anyone’s eye under the provisions of this Bill, can he give us some practical, concrete examples of where such scheme-specific variations may come about, to help the House, the Committee and our constituents to fully understand the scope?
Clause 8(2)(a) talks about conditions
“relating to the financial resilience of the holder of the licence or otherwise relating to the holder’s financial arrangements”.
The Minister directly referred to how much debt a licensee might be allowed to have, under the scheme of a licence. I do not object to that as a core principle, but if it is to be the case that something can be laid down as clearly as how much debt-gearing an operator or licensee is permitted to have, surely it can also be written into any licence not necessarily the exact pounds and pence of what any toll can be, but some sort of ruling that says a toll must be proportionate to, for example, the overall build cost over a certain number of years. Maybe, as we are talking about debt-gearing to build infrastructure such as the lower Thames crossing, a licence could say that the toll must not be any more than the total debt divided over how many years the Secretary of State or the ORR deems the licence to cover.
That is the most important question flowing through all the amendments and all the debates on this Bill: how much are the tolls actually going to cost people to use these roads? I fully accept that a pounds and pence figure is very difficult to conjure up, but surely clause 8(2)(a) would give us the ability to set the parameters of a toll. If we can set the debt limit, we can surely set limits for the tolls.
Justin Madders
I think the shadow Minister supports the amendment, which is good to hear. On his question about other potential variations, conditions could cover the use of land, the design or operation of the highway, information sharing and co-operation with other bodies. Because the Bill is scheme-agnostic and creates a framework designed for the long term, it really is not possible to be any more specific than that; indeed, I think it is prudent for us to keep a broad thrust in the Bill.
On the shadow Minister’s other point, the Bill already contains safeguards for tolling levels; he need only look at clause 7 on tolling conditions, which sets out some of the safeguards through the ORR. I hope that gives him some reassurance. I acknowledge that he recognises—I think—that we are not going to be able to set a precise toll in legislation. I say there are sufficient safeguards to ensure that it will be set at a proportionate level; I suspect he does not agree, but I believe that those safeguards are clear in the Bill.
Amendment 1 agreed to.
Clause 8, as amended, ordered to stand part of the Bill.
Clauses 9 and 10 ordered to stand part of the Bill.
Clause 11
Modification of licence conditions after grant
Justin Madders
I beg to move amendment 2, in clause 11, page 10, line 13, at end insert—
“(9) Nothing in this section prevents the modification of a licence by a scheme—
(a) under paragraph 1 of Schedule 1 (transfer schemes) in reliance on paragraph 2A(3)(b) of that Schedule, or
(b) under paragraph 1 of Schedule 3 (highways administration transfer schemes) in reliance on paragraph 5(6)(b) of that Schedule.”
This amendment is consequential on amendments 29 and 35.
The Chair
With this it will be convenient to discuss the following:
Clauses 11 to 13 stand part.
Government amendments 3 and 4.
Clauses 14 and 15 stand part.
Justin Madders
I will start by addressing the clauses in general; if I dive straight into the amendments, it may overcomplicate the debate on what is already a fairly complicated Bill. The clauses set out how a licence can end or be transferred, where the licence holder has requested it. Further to amendments 2 to 4 and 22 to 25, licences can also be transferred under the provisions set out in schedule 1.
For the regulated asset base model to function properly, it is important that transfers of licences can take place and that the process is set out clearly. For some schemes under the RAB model, the same person might hold a licence for a very long time. At some point, however, the licence may well need to change hands. The clauses will allow for that to happen, and set out clearly the conditions that the regulator may deem it appropriate to apply in granting its consent.
Government amendment 2 allows for licences to be transferred under the transfer schemes in schedule 1 as well as under clause 14, and ensures that Government amendments 29 and 35 achieve their objectives. Those amendments allow for the transfer of a licence through a transfer scheme, as well as under clause 14. Amendment 2 makes it clear that provisions relating to modifying licence conditions post grant do not impinge on the ability to make incidental modifications to a licence when it is partially transferred under schedule 1 or schedule 3, once amendments 29 and 35 are made. When only part of a licence is transferred under those schedules, incidental modifications to the terms and conditions of the licence may be necessary to ensure that the licence can be split and continue to operate effectively.
Once it has hopefully been amended, clause 11 will enable a licensing authority to modify licence conditions after a licence has been granted. That power is necessary, because the licences may govern major infrastructure over long periods. The conditions may need to respond to changing operational, financial or regulatory circumstances, and the clause provides a controlled process for doing so. Before making a modification, the authority must publish the proposed change, the effect of it and the reasons for it, and must allow at least 28 days for representations.
If the authority proceeds, it must publish the final decision, explain how representations were considered and give at least 28 days’ notice before the change takes effect. The licence holder may appeal specified modifications to the Competition Appeal Tribunal. During the consultation period, the Secretary of State may also direct the ORR not to make a proposed modification. Clause 11 balances the necessary flexibility with transparency, accountability and effective rights of challenge. I therefore commend amendment 2 and clause 11 to the Committee.
Clause 12 provides a clear process by which the ORR can revoke a licence with the agreement of the licence holder or in accordance with the terms of the licence. That is necessary because a long-term licence may need to end before its stated expiry date, which the clause ensures can happen through an orderly and—importantly—transparent statutory process.
Before revoking a licence, the ORR must publish its proposal, explain its reasons and specify the proposed revocation date. It must allow at least 28 days for representations. If it decides to proceed, it must publish the decision and the date on which the licence will be revoked. The notices must be brought to the attention of those likely to be affected, and copies must be sent to the Secretary of State, each relevant strategic highways company and any other appropriate persons. During the representation period, the Secretary of State may direct the ORR not to revoke the licence. The clause therefore provides necessary flexibility, and contains transparency, oversight and an orderly transition.
Clause 13 provides for the revocation of a licence where necessary in the interests of national security. Strategic road infrastructure may be of national importance; therefore, the statutory framework must contain a clear mechanism to act where continued operation under a particular licence would present a national security concern. The power is deliberately narrow. The Secretary of State may direct the ORR to revoke a licence only if satisfied that revocation is necessary in the interests of national security.
The ORR must then publish a notice of the direction in a manner appropriate to bring it to the attention of any persons likely to be affected, and must send that notice to the licence holder, each relevant strategic highways company and any other appropriate persons. The notice must specify the date on which the licence is revoked. Clause 13 provides a focused national security safeguard, while the wider provisions in the Bill ensure that responsibility for the highway can continue after revocation. I therefore commend clauses 12 and 13 to the Committee.
Government amendment 3 ensures that clause 14 refers to both the conditions and terms of a licence in relation to transfers—[Interruption.] I hope that wasn’t a comment on my amendment.
