Highways (Financing) Bill (First sitting)
(1 day, 13 hours ago)
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The Chair
We are now sitting in public and the proceedings are being broadcast. Before we begin, I remind Members to switch all electronic devices to silent, and that tea and coffee are not allowed in the sittings. We will first consider the programme motion on the amendment paper and then a motion to enable the reporting of written evidence for publication, and a motion to allow us to deliberate in private about our questions before the oral sessions begin. In view of the time available, I hope that we can take those matters formally and quickly, without a debate. Date Time Witness Thursday 29 October Until no later than 12.05pm The AA The RAC Foundation Thursday 29 October Until no later than 12.45pm Logistics UK The Road Haulage Association M6toll Thursday 29 October Until no later than 1.00pm Transport Action Network Thursday 29 October Until no later than 2.35pm The Centre for Policy Studies Britain Remade Thursday 29 October Until no later than 2.55pm British Vehicle Rental & Leasing Association Thursday 29 October Until no later than 3.35pm Office of Rail and Road National Highways Thursday 29 October Until no later than 4.10pm Wates Construction John Laing Thursday 29 October Until no later than 4.30pm Department for Transport
Ordered,
That—
1. the Committee shall (in addition to its first meeting at 11.30 am on Thursday 29 October) meet—
(a) at 2.00 pm on Thursday 29 October;
(b) at 9.25 am and 2.00 pm on Tuesday 3 November;
(c) at 11.30 am and 2.00 pm on Thursday 12 November;
(d) at 9.25 am and 2.00 pm on Tuesday 17 November;
(e) at 11.30 am and 2.00 pm on Thursday 19 November;
(f) at 9.25 am and 2.00 pm on Tuesday 24 November;
2. the Committee shall hear oral evidence in accordance with the following Table:
3. proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 23; Schedule 1; Clauses 24 to 68; Schedule 2; Clause 69; Schedule 3; Clauses 70 to 97; new Clauses; new Schedules; Clauses 98 to 104; remaining proceedings on the Bill;
4. the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 24 November.—(Justin Madders.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Justin Madders.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee Room.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Justin Madders.)
The Chair
We are now sitting in public again and the proceedings are being broadcast. Before we start hearing from our witnesses, do any Members wish to make a declaration of interest in connection with the Bill? No one does, so we will hear evidence first from the Automobile Association and the RAC Foundation—welcome. We must stick to the timings that are in the programme order that the Committee has agreed. For this session, we have until 12.05 pm. Will you please briefly introduce yourselves for the Committee?
Edmund King: I am Edmund King. I am president of the Automobile Association and director of the AA Charitable Trust. I am a former visiting professor of transport at Newcastle University, and I have been involved in roads and road infrastructure probably for about 30 or 35 years. I used to be a member of the British Road Federation, which campaigned for better roads in the late ’80s and the ’90s.
Steve Gooding: Good morning, I am Steve Gooding. I am the director of the RAC Foundation, the charitable research body set up by the Royal Automobile Club back in the 1990s to conduct and disseminate research relating to motoring.
Greg Smith (Mid Buckinghamshire) (Con)
Q
On one level the Bill, particularly on Second Reading and in other narratives that have come out since it was first published, seems to be presented as answering the question: how do you solve a problem like the lower Thames crossing? But it equally has a lot of other provisions—perhaps it is due to badly drafted clauses or perhaps it is deliberate—that seem to allow tolling and road pricing to extend further than the lower Thames crossing. Is that something your organisations are concerned about, and do you feel enough focus has been given to parts of Bill related to everything other than the lower Thames crossing—to the general motorists in this country?
Edmund King: Obviously if you look at the need for the lower Thames crossing—the congestion and the environmental issues currently at Dartford—it is easy to see that some alternative solution is needed. But, as you rightly say, this Bill is not just about the lower Thames crossing; it could allow that finance model with other schemes. It might have been easier if it was concentrated on the lower Thames crossing because then you could have brought in more restrictions and safeguards on tolls for motorists.
As the Bill stands, on the one hand you have the Office of Rail and Road as the regulator for it, and then you have drivers who are the consumers, whether they are individual motorists or heavy goods vehicle drivers. To some extent, there might be a conflict between those two. The ORR has to ensure that the licensee makes money from it so it can be viable, but at the same time, it regulates tolls for the drivers. You could argue that there might be a conflict in that at times.
When we looked at similar schemes before—I did a paper on road miles with an economist, which looked at the broader issue of road pricing—one thing we called for was an independent body to oversee tolling and ensure it is fair. I certainly think that the responsibility of the ORR when it comes to tolls could be strengthened and given more independence within the Bill.
Steve Gooding: Clearly, the Committee will want to look very closely at clause 3, which I think is the key thing here. Yes, we looked at it and wondered whether this was a way of creating a framework that could then be applied to the existing road network and the existing motorway network. Clearly, the provisions relate to the trunk roads—the National Highways roads.
I think the way clause 3 is drafted tightens that down to where capacity is being added, but we want the Committee to look at how much capacity is being added in order to make that a valid use of the powers in the Bill. Is it simply, for example, playing tunes with the speed limits or maybe adding a lane? What is it? In those circumstances, would we really be contemplating transferring sections of the existing national road network over to a private company? I do not think that is the intention, but the intention is not always the actuality.
Greg Smith
Q
“A licence may also provide for the holder of the licence to secure the maintenance, operation or improvement of any other highway”.
Is it the view of your organisation and members that people would expect that to be about an entirely new road or perhaps a dualled road where there is currently a single carriageway, rather than making what many might consider a relatively minor improvement, such as—I do not know whether this is an improvement—adding smart motorway cameras?
Steve Gooding: Our understanding of it, and this is why I think the Committee will want to make sure this is clear, is that the subsections of clause 3 relate back to each other. It is not relatively minor maintenance of itself that would enable the licence to be awarded. In our reading of it, it has to be linked back to enhancement and capacity—but perhaps the Minister will want to make that clearer.
Greg Smith
Q
Edmund King: You can say that in relation to the lower Thames crossing, because in that part you know the two elements—one is the current Dartford crossing; one is the new crossing—and you can look in that area. But if you look at the Bill more generally, it is very difficult to say because we do not know where it will be applied. Clause 3(1)(a) does say
“construction of a highway specified in the licence”,
but we obviously do not know where that highway is or what the competing interests are with housing, the economy, routes and so on. In terms of this Bill, it is difficult to say unless a concrete scheme is being considered.
Steve Gooding: It is within the duties that are being placed on the Secretary of State to consider where these powers will be used: there are duties in relation to having regard to users of the network, for example. It could be made more explicit. After all, we are talking about a national asset here, and if faced with a toll and an alternative, people might well choose the alternative, with negative traffic impacts in the round. That would have to be taken into account.
The Parliamentary Under-Secretary of State for Transport (Justin Madders)
Q
There is a narrative that the Bill is a Trojan horse for widespread road charging. We have made it very clear that the operation of this legislation will be for specific and limited circumstances. Is there something more that we can do or say to reassure you that there is no secret plan to widely use this?
Steve Gooding: I certainly do not think that it is a conscious Trojan horse, if I may say that, but having been involved in similar drafting exercises before, one always wants to destruction test whether something could be used in a way that was not anticipated. When one looks at the proposals for the Dartford crossing and the lower Thames, you are bundling the existing crossing into the package, as it were, that the private sector licensee is going to run. One wonders whether there might be other instances where something will be brought into the ambit of the licence that we will not have been expecting or intending at the point of passing the legislation, for which we might need further tightening of clause 3.
Edmund King: Part of the problem with Governments and tolls is their previous record. If you go back to the original Dartford crossing, the tolls were meant to be removed when the bridge was paid for and certain maintenance was put aside; that occurred in 2003, and subsequent Governments have not removed them. Drivers do remember that Governments have rescinded their promises, so there is that mistrust. Having said that, when we talk to drivers about new infrastructure—and about it being new infrastructure, not existing infrastructure—they are much more open to it being tolled because they can see the benefits in time savings, reducing congestion and so on. Certainly with the lower Thames crossing, they can see the benefits from that.
Justin Madders
Q
Edmund King: Clause 83 talks about a stakeholder group being appointed by the ORR even though the chair is approved by the Secretary of State. In a way, if the ORR is the regulator, surely the stakeholder group should be more independent. We would rather see that clause changed so that the Secretary of State appoints the stakeholder group, so that it has a degree of independence. If the regulator appoints the stakeholder group, surely it will say what the regulator wants it to say, so more independence could be built in there.
Olly Glover (Didcot and Wantage) (LD)
Q
Steve Gooding: Our starting point would be that the right sort of duties are applied to the ORR in the Bill, in terms of having regard to the interests of road users and customers of this service. Of course, there are certain things that the Bill provides for that we have not seen yet: we do not know what the terms of the licence will be, we do not know what the terms of the Secretary of State’s guidance to the ORR will be, and we do not know exactly the ORR’s template will be. I am well aware that there is always a balance to be struck between what goes into those documents and what could actually be in the Bill. In principle, I think that the protection is there, but in practice, it might be sensible to have a bit more in the Bill and a bit less reliance on the other documents—but until you see the drafts of the other documents, it is quite hard to tell.
Edmund King: Clause 26 talks about tolls being “fair and transparent”. I think that we would like to have seen something built in there about affordability, because they can be fair and transparent, but can people afford them? In effect, the lower Thames crossing and Dartford will have a monopoly position. If you want to cross the Thames to the east of London, they are your choices.
When the M6 toll first opened, it was rumoured that the tolls for HGVs were initially artificially high and that the operators did not particularly want HGVs to cause wear and tear on the toll. I think that question of affordability is important, and it goes beyond cost: if people cannot afford the toll, they will use other, inadequate roads or go the long way around the M25, which is already vastly congested near Heathrow. I think something about affordability should be built in—perhaps linked to inflation; something more—so that the monopoly position cannot be exploited.
Olly Glover
Let me make a brief comment. On your point about some of the things that are dependent on the Bill, such as the licence, not yet being specified, we had a similar debate during the passage of the Railways Bill through the Commons. I think the Government ultimately decided to at least start publishing some of those things alongside it, so I hope the Minister might give some thought to that.
Jim Dickson (Dartford) (Lab)
Q
One concern for them is that there might be perverse incentives via the tolling to use one crossing rather than another. Do you have views about how we could make sure that does not happen and what the ORR would need to do in negotiation with the licence holder? Do you have any views about local resident discount schemes, including how well they have worked elsewhere and whether they should be a necessary part of any future arrangement, although that may not be in the Bill?
Edmund King: Those are all relevant questions, even down to the time that the toll applies—is it 24 hours a day or 6 am to 10 pm, as it is currently? Are motorcycles free? What is the resident discount? Could there be a resident discount? We believe that there should be, because frequent users, such as those who live on one side of the crossing and work on the other, are already paying motoring tax in other ways, but is this a tax on jobs? Those issues are vital. It is also vital to get the support of local people, whether they be businesses or drivers. Giving those concessions would help win that support, particularly when we know that the construction period will cause a lot of congestion and adverse effects. Those are all valid points.
Steve Gooding: All I would add is that this is one of the challenges with creating an overarching framework in the Bill rather than something specific to the Dartford and lower Thames crossings. I do not doubt that in the Secretary of State’s guidance to the ORR, there will be explicit reference to the need not to create the sort of problems that you envisage and to set toll levels in such a way that manages the traffic flow between the two crossings, but we have not yet seen that.
Mike Reader (Northampton South) (Lab)
Q
Steve Gooding: I cannot point to anything else in the Government’s programme that specifically lends itself to that case. I have found myself wondering whether, having been announced and dis-announced many times, the Stonehenge tunnel might reappear under something like it as another key link on a longer arterial route, but I do not have a list.
Mike Reader
Q
Edmund King: I do not know whether there has to be independent regulation, but there should be a greater degree of independence alongside the ORR. The ORR to date has had much more to do with railways than roads. Yes, it is the overseeing body of National Highways, but I think five of the ORR executives are from railway backgrounds and two are from road. It needs to be strengthened there.
I still feel that there should be, alongside the ORR, an independent body that looks at things such as the level of tolls and feasibility. If drivers are going to be paying a higher toll to use these crossings, if a crossing is not working for some reason—for example, if there are roadworks or incidents that need clearing up—it should be a two-way process and drivers should get money back. If this really is an independent business model, it has to work both ways. Under this regulated model, you could push it a bit further to give that degree of independence. That might be through the stakeholder group and you would then change how it is reported, but I certainly think it would help.
Steve Gooding: The independence is of more importance on the other side of the equation. If the investment world does not have reassurance that tolls will be set at a level that enables it to remunerate its efficient cost, it will be more suspicious. As I have dealt with in my past, historically, the political pressure has been to keep the charges and tolls down. If anything, consumer pressure is greater politically than it is for the regulator. That is why it is important that the regulator has a clear duty on consumer protection, as Mr King and I are saying.
Mike Reader
Q
Steve Gooding: They will certainly want the income—there is no question about that. We are comparing it with the M6 toll—one of very few examples of this in this country—where there is an alternative, free-of-charge route. Here, the operating cost for commercial traffic to go around to the west of London, for example, would realistically make that a much less viable alternative.
