The Parliamentary Under-Secretary of State for Transport (Justin Madders)

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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.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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Read the Bill!

The Parliamentary Under-Secretary of State for Transport (Simon Lightwood)

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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

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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—

Simon Lightwood

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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.

Simon Lightwood

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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.

The Parliamentary Under-Secretary of State for Transport (Justin Madders)

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Q Good afternoon, gentlemen. Mr Hopkinson, you have expressed concerns about the limited incentives for cost control—presumably that is mainly in the construction part of the scheme; obviously, we are talking about the lower Thames crossing here. The Bill gives the ORR the ability to set licence conditions on economic allowances and expenditure controls, and provides for the investors to make a reasonable return. Those safeguards are set out. Do you not consider those sufficient and would you like to see something in addition?

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

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Q But you would accept that in that model there is no control from the regulator?

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

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Q As you rightly point out, there are a number of opportunities for licences to be terminated. I would suggest that risks on revenue for too high a toll charge would apply equally in this model as they would in concession models.

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.

Justin Madders

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We hope the Bill will address those concerns.

Justin Madders

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Q You said a little about how consistency across the country would be helpful for your members. I just want to take you one step back: is the principle of barrierless charging one that your organisation would support?

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

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Q The regulation-making powers in the Bill will hopefully address those concerns if there is adequate consultation as we move forward.

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.

Justin Madders

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Q Good afternoon. You probably heard witnesses earlier express a little scepticism about your ability to deal with the potential cost inflation or exaggeration—whatever word you want to use. You have obviously both been involved in this project from its inception, particularly in terms of construction, and you are running the existing crossing, so you know what the running costs and maintenance costs are. Would you say that, because of that, the scope for being blinded by PowerPoint, for want of a better description, is probably more limited than it could be?

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

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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.

Justin Madders

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No questions.

The Parliamentary Under-Secretary of State for Transport (Justin Madders)

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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.

Justin Madders

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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.

Justin Madders

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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

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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.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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Or Wales.

Justin Madders

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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.

Justin Madders

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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

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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

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I will now give way to the hon. Member for Bognor Regis and Littlehampton.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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.

The Parliamentary Under-Secretary of State for Transport (Justin Madders)

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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.

Justin Madders

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Don’t worry about that.

Justin Madders

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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—

Justin Madders

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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.

Justin Madders

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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

Justin Madders

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The coalition is coming back.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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

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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.

Justin Madders

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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

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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.

Justin Madders

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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

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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.

Justin Madders

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They might be an improvement.

Justin Madders

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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

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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.

Justin Madders

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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—

Justin Madders

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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

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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.

Justin Madders

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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.

Justin Madders

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Sorry, I have just finished.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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.

Justin Madders

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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.