Justin Madders
Amendment 3 makes it clear that licence transfers under clause 14 are subject to the conditions of the licence, as well as its terms. Conditions relating to licence transfers may be imposed on licences under clauses 8 and 9, as the Committee discussed previously. The conditions may affect how and when licence transfers are made, and thus it is important that licence transfers under clause 14 are subject to them.
Government amendment 4 ensures alignment between clause 14 and schedule 1, once the schedule has been amended by Government amendment 29. This amendment is therefore interlinked with amendment 29 and is consequential on it. The Committee will come on to discuss amendment 29 later in its consideration, but by way of brief explanation, it allows for transfer of all or part of a licence through a transfer scheme. Without amendment 4, clause 14(1) would prevent transfer of the licence under schedule 1. The amendment fixes that and ensures that clause 14 aligns with schedule 1, which permits transfer of the licence through a transfer scheme, once the schedule is amended.
Clause 14, alongside the processes set out in schedule 1, establishes the statutory basis for transferring the whole or part of a licence. The licences may operate over long periods. It is therefore sensible to provide for a change of licence holder or a transfer of part of the licensed responsibilities, where appropriate. However, a transfer cannot take place without regulatory control.
The licence holder must obtain the ORR’s consent and comply with the procedure under clause 15, and with any relevant terms or conditions of the licence. The Secretary of State may direct the ORR not to consent where that is necessary in the interests of national security. Subject to that safeguard, the ORR may refuse consent only if it considers that the proposed transferee is not a fit and proper person to hold the licence or the part that is being transferred. The ORR may also impose appropriate conditions, which may ensure that the necessary property, rights and liabilities are transferred or created between the parties. Clause 14 therefore provides commercial and operational flexibility without allowing licence obligations to be transferred free from regulatory scrutiny. I commend it to the Committee.
Finally, clause 15 sets out the procedure that the ORR must follow before consenting to the transfer of a licence or part of a licence under clause 14. Before giving consent, the ORR must publish a notice stating that it proposes to consent and explaining its reasons. The notice must allow at least 28 days for representations about the proposed transfer. If the ORR decides to proceed, it must publish a further notice setting out its decision and the date on which the transfer will take place. Both notices must be published in a manner appropriate to bring them to the attention of persons likely to be affected. The ORR must also send copies to the Secretary of State, each relevant strategic highways company and any other appropriate persons. When sending the proposal to the Secretary of State, the ORR must identify any conditions it proposes to impose on the transfer under clause 14. Clause 15 therefore ensures that transfers are considered openly and on an informed basis, while providing a clear route for an approved transfer to take effect.
I hope that I have been clear for Committee members. Clauses 11 to 15, as amended, will provide the certainty that licence holders need with regard to how their licence may come to an end, or be transferred or revoked. They also provide assurance to the ORR and to the public of the clear processes for how the end of a licence should be managed. I therefore commend the clauses and Government amendments in the group to the Committee.
Greg Smith
I have never been considered a Tory wet, Ms Lewell, but my notes now are, after my acrobatics with them. I particularly apologise to the Hansard reporters when my notes eventually make it to the Official Report at the end of the sitting.
Greg Smith
The Minister suggests an improvement to my notes—I certainly cannot read them any more.
I do not think that there is particular disagreement between the official Opposition and the Government on this part of the Bill, so I just want to pose a couple of questions to the Minister on clauses 12 and 13 on the revocation of any licences. Clearly, a licence may well need to be revoked if things are going horribly wrong, or indeed—as the Minister highlighted in his remarks—if there is a national security concern. The first duty of any Government is to keep citizens safe, and given a national security concern, it is absolutely right that there should be the power to revoke a licence.
What is missing from clauses 12 and 13 is what happens if a licence is revoked, but there is no one out there willing to take it on so that clauses 14 and 15 would come into effect. Who becomes the licensee by default? Is it the Department for Transport? Is it the ORR? Is it someone else? That is not a disagreement with the clauses—they seem relatively comprehensive, and certainly the power given any national security concerns is absolutely right—but who takes over?
What if no company wishes to take on that liability—that licence—and the cost of operating the lower Thames crossing or anything else that is granted a licence? We need clarity on that. Although the procedure set out in the clauses is unobjectionable, the net result in some circumstances is not. I hope those circumstances never come to pass, but we must plan for the worst. We need an answer on that point.
Justin Madders
I am grateful for that important question. The simple answer is that National Highways would become the operator of last resort. As it already operates the adjoining parts of the network, that would be an entirely sensible move. Let us be honest, we do not want to be in that position. At this stage, it is difficult to foresee the circumstances in which that would apply, because the whole purpose of the RAB model is to provide certainty over the long term—although it is of course right that we have safeguards in the Bill. I hope that response has addressed the shadow Minister’s question.
Amendment 2 agreed to.
Clause 11, as amended, ordered to stand part of the Bill.
Clauses 12 and 13 ordered to stand part of the Bill.
Clause 14
Transfer of licences
Amendments made: 3, in clause 14, page 11, line 21, after “terms” insert “or conditions”.
This amendment clarifies that a transfer of a licence must be in accordance with any conditions of a licence relating to its transfer (as well as any terms).
Amendment 4, in clause 14, page 11, line 38, after first “under” insert
“a transfer scheme made under Schedule 1 or”.—(Justin Madders.)
This amendment is consequential on amendment 29.
Clause 14, as amended, ordered to stand part of the Bill.
Clause 15 ordered to stand part of the Bill.
Clause 16
Holder of licence to be highway authority and traffic authority
Question proposed, That the clause stand part of the Bill.
Justin Madders
Clauses 16 to 21 engage the fundamental legislative scaffolding required to operate licensed highways by plugging it into the existing legislative framework. The clauses establish clear responsibility for operating and maintaining licensed highways. They give licence holders the legal status and functions they need while retaining specified statutory powers with a public body.
The clauses allow a licensee to delegate, without removing its responsibility or the ORR’s oversight, and protect continuity by allowing a strategic highways company to intervene when a licence holder cannot properly perform its functions. The clauses allow relevant responsibility to pass automatically to the relevant strategic highways company when a licence ends without a replacement. I trust the clauses are uncontroversial but I will go into a little more detail for the benefit of the Committee.
Clause 16 makes the licence holder the highway authority and traffic authority for each highway specified in its licence. That gives the licence holder the legal status to carry out the day-to-day highway and traffic authority functions required to operate and maintain the licensed road. The clause is concerned only with trunk roads covered by the licence, not with the wider responsibilities of highway or traffic authorities. A licensed highway is treated as a highway maintainable at the public expense for the purposes of the Highways Act 1980. That keeps the legal status of the licensed highway clear, even though the works and operation of it are to be privately financed. These arrangements take effect from the date stated in the licence or, if no date is stated, from when the licence is granted. That provides a clear point at which statutory responsibility moves to the licence holder.