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
Q
Steve Gooding: I worked at the ORR back in the day—
Alison Griffiths
I used to work at RAC.
Steve Gooding: As somebody who worked there, I think there are two key things: one is independence, and the other is capability. We are talking specifically about growing and making sure that the ORR has the requisite capability to undertake the tricky and, in a way, very public task of setting that. It would need to build that up. As you say, a lot of the expertise in the ORR today is on railways. Yes, that is engineering, construction and all that, but I would certainly like to see a significant strengthening in the capability of the ORR around some of the specific things about this project and its relationship with the existing crossing.
Edmund King: I agree. I believe the ORR is looking to bring in new skills, particularly in economic regulation and the broader issues, which will be needed. There are similarities between road and rail, but there are also differences and some of the consequences in regulation are quite different, so it will need to be beefed up.
Tristan Osborne (Chatham and Aylesford) (Lab)
Q
Secondly, this week, the Public Accounts Committee, which I sit on, released a report on the RAB model for Sizewell, which there are concerns about. Do you have a view on that model? I appreciate that you have indicated that the model will not be used elsewhere, but is there an educated view on whether an alternative model might have worked better?
Steve Gooding: On the first point, the Bill is not specific even to the Dartford crossing or the lower Thames crossing, so I do not think that it takes account of the other schemes we have talked about per se, other than in the general duty for the Secretary of State and ORR to consider the network as a whole. That has already been raised, but the Committee might want to probe it a bit further.
As for the RAB model, I can certainly see the logic, but one has to start with a decision that the Chancellor does not wish to borrow the money himself. If that is the case, in these circumstances, given where National Highways has got to already with contracting for the construction of the tunnel, this appears to be a sensible model, provided that lessons are learnt from past RAB projects. One of those is about the ability and capability of the regulator to do what it is being relied on to do.
Edmund King: One of the features of the RAB model that is quite hard to get your head around is that it is open ended. There is no finish date. On the M6 toll I know that it is a different private finance model, but it was given a 53-year concession. Under this model, in effect, the concession could be 100 or 120 years unless the licence is revoked. That is quite difficult to get your head around at first, because when you look at the Dartford crossing and the tolls going to the Treasury, this is totally changing the model. We have to be sure that the safeguards are there and built into the model. That is why I think toughening up and strengthening the Office of Rail and Road and bringing in a greater degree of independence is increasingly vital.
Dr Peter Prinsley (Bury St Edmunds and Stowmarket) (Lab)
Q
Steve Gooding: I hesitate to say what the price is going to be. I suspect it is going to be whatever it costs today to go across the Dartford crossing and some more. Given the anxiety that people quite rightly feel at the moment when looking at the cost of the lower Thames crossing, there must be a question whether it has to cost quite that much. Whatever further pressure can be applied, everything is going to flow from that initial estimate. How the RAB is valued over time will flow from the question of what it costs to build this thing. That is why it is so important at the outset that as much pressure is put on National Highways to keep the costs under control and preferably drive them down. That is what will affect things. Subsequently, some quite big bills will come in for the refurbishment and renewal of the existing bridge and tunnels. Keeping pressure on those is important and that is why, as we keep saying, the pressure from the regulator to press for the efficient cost is so important to the structure working.
Dr Prinsley
Q
Steve Gooding: It is very hard to write it into the Bill. However, there is absolutely the need to keep the pressure up. That is why we have the independent regulator—some entity that is effectively saying, “You can tell me whatever you like about the cost of this, but in my opinion, the efficient cost of it is x.”
In this model, particularly if we are talking about the lower Thames crossing, that first estimate will be derived from the National Highways model, obviously with ORR involvement, but it will not be quite the same as subsequent reviews where it will be entirely down to the ORR.
Edmund King: Currently the cost at Dartford is £3.50 for cars and £8.40 for heavy goods vehicles. It brings in about £130 million a year. If you do some back-of-the-envelope calculations, on a 120-year concession, that would bring in £15.6 billion. It is estimated that the scheme might cost £11 billion now. People accept that the £3.50 and it is affordable. I think it should be based on that figure with limits built in, whether linked to inflation or something else. It is vital that it is to be affordable for people, not just fair and transparent.
The Chair
That brings us to the end of the time allotted for the Committee to ask questions to this panel. On behalf of the Committee I thank our witnesses for their evidence.
Examination of Witnesses
Ben Garratt, Declan Pang and Michael Whelan gave evidence.
The Chair
We will now hear oral evidence from Logistics UK, the Road Haulage Association and M6toll. For this session we have until 12.45 pm. Will the witnesses briefly introduce themselves for the record, please?
Ben Garratt: I am Ben Garratt, interim director of policy and communications at Logistics UK.
Michael Whelan: I am Michael Whelan, general manager at M6toll.
Declan Pang: I am Declan Pang, director of policy at the Road Haulage Association.
Greg Smith
Q
Ben Garratt: It is a tricky question. What we know is that the current situation and reliance on the Dartford crossing costs the logistics sector, as well as other users of the crossing, a lot in terms of the congestion that comes from that. The cost of sitting in traffic is estimated at £200 million a year. That is based on the time sitting doing nothing, but does not take into account the wider cost to the logistics sector and supply chains of goods not arriving on time. It is just based on the wasted time of the driver. We also know that reliability, or lack of it, is a cost borne by the sector that is then passed on.
When we speak to our members, they tell us that what they want is a reliable transport system so they can factor in how much a job is going to take—how much time, how many drivers and what they should charge for it—and unreliability means it is much harder to do that. As a sector we potentially have more assets than we need to cover the same amount of ground, which is why it is really important for the sector that capacity increases and why we support, therefore, the delivery of the lower Thames crossing.
In terms of a breaking point it is quite tricky because the reason that the sector has a low margin—between 1% and 3%—is because it is a highly competitive sector. It is a feature of the sector rather than something we would say we complain about. It is because there are lots of logistics businesses all competing with each other to deliver the best price. When there are cost pressures on the sector over the medium to long term, it generally keeps that margin where it is, but it results in the overall cost being passed on to the public. Unless it is priced ludicrously, the risk is more about the overall cost being passed on to the public rather than it breaking the operators, as it were.
Greg Smith
Q
Ben Garratt: No, we do not. We would say that the inflationary impact is a balance between the direct input costs—paying a toll, fuel duty and taxes—and the indirect costs of congestion. As a sector, we want to keep those two things in balance, but one of the things that we do want is more investment in the transport network—road, rail and beyond—because some real hotspots are causing congestion and therefore passing the cost on. This is one of them, but it is not the only one.
We need to make sure that is in balance. We are not disputing building this particular crossing, but not building things in general has a cost in itself. It is about making sure that this is fair, and therefore about considering the different ways of paying for it. Traditionally, such things have been done under general taxation, which we all pay for, but given the fiscal situation, we as a sector are not against a toll approach, a private finance approach, for this particular crossing.
This crossing is one heavily used by the logistics sector. For us, it is a key part of the trading route between Scotland, the midlands and the north, and Europe; it is not simply an issue for the east of London, Essex and Kent. We want to see it happen and, as a sector, we are prepared to help pay for it. We just want to make sure that the toll takes into account the different vehicles, and that the different toll rates for different vehicles take the sector into account. The toll should not be based just on the weight of vehicle, and wear and tear; we need to take into account the economic value that the logistics sector provides to the rest of the country. Ultimately, we all pay for that in a way that is slightly different from other road users.
Greg Smith
Q
Declan Pang: The cost and affordability of toll rates is a significant concern for us. As you all know, the majority of those in the haulage sector are small and medium-sized enterprises. Small businesses, many of them microbusinesses, are the major users of the trunk road network, so their interests need to be front and centre of how toll rates are set. At the moment, we also have quite a fragile situation in the haulage sector—a particular rate of mergers and acquisitions, as well as a high rate of insolvencies—and that difficult climate has certainly been exacerbated by higher input costs and fuel costs. That should certainly be considered when the Bill is looked at.
In the Bill itself, we are particularly concerned about the affordability of tolls and the transparency of how those tolls will be set, as well as the wider impact of the financing model. We would very much like MPs to think about and look at how tolls will be calculated, how they might increase over time, and how the ORR, as the regulator, will assess the affordability of tolls, because we do not feel that that is clearly set out, as the Bill stands. Lots of concern is about whether the Government have plans to use the Bill powers to introduce tolls on roads that are currently free. We certainly seek additional assurances on that point from the Minister.
Greg Smith
Q
Declan Pang: Absolutely. The costs of constructing these schemes are essential in terms of reducing the level of tolls. We particularly think that the Bill as drafted is quite open ended in terms of the phrases it uses. As a previous witness said, affordability should be part of it, rather than just “fair and transparent”. We would like to see that included. We are very supportive of Jim Dickson’s amendment on the rates as well. We would like to see more consideration given to affordability for businesses.
Ben Garratt: I agree with everything Declan said. In the assurances space, clause 1 talks about the ORR having regard to economy. That also comes up in other clauses of the Bill. We would like assurances that that includes an understanding that freight and supply chains are a part of “economy”. It is quite a broad term otherwise.
Greg Smith
Q
Michael Whelan: Our specific interest in the Bill is part 7, which will enable us to introduce free-flow tolling. At the moment, on the M6 toll, we have barriers where you need to slow down, stop and pay. Part 7 of the Bill is the first step for us to enable free-flow tolling, which will help my freight and logistics friends sitting to either side of me—they will not have to slow down and stop. That has many benefits, including time savings. The M6 toll is a very reliable route compared with the alternatives, so it further increases that reliability through increased time savings. It will also mean reduced carbon dioxide emissions because of less stopping and starting.
Justin Madders
Q
Ben Garratt: The current situation lacks resilience. The sector uses the Dartford crossing, which crosses east of London, as a part of what I describe as a core route for the whole country; it connects Scotland and the north, the midlands, the south-east and Europe on that trading route, particularly in trading across the short straits, which handle more than half of all goods traded between Britain and mainland Europe. It is a really important part of the network to get right and it is currently overloaded. As we know, it is causing significant congestion, which adds costs. As you have noted, that is not simply an even matter of a busy road; it is also the crossing being closed to allow hazardous goods to cross, which everyone else has to wait for. That has a significant impact across the whole network. It is not sustainable.
That also takes into account the assumption that the crossing is broadly open all the time, but things will need repairing over their lifetime. Across the rest of the transport network, there is the structures fund and National Highways is focused on other structures that will need repairing at some point. We have a resilience challenge as well as a costs challenge because of that capacity issue.
Declan Pang: We absolutely need to increase the resilience of that particular route as well as the whole road network. Vehicle miles are increasing and congestion is forecast to increase, so this is a problem we have to get ahead of. That means making sure we can increase trunk road capacity.
Justin Madders
Q
Michael Whelan: I can only really talk about the M6 toll; I will not be broader than that. What our customers pay for—they choose to pay; there are alternatives they could choose—is reliability and travel time saving. Interestingly, we have recently seen that HGV growth on our road is up more than 50% compared with pre-covid numbers. That is predominantly because of the reliability that we offer. We have also found that the freight industry in particular finds savings in terms of lower fuel costs, time and making deliveries on time.
In terms of where toll money goes, we are 100% privately funded; we do not receive any funds from the Government. The money goes first of all to the Government. Like every other good law-abiding citizen, we have to pay our taxes and we do. Then it goes into maintenance, and because we are owned by pension funds, at the end of the day the residual money actually goes back into pension holders’ pockets. It is a cycle of pension investors cycling around the money. I hope that answers some of your questions.
Justin Madders
That is very helpful. I wonder whether the other two witnesses have anything to say from the other side of the road, so to speak.
Ben Garratt: It is a challenging calculation. Look at how much the logistics sector is currently paying to cross the Dartford crossing: it is about 40% of the road use but it is more because HGVs and larger vehicles pay more than that. We can assume they are paying over £100 million a year to cross it, as a rough calculation. The cost of congestion to drivers is about £200 million a year. We can add on to that—we do not have the numbers, but we know beyond that is the cost to wider supply chains and the cost of unreliability. We can make an assumption, thinking about the experience on the M6 toll, that the sector would rather pay up front for reliability than pay during the day for a lack of reliability, knowing that the costs for that are much bigger than the £200 million because of the impact across supply chains.
Declan Pang: The most important thing for our members is reliability. They want reliability and consistency of journey times. Congestion can be very unreliable, which drives a significant amount of cost into the supply chain, so that is, first and foremost, the most important consideration. Clearly, if we ended up in a situation in the future where we had multiple tolled routes, the cumulative impact of that situation would be deeply concerning to us, but I appreciate that the Bill is looking specifically at the lower Thames crossing.
Olly Glover
Q
Ben Garratt: There are features of the Bill about which we are not seeking amendment but seeking reassurances. For example, it must be ensured that there is a strong regulator for establishing the scheme and monitoring it going forward. That relates to the licensing conditions too. Therefore, we see value in there being a Bill setting a broad framework and including the regulator in that, rather than potentially doing things how they have been done in the past in the sense of having individual schemes. We would seek reassurances about the strength of the regulator in that space, and that it will think about freight and logistics when it thinks about economy.
We have heard from Michael about how the sector is voting with its feet—
Justin Madders
With its wheels.