Where legislation gives a strategic highways company functions because it is the highway authority or traffic authority for a trunk road, those functions will generally be exercisable by the licence holder for the licensed highway. Development consent orders under the Planning Act 2008 are expressly excluded from that rule. That avoids the automatic transfer of project-specific consents in a DCO. These consents will need to be considered separately as part of specific licensing decisions and can be dealt with separately, as appropriate, either under the Bill’s transfer provisions or under specific provisions of the DCO itself. That also gives much needed flexibility when establishing a new scheme.
Subsequent clauses retain certain functions to the relevant strategic highways company, which is of course National Highways, and provide safeguards for delegation and operational continuity. Clause 16 therefore places responsibility for the licensed highway with the body that will operate it, while preserving the wider statutory framework for trunk roads and other highways.
Clause 17 sets limits on the functions that a licence holder may exercise as the highway authority and traffic authority for a licensed highway. Although clause 16 gives the licence holder that status, certain functions should remain with a public body because of their nature and legal effect. The licence holder may not exercise functions relating to the making of schemes or orders under the Highways Act 1980. It may not exercise compulsory purchase functions under that Act, or functions relating to the making of orders or giving of directions under the Road Traffic Regulation Act 1984. These are delegated forms of legislation and it is important to have proper public scrutiny of their use.
For those unfamiliar with the details of those pieces of legislation, order-making powers include matters such as changing speed limits, making trunking orders, restricting access to a road or introducing one-way systems. These functions will instead be exercised for the licensed highway by the relevant strategic highways company, which ensures that significant statutory powers, including compulsory purchase and most traffic regulation powers, remain with a public body.
The clause also allows the Secretary of State to make regulations about who may exercise highway and traffic authority functions for a licensed highway. It may, for example, be appropriate for certain functions to be exercised by a local highway authority, depending on the specific scheme. Those regulations may provide for a specified person other than the licence holder to exercise one of the functions retained by the clause. They may also allow another specified person to exercise other functions instead of, or alongside, the licence holder. The regulations may also make the modifications needed so that existing highways and traffic legislation operates properly where functions are exercised under the new licensing framework. Clause 17, when read together with clause 16, therefore ensures that the licence holder has the functions needed to operate the highway, while keeping specified statutory powers with an appropriate public body and allowing responsibilities to be allocated clearly.
Clause 18 allows the licence holder to authorise another person to exercise functions conferred on it under this chapter of the Bill, which includes clauses 16 to 22. That provides practical flexibility in how the licence holder carries out its highway and traffic authority functions. It allows another person with suitable operational capability to exercise a function on the licence holder’s behalf. Where the licence holder authorises a strategic highways company to exercise a function, the clause also allows that company to delegate the function further under the Infrastructure Act 2015, subject to the modifications set out in the Bill.
Of course, the ORR must be able to oversee all of these arrangements. The licence holder must therefore provide any information or documents that the ORR reasonably requests to review how a delegated function is being exercised. Importantly, delegation of the function does not transfer responsibility for it. The licence holder remains responsible for the exercise of the function even when another person carries it out. Clause 18 therefore provides operational flexibility while preserving clear responsibility and regulatory oversight.
Clause 19 provides an important safeguard to ensure that essential highway functions continue if a licence holder cannot properly perform them. It allows the relevant strategic highways company to exercise a licence holder’s function instead of the licence holder in two circumstances. The first is an emergency that the ORR considers has seriously affected the licence holder’s ability to carry out the function. The second is where the licence holder has failed or is unable to discharge the function properly, that failure amounts to a breach of a licence condition, and the ORR has issued a contravention notice. In those circumstances, the ORR must notify both the licence holder and the strategic highways company when the function transfers. If the circumstances justifying the intervention come to an end, the ORR must notify both parties and the function will then return to the licence holder.
The strategic highways company may recover from the licence holder any expenditure reasonably incurred in carrying out the function. Clause 19 therefore protects road users and supports operational continuity while ensuring that the responsibility returns to the licence holder when intervention is no longer required.
Clause 20 deals with the acquisition of land needed to carry out works under a licence. I must emphasise that this does not circumvent the normal planning process. For major works, the development consent order will invariably set out the land to be acquired for the scheme in question. It is possible, however, that in the course of a licence for the construction, operation and maintenance of a licensed road, additional land will at some point be required to complete works required to fulfil licence obligations. In some cases, the land needed for those works may not be available to buy by agreement. The clause therefore allows the relevant strategic highways company to use its existing compulsory purchase powers to acquire land needed for the licensed works.
The power will not be given to the licence holder. It remains with the strategic highways company as the accountable public body. The power may be used only where clear statutory tests are met. The strategic highways company must be satisfied that the licence holder has made reasonable attempts to acquire the land by agreement. It must also be satisfied that alternatives have been considered, that compulsory purchase is the better course of action, and that there is a compelling case in the public interest.
Before acquiring land compulsorily, the strategic highways company must consult the ORR. Once acquired, the land must be transferred to the licence holder as soon as reasonably practicable. The strategic highways company may recover from the licence holder the reasonable costs it incurs in exercising the power. Clause 20 therefore ensures that essential land can be acquired where necessary, while keeping compulsory purchase powers with a public body and making their use subject to clear safeguards, as I am sure the Committee would expect.
Clause 21 deals with what happens to responsibility for a licensed highway when a licence expires or is revoked. It is important that the ending of a licence does not create uncertainty about who is responsible for the highway. The clause applies where the highway was covered by the licence immediately before it ended and is not covered by another licence. On the day the licence expires or is revoked, the relevant strategic highways company automatically becomes the highway authority for the highway.
The highway is also treated as a highway maintainable at the public expense for the purposes of the Highways Act 1980. The transfer takes effect automatically. That provides a clear and immediate change of responsibility when no replacement licence is in place. Clause 21 therefore ensures that there is no gap in highway authority responsibility when a licence comes to an end. I hope that answers the shadow Minister in more detail.
Greg Smith
I have a few questions on this group. We have no problem with clause 16. In respect of clause 17, the Minister referenced the setting of speed limits as an example of where functions should be exercisable by persons other than the licence holder—the state, for lack of a better phrase. I do not disagree with the premise—it would be unusual, to say the least, to allow a private company to set speed limits outside our national scheme—but it prompts a question for the whole Bill.
Let us say that a scheme is built, and its original consent, set by the appropriate body, is for a 40 mph speed limit. If the licence holder then makes a representation to the appropriate body in conjunction with the local police force or local authority, it could be determined that the scheme should be converted to a variable speed limit road—we are seeing a lot of those popping up across the country. That could involve quite considerable expense, putting up gantries and having repeater signs with changing speed limits. Where does that fit in with some of the other provisions we have debated? Would that be a capacity change? In theory, variable speed limits speed up the overall journey time and manage congestion spots before they appear, by slowing the whole road down for a bit so that there is not a pile-up. Can the Minister assure the Committee that there would be no back door for a licence holder to negotiate with the appropriate bodies to charge a higher toll because of a change to a variable speed limit system?