Ben Garratt: With its wheels, indeed—in terms of using a toll road to improve reliability in that space. The risk of rolling this out to other roads was highlighted earlier. We would have concerns about that. That is why I mentioned that this is a particularly important route for UK trade. We would not want to see the powers in the Bill used to push out tolling much more generally without new capacity. There is language in the Bill about associating it with new capacity, and again, we would seek further ministerial reassurances that the Bill is focused on that and not widespread tolling.
Declan Pang: I would just add, in relation to the role of the ORR, the stakeholder group needs to be strengthened much more in terms of how it is described at the moment. There is no statutory requirement for a representative of freight and logistics to be in the group. Really, it is quite vague as to who would be sitting in it. In theory, you could have representatives from toll companies or from the DFT, for example, and exclude any industry or road users. Clearing that up and making the governance of that much clearer is vital. I agree with the previous witness who talked about having a more independent role for a stakeholder group, which would make it much more impartial.
Ben Garratt: We would concur with all of that.
Jacob Collier (Burton and Uttoxeter) (Lab)
Q
Ben Garratt: It may be that there is a market dynamic around the M6 that means it is working reasonably well, in that there is a good alternative route that is not always congested. I assume that Michael would feel that they are playing in a competitive environment. Logistics businesses, as we said, are often choosing to use it. It is a slightly different situation in other parts of the network when the current crossing is full a lot of the time, so it could be more of a distress purchase, let us say, to use the alternative route. Therefore it is important that it is regulated and that there is a role for the regulator in ensuring fairness, which the broader market might not necessarily apply in all parts of the network.
Declan Pang: The role of the regulator is certainly very important. As part of the process we need an independent element to that and to strengthen the role of the stakeholder group as an independent group.
On the specific aspects of the Bill that relate to toll amounts, clause 25 talks about classes of road vehicle in respect of which tolls are payable. We have some concerns about how that might impact different types of haulage operation and HGVs, which may disadvantage certain types of businesses. That is an example of something that we think needs to be a bit more consistent, given what we have with the M6 toll at the moment.
Alison Griffiths
Q
Michael Whelan: In terms of economic benefits, the best way to look at the M6 toll is to consider the fact that 50,000 vehicles use it every day. If it was not there, the M6 and surrounding network would be quite a mess. As a result of the M6 toll, we have seen significant investment into the region. Numerous businesses have invested in logistics sites up and down that corridor—for example, there is a massive Amazon site near us. That also creates jobs for the region. I will not go through it all; please refer to the pre-reading that I know you all have.
In terms of part 7 of the Bill, which we are specifically interested in, as we see it, as it is an existing road, the ORR regulations do not apply. If they were to apply, that would have a significant impact on our concession agreement, on investors and, in particular, on lenders, who have all invested into the roads. Having this conversation is important, but for us it is a separate issue.
Declan Pang: On the RAB model in particular, we are supportive of any measures that will be brought forward to increase road building and capacity, and efforts in that regard. We think that RAB gives some certainty to the market around providing investment opportunities.
In addition to my comments around the stakeholder group, the ORR has been heavily weighted towards rail regulation and currently has a much smaller role in highways monitoring. As a proportion of what it does as an organisation, its role from a roads perspective is smaller than the rail element, and that is probably reflected in its level of engagement with the sector as it stands. The Bill would reflect quite a significant change in its level of responsibility, and we would want to be sure about the capability and capacity for it to take on that responsibility.
Ben Garratt: I want to expand on something Michael said about the wider benefits. Understandably, the logistics sector invests where there is transport capacity and junctions, from where it can then access the rest of the country. Particular parts of the road and rail network have a lot of logistics clustered around them. It is also about having good journey times between large conurbations.
We can definitely see, in other parts of the country, what we would say is artificially less logistics investment than there should have been, because of transport constraints in parts of the network. It particularly affects the north-west, where it is more of a rail issue. A lack of capacity on the west coast main line leads to more modern logistics being clustered further south than maybe it otherwise would be. There is a real economic benefit for the country in getting the capacity right.
Jim Dickson
Q
Ben Garratt: I think it would inhibit economic growth. Thinking about the modal shift piece, using the right modes for the right kind of journeys in our logistics system is really important, but it is not simply about getting more off congested roads and more on to rail. Rail can play a particularly strong role, as you would understand, where there are railway tracks that connect to ports and are bringing in containers. As this area gets congested, I do not think that would automatically lead to the logistics sector switching to rail, because of the lack of rail connectivity.
It could, over time, lead to less use of the short straits and more use of container shipping but, really, those dynamics are shaped by where the goods are coming from in the world. It would largely just be a bottleneck. It would increase the costs, over time, of exporters connecting to new markets. The current situation will invariably be inhibiting businesses from thinking about going to export, because it has an effect on the costs. We want to see that resolved. In short, it would be bad for the economy if it did not happen.
Declan Pang: We are very much behind it and we are grateful for your efforts in campaigning for it. We are pleased to see that the development consent order was approved. It is already having a significant impact on the economy, given the level of congestion. It is vital that we get it delivered.
Jim Dickson
Q
Michael Whelan: We fully support that and are looking at it as an industry—some operators of toll roads have come together to discuss that. Having one account makes a lot of sense, particularly for freight and logistics organisations. On top of that, interoperability can be expanded into other things, such as signage. Anywhere else in the world, toll roads will have a unique colour or symbol. That is important, because it helps to make sure there is some consistency and knowledge for the customer of what they are approaching, such as about when to pay. When it comes to free-flow tolling, it is important that people understand in advance what the rules are. Hence, we fully support part 7, with some minor amendments that we would like to see to clauses 92 to 94. Those are outlined in the pre-reading, but I think we might have run out of time to go through them now.
Douglas Lumsden (Aberdeen South) (Con)
Q
Michael Whelan: We have done that. About two and a half years ago we put in place a new toll system—we spent £20 million on it—and that enabled us to introduce new toll pricing. We reduced prices for locals to £4, and we have held that there for the two and a half years. We have not increased it. That is something we are conscious of and have actively looked at, as well as having new products, some with discounts and some without. Interestingly, the account product that does not have a discount is our most popular one.
Douglas Lumsden
Q
Michael Whelan: It provides an easier way to get a receipt. It also provides the ability to drive through what we call our breeze lanes, on which the gates will open automatically if your account is in good status.
Douglas Lumsden
Q
Ben Garratt: Our sense is that the way in which the Bill is drafted is relatively strong. That is why we are seeking assurances on the record, rather than amendments. We do not want it to be used as a Trojan horse to spread this across the country, but there is a particular case for it on this particular route. Given the wording at the moment, to have assurances would be proportionate.
Douglas Lumsden
Q
Ben Garratt: Again, it would be good to get an assurance that that will not be the case, but that is not our reading of the Bill at the moment. That does not mean that others could not interpret it differently at some point, when looking at it in the future. That is why we are seeking a strong assurance that this is about adding actual new trunk road capacity and not doing things like what you just said.
Douglas Lumsden
Q
Declan Pang: We are concerned about how the Bill could be applied to introduce tolls. We want greater reassurances from the Department about that. Clause 81 in particular gives the Secretary of State the power to direct any road to be made a trunk road, so we are concerned about what could be brought into scope. We want greater reassurances.
The Chair
That brings us to the end of the time allotted. On behalf of the Committee, I thank our witnesses for their evidence.
Examination of Witness
Ralph Smyth gave evidence.
The Chair
We will now hear oral evidence from Transport Action Network. We have until 1 pm for this session. Will the witness briefly introduce themselves for the record?
Ralph Smyth: My name is Ralph Smyth and I am here on behalf of Transport Action Network. I have about 15 years’ experience, including influencing the Infrastructure Act 2015 and serving on the National Highways strategic design panel and seeing some of the schemes that we are discussing today, as well as working on road freight decarbonisation projects.
Greg Smith
Q
Ralph Smyth: It is a very good question. I point first to the second national infrastructure assessment, which was published three years ago. That said that by the end of 2026—so where we are now—the Government should publish an integrated strategy for road and rail. If you can see how you are going to improve the rail links and the road links, that would join up better and give confidence about where there should or should not be, for example, a change to the roads.
The other dimension is the local angle. We have heard recently in the media about how mayors might be given more of a say on water, for example, but the Bill goes in the opposite direction. It actually weakens or removes the mayoral input on transport. Transport has been the totemic issue of devolution and, oddly, the Bill removes that. A special new category of highway is created that is not subject to something called the network management duty, which is about joining things up in long-term planning and in short-term operations, such as where there is disruption. My concern is that for some of the schemes talked about, like the lower Thames crossing, it is going to be difficult to attract the private sector to invest without making it easier—for example, without reducing the risk of mayors getting in the way or trying to promote a railway line that would actually abstract some of the traffic.
Greg Smith
Q
Ralph Smyth: I would not want to leave out the rural areas where there are perhaps not mayors.
Greg Smith
Absolutely right—do not leave the rural areas out.
Ralph Smyth: Quite. The problem is the bigger context and the discussion about rewiring the state. That is talking about removing consultation, so simply a duty to consult to give your views might not be worth much.
The problem is that it needs to make economic sense for the investors. The M6 toll did not make a profit for 20 years. You are going to have to tilt this, particularly for very big schemes like the LTC, to make it attractive for investors, and that could mean making things less affordable for drivers and there being less involvement for mayors, despite transport being one of their big issues.
Greg Smith
Q
Ralph Smyth: The tipping point depends on the sector and the type of journey. For discretionary journeys, like seeing a relative, a sudden increase in toll might have an impact quite quickly. If you are commuting and doing the same journey every day or if a haulage firm is doing the same routes, it might take longer for a response to happen. As we are talking about tipping points, I will also talk about climate change, because some figures from the Environment Agency have shown that by 2050—not long after some of these roads might be built—about half the UK transport network will flood regularly. That obviously means a lot of disruption and a lot of increased costs for the operator or owner of the assets. Those things will also affect, given where we are going, our use of roads, railways and everything else.
Greg Smith
I am mindful that this is a shorter session, so I will stop there.
Justin Madders
Q
Ralph Smyth: That is correct, yes. It is almost like an area that devolution has forgotten. We hear about the importance of roads; we heard about that from the previous witnesses, so it does appear a bit odd that there is not much there. One thing is that currently there is a duty, whether you are a local highway authority—county councils and so on—or the strategic highways authority, which is National Highways at the moment, to co-operate, but this Bill will create a new type of private highway authority and it will not join up. Some of the schemes that have seen funding withdrawn in road investment strategy 3 are very close to urban areas, and if they were funded via this route, that would not be an integrated approach and would be very different from what we are hearing about for the railways, where the Government have talked about the need for a single guiding mind.
Olly Glover
Q
Ralph Smyth: Very much so. There is the issue of crowding out. If there is certainty that there is going to be a road scheme, that makes it harder for a mayor or someone else to promote an alternative, such as a tram or a rail or bus upgrade. After this meeting, I am taking part in the mass transit taskforce, where perhaps those issues will come up.
Mike Reader
Q
Ralph Smyth: We heard a lot about regulation in the previous session. If you look at Ofwat and Ofgem, their income comes from lots of different companies. Whatever you might think of some of the water companies, at least that means diversity of income. You can compare that with the ORR. With nationalisation, now—or soon—all the money will be coming from the Department for Transport. It is similar for much of the road function. That is about National Highways. We are talking about only a very small bit if there is going to be only one toll scheme. If you put yourself in the shoes of an investor, would you be confident that that was an independent regulator if pretty much all its business came from one person—the Secretary of State for Transport?
Mike Reader
Q
Ralph Smyth: I am not sure how much difference there is. The problem is that if you build an expensive road scheme with a regulated model, you can want to make it affordable, but at the end of the day, there will need to be a return for the private investor. There is the theory and then there is the reality that this is not a way of creating new money. It is either going to be paid out of public funds or, if it is going to be a regulated system—as other witnesses have said, many of the roads do not have alternatives, but it is hard to see how a regulator can really make much difference.
Mike Reader
Q
Ralph Smyth: On investor certainty, the problem is that that assumes that traffic will keep growing, but, as I covered in the written evidence TAN submitted to the Committee, the latest ONS forecasts say that from about 2055, the population of the UK will be going down. I heard the Minister say that demand will only increase, but if demand starts to go down, it is a very different picture. That will mean that each user will have to pay more per journey, so it could lock you into higher, unaffordable charges.
Jim Dickson
Q
Ralph Smyth: I may struggle to persuade you on this within the 15 minutes allotted.
Jim Dickson
Give us a summary.
Ralph Smyth: I was interested to hear other witnesses say that if it was not built, it might mean a shift in some of the trade routes to help to rebalance away from the overheated south-east. If you want to read more, there is a report by TAN on what the alternatives are. I would be happy to send that to the Committee, if it would be helpful.
The Chair
As there are no further questions from Members, I thank Mr Smyth for his evidence. That brings us to the end of this morning’s sitting.
Ordered, That further consideration be now adjourned. —(Michael Wheeler.)
Immigration and Asylum Bill (Thirteenth sitting)
Thursday 29th October 2026
(1 day, 13 hours ago)
Public Bill CommitteesRead Full debate Immigration and Asylum Bill 2026-27 View all Immigration and Asylum Bill 2026-27 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 29 October 2026 - (29 Oct 2026)
The Committee divided: - Ayes: 2 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 2 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 11 - Question accordingly negatived.
The Chair
We are now sitting in public and the proceedings are being broadcast. Today we will continue line-by-line scrutiny of the Immigration and Asylum Bill. Before we begin, I remind Members to switch off electronic devices or put them on silent. Tea and coffee are not allowed in sittings. The selection list for today’s sitting is available in the room and on the parliamentary website. It shows how the clauses, schedules and selected amendments have been grouped for debate. Members are reminded to bob and catch my eye if they wish to speak in any debate.
New Clause 35
Core protection: protection claims and protection status
“(1) This section applies for the purposes of the Immigration Acts.
(2) A protection claim means a claim made by a person that to remove them from or require them to leave the United Kingdom—
(a) would breach the United Kingdom’s obligations under the Refugee Convention, or
(b) would otherwise cause them to face a real risk of suffering serious harm in their country of nationality (or, where they do not have a nationality, the country of their former habitual residence), in circumstances where they would be unable or, owing to such risk, unwilling to avail themselves of the protection of that country.
(3) For the purposes of subsection (2)(b), serious harm means—
(a) the death penalty or execution,
(b) unlawful killing,
(c) torture or inhuman or degrading treatment or punishment, or
(d) serious and individual threat to a civilian’s life by reason of indiscriminate violence in situations of international or internal armed conflict,
which is inflicted by an actor of serious harm mentioned in subsection (4).
(4) The actors of serious harm are—
(a) the State;
(b) any party or organisation controlling the State or a substantial part of the territory of the State;
(c) any non-State actor, if it can be demonstrated that the actors mentioned in paragraphs (a) and (b), including any international organisation, are unable or unwilling to provide reasonable protection against the serious harm.
(5) The Secretary of State may refuse a protection claim under subsection (2)(b) on the grounds mentioned in Article 1F or Article 33(2) of the Refugee Convention (commission of crimes etc).
(6) A person qualifies for protection status if they would be able to make a successful protection claim; and a person has protection status if the Secretary of State has decided to allow a protection claim made by the person.
(7) The Secretary of State may revoke a person’s protection status.
(8) The Refugee Convention means the Convention relating to the Status of Refugees done at Geneva on 28 July 1951 and its Protocol.”.—(Anna Turley.)
This new clause, together with the clause inserted by NC36 and the Schedule inserted by NS1 would replace clause 21. This new clause and the provision in the new Schedule aim to set out on the face of the Bill the provision that would otherwise have been made under the power in clause 21.
Brought up, read the First and Second time, and added to the Bill.
New Clause 36
Core protection: amendments
“(1) Schedule (Core protection: amendments) contains amendments that are consequential on or otherwise related to section (Core protection: protection claims and protection status).
(2) The Secretary of State may by regulations make further provision that is consequential on or otherwise related to section (Core protection: protection claims and protection status).
(3) Regulations under subsection (2) may in particular—
(a) amend any legislation so as to change references to human rights claims or asylum claims to references to protection claims;
(b) insert, amend or remove references in any legislation to ‘protection status’, ‘protection claim’, ‘human rights claim’, ‘asylum’, ‘refugee’, ‘humanitarian protection’ or any related terms;
(c) confer rights and impose obligations or requirements on any person (including the Secretary of State) in relation to a protection claim or protection status.
(4) Regulations under subsection (2) may amend, repeal or revoke provision made by primary legislation passed—
(a) before this Act, or
(b) later in the same session of Parliament as this Act,
(as well as amending or revoking provision made under such primary legislation).
(5) In this section ‘primary legislation’ means—
(a) an Act,
(b) an Act or Measure of Senedd Cymru,
(c) an Act of the Scottish Parliament, or
(d) Northern Ireland legislation.”.—(Anna Turley.)
This new clause introduces the Schedule of amendments which are consequential on, or otherwise related to, the new definitions of protection claim and protection status in the new clause inserted by NC35. It also gives a power to the Secretary of State to make further consequential and related amendments, including to primary legislation.
Brought up, read the First and Second time, and added to the Bill.
New Clause 6
Negotiations on UK participation in the EU Migration and Asylum Pact
“(1) The Secretary of State must, within three months of the passing of this Act, commence negotiations with the European Union and any such other relevant authority with a view to the United Kingdom’s entry into the European Union’s Pact on Migration and Asylum.
(2) The Secretary of State must lay before Parliament a report on the progress of negotiations under subsection (1)—
(a) within one month of their commencement, and
(b) every six months thereafter until negotiations conclude.”.—(Mr Paul Kohler.)
This new clause would require the Government to open negotiations with the EU on UK participation in the EU's Migration and Asylum Pact.
Brought up, and read the First time.
Mr Paul Kohler (Wimbledon) (LD)
I beg to move, That the clause be read a Second time.
It is an honour to serve under your chairship, Mr Stuart. The new clause would require the Government to open negotiations with the European Union on UK participation in the EU’s migration and asylum pact.
Dangerous small boat crossings were sporadic and rare before Brexit. In diverging from European immigration policy, we have weakened our ability to deal with this crisis. We removed the deterrent of collective enforcement and lost access to the Eurodac biometric database. Being outside the EU is the single biggest pull factor driving this crisis. Failed asylum seekers in the EU know that the UK is a second bite at the cherry, because without access to the EU’s biometric database, we have no idea who they are or whether they have already been refused asylum by our neighbours.
Without a watertight returns agreement, we have no way to send asylum seekers back to the safe countries they passed through before arriving in the UK. A report by the Migration Observatory at the University of Oxford found that, in interviews, migrants in northern France often cite the departure from the Dublin accord as a reason for wanting to seek asylum in the UK, particularly if they have already been refused protection in the EU.
Chris Philp admitted in a leaked audio recording that just before the Conservative Government exited the EU transitional arrangements, his Conservative colleagues realised that Brexit meant losing the Dublin agreement—
The Chair
Order. The hon. Gentleman has been here for some time. As he will be aware, we refer to colleagues by their constituency seat, not by name.
Mr Kohler
I apologise. The right hon. Member for Croydon South (Chris Philp) said that they realised they could no longer
“rely on sending people back to the place where they first claimed asylum”.
In spite of the Home Secretary’s statements to the contrary in the recent Home Affairs Committee evidence session, the Prime Minister was quoted in The Times as saying
“the small boats crisis has arisen in the last 10 years because we lost that returns agreement”.
There seems to be a belated admission—in No. 10, at least, if not in the Home Office—that Brexit has exacerbated the problem of illegal immigration to this country.
We cannot continue to be on the outside looking in. The security needs of our border demand closer alignment with Europe.
The Home Secretary has signalled her desire to negotiate access to the Eurodac database, and we are asking the Government to go further in working with our European neighbours by joining the migration and asylum pact. Our new clause would mandate negotiations to join the pact, so that we can share the benefits of European collaboration on immigration. Although Border Force has had some success in reducing dangerous crossings, there will always be a market for criminal gangs to exploit unless we join the EU’s comprehensive framework. Does the Minister acknowledge the potential for the migration and asylum pact to deliver more effective border security, or was the Prime Minister wrong to draw attention to the negative impacts of Brexit?
Blake Stephenson (Mid Bedfordshire) (Con)
It is a pleasure to serve under your chairship, Mr Stuart.
New clause 6 would require the Government to start negotiations to join the EU pact on migration and asylum within three months. Committee Members should not be surprised to hear that the official Opposition oppose this new clause. The hon. Member for Wimbledon spoke at length about the returns agreement, but it is not simply a returns agreement. At its heart is a so-called solidarity mechanism, under which member states either accept asylum seekers relocated from other states or pay contributions instead. Joining it would mean the United Kingdom accepting people we did not choose, under rules we did not write, ultimately subject to the European Court of Justice. That is the opposite of taking back control.
The Conservative borders plan takes a completely different approach. We would ban asylum claims by people who enter the country illegally and remove them within a week. We would seek returns agreements with countries of origin, backed by visa sanctions on those that refuse to take their nationals back, and we would support our allies in Europe to stop illegal entry with intelligence, policing and maritime resources. That is co-operation, and it does not require us to hand control of our asylum system to Brussels.
The Liberal Democrats have shown clearly during this Committee that they are not capable of being serious about controlling immigration. They will say that the pact will let us return people to the EU, but the price is relocation quotas and EU jurisdiction, and the evidence from the pact so far is that returns between member states remain very limited indeed. I hope the Minister will confirm today that the Government have absolutely no intention of seeking to join the pact or its solidarity mechanism.
The Minister for Border Security and Asylum (Anna Turley)
It is a pleasure to see you back in the Chair, Mr Stuart. I thank hon. Members for tabling the new clause and for their thoughtful contributions to the debate.
I agree with the hon. Member for Wimbledon that deeper international co-operation is important. That is why the Home Secretary is in regular contact with her counterparts across Europe, including in France, Germany and Belgium, and we are continuing to establish a more comprehensive relationship with Europe as a whole. However, I remind him that irregular migration is not an issue limited to EU nation states. That is why we as a Government are looking even wider and being even more ambitious: not only tackling the issue when it emerges within European territories, but working upstream to prevent the vile trade of organised immigration crime in the first place.
For example, in August 2025 we signed an agreement with Iraq to bolster efforts to deter small boat arrivals. In October 2025, we signed an agreement with Vietnam to crack down on illegal migration and increase returns. In August this year, we signed a migration partnership with Egypt, which will continue to bear down on illegal migration and cut the time needed to return Egyptian nationals with no right to be in the UK by 90%. Those are just some examples of the importance of that broader co-operation and partnership. My hon. Friend the Minister for Migration and Citizenship also attended this year’s Berlin process meeting of Interior Ministers in Montenegro in September. It was a fantastic opportunity to strengthen international police co-operation and develop a joint response to cross-border security challenges not only with our EU counterparts but with representatives from the western Balkans.
I agree that international co-operation is an essential strand of our overarching strategy to tackle illegal migration, and one that I am keen to highlight is bearing fruit. As hon. Members will know—I will say it again, just for the record—small boat arrivals have decreased by more than 40% compared with this point last year. I am not claiming that the job is done—far from it—but we are taking a holistic approach to this issue, of which the Bill is one part. However, the Government will not support the new clause.
I want to pick up on a couple of the points the hon. Member for Wimbledon raised about the impact on returns and about Eurodac. We continue to work with our European partners on the shared challenge, including on returns, but joining the pact would not guarantee increased returns, and our focus is on practical co-operation that delivers real returns outcomes.
Eurodac is a matter for the EU, not a unilateral UK decision. Eurodac is one example of a pact measure where our participation is not legally possible without EU agreement, and the Eurodac legislation makes that clear. Access to asylum data could, of course, help identify individuals who have previously claimed protection in an EU member state before travelling to the UK, but it is for the EU to decide whether it wishes to extend access to third countries. In the meantime, we are strengthening practical co-operation with European partners, including through intelligence sharing and our observer status in the European Migration Network, which delivered on a key PM commitment from the UK-EU summit, and I will come on to say a bit more about the work we are doing on that.
Going back to the new clause, participation is not a straightforward proposition. The pact is not a single agreement that third countries can simply choose to join. It is complex collection of EU legislative measures, many of which are designed specifically for EU member states and Schengen countries. There is no established model for third-country participation, so any form of UK participation would require agreement from the EU and significant EU and operational change before extensive negotiations could commence. The pact is still being implemented across the EU and has been in application only since June this year. Member states are working to implement it, with the EU rightly focused on making it work for its own member states. That is a significant challenge, particularly for frontline countries that are facing the greatest migration pressures.
Anna Turley
I would not want to get ahead of the discussions that my right hon. Friend the Home Secretary and others will be having at that summit. The hon. Gentleman will know that the Government are clear that greater co-operation and international partnership are crucial for us to manage the big global challenges that we face of immigration, migration and illegal migration. We believe that co-operation is the solution, not the problem, but it is about making sure that we do that in the right way that works for this country within our sovereign powers.
We should also recognise that irregular migration still existed while the UK was part of the EU. Closer co-operation with our European partners is important, but experience shows that no single agreement or institutional framework can solve this challenge on its own. Under previous Dublin arrangements when in the EU, the UK become a net recipient of transfers between EU member states, as the hon. Member for Mid Bedfordshire mentioned, largely as a result of family reunification provisions, so we cannot pretend that UK participation in EU frameworks solves all migration challenges.
However, we will of course continue to work closely with our European partners. As I have said, illegal migration is a shared challenge, and co-operation is essential, but it would be a mistake to suggest that simply signing up to the pact would provide a quick or automatic solution. There is no silver bullet, and I am afraid that the new clause is unworkable in practice. It would require the Government to open negotiations with the European Union, but Parliament cannot legislate for the EU to agree to such negotiations with us. Whether discussions take place, and on what basis, ultimately depends on both parties and is not for the UK to unilaterally dictate. It is therefore right that the UK retains the flexibility to pursue the forms of co-operation that best serve our national interest and respond to rapidly evolving migration challenges.