Justin Madders
Those were some interesting questions from the shadow Minister. On the first point about the operation of clause 17 and what we have loosely described as “capacity-enhancing improvements”, it is of course the case that the gateway to the licensing regime is through capacity-enhancing improvements in any event. The eligibility for a licence would already have been established under the Act, so I am not sure why additional capacity would create anything different, because the licence would already have been issued by that point. Unless I misunderstood the hon. Gentleman—
Greg Smith
I am happy to explain further. My point is that, with speed limits being set, rightly and properly, by other authorities—there is no disagreement on that point—speed limits could then be used to essentially create new conditions on that road, which could then be used as a springboard to a higher toll or a different set of conditions. The ORR and the licensee could find themselves in a vicious doom loop of disagreement on that point. What I am trying to get across to the Minister is how something that is fundamentally and, I double underline, rightly set by a different authority could become a point of disagreement in the set of licence conditions for any licensee.
Justin Madders
I am grateful for the hon. Gentleman’s explanation; I think I now understand what he is trying to say. We are entering the realms of speculation at this point—
Justin Madders
And the hon. Gentleman is doing it well. He is speculating that any improvements of that nature would probably improve traffic flow and increase the number of vehicles going through the network. I would say that that was probably more of an argument to reduce returns than to increase them, but the prospect is probably rather too remote for us to say anything more concrete at this stage.
Similarly, in response to the hon. Gentleman’s questions about when an emergency under clause 19(2) might be called, it would be rather risky for me to set out every circumstance in which that might happen here. It is important to remember that the clause is about the ORR’s view of the licence holder’s ability to undertake its obligations under the licence. There are obviously already a number of provisions in the legislation about the kind of things that the ORR would be able to consider. Trying to pin us down on the specific instances where an emergency might be called would unnecessarily tie the ORR’s hands.
Greg Smith
I understand why the Minister does not want to give an exhaustive list of examples, but if I may slightly confine the question, will he look at the wording in the clause and make it clear, either now or on Report, that when the ORR “must have regard”, the definition of an emergency is specific to that licensee, as opposed to something affecting everyone, such as extreme heat on the road surfaces?
Justin Madders
I will take that away. The test under the clause is the license holder’s ability to undertake the licence. It is probably inappropriate for me to speculate om whether that would apply to the rest of the network or specifically to the licence holder. My instinct is to say that that would not be the question. It is about the ability of the licence holder to undertake its functions, and if they are significantly impaired in the ORR’s view, the source of that impairment is probably not relevant. If it is an emergency that has created the impairment, clause 19(2) would come into effect. However, if, having consulted with officials, I have more to say on that, I will of course write to him.
The Chair
Maybe next time.
Question put and agreed to.
Clause 16 accordingly ordered to stand part of the Bill.
Clauses 17 to 21 ordered to stand part of the Bill.
Clause 22
Litter functions
Greg Smith
I beg to move amendment 79, in clause 22, page 16, line 23, at end insert—
“(2A) Regulations under this section must ensure that—
(a) a single authority or licence holder is designated as responsible for litter clearance on each highway specified in a licence;
(b) the identity and contact details of that responsible body are published;
(c) members of the public may report litter and make complaints directly to that responsible body; and
(d) that the responsible body remains accountable for litter clearance notwithstanding any arrangements made with another person to carry out the work.”
This amendment would establish clear responsibility and public accountability for litter clearance on licenced highways.
Greg Smith
Amendment 79, which stands in my name and that of my hon. Friend the Member for Bognor Regis and Littlehampton, tries, like most of our amendment today, to give more clarity about what happens in the event of the scourge that is littering. I cannot imagine that there is any Member of this House who has not been out litter picking along the roads and highways in their own constituencies—not the motorway, but on certain parts of the strategic road network and A roads. I certainly see groups in my constituency doing that on a regular basis. All our constituents are rightly upset when they see litter on the verges and sides of the roads. It gets me incrediblyangry too.
The point that the amendment makes is that a motorist or local resident should not be left guessing who is responsible for litter on a licensed road. Will the Government accept a named and published accountable body and a direct route for complaints under each licence that is issued? If work is outsourced, who remains legally responsible for ensuring that the highway is kept clear? The public-facing accountable body should, in my opinion, at least be clearly defined in the regulations when they come to pass and provision to ensure that is the case—as amendment 79 would—should be written into the Bill.
It would be a disaster if we get this wrong and an accident happens because of severe fly-tipping or litter on any one of these roads. We have all seen severe fly-tipping in our own constituencies and the impact it has, particularly on safety. During debate on the previous group we discussed the extreme heat. There were significant fires in that extreme heat, and glass dumped on the side of the road only exacerbates that particular problem. While I do not want to labour this point at length, I think it is incumbent upon the Government to properly consider this amendment and to see if we can strengthen the Bill through its inclusion.
Justin Madders
I am grateful to the hon. Member for moving this amendment as it gives me an opportunity to promote an upcoming litter pick in my constituency, alongside the father of the Whip, my hon. Friend the Member for Worsley and Eccles, on Saturday morning. We will be doing our bit, as we always do. I pay tribute to all the volunteers up and down the country who do a fantastic job in showing great community spirit. However, I make it clear that the trunk road network is not a place for such activities. Instead, it should be handled by an appropriate body, which is indeed what clause 22 seeks to do.
Regarding amendment 79, the shadow Minister is right to raise the issue of clear lines of responsibility for litter clearance on licensed highways. He is right that there should be a clear responsibility. That is why clause 22 exists. He will not be surprised that existing litter legislation was not drafted to account for privately operated highways under the new licensing framework. Clause 22 therefore allows the Secretary of State to make regulations so that existing litter duties can operate properly for licensed highways. That does not mean that responsibility could be handed out arbitrarily. The purpose of the regulations is to ensure that litter functions sit with the appropriate body for the licensed highway and with a clear responsibility for them to carry them out. My objection is not to providing clear information as the hon. Member wants; it is about prescribing detailed requirements about contact details for complaint handling on the face of primary legislation. Clause 22 already provides a regulation-making power to establish how these functions will operate.
Clause 22 ensures that the existing framework for litter under the Environmental Protection Act 1990 can be applied appropriately to the highways specified in relevant licences. The clause therefore allows the Secretary of State to make regulations so that litter responsibilities can operate effectively on licensed highways. The regulations may apply existing duties to keep land clear of litter and refuse to highways covered by a licence. They may also allow the litter enforcement functions to be exercised by or on behalf of a licence holder. In some cases, those functions may sit alongside another body’s responsibilities, in others they may be exercised instead of them. That flexibility ensures that the responsibility can be allocated appropriately for the licensed highway.