The Government’s approach is clear: we will pursue practical co-operation with European partners wherever it advances the UK’s interests and delivers operational results. As the Prime Minister set out, we are already working with the EU to strengthen co-operation on migration, border security, data sharing and tackling the criminal gangs that profit from human misery. Our objective is not to focus on a single mechanism but to build a stronger and more effective long-term partnership with the EU on shared challenges, including illegal migration. That builds on the progress we have already made since the UK-EU summit in 2025, and I am looking forward to further partnership and co-operation with this year’s summit. For those reasons, we do not believe that the new clause is necessary, and I ask the Committee to reject it.
Mr Kohler
I am saddened by the responses from both the Minister and the hon. Member for Mid Bedfordshire, who do not see that this is a collective problem that we must work on collectively to address. Beginning negotiations would help us to start that process and to not sit in isolation, as we do now. I will press the new clause to a vote, because it is important to make it clear that we think the Government should be negotiating with the EU. The Prime Minister says that he wants to negotiate on many issues. This is a particularly important issue and, let us remember, one that was caused by Brexit, as the Prime Minister has admitted. It is also one that can be solved by closer collaboration with Europe.
Mr Kohler
I beg to move, That the clause be read a Second time.
I was grateful to the Minister for her comprehensive response on the previous new clause, even though she did not agree with me. I hope new clause 7 will help her to address the evidential issues she referred to and examine whether entering the pact would be more sensible for the UK.
The new clause would require the Government to conduct an annual cost-benefit analysis of the UK’s bilateral immigration and asylum agreements and arrangements. The assessment would consider the costs and outcomes of each arrangement against the cost of the UK’s participation in the EU’s migration and asylum pact.
Melanie Onn (Great Grimsby and Cleethorpes) (Lab)
How much does the hon. Member think that undertaking an annual cost-benefit analysis would cost, given that we are outside the EU, and who would bear that cost?
Mr Kohler
I think we all believe in evidence-based policy making, and we need to do things such as cost-benefit analysis. To argue that one cannot do a cost-benefit analysis before making any policy change is not a solution; it ends up meaning that we just guess. We have to actually plan policy.
Leigh Ingham (Stafford) (Lab)
The hon. Member said that he believes in making evidence-based decisions, but he is unable to say what it would cost to make this change. If that is his belief, can he explain what the cost of the new clause would be?
Tom Gordon (Harrogate and Knaresborough) (LD)
Does my hon. Friend not find it a bit rich that Members of the governing party are talking about the cost of a cost-benefit analysis, when earlier clauses and amendments—such as on the implementation of a new training scheme and getting people up to speed—have already been included in the Bill, with no assurances from the Minister about exactly how much they will cost?
Joe Robertson (Isle of Wight East) (Con)
I agree that the Government quite like cost-benefit analysis. Perhaps they could do a cost-benefit analysis of the hon. Member’s proposal for a cost-benefit analysis before deciding whether to support it. That is just a suggestion.
Melanie Onn
There is a serious point here, but I also recall the hon. Member schooling all of us in this Committee on the importance of interrogating line by line, rather than giving grand, broad political speeches. I am simply asking how much he thinks his proposal would cost. He has brought it to the Committee for us to consider, and that is a reasonable question.
Mr Kohler
The hon. Member is simply repeating herself and taking party political positions. The Bill has many policy positions and clauses without cost-benefit analyses. The Liberal Democrats believe in evidence-based politics. I realise that Labour Members simply like to take positions that look good to the red wall, but we are actually trying to move things forward.
Melanie Onn
I take the hon. Member’s point about other clauses in the Bill. Has he at any point queried or questioned the Government about the costs, given that he is part of the Opposition?
Mr Kohler
We are trying to push forward a cost-benefit analysis. As I said in my first intervention in this Committee, we do not use Committee stage well when we sit like this—pretending we are in the Chamber—and get into party political arguments with each other. The House should address how we use Committee. We should sit as a Committee, discuss things and really enter into line-by-line scrutiny. I have covered that before, so I will not bore the hon. Lady with it any more.
I have now utterly forgotten where I had got to, so I will start again. In fact, I had not yet said this bit, and it will goad the official Opposition even more, I suspect: the Liberal Democrats enjoy talking about the European Union. We make no secret of the fact that closer relations with the bloc would go a long way to resolving the small boats crisis and illegal immigration. However, it should not be a question of ideology or party political posturing; it must be a question of what works and how much it costs. The Government talk about reducing pull factors for migrants, but they seem unwilling to face the realities. Ensuring a coherent international approach to irregular migration is the single most powerful weapon that the Government could utilise to reduce the pull factor. I suspect that Government Members secretly agree with that.
I understand the Minister’s reticence about new clause 6, but understanding the costs of joining the migration and asylum pact would enable us to do a value-for-money comparison with the current bilateral deals that the Government have made and are negotiating.
Mr Paul Foster (South Ribble) (Lab)
The hon. Member’s new clause proposes a cost-benefit analysis of each bilateral immigration and asylum agreement or arrangement in force. How many individual agreements are we are talking about?
Mr Kohler
I will start with one: since Brexit, the Government have spent more than £1 billion on the agreement with France. We do not yet know the costs of intelligence sharing with Belgium, so I cannot give an answer on that. However, those deals fail to recognise that people who seek asylum are desperate. Sadly, making the French coast a more difficult place from which to embark pushes asylum seekers towards longer, more dangerous routes. Small boat departures from Belgium used to be rare, but that has changed since the start of 2026. There were 32 attempts to launch small boats from Belgium between January and April of this year, of which five were prevented. In comparison, there were just two launch attempts in the whole of 2025. We believe that agreeing a deal with the entire bloc would be more effective in preventing dangerous small boat crossings, by implementing a deterrent that encompasses all of Europe.
I take the Minister’s point, however. We do need some evidence, which is why the Liberal Democrats suggest a cost-benefit analysis. New clause 7 calls on the Home Secretary to undertake a cost-benefit analysis of bilateral arrangements, to compare their costs with the estimated costs of joining the pact. Does the Minister acknowledge the benefits that that information could yield? Hon. Members have shown that they are interested in the answer, so let us give them the answer. I would like to hear what the Minister thinks.
Blake Stephenson
I was surprised to hear the hon. Member for Wimbledon be so supportive of rejoining the EU—I think we have all learned something this morning. We have also learned that the Liberal Democrats feel that that would be a silver bullet to fix all these issues. Yet still the hon. Member comes forward to ask for a cost-benefit analysis to prove it. His statutory duty to benchmark every bilateral agreement against the EU pact is designed to build a case for joining the pact, not to improve returns, and for that reason, the Conservatives oppose it.
Anna Turley
I am grateful to the hon. Member for Wimbledon for his new clause. I understand the case that he is trying to make. He is trying to build his evidence base to persuade us to join the EU pact, but, despite his earlier efforts, I am afraid we will not support his new clause.
We agree that migration co-operation should deliver clear operational benefits, represent value for money and be subject to appropriate scrutiny. Indeed, that is already the case. Relevant spending and significant proposals are assessed under the established appraisal, assurance and accounting officer requirements. Ministers rightly expect officials to demonstrate that policies are deliverable, affordable and capable of achieving their intended objectives. I remind colleagues that we have already published an impact assessment for the Bill. I appreciate that there are details still to be refined, but colleagues will find in the impact assessment information that I hope will support their understanding of the Bill.
I want to be clear that the value of migration co-operation is complex. Some agreements help to deter irregular migration, and some help to change behaviour and prevent dangerous journeys from happening in the first place. Those benefits can sometimes be difficult to measure directly, but they are no less important when considering the overall value of an agreement. Equally, the Government are not lacking in transparency. We regularly publish information on major migration partnerships—for example, we have published details of UK-France co-operation under the broader framework of the Sandhurst treaty and subsequent agreements, including funding commitments, operational activity and strategic objectives. UK-France co-operation is also subject to regular strategic review by the French Government and the UK Government.
The hon. Gentleman’s new clause goes considerably further, however. It would require the Government to publish an annual assessment comparing our existing bilateral migration agreements against a wholly hypothetical model of UK participation in the EU migration and asylum pact. We do not believe that that is a sensible or proportionate requirement. The pact is an internal EU framework comprising 10 separate legislative measures. The UK is not seeking to participate in it, and there is no established mechanism through which non-EU, non-Schengen countries such as the UK can do so.
That means that there is no settled understanding of what the legal route to participation might be, what obligations it might entail, what operational arrangements would be required, or indeed, as my hon. Friend the Member for Great Grimsby and Cleethorpes said, what costs might arise, yet the new clause would require the Government to produce an annual assessment based on assumptions and theories about all those issues, about which we would have no information. Any such exercise would be inherently speculative. It would require officials to assess a theoretical arrangement that does not exist, using assumptions that cannot be verified and for which there is no established evidence base.
The new clause also appears to rest on the assumption that participation in the pact would somehow replace the UK’s existing network of bilateral migration arrangements and partnerships. There is no reason to believe that that would be the case. EU member states, operating within the EU’s common asylum and migration framework, continue to maintain bilateral arrangements with third countries to support returns, migration management and broader co-operation. The need to engage directly with countries of origin and transit does not disappear because a country participates in the EU system.
At the same time, many of our migration partnerships are about far more than asylum processing or returns. They sit within broader bilateral relationships, helping us to tackle migration pressures at source, disrupt organised immigration crime, strengthen returns co-operation and support wider foreign policy objectives. Participation in the pact would not remove the need for many of the agreements that the new clause seeks to assess. In practice, the UK could find itself maintaining a significant proportion of its existing partnerships, while also incurring additional costs associated with participation in the pact itself.
The new clause also takes no account of the cost of pursuing that proposed participation. As I have already highlighted, negotiating any bespoke arrangement with the EU would require significant official resource, extensive discussions with EU institutions and member states, and potentially substantial legislative and operational change. At the same time, the pact is still being implemented across Europe. Its impacts, costs and benefits are still emerging, and it will take time before there is a clear and reliable evidence base from which lessons can be drawn.
Against that backdrop, requiring officials to construct and maintain an annual assessment of theoretical policy that the Government are not pursuing would not represent good value for money. As I said—and I hope the hon. Member for Wimbledon understands my values and intentions here—the Government are committed to deeper co-operation with European partners on tackling illegal migration. As the hon. Gentleman mentioned, the Prime Minister has set out that Europe is our neighbour and that stronger co-operation with our European partners is essential to tackling these shared challenges. That is why we will be using our engagement with the EU, including the forthcoming summit on 20 November, to pursue practical co-operation on border security, organised immigration crime and improved information and data-sharing, where that supports our national interest. However, none of that requires participation in the pact. We reject the suggestion that joining the pact is the only route, or the necessary route, to achieving these objectives. Our focus is on practical co-operation that delivers results, not a hypothetical arrangement whose terms, costs and obligations cannot be known. For those reasons—
Melanie Onn
I am sorry for interrupting the Minister’s flow. Does she recognise that we have managed various agreements with the EU without signing up to various pacts?
Anna Turley
The hon. Lady is absolutely right, and we are proud of those arrangements. The hon. Member for Wimbledon referenced agreements with Belgium; we are co-operating with all our partners on the frontline of illegal migration.
Anna Turley
I think the number is around 1,200, but I would have to check the exact figures. That deal was a really important opportunity to pilot the idea of safe and legal routes. We learned a lot from that pilot, and it was disappointing that it could not continue, but we are taking what we learned from it further in our discussions and conversations with other countries.
Mr Kohler
Does that not show that these bilateral arrangements are not sufficient and we need a collective approach? That deal cost a lot of money, but not many people went back via that route. We need to take a collective approach to this issue, because the problem is shared across Europe.
Anna Turley
I disagree with much of what the hon. Gentleman has said today, but he is right on that point. There is opportunity for broader co-operation on many of these fronts, which is why we will continue to explore co-operation. However, signing up to these restrictive pacts would limit that opportunity. I think we have the best of all worlds here: not only can we have direct negotiations with other countries, but we can scale up things such as the one in, one out deal when we think there is potential to do so with other countries. On that note—
Blake Stephenson
I caught the Minister just in time. She described the one in, one out scheme as a “pilot”. I do not recall it ever being described as a pilot when it was launched. Can she unpack what the expectations were, what was delivered and why the scheme has been cancelled?
Anna Turley
I will abide by the Chair’s ruling, but I am happy to pick that up with the hon. Member later and send him plenty of information backing up the statement that it was a temporary arrangement.
On that note, I will not detain the Committee any further. I respectfully ask the hon. Member for Wimbledon not to press the new clause to a vote.
Mr Kohler
The Dublin accord—our previous arrangement, when we were in the EU—was a success. As the right hon. Member for Croydon South made clear, the previous Conservative Government did not realise until the last moment the problems that would be caused by no longer being in the Dublin accord after Brexit. The Minister is right to say the accord’s successor is only just starting—I understand that—but at some point we must make a decision on whether to join it. A cost-benefit analysis would surely be useful. We will again press the new clause to a vote.
Question put, That the clause be read a Second time.
Mr Kohler
I beg to move, That the clause be read a Second time.
The new clause would establish a new Department for immigration and border security, transferring the immigration, asylum and border security functions of the Home Secretary to that office. The Home Office is a large organisation, and its functions are various: immigration and borders, passports and security, counter-terrorism and homeland security, policing and crime, drugs and alcohol policy, and public protection. Serious questions must be asked about the capacity of any single Department to handle all those responsibilities.
Those concerns manifest when Department inefficiencies become clear. The average wait time for an asylum decision has come down substantially since Labour took office, but over a quarter of cases still take more than a year to process.
Catherine Fookes (Monmouthshire) (Lab)
Of course, we all want an efficient, fair, secure and sustainable asylum system. I thank the hon. Gentleman for acknowledging our really good success recently, but how would setting up a new Department help us to speed up those processes and get the asylum system back under control?
Mr Kohler
As I have said, we believe that the Home Office is too large and cannot focus on all things for which it is responsible. I ask the hon. Lady to consider the disaster of asylum hotels. Why was that a disaster? Because the Home Office was not concentrating on that particular issue. It signed contracts that made millions for businessmen but did not help asylum seekers at all.
Catherine Fookes
I thank the hon. Gentleman for so generously giving way again. We have cut asylum hotel use by 50% since we have been in charge, so we are already having success with the Home Office as it is.
Mr Kohler
But that mistake was made because the attention of the Home Office was diverted to other issues at the time. [Interruption.] The hon. Member looks at me quizzically, but a mistake was made. Yes, the Government have started to solve that mistake, but asylum hotel numbers went up by 8% last year, so the idea that they have just gone down and down is not accurate.
The new clause would create a new Government Department that could put its entire focus on effective immigration policy. It would produce an annual immigration plan—subject to scrutiny and a vote in Parliament—setting out how the Government will deliver a fair, controlled and effective system. It would also work across Government to develop long-term workforce plans for public services and critical national infrastructure, ensuring that migration policy is designed in tandem with investment, domestic skills and training, to strengthen our services. This plan would ensure that British people and services finally get a system built to work for them—a system based on evidence that works across Government and different sectors to deliver better public services and a growing economy.
Siân Berry (Brighton Pavilion) (Green)
It is a pleasure to have you overseeing proceedings this morning, Mr Stuart.
I will abstain on new clause 8, but I absolutely appreciate the sentiments behind it. I will not back it in full because the Green party has been thinking about this issue for some time, and we have our own alternative proposal. I will speak a little about the ways in which breaking up the Home Office—along the lines set out in new clause 8—would be a good idea.
I refer in particular to the “No Way Home?” report, which was commissioned in June 2025 by my hon. Friend the Member for Bristol Central (Carla Denyer), and produced by Zoe Gardner, an independent researcher and campaigner on immigration and asylum policy. The report recommended that we make a new Department for population, infrastructure and immigration and a Department for community security from the Home Office. Previous Green party policy has used different names for those ideas—including in 2019, when we talked about creating a Ministry for sanctuary and a Ministry for the interior—but they follow the very same lines in splitting up the responsibilities.
The “No Way Home?” report goes into more detail. It says in particular that cross-governmental work should be embedded in the remit of the new Departments, and that
“A Department for Population, Infrastructure and Immigration”
should be
“taking on joint task forces with shared budgets with Department for Housing, Communities, and Local Government in order to ensure a long-term approach to the country’s population, workforce and infrastructure needs is built into the management of immigration policy.”
On the other side, the new Department for policing and security matters—a “Department for Community Security”—should have
“joint teams working across mental health, housing, homelessness and social services”
to manage things such as addiction, rather than taking an enforcement approach to drug policy—allowing social services to deal with that—and ensuring that policing work is better integrated across the board with a preventive approach to crime. The report says:
“The current remit of the Home Office does not include responsibility for long-term integration, infrastructure planning, and community cohesion”.
Those are all issues that we have raised in this Committee as being harmed by the Bill, potentially because the Home Office is not tasked with being concerned about such harms.
The report talks about the history of the Home Office as a Department, and how it has been “beset by repeated scandals”. Very famously, those have included the Windrush scandal, which emerged out of the policies of the former Prime Minister, now Baroness May of Maidenhead. Her hostile environment policies, which I think were enacted between 2012 and 2016, were
“designed to make life unbearable in the UK for immigrants who were unable to prove their status”,
and the Windrush scandal resulted. The “Windrush Lessons Learned Review” made it abundantly clear not only that the political direction set by the then Home Secretary but that the culture and internal structures at the Home Office were at fault for producing the crisis. Earlier, in 2006, a scandal emerged regarding the release of about 1,000 foreign national prisoners, which forced the resignation of the then Home Secretary, Charles Clarke. He was replaced by John Reid, who famously proceeded to describe the Department as “not fit for purpose”. We are nearing a consensus view on the issue, I believe, and the Department should be looking very closely at what it can do.
The current work and remit of the Home Office
“covers some of the most hotly politically contested areas”.
I know that from my brief as my party’s spokesperson in the House on the Home Office and the Justice Department—we are constantly in the news on these issues. Every change is fought over in the public arena, because these are some of the most salient issues of the day. It is no wonder that
“the role of Home Secretary is often viewed as a poisoned chalice.”
Ministers—in the room today and more widely—might be interested in a more focused remit if they are to take on these responsibilities in future.
Despite repeated attempts at reform,
“the Home Office has continued to exhibit deep-rooted cultural and institutional problems in its management of the immigration brief, in particular…As a result, a growing number of voices from across the political spectrum have begun to call for an exploration of options for more radical reform. In most cases, the conclusion is that the Department should be split,”
with immigration moved into a more dedicated department. The report concludes:
“The remit of the Department itself contributes to negative outcomes by linking immigration with security, but neither immigration nor security with community cohesion, infrastructure, or the country’s economic needs”.
It says:
“The time is ripe for root and branch reform, and only a full break up and redistribution of the responsibilities of the Department has the potential to solve all the problems”.
I hope that Ministers will look at that in the future, and that this new clause nevertheless stimulates some discussions in Cabinet and with the Prime Minister about how to improve those deep-seated problems and scandals and avoid them in future.
Anna Turley
New clause 8, tabled by the hon. Member for Harrogate and Knaresborough, sets out the desire for a new Government Department for immigration and border security to be established, and for the transfer of all the Home Secretary’s immigration, asylum and border security functions to that new office. I have to say that I really admire the hon. Members for Harrogate and Knaresborough and for Wimbledon for attempting to reshape Whitehall through an amendment to a Bill—it is impressive, and I will do my best to respond to it. I appreciate that it is a thought-provoking new clause that of course warrants broader discussion.
Mr Kohler
I am, for my many sins, a member of the Home Affairs Committee. Time and again, we see that the Home Office does not have the bandwidth to deal with every issue that it has to confront. I am still bemused by the point made by the hon. Member for Monmouthshire that, because the Home Office is now beginning to solve one of the problems it caused for itself, that somehow proves that it does not make mistakes. It makes mistakes because it does not have the bandwidth. The Home Office signed asylum contracts it did not even read, which incentivised providers to spend money, and surprise, surprise, the providers did spend money. Why did the Home Office make that mistake? Because it was not focusing on that issue at the time—it does not have the bandwidth.
As the Minister anticipated, the new clause is a probing amendment. We will not be pushing it to a vote. However, I am sure that I am not telling too much of a secret by saying that I suspect the Home Affairs Committee will be addressing issues such as this in the not-too-distant future. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 9
Refugees: Anti-Homelessness Taskforce
“(1) The Secretary of State must, within three months of the passing of this Act, establish a taskforce (‘the Taskforce’) to prevent homelessness among asylum seekers and refugees.
(2) The purpose of the Taskforce is the elimination of homelessness among asylum seekers and refugees in the United Kingdom.
(3) The Taskforce must include representatives of—
(a) the Home Office;
(b) the Department for Work and Pensions;
(c) local authorities;
(d) non-governmental organisations with experience of or expertise in working with and supporting asylum seekers; and
(e) such other persons as the Secretary of State considers appropriate.
(4) For the purposes of seeking to prevent homelessness among asylum seekers and refugees, the Taskforce must—
(a) work to ensure that the work of different services involved in facilitating the transition out of asylum support of asylum seekers and refugees is coordinated;
(b) work to ensure that asylum seekers and refugees granted core protection status are promptly provided with essential documents;
(c) develop and oversee arrangements for the early identification of persons at risk of homelessness following the grant of protection status; and
(d) keep under review the appropriateness of the length of the period during which a person may occupy asylum accommodation following a grant of refugee status or humanitarian protection (‘the move-on period’), including by considering evidence on the extent to which persons are successfully moving into work and settled accommodation within that period.
(5) The Secretary of State must, no later than twelve months after the establishment of the Taskforce, and annually thereafter, lay before Parliament a report on—
(a) the work of the Taskforce;
(b) the evidence considered under subsection (4)(d) on the move-on period, and any recommendations made by the Taskforce; and
(c) any changes made, or proposed to be made, to the move-on period or to related policy as a result of the work of the Taskforce.
(6) In this section,
‘asylum accommodation’ means accommodation provided under sections 4, 95 and 98 of the Immigration and Asylum Act 1999.”—(Mr Kohler.)
This new clause would require the Secretary of State to establish a cross-departmental taskforce, whose stated aim is preventing homelessness among asylum seekers and refugees.
Brought up, and read the First time.
Mr Kohler
I beg to move, That the clause be read a Second time.
The new clause would require the Secretary of State to establish a cross-departmental taskforce whose stated aim is to prevent homelessness among asylum seekers and refugees. The Prime Minister has, to his great and huge credit, made ending homelessness a priority, but why, then, is the Minister pursuing the measures in this Bill that contradict such a noble aim? We have already seen that the refugee tax and core protection introduction risk exacerbating the precarity experienced by refugees with settled status.
In December 2024, the Government doubled the grace period refugees were given to move out of Home Office accommodation to 56 days. They did that, as they stated at the time, to provide refugees with more time to find alternative accommodation, reducing the risk of homelessness and putting pressure on overstretched council housing services. The Home Office has now reduced the grace period to 42 days, which would increase such pressures. The longer move-on period was shown to be effective. According to the Refugee Council, an estimated 1,000 refugee households in England avoided homelessness in 2025 thanks to the increased time they had to begin rebuilding their lives in the UK. I am concerned that a reduction in move-on time would lead to increased refugee homelessness, and I would be interested to hear whether the Minister has seen any data on refugee homelessness levels since that reduction in the grace period.
The issue of a shorter move-on period is compounded by systemic issues identified by the Refugee Council. Those include refugees receiving documentation in stages instead of all at once, delayed access to e-visas, local authority uncertainty on refugee entitlements and challenges of low digital literacy. Those challenges require a tailored approach, which is why our new clause would establish a taskforce to combat refugee homelessness. It would be responsible for co-ordinating the different services, moving people out of asylum support, ensuring that people who are granted refugee status get their essential documents promptly, identifying those at the greatest risk of homelessness and monitoring the impact of changes to the move-on period.
Asylum has become a politically charged issue, but we cannot lose sight of our obligations to those fleeing war and persecution. We must ensure that move-on initiatives deliver. The National Centre for Social Research found that constraints of systemic housing shortages and the concurrent roll-out of e-visas were holding us back. It made recommendations that included restoring the move-on period to 56 days, better data sharing and strengthening the support on offer. It would be within our taskforce’s remit to ensure that those recommendations are properly implemented. Having a body dedicated to protecting homeless asylum seekers is a way to ensure that we uphold our responsibilities and action those recommendations.
Blake Stephenson
The hon. Member for Wimbledon has described the real pressures on councils across the country. When people are granted protection and leave asylum accommodation, many present as homeless, and local authorities across the country pick up the cost. However, in our view, a statutory taskforce will not solve that. The root of the pressure is the number of people arriving and the time that they spend in the system. Fewer arrivals and faster outcomes would do far more for councils than any taskforce.
We will not support the new clause, but let me ask the Minister a question, building on the one that the hon. Member for Wimbledon asked. What is the current move-on period after a grant of protection, and what assessment have the Government made of the cost of refugee homelessness to local authorities throughout England?
Anna Turley
I am grateful to the hon. Member for Wimbledon for raising this issue through his new clause, because it is a big priority for this Government, as he alluded to. I want to put it on record that I and the Government support the notion that no one should be sleeping rough. As the Prime Minister has set out, ending homelessness is his No. 1 priority.
As Members will be aware, in the immediacy, the Government have committed £442 million to ensure that everyone who is sleeping rough is off the streets by Christmas. That feeds into the wider £4.4 billion being invested in homelessness and rough sleeping services over the next three years. This combines immediate accommodation support with longer-term settled housing and intensive support for people who have experienced prolonged rough sleeping. The Christmas ambition is the first phase of that wider effort. It is a programme of practical delivery and, as I have laid out, it is not one that depends on establishing a separate statutory taskforce.
Looking beyond the Christmas delivery plan, the Government are already taking a cross-Government approach through the national plan to end homelessness in England and the interministerial group on homelessness and rough sleeping. That group brings together work on housing, health, employment and transitions out of public service with regular monitoring of delivery. A separate taskforce would duplicate existing co-ordination arrangements rather than address the practical barriers that people face.