The regulations may also make appropriate changes to how existing litter legislation applies to a private licence holder so that it works effectively with licensing frameworks. This will ultimately help ensure that there are clear lines of accountability and no gaps in the management of licensed highways. I therefore commend clause 22 to the Committee.
Greg Smith
I recognise the arguments that the Minister has put forward, but I still think the Bill would be stronger with the exact wording of my amendment. However, I accept his assurances and at this moment, although we might return to it on Report, I am happy to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 22 ordered to stand part of the Bill.
Clause 23
Transfer schemes
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendments 22 to 31.
Schedule 1.
Justin Madders
I will take clause 23 and schedule 1 stand part together as clause 23 simply introduces schedule 1. I will then turn to the Government amendments.
Clause 23 and schedule 1 set out how transfer schemes operate under the Bill. The provisions are necessary to make sure that the assets, rights and liabilities necessary for performing the role of the licence holder can be transferred to them. It is vital to enable the seamless transition from a previous licence holder to a new one. The amendments to schedule 1 will ensure that the provisions cover the scenarios that we envisage transfer schemes will need. They enable the transfer schemes to be made from a strategic highways company to its wholly owned subsidiary, permit the transfer of a licence under specified circumstances beyond those set out in clause 14, and allow for a transfer scheme to provide for compensation to be paid to a transferor or third party.
Clause 23 introduces schedule 1, which makes detailed provision for transfer schemes. A licence holder may need property, contractual rights and other legal interests in order to construct, operate, maintain or improve the highway specified in its licence. Existing rights and liabilities may also need to move between the Secretary of State, a strategic highways company, a licence holder or another appropriate person.
Transfer schemes provide an efficient statutory mechanism for making those changes. They can transfer existing property, rights and liabilities and make the supplementary provision needed to ensure that a transfer operates effectively. The detailed powers, procedures and protections are set out in schedule 1. Together, clause 23 and the schedule support an orderly transition into the licensing regime, as well as when a licence is revoked, expired or transferred to a new licence holder. This ensures that responsibility for a licensed highway is matched by the assets and legal arrangements needed to discharge it.
Government amendments 22 and 23 allow for a transfer scheme to provide for transfers of property, rights and liabilities from a strategic highways company to its subsidiary. Amendment 23 adjusts wording to ensure that subsidiaries of strategic highways companies are referenced explicitly in the list of persons for whom the Secretary of State can make a transfer scheme. This is vital to ensure that the transfer of assets, including the Dartford crossing and the lower Thames crossing project, from National Highways to its subsidiary can take place before the transition to the private sector.
The current drafting of schedule 1 only allows a transfer scheme to be made transferring assets to a subsidiary if that entity already holds a licence or is intended to in the future. That would not allow for scenarios in which an intermediate vehicle is set up to hold the assets before a further transfer. This amendment makes that possible and is essential for the proper functioning of these provisions, for scenarios that are likely to occur.
Amendment 24 follows on from amendments 22 and 23 and enables transfer schemes to provide for the transfer of property, rights and liabilities from subsidiaries of strategic highways companies to licence holders. This amendment ensures that where assets, rights and/or liabilities have been transferred to a subsidiary of a strategic highways company, they can then be transferred on to a licence holder or person due to hold a licence. That, in combination with amendments 22, 23 and 25, provides for a scenario in which the strategic highways company sets up a wholly-owned subsidiary to hold assets, rights and liabilities due to be the responsibility of a licence holder. It allows for the Secretary of State to then transfer those assets, rights and liabilities on to the licence holder or person due to hold a licence.
Government amendments 25 and 26 reflect the changes in amendments 22 to 24 to enable transfers to and from subsidiaries of strategic highways companies. They make consequential changes to ensure that the definition of “subsidiary” in paragraph 1 of schedule 1 and other references to subsidiaries in the paragraph accurately align with the new drafting in amendments 22 to 24.
Government amendment 27 makes it clear that transfer schemes can include provisions that come into effect at different times. It does not specify that different dates must always be included in provisions. In many cases, it may be more appropriate for the whole transfer scheme to come into effect at once. However, there may be circumstances where it may be appropriate for particular parts of the transfer scheme to come online at the point when the relevant responsibilities in the licence do too.
For instance, in the case of the Dartford crossing, the existing design, build, finance and operate contract will run beyond when the transaction to the private sector is due to take place. When the transfer scheme is made for the Dartford crossing, the scheme will be able to set a later date for certain responsibilities under that contract to transfer, ensuring they can remain with National Highways and its DBFO contractor until the end of that arrangement. Were this not possible, the licence holder would need to delegate their responsibilities to National Highways who would then delegate them to the contractor. While not infeasible, that complicated arrangement can be avoided through the amendment.
Government amendment 28 sets out requirements for when transfer schemes transferring property, rights and liabilities away from a licence holder can be made by the Secretary of State. It means that the Secretary of State cannot make a transfer scheme without the consent of the licence holder and the transferee, where that transferee is not the Secretary of State herself or a strategic highways company, except where the scheme is being made in connection with a licence revocation or expiry.
Setting out conditions that must be met before the Secretary of State makes a transfer scheme will reassure investors that transfer schemes would not be made on an ad hoc basis. In circumstances where the licence is either not being revoked or has not expired it is right that the Secretary of State be required to obtain the transferor’s consent before making the transfer scheme.
Government amendment 29 allows for transfer schemes made under schedule 1 to provide for the transfer of licences granted under clause 3. A transfer scheme may transfer the whole or part of the licence. Clause 14 already sets out a process for the ORR to consent to licence transfers. Where a licence is transferred under clause 14, the Secretary of State will have to make a separate transfer scheme under schedule 1 to transfer the relevant assets, rights and liabilities alongside the licence.
In some cases, it will be more efficient to transfer the licence alongside the relevant assets, rights and liabilities, rather than running two separate processes under clause 14 and schedule 1. That will generally be where a licence transfer is initiated by the ORR rather than the licence holder, for example to split the licence between two licence holders. The amendment will allow for more efficient and streamlined licence transfers in appropriate cases where the ORR initiates a transfer.
Where only part of a licence is being transferred, the amendment also allows for the apportionment of rights and liabilities under the licence and incidental modifications to the licence’s terms and conditions.
I turn to Government amendment 30. Paragraph 3 of schedule 1 allows transfer schemes to provide for the payment of compensation. Currently, schemes can only provide for the Secretary of State to pay compensation to third parties who are adversely affected by the scheme. The amendment extends that provision to also allow schemes to provide for the transferee to pay compensation. That ensures that transfer schemes can require the transferee to pay compensation if the Secretary of State considers it appropriate in any given case. For instance, in some circumstances it may be appropriate for a new licence holder to pay compensation instead of, or as well as, the Secretary of State.