We recognise that newly granted refugees can face particular challenges. Asylum move-on liaison officers, where present, explain next steps, signpost housing and benefit support, liaise with local services and escalate barriers. They provide practical help with navigating the transition. The hon. Member for Mid Bedfordshire asked what the move-on period is: it is currently 42 days.
We regularly review the role of the liaison officer model to ensure that it meets the needs of users and to reduce homelessness among newly recognised refugees. This includes exploring earlier, targeted housing advice before an asylum decision, and working with accommodation providers to improve the quality and timeliness of information given to local authorities when asylum support ends.
Anna Turley
The hon. Gentleman makes an important point. I know that there is sometimes a lag in us being able to publish statistics on that, but I am hopeful to be able to share statistics with hon. Members shortly. In June this year—these are the latest published figures—there were 99 people sleeping rough in this country who had left asylum support in the last 85 days. Our internal data suggests that the numbers of people leaving asylum support are extremely low, but, as I said, information on that will be published.
We are working closely with other partners and charity organisations, including Migrant Help, which offers positive move-on advice to all supported newly granted refugees through the advice, issue reporting and eligibility contract. That includes guidance on accommodation, finances and employment, and support for individuals to integrate into the UK when Home Office support ends.
As we have discussed a lot during the Bill’s passage, it builds on the “Restoring Order and Control” statement that the Home Secretary made, and it is essential if we are to restore control to our immigration system. As the Committee will know, core protection is a key part of that, and will simplify the current system of protections. That will of course be shared in due course.
Mr Kohler
I thank the Minister for her answer. On the basis of her assurances, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 10
Removal of restrictions on asylum seekers engaging in employment
“(1) The Secretary of State must, within three months of the date on which this Act is passed, lay before Parliament a statement of changes to the immigration rules for the purposes of making provision for asylum applicants to take up employment while their application is being determined where it has been over three months since the application was made and no decision has been made.
(2) For the purposes of this section, the ‘immigration rules’ mean any statement of rules, or any changes to such rules, presented to Parliament pursuant to section 3(2) of the Immigration Act 1971.”—(Mr Kohler.)
This new clause would require the Secretary of State to make changes to the Immigration Rules to enable asylum seekers to take up employment, if it has been over three months since they applied.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss new clause 24—Right to work for asylum applicants where decisions not made within six months—
“(1) The Secretary of State must, within three months of the passing of this Act, make such changes to the Immigration Rules as may be necessary for the purposes of granting a person making an application for asylum, and any adult dependants of that person, the right to work in the United Kingdom where—
(a) a period of six months has elapsed from the day on which the person made an application for asylum, and
(b) the Secretary of State has not made a decision on the person’s application.
(2) A grant of the right to work under subsection (1) must—
(a) be granted without the need for an application by the person making the application for asylum or an adult dependant of that person;
(b) permit the person to take up employment or self-employment without restriction on occupation, skill level or salary;
(c) be on terms no less favourable than those that would apply to a person granted refugee status in the United Kingdom;
(d) persist until—
(i) the person’s claim has been finally determined, or until any right of appeal has been exhausted, or
(ii) the person otherwise ceases to be an applicant for asylum or an adult dependant of such a person; and
(e) be capable of being evidenced by documentation or a digital status which can be relied upon by an employer for the purposes of a right to work check.
(3) For the purposes of this section, ‘the Immigration Rules’ mean rules laid before Parliament under section 3(2) of the Immigration Act 1971.”
This new clause would require the Secretary of State to grant applicants for asylum, and their adult dependants, the right to work where a decision has not been made on their application within six months.
Mr Kohler
Our proposal to allow refugees to begin working after three months waiting for a decision would generate five times more revenue than the misguided debt levied on asylum seekers by earlier provisions in the Bill. It would have an instantaneous effect and generate a much more positive financial outcome than that immiserating proposal, both for the Home Office budget, which is under strain from the ballooning asylum bill, and for the Treasury’s tax receipts.
In 2022, the Labour party acknowledged that the current 12-month waiting period should be halved, yet the Government refuse to pursue this common-sense policy. The National Institute of Economic and Social Research has modelled the macroeconomic effects of lifting the ban. According to it, allowing those who have been waiting more than six months for a decision to work would save the Government £4.4 billion a year, increase tax revenue by £800 million and add £1 billion to GDP.
Time spent being prevented from working has a scarring effect on refugees’ future likelihood of being in work. These effects are well documented; the longer someone is out of a job, the harder it is for them to get one. A study of Swiss asylum seekers found that, for each year they are prevented from working, their future employment rate falls by 4 to 5 percentage points. Furthermore, preventing refugees from working only drives greater numbers of people towards the black economy. Instead of pursuing policies that improve prospects for asylum seekers, the current path serves only to increase state dependency and enrich criminality. We must remember that if this country works for refugees, refugees will work for this country.
The argument that giving asylum seekers employment rights will encourage further illegal immigration is well worn but ultimately unsubstantiated. Available evidence suggests that employment rights play little to no role in people’s destination of choice, whereas factors such as language and familial relations are far more influential. The Government’s position is disputed by their own Migration Advisory Committee.
Indeed, asylum seekers come here in spite of the fact that our working regulations are a complete outlier in comparison with other states. EU law requires access to work after six months at most, while Canada allows it immediately and the US after six months. Even Denmark, which is always held out as being quite hard-line on immigration issues and undocumented migrants, allows it after six months. A three-month limit would be in line with our allies and may incentivise the Home Office to improve the efficiency of its decision making.
Allowing refugees to work after three months would be worth £437 million per cohort, which is five times the cost that would be recovered with a £10,000 payment scheme. Importantly, the public support this measure. Lift the Ban research found that 71% of the public agreed that people seeking asylum should have the right to work. Ultimately, people who work while they wait for an asylum decision are more ready to support themselves when they get status. This is good for the taxpayer, good for the asylum seeker and good for the country.
Blake Stephenson
The Liberal Democrats’ new clause 10 would give asylum seekers the right to work after three months, and the Green party’s new clause 24 would give them an automatic, unrestricted right after six months that lasts through every appeal. We oppose both new clauses.
People who enter the UK illegally should not be able to claim asylum here at all. The new clauses go in the opposite direction. They would make the UK a more attractive destination for people deciding whether to pay a smuggler to cross the channel. Everybody wants to reduce pull factors so that we can reduce dangerous crossings, and I am afraid that the new clauses would introduce additional pull factors.
I will keep my remarks brief and just ask the Minister a question. How many asylum seekers currently have permission to work, and what assessment have the Government made of the effect that earlier work rights would have on the number of claims?
Siân Berry
The right to work does not impact only those seeking sanctuary; the impact also falls on their children and on communities. Giving people seeking sanctuary the right to work—or, rather, restoring their agency—is a matter of basic dignity and human rights. People who have fled war or persecution should have the opportunity to rebuild their lives in the UK with dignity and independence. That means that they need a safe place to live, access to support and a genuine right to work, as set out in new clause 24. It is important to stress that this debate is about restoring choice and agency to people seeking sanctuary, not imposing new requirements on those who are not ready or able to work.
As it stands, the law permits a person seeking asylum to request permission to work if they have been waiting more than 12 months for a Home Office decision on their asylum claim through no fault of their own. That may be 12 months after they initially claimed asylum or 12 months after they made further submissions, which are then considered as a fresh claim.
It has been more than two decades since those seeking asylum could apply to work after six months. People repeatedly raise the issue of enforced worklessness while claims are processed. My new clause 24 would simply restore the previous time limit and match the Home Office’s own targets for decision making. The Liberal Democrats’ new clause 10 would grant the right to work at three months, which is also perfectly reasonable. New clause 24 goes into more detail about how the proposal should be implemented. It states that the right should be automatic, without the need for an application, and that there should be no restrictions on the type of employment. It also states when the right should end, if a decision on the application is made one way or the other.
More often than not, vulnerable people are left waiting for months, and often years, for a decision. For that entire period, however qualified and willing they are, they are not permitted to work. That is profoundly felt by people who arrive with real skills, a keen willingness to contribute and a desire to rebuild their lives. Instead, the current rules require them to survive on a small weekly allowance. They are unable to contribute, build a life and often even volunteer in their communities without navigating endless bureaucratic red tape.
The most potent and poisonous rhetoric of the far right plays up the dependence that people are left in; it stokes conflict between people in the asylum system, who are denied the ability to earn, and others in society. Members can hear the voices I am referring to in their heads right now. There is absolutely no need to leave in place the restrictions that fuel that kind of rhetoric and racism, and that badly harm the acceptance and integration of refugees.
Work can bring not only integration and community strength but genuine benefits to people fleeing war, trauma or oppression. That is because people seeking sanctuary in the UK are five to six times more likely than the general population to have mental health needs. A review of the impact of asylum processes on mental health found that policies restricting work contributed to psychological distress and social exclusion. The mental health cost of robbing vulnerable groups of the ability to exercise their agency and provide for themselves and their loved ones is far too high.
Many people seeking asylum in the UK and elsewhere are living with trauma. That contributes to their poor mental health. They might also be recovering from illness or caring for family members. It is important that a humane and just system recognises the structural barriers to finding work that many of these people will face. We must recognise that some people will want to work immediately, while others may need time and support to rebuild their lives. Therefore, my new clause is set out as a right to work. If the Government make any moves in this direction, they must refrain from making it a mandate to work.
Despite the clear and mounting evidence in favour of the right to work, successive UK Governments have closed their minds to the idea and refused to implement it. The usual response, which has already been aired in this debate, is that permitting work sooner risks acting as a pull factor to further migration, but that does not hold water given the evidence. The UK maintains one of the strictest systems in Europe concerning the right to work for people seeking asylum. The international evidence is unequivocal and the difference in waiting times across comparable countries is enlightening.
In 2018, Ireland opted in to the recast EU reception conditions directive and allowed work after nine months. That was subsequently reduced to six months in 2021. Comparable countries in Europe have far more lenient policies on the right to work. In Germany, it is granted after three months, with the only restriction being on self-employment. There is a similar policy after 60 days in Greece. In Italy the period is two months, in Spain it is six months, in Belgium it is four months, and in Denmark it is six months—all with no restrictions. In Sweden someone can apply to work immediately in limited sectors, and in France there are restricted types of work that someone can do after six months. All this is evidence that an alternative can be imagined that is intensely practical, would not have the knock-on effects that other parties have suggested, and can work.
Alongside the moral arguments, there is a strong economic angle to be considered. The Lift the Ban coalition, which has already been quoted in this debate, estimates that lifting the ban could save the Treasury over £280 million per year, and recent research by the National Institute of Economic and Social Research found that lifting the ban after six months could save the Government a total of £4.4 billion per year, increase tax revenue by £880 million and add £1 billion to GDP.
Restricting access to legal work inevitably increases the risk of exploitation. When people are prevented from supporting themselves lawfully, they can be pushed towards unsafe and illegal forms of work. Granting people the right to work therefore extends itself to protecting vulnerable people from further exploitation and abuse, and extends the ability to maintain community cohesion and safety.
In my view, though, the greatest cost of the current policy is the human cost—years of wasted potential, lost independence and lives left on hold while awaiting a decision. The Government should heed the approach taken by much of mainland Europe already and accept these amendments.
Anna Turley
I thank the hon. Members for Harrogate and Knaresborough and for Brighton Pavilion for tabling the new clauses, and I am grateful for the discussion. As we have heard, new clauses 10 and 24 would significantly change the Government’s policy on the period before asylum seekers can seek permission to work from the Home Office, reducing that period to three months and six months, respectively. New clause 24, tabled by the hon. Member for Brighton Pavilion, would go much further and grant asylum applicants and their adult dependants an automatic and unrestricted right to employment and self-employment after six months of waiting for a decision on their asylum claim—a right that would continue until the claim and any appeal had been finally determined.
Hon. Members will know that those who claim asylum are not normally allowed to work while their claim is considered. They may instead receive accommodation and support to meet their essential living needs if they would otherwise be destitute. Under our current policy, asylum seekers may be eligible to apply for permission to work in the UK where their claim has been outstanding for 12 months or more, through no fault of their own. Where permission is granted, employment is restricted to jobs on the skilled worker occupations at regulated qualifications framework level 6 or above.
To respond to the question of the hon. Member for Wimbledon about legal entrants, it is important to flag that all legal entrants are prohibited from working. Some individuals who claim asylum after being here legally retain the right to work throughout their claim. An asylum seeker is allowed to apply for permission to work after 12 months, as I said, if they have not received a decision and will be employed in a high-skilled job. On the statistics he asked about, the Home Office publishes a vast amount of statistics regularly. The numbers for those who have permission to work will fluctuate constantly, as people move in and out of the system quite rapidly. Our focus has been on ensuring that people receive an initial decision on their claim as quickly as possible.
Mr Kohler
I am saddened that the Minister will not move on that point. The Labour party, when out of power, supported this proposal. As my party knows, supporting something when out of power, but not when in power, is not a good message to send to the electorate. The dignity of labour is important, and work is important to the ability to integrate into the community. The new clause would also make money for the Treasury. Why is work a pull factor for the UK but not for every other country? Why are we such an outlier? No answer has been given. The existing policy simply excludes migrants from society. It makes them vulnerable to the black economy and the criminals who frequent it, and simply does nothing to improve the lives of people, many of whom will be granted asylum. I am saddened—as I suspect are many Labour Members in their hearts—that the Government will not concede the point.