Douglas Lumsden
I am trying to think of possible compensation schemes. If, for example, a person’s property has been blighted by a new road that has been constructed, who would be liable for that? Would it be the licensee? Would that transfer to a new owner as well?
Justin Madders
The clauses are about the transfer of assets, rights and liabilities. That is why the amendment is in there—to ensure that if there is an outstanding compensation claim, there is a power for the transferee to pay that. We do not want to be in a situation where a party who is trying to exit the arrangements is refusing to meet its obligations. This is a complicated set of amendments, but they are effectively trying to cover all bases in terms of whether there is compensation. It is also about whether a party leaving the agreement is seeking some compensation for costs that they have occurred.
This is a fairly broad amendment, but it is necessary. We obviously hope not to have many situations where licences are transferred in whole or part, but it is prudent to have provisions in the Bill to ensure that those circumstances are catered for.
Douglas Lumsden
I am trying to work out who is responsible for property blight. Would it be the licence holder? Would it be the Highways Agency? Who would it be?
Justin Madders
Property blight would probably be dealt with by development consent orders and the planning process rather than this Bill, which is about the financial and regulatory framework for operating highways. It would probably come before we got to the issuing of licences. I hope that answers the hon. Gentleman’s question.
Government amendment 31 further extends the existing compensation provision in schedule 1 to allow transfer schemes to provide for compensation to be paid to transferors as well as third parties. In some cases, it may be appropriate for compensation to be paid to a transferor—for example, where a licence has been revoked on a non-consensual ground set out in the licence. Under amendment 30, the scheme could provide for the compensation to be paid by the Secretary of State or the transferee, as appropriate. The drafting is not prescriptive. Compensation will not always be needed for either the transferor or a third party, but the provision is drafted to make it possible for all relevant scenarios to be covered.
Greg Smith
I will not speak at length; I merely ask some questions of the Minister about the taxation provisions at the end of schedule 1. I think many of our constituents would be surprised to find in the Bill the following provision:
“The Treasury may by regulations make provision for varying the way in which a relevant tax has effect”
in relation to a transfer. The Bill even says that income tax could be varied.
I can conceive of a situation where the ORR finds itself in a sticky spot trying to transfer a licence— perhaps there are not many willing participants—and tries to create an incentive for it to be taken on. Surely, however, to be as explicit as providing for the varying of taxes from income tax to corporation tax and beyond is highly unusual within legislation. Our constituents would normally expect a tax to be a tax. Although there may be, in Budgets from time to time, provisions that allow reliefs, to nakedly change corporation tax or income tax—as my reading of schedule 7(1) suggests—seems an extreme measure. I would be grateful for an explanation from the Minister.
Justin Madders
I will have to disappoint the shadow Minister. I will not be able to give him a detailed explanation today. All I would say is that the schedule does require such proposals to be approved in a statutory instrument subject to the affirmative procedure, but I will seek counsel from Treasury colleagues about what possible circumstances this may apply in and write to the shadow Minister.
Question put and agreed to.
Clause 23 accordingly ordered to stand part of the Bill.
Amendments made: 22, in schedule 1, page 68, line 7, after “company” insert
“, a subsidiary of a strategic highways company,”.
This amendment is consequential on amendment 23, which allows for a transfer scheme to provide for transfers from a strategic highways company to a subsidiary of a strategic highways company.
Amendment 23, in schedule 1, page 68, line 9, after first “to” insert “—
(i) a subsidiary of a strategic highways company, or”.
This amendment allows for a transfer scheme to provide for transfers from a strategic highways company to a subsidiary of a strategic highways company.
Amendment 24, in schedule 1, page 68, line 10, at end insert—
“(ba) from a subsidiary of a strategic highways company to a person who holds, or is to hold, a licence;”.
This amendment allows for a transfer scheme to provide for transfers from a subsidiary of a strategic highways company to a licence holder or prospective licence holder.
Amendment 25, in schedule 1, page 68, line 13, after “company” insert
“or a subsidiary of a strategic highways company”.
This amendment is consequential on amendment 26 (which leaves out provision that a reference to a strategic highways company includes a reference to its subsidiary).
Amendment 26, in schedule 1, page 68, line 18, leave out sub-paragraph (2) and insert—
“(2) In sub-paragraph (1) ‘subsidiary’ has the same meaning as in the Companies Act 2006 (see section 1159 of that Act).”
This amendment is consequential on amendments 23 and 24.
Amendment 27, in schedule 1, page 68, line 36, after “date” insert “or dates”.
This amendment clarifies that different parts of a transfer scheme may come into effect at different times.
Amendment 28, in schedule 1, page 69, line 10, at end insert—
1A “(1) The power to make a transfer scheme within paragraph 1(1)(c) is exercisable only if the Secretary of State obtains the consent of—
(a) in the case of a transfer within paragraph 1(1)(c)(i) or (ii), the proposed transferor;
(b) in the case of a transfer within paragraph 1(1)(c)(iii) or (iv), the proposed transferor and the proposed transferee.
(2) The consent of the proposed transferor to the making of a transfer scheme is not required where the scheme is made in connection with or in pursuance of the revocation or expiry of a licence.
(3) In this paragraph ‘proposed transferor’, in relation to a transfer scheme proposed to be made, means the person who is proposed to be the transferor; and ‘proposed transferee’ is to be read accordingly.”
This amendment clarifies the circumstances in which a transfer scheme may be made under paragraph 1(1)(c) of Schedule 1.
Amendment 29, in schedule 1, page 70, line 20, at end insert—
2A “(1) A transfer scheme may include provision for the transfer of a licence held by the transferor to the transferee.
(2) Provision under sub-paragraph (1) may relate to the whole or any part of the licence.
(3) Where a transfer scheme provides for the transfer of a part of a licence, the scheme may include provision—
(a) apportioning rights or liabilities under the licence;
(b) making incidental modifications to the terms and conditions of the licence.”
This amendment provides that a transfer scheme may include provision for the transfer of the whole or part of a licence.
Amendment 30, in schedule 1, page 70, line 23, after “State” insert “or the transferee”.
This amendment provides that a transfer scheme may provide for compensation to be payable by the transferee, in relation to the scheme, as well as by the Secretary of State.
Amendment 31, in schedule 1, page 70, line 23, leave out
“any person, other than the transferor or transferee,”
and insert
“the transferor or any person”.—(Justin Madders.)
This amendment provides that a transfer scheme may provide for compensation to be payable to the transferor as well as any third party whose interests are adversely affected by the scheme.
Schedule 1, as amended, agreed to.
Clause 24
Charging of tolls
Greg Smith
I beg to move amendment 50, in clause 24, page 17, line 14, leave out lines 14 and 15.
This amendment would remove the power of the Secretary of State to specify any circumstances in regulations about how tolls must be paid.
The Chair
With this it will be convenient to discuss the following:
Amendment 51, in clause 24, page 17, line 20, leave out lines 20 and 21.
This amendment would remove the power from a licence holder to specify equipment to be carried in or fitted to a road vehicle while it is on the highway.
Amendment 53, in clause 24, page 18, line 6, at end insert—
“(9) Before setting the levels of tolls to be charged, the holder of a licence must consult—
(a) road users likely to be affected,
(b) local businesses,
(c) local residents,
(d) local highway authorities whose areas may be affected.”
This amendment would require consultation before tolls can be charged.
Amendment 54, in clause 24, page 18, line 6, at end insert—
“(9) A tolling scheme made under this section may not come into force unless it has been approved by Parliament.
(10) On any occasion that the licence holder wishes to increase the level of a toll which is already being charged under a licence, this must be approved by Parliament.
(11) To meet the requirement in subsections (9) and (10), the Secretary of State must make regulations setting out the tolling scheme and levels of tolls to be charged under it.
(12) Regulations made under subsection (11) are subject to the affirmative procedure.”
This amendment would require parliamentary approval of road user charging under this Act on each occasion that it was implemented.
Clause stand part.
Greg Smith
The amendments in this group stand in my name and that of my hon. Friend the Member for Bognor Regis and Littlehampton. The crux of much of what we have spoken about today, and I am sure will continue to speak about at length on this Bill, is the way in which tolls are charged. Our amendments in this group seek to get the clarity that many of our constituents, I am sure, will want on that very question.
The lead amendment is about removing the power of the Secretary of State to specify circumstances in regulations for how tolls must be paid. Amendment 51 is about removing the power from a licence holder to specify equipment to be carried in or fitted to a road vehicle while it is on the licensed highway. Amendment 53 requires consultation before tolls can be charged. Amendment 54 requires parliamentary approval of road user charging under the Bill—assuming that it becomes an Act—on each occasion on which it is implemented.
The power to determine how a motorist pays should not be an open-ended power to require equipment in vehicles. I simply do not get the necessity or the proportionality of that requirement in the Bill, which is why we seek to remove it. The requirement for equipment in vehicles is almost like taking 10 steps backwards in order to use a tolled road. Certainly, tolls can have those little boxes in a windscreen, which beep as someone goes through a barrier, but as has now been widely proven—over multiple decades—that is just straightforwardly unnecessary.
Here in our capital city, we cannot drive a vehicle without paying the toll that is the congestion charge. That does not involve anyone having to have a little box in their windscreen or any other equipment in their car, because we all have those very straightforward things that have been on our cars for many, many years called number plates. The cameras can very straightforwardly pick any vehicle up as it goes by. By law, we have to have a number plate. If we have not paid a toll, the congestion or ULEZ—ultra low emission zone—charge, the Birmingham clean air toll or whatever against the registration of our vehicle, we get a penalty charge notice in the post. It works. Some of us might not particularly like it, but it works. Why on earth should any toll operator suddenly require any motorist seeking to use the toll roads to stick things in their windscreen or put chips in their car, or whatever it might be?
Richard Quigley (Isle of Wight West) (Lab)
Does the hon. Gentleman agree that there is a problem with ghost number plates and other forms of avoiding ANPR, automatic number plate recognition? What would his solution to that be?
Greg Smith
I take the hon. Gentleman’s point—there is certainly a problem with ghost plates, but that is an enforcement problem for the authorities, for police forces, for the Government to crack down on to stop a criminal practice that he is right to say is happening on our streets. I am not convinced, however, that we should legislate for a scheme that will involve the tolling of new infrastructure, such as the lower Thames crossing, and require the expense of technology not only going into cars, but to read that technology in cars in order to pay the tolls, when we have a registration system on all our vehicles in the first place.
On those registration plates, we have agreements with many other countries whose citizens could conceivably drive to the United Kingdom from abroad, to ensure that their plates are recognisable as well. In particular in London, therefore, any visitors driving over from France, Belgium, the Netherlands or wherever will, equally, not need to start strapping devices to their windscreens in order to visit our country, to spend their money here and to enjoy the wonderful things we have to offer in England.
I put it to the Minister that this could be a much simpler Bill if we simply get rid of those provisions. I do not want to relitigate the argument about exactly how much the toll is going to be—we still do not know—but before any toll level is set, affected road users, businesses, residents and local authorities should be consulted. Surely that is a straightforward ask.
We heard a lot of evidence from the haulage sector in our oral evidence sessions. The sector already operates on tiny margins; it is very common for a haulage operator, certainly those that I visit in my own constituency, to be operating on as low as a 1% margin. If haulage operators are to be charged these tolls, it is vital that they should have their say, and for that to be put clearly on the record. We should also bear in mind that ultimately all the costs get added to the cost of the goods being transported, so this is an inflation-fuelling measure.
We all know how consultations go sometimes—we do not always get what we want—but the impact that any tolls could have should be clear and on the record, so that when that toll rate is set, it takes into account, if nothing else, the market conditions that will dictate whether people are willing to use that road or will take any measure conceivable to avoid getting on it in the first place.
Any new tolling scheme or any increase to an existing toll should require Parliament’s approval. Why should that decision be left to operators, Ministers or the ORR alone? We need safeguards to prevent unnecessary equipment requirements, and parliamentary control to apply to the level of any charges.
Justin Madders
Amendment 50 would amend the ability of the Secretary of State to reassign responsibility for payment of a toll through regulation. The shadow Minister argues that the amendment would remove the power to specify any circumstances in regulations about how tolls would be paid. The amendment would remove important flexibility from the tolling system and the ability to make someone other than the registered keeper responsible for paying a toll in specified circumstances.
This provision matters, as it is not always possible to trace the registered keeper of a vehicle and there may be situations where it is appropriate for another party to be pursued for payment. That could include hired or leased vehicles, as I am sure the witnesses from last week would attest to. It could also be important where vehicles are registered overseas or following a change of vehicle ownership. Ultimately, it will normally be right for the registered keeper to be held liable for any charges, but that will not always be the case, for the reasons I have set out. It is important that we maintain flexibility.
Clause 24(2)(b) allows regulations to address precisely those circumstances, providing for someone other than the registered keeper to pay the toll where keeper liability would be inappropriate. The question is not whether tolls should be paid, but who should be responsible for them. We would retain the flexibility to make that distinction, rather than impose keeper liability in every case. I therefore ask the hon. Member to withdraw the amendment.
Amendment 51 would amend the ability for a licence holder to require equipment to be carried in or fitted to a vehicle. It is worth pointing out that just because something is in the legislation, that does not mean there is some dastardly, secret plan to implement it. I will give a practical example of why this power is in the Bill. At the Dartford crossing, before the toll barriers were removed, those who wished to do so were able to set up an account and place a smart tag in their vehicle. The smart tag would speak to the toll booth and open the barriers, charging the registered account. It meant that those who had the tag did not need to open their windows to drop a coin into the bucket at the booth, and it sped up their journey. A similar arrangement applied at the Mersey tunnels.
There are, of course, no longer barriers at the Dartford crossing and the charges are based on the number plates of those who cross. We have already heard why that is not necessarily a foolproof process. But—this is the point of having the clause in the Bill—we do not know what might happen in the future in terms of technology in cars. It is possible that we might not even have number plates at all. Perhaps there will be chips attached to vehicles that have all the user’s data on them, which will be important in tracing the registered keeper. The fact that we do not know how vehicles will develop in the future means that it is important to keep the Bill technology-neutral. That is the purpose of this clause.
Douglas Lumsden
The Minister is right that we do not know what the vehicles of the future will look like, but it should not be up to the holder of the licence to dictate what should be in people’s cars. If we think about the Bill, this is not about just the lower Thames crossing; it could be used for schemes right across the country. Surely the Minister is not suggesting that we would have a different piece of equipment in our car for every scheme that we may be passing through, from one end of the country to the other?
Justin Madders
I am grateful for the intervention, but I am not suggesting that at all. I am suggesting that it is important that we keep the Bill technology-neutral because we do not know what might happen further down the line.
Alison Griffiths
I think it is quite interesting that, in an age of acute cyber-security risks, the Minister considers this a technology-neutral position. We have an analogue system that works very effectively and systems that could be controlled by the Government rather than the licensee, which would ensure appropriate cyber-security. The position that the Minister is suggesting is technology-neutral is actually the reverse: it exposes us to acute cyber-risk over which we will have very little control.
Justin Madders
I am grateful to the hon. Lady, but I would say that she is making my case for me: we need to keep up with important changes and risk in the cyber-security world. That is why keeping the Bill as technology-neutral as possible is important, because we simply do not know what will be coming next. Giving operators the flexibility to be able to determine what technology is used is an important part of cyber-security moving forward.
Amendment 53 would insert specific consultation requirements into the Bill before a toll can be set. I agree that local communities and those who use the tolls should have a voice. The question is not whether they should have a voice, but how best to secure that engagement within the Bill’s framework of independent regulation. As it stands, the framework places responsibility with the regulator to set tolling requirements through its code and licence conditions, and to enforce compliance. Consultation requirements should sit within those arrangements, rather than be prescriptive in the Bill.
In exercising its functions, the ORR must have regard to the principles of transparency, accountability, proportionality and consistency, and keep the interests of users at the heart of its decision making. That is an important safeguard in the Bill, and I hope that it addresses some of the shadow Minister’s concerns. He will know that the Bill establishes a stakeholder group that will directly advise the ORR. Again, I hope that will address the point about the voices of users being heard in this process. I do not believe that the amendment would improve engagement. Instead, it would constrain the regulator’s discretion to determine how best to take forward individual users’ voices, so I ask the Member not to press it.
Jim Dickson
Without wishing to prolong proceedings, it is very important that the exact level and differential of tolls between the Dartford crossing and the lower Thames crossing—this legislation is being used to construct the lower Thames crossing—is properly considered. My constituents are particularly keen that there should not be a differential between the two crossings so that a financial incentive is created to use one rather than the other, somewhat negating the fact that we have the new infrastructure in place. We need to try to balance the traffic between the two crossings, and tolling will obviously be an important part of that. Would the Minister note that? Perhaps we can ensure collectively that that is in the thinking of the licence holder going forward.
Justin Madders
My hon. Friend is absolutely right. We believe that it would not be in the interests of the licence holder to have a differential scheme, but he is right to raise the importance of that local voice and we believe the legislation as it stands will enable that to happen.
Amendment 54 would, if enacted, see a requirement inserted for Parliament to approve each new tolling scheme. Making pricing dependent on parliamentary approval would introduce uncertainty for investors about the revenues on which a scheme depends. We need a framework that combines effective public controls with the predictability necessary to attract long-term private investment. The Bill seeks to strike that balance through independent regulation. The ORR is a strong independent regulator with a reputation for boosting investor confidence by fostering stable, predictable investment conditions, and it has responsibility for setting tolling requirements and enforcing them. That is the right approach, with robust regulatory oversight within a stable, predictable framework, rather than making prices subject to a separate parliamentary decision.
My concern is therefore not with scrutiny itself, but with the uncertainty the amendment would create for financing schemes under the Bill. It would make those schemes, including the lower Thames crossing, less attractive to investors and harder to finance. I therefore ask the Member not to press the amendment.
Greg Smith
I am grateful to the Minister for his response to the amendments. On the equipment in vehicles point, as I said in my earlier remarks, we are in danger of taking several steps backwards, as he himself acknowledged that there were schemes in the past where we used to wind our window down—literally wind it down, rather than press a button—and then throw a few coins into a basket. That has gone—it is over—and so should that be gone and over and moved to an ANPR system, albeit with the challenges we have around ghost plates to enforce against.
I just do not understand why we would have any interest—this is not a party political point; this is just a practical point for all our constituents—in trying to bring about a scheme that involves boxes and chips and all sorts of things being required to be put into heavy goods vehicles and private vehicles, rather than just using the number plate system that by law we are all required to have on our vehicles.
On the point about consultation, the hon. Member for Dartford made the point incredibly well. Preventing the disincentives to use a new scheme if the toll turns out to be higher than the existing Dartford crossing scheme is a sensible point. The hon. Gentleman knows his constituency far better than any of us. If he reports that that is a live concern among his constituents, I would urge the Minister to listen so that the good people of Dartford do not find themselves with that disincentive to use a new scheme because it is priced higher than the existing one.
I am content to withdraw amendments 50 and 53, both of which I suspect we will come back to on Report. I really do invite the Minister to think about how that consultation, in the interests of his colleague the hon. Member for Dartford as much as any future schemes, could be addressed before we get to that stage. On amendments 51 and 54, particularly the point on parliamentary approval—not for Parliament to set tolls—given the Minister declined the rules that we suggested around tolling regimes earlier, if there will not be guidance and upper limits as there are on the debt that any licensee may hold, that only leaves the option for us in Parliament to vote on those tolling arrangements as they come along on each and every occasion.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 51, in clause 24, page 17, line 20, leave out lines 20 and 21—(Greg Smith.)
This amendment would remove the power from a licence holder to specify equipment to be carried in or fitted to a road vehicle while it is on the highway.
Question put, That the amendment be made.