Question put, That the clause be read a Second time.
Siân Berry (Brighton Pavilion) (Green)
On a point of order, Mr Stuart. I did not withdraw new clause 24. Am I allowed to press it to a vote?
Siân Berry
Of course!
New Clause 11
Refugee family reunion
“(1) The Secretary of State must, within six months of the date on which this Act is passed, lay before Parliament a statement of changes to the immigration rules for the purposes of making provision for refugee family reunion in accordance with this section.
(2) Any changes to the immigration rules included in any statement laid before Parliament under subsection (1) must come into effect after 21 days.
(3) Before a statement of changes is laid under subsection (1), the Secretary of State must consult with such persons as the Secretary of State deems appropriate.
(4) A statement laid under subsection (1) must set out rules providing for leave to enter and remain in the United Kingdom for family members of a person granted refugee status or humanitarian protection.
(5) In this section—
the
‘immigration rules’ mean any statement of rules, or any changes to such rules, presented to Parliament pursuant to section 3(2) of the Immigration Act 1971;
‘refugee status’ and
‘humanitarian protection’ have the same meaning as in the immigration rules;
‘family members’ include—
(a) a person's parent, including an adoptive parent;
(b) a person's spouse, civil partner or unmarried partner;
(c) a person's child, including an adopted child, who is either—
(i) under the age of 18, or
(ii) under the age of 25 but who was under the age of 18 or unmarried at the time the person granted asylum left their country of residence to seek asylum;
(d) a person's sibling, including adoptive sibling, who is either—
(i) under the age of 18, or
(ii) under the age of 25 but who was under the age of 18 or unmarried at the time the person granted asylum left their country of residence to seek asylum; and
(e) such other persons as the Secretary of State may determine, having regard to—
(i) the importance of maintaining family unity,
(ii) the best interests of a child, read in accordance with Article 3 of the 1989 UN Convention on the Rights of the Child,
(iii) physical, emotional, psychological or financial dependency between a person granted refugee status or humanitarian protection and another person,
(iv) risks to the physical, emotional or psychological wellbeing of a person granted refugee status or humanitarian protection, including from the circumstances in which the person is living in the United Kingdom, or
(v) such other matters as the Secretary of State considers appropriate;
‘adopted’ and
‘adoptive’ refer to a relationship resulting from adoption, including de facto adoption, as set out in the immigration rules.” —(Tom Gordon.)
This new clause would require the Secretary of State to make changes to the Immigration Rules to make provision for leave to enter or remain in the UK to be granted to the family members of refugees and of people granted humanitarian protection.
Brought up, and read the First time.
Tom Gordon
I beg to move, That the clause be read a Second time.
It is an honour to serve under your chairship, Mr Stuart. New clause 11 would require the Secretary of State to make changes to the immigration rules to make provision for leave to enter or remain in the UK to be granted to the family members of refugees and of people granted humanitarian protection. The family reunion route was paused on 4 September 2025, with a stricter system promised from spring 2026 still not in place, as we discussed earlier in Committee. So I ask the Minister: if the Government announce a new settlement route, will there be a new family reunion route, too? We want to see the details of the resettlement scheme announced with this legislation. Obviously, the purpose of this amendment is to make sure we end up with the tens of thousands of people, predominantly women and children who used to use the family reunion visas, able to access it.
I meet many people in my constituency of Harrogate and Knaresborough, from victims of genocide such as the Yazidi people to people who came through the Afghan route. Quite often the distress and additional trauma that is caused by having been separated from their families compounds the issues that they are already trying to grapple with.
With the new rules set to come in under this Bill, there will be issues around refugees being able to hit the income thresholds so that their family members can come with them. That is the purpose of this new clause and I would welcome any news or updates from the Minister further to the questions already put during the course of this Bill Committee.
Blake Stephenson
New clause 11 would require the Government to restore refugee family reunion within six months, but I understand that it also widens definitions to include children up to the age of 25, which was not in the hon. Member’s opening remarks, so I hope I am not mistaken.
We oppose this measure. Family reunion, as proposed in new clause 11, would add a further reward to a successful illegal crossing. Every grant would bring the prospect of encouraging a wider family member, and it would create a well-known incentive for families to send one member ahead, sometimes a child, on the most dangerous journey of all. We all want to stop and limit dangerous journeys. Safe and legal routes should be for people from regions of conflict who we choose to help, as we have done for Ukraine, Hong Kong and Afghanistan. There should not be a reward for illegal and very dangerous crossings. We will not support the new clause, but can I ask the Minister to tell us when the Government intend to publish their replacement for the suspended family reunion route, as I think she intimated they would in the previous debate, and whether the intention is for it to be capped?
Anna Turley
New clause 11, tabled by the Member for Harrogate and Knaresborough, seeks to reopen the refugee family reunion route and greatly expand eligibility to wider family members. The Government took the difficult decision to suspend the refugee family reunion route in September 2025. That was done in response to immediate pressures placed on local authorities and public services by the rapid rise in arrivals in recent years.
The family reunion route had grown exponentially, placing significant and unsustainable pressures on local authorities and public services. Grants rose from approximately 5,500 per annum between 2015 and 2022 to more than 20,000 in the year ending September 2025. As the hon. Member for Mid Bedfordshire said, we cannot have a situation where families are sending men on dangerous journeys, through other safe countries, to reach these shores with the intention to bring their families. We are extremely keen to prevent that. We want to ensure that there is a sustainable route for families that are genuinely fleeing war and persecution to come to this country, and that was not it.
Suspension remains in place while we are developing the wider reforms to the family migration system. I know that colleagues are on tenterhooks, and I wish I could expand on that further, but I can assure them that they do not have very long to wait at all—as I am sure they can see from the increased media frenzy around these issues. I will not pre-empt the Home Secretary’s announcements, but I reassure colleagues that those announcements are well on their way and they do not have long to wait.
The system we want to see will be fair, controlled and sustainable. The Government recognise the importance of family unity and the distress that separation can cause. We also recognise the contribution that families can make to helping refugees integrate. However, we must ensure that our approach takes account of the capacity of communities to support those arriving.
I want to be clear that suspension does not mean that family members have no way of applying to come to the UK. Other family routes remain available where people meet the relevant requirements, with provisions such as fee waivers available, and a consideration of any exceptional circumstances where an individual may not meet the criteria set out in those routes. In addition, applications under the suspended route that were submitted before the suspension came into force continue to be processed.
New clause 11 would go considerably further than simply restoring the previous arrangements. It would require the Government to establish a new and expansive refugee family reunion scheme within six months, and prescribe a significantly wider group of qualifying family members, including parents, siblings, unmarried adult children and siblings up to the age of 25 and other unspecified family members. This is highly likely to lead to considerably more people arriving than ever before, without any necessity for their sponsor to support them.
The new clause would also cut across established routes that already make specific provision for these relationships, including Appendix Child Relative for vulnerable children joining a close relative with protection status, and the Adult Dependant Relative route for adults requiring long-term, personal care. Those routes contain carefully designed eligibility, dependency, care, maintenance and accommodation requirements. The new clause risks creating an overlapping route for the same cohorts without specifying any safeguards that would apply, potentially undermining the workings of our wider family migration system.
The new clause would further enable children to sponsor their parents and siblings, which is something that was not possible under the previous route. We must consider the incentives that such a change would create. If a child reaching the UK alone could subsequently provide a route for other family members to join them, there is a real risk that smuggling gangs could exploit that expectation, leading to more children being sent on dangerous journeys, including on small boats. That would put children at greater risk of abuse and death.
The proposals tabled by the hon. Member for Harrogate and Knaresborough should also be considered together. Amendment 54 would have provided that requirements being imposed must demonstrate that arriving family members could be suitably supported and accommodated by their sponsor. Together, these proposals, if accepted, would pre-empt the Government’s ongoing work that I have mentioned on our future family migration framework by constraining our ability to consider refugee family reunion alongside the wider reforms that we are making. It would be premature to prescribe the outcome of that work in the Bill. They are also likely to lead to a large increase in arrivals, which would further exacerbate existing pressures on local authorities and public services.
The hon. Member for Harrogate and Knaresborough should consider how the consequences of such a surge in arrivals, if these proposals were enacted, would be managed. Where would families live if suitable accommodation had not been secured? Who would meet their immediate needs if their sponsor could not support them? Do we expect already stretched local authorities and public services to support those arrivals? If children are allowed to sponsor, as he proposes, a child cannot be expected to obtain a sufficient income or secure suitable accommodation for an arriving family, so who would meet those needs? What assessment has he made of the additional resources that would be needed, and how does he propose these costs should be met?
Those responsibilities simply cannot be left for local authorities to resolve after families arrive. They have practical consequences for homelessness services, temporary accommodation, children’s services and school places, as well as the local people who rely on those services. For those reasons, I ask the hon. Member for Harrogate and Knaresborough to withdraw the new clause.
Tom Gordon
I welcome the Minister’s words about us hopefully seeing something coming forward soon. I gently suggest that if we had something a little more concrete, we might not have needed to table new clauses such as this. Nevertheless, I welcome what the Minister has said. As I said before, I sit on the Joint Committee on Human Rights, and we will hopefully invite someone from the Minister’s Department to speak to us. I am sure I can press the point further there, so with that in mind, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Ordered, That further consideration be now adjourned.—(Jade Botterill.)
Social Housing Bill (Third sitting)
Thursday 29th October 2026
(1 day, 13 hours ago)
Public Bill CommitteesRead Full debate Social Housing Bill [HL] 2026-27 View all Social Housing Bill [HL] 2026-27 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 29 October 2026 - (29 Oct 2026)
The Committee divided: - Ayes: 1 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 1 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 1 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 1 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 1 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 1 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 1 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 1 / Noes: 7 - Question accordingly negatived.
The Chair
Good morning, ladies and gentlemen. The usual housekeeping rules apply: electronic devices should be switched off and there should be no food and drink in our sittings, except the water provided. If colleagues are kind enough to make any speaking notes available to Hansard, that will facilitate its work.
New Clause 1
Strategy for the provision of 150,000 new social housing dwellings a year in England
“The Secretary of State must, within twelve months of the passing of this Act, publish and lay before both Houses of Parliament a report which sets out a strategy for the provision of at least 150,000 new social housing dwellings in England in each financial year for the following twenty years.”—(Gideon Amos.)
Brought up, and read the First time.
Gideon Amos (Taunton and Wellington) (LD)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss the following:
New clause 34—Brownfield sites social housing development strategy—
“(1) Within 12 months of the passing of this Act, the Secretary of State must publish and lay before Parliament a strategy for prioritising the development of brownfield sites for social housing.
(2) The strategy published under this section must include—
(a) measures to accelerate planning approvals on brownfield sites for social housing, and
(b) incentives for regeneration of derelict urban land for the purpose of social housing.”
This new clause seeks to require the Government to publish a strategy for prioritising brownfield land for social housing development.
New clause 4—Local authorities: borrowing restrictions—
“(1) The Secretary of State must by regulations remove relevant restrictions on local authorities to enable borrowing for the purpose of building or acquiring social housing.
(2) When determining the definition of ‘relevant restrictions’ under this section, the Secretary of State must pay due regard to the need to—
(a) retain restrictions essential to the management of the economy and local authority finances; and
(b) remove restrictions that place undue limitations on the ability of local authorities to provide sufficient social housing to meet local need.”
Gideon Amos
It is a pleasure to serve on the Committee under your chairmanship, Sir Roger. New clause 1 would require a strategy for the provision of 150,000 new social homes a year in England, which is the Liberal Democrat target. We welcome the Government’s commitments so far to funding and supporting the delivery of social homes, which are of key importance—in fact, we welcome those proposals a lot more than some of the planning system proposals for private housing development, but the focus of the new clause is on social homes. However, we need a significant target. So far, the Government have not set a statutory target, or indeed any clear target at all. The National Housing Federation and Shelter estimate that 90,000 more social homes are needed per year. Why did we go to 150,000? Because social homes should not be for just the most excluded, desperate and challenged in our society; they should be for working people in low-paid jobs.
Deirdre Costigan (Ealing Southall) (Lab)
I hesitate to ask the hon. Gentleman a slightly difficult question so early in the proceedings; he is a very nice man and does a very good job. He has previously said that national housing targets should not be dictated by Whitehall, that the Government’s housing targets are over the top and that a targeted approach to housing is unreasonable. Does he not agree that what the Government are doing is in line with his previous comments, and that it will achieve more social and affordable housing by overhauling the funding mechanisms for housing and by breaking down the planning barriers? That is a better approach, as he would previously have agreed himself.
Gideon Amos
I welcome the hon. Lady’s question about the details of Liberal Democrat policy, upon which I shall be delighted to expound. The challenge I was making is that the Government’s overall target for homes is mainly for private homes, so we have situations in Taunton where thousands of homes will be imposed on a community that will not be able to afford them or have any access to them. They will not be for local people.
Those targets come alongside the planning reforms, which seem to celebrate a confrontational approach—I think the Labour party called it a “blockers versus builders” approach. The notion that that will somehow lead to more community acceptance of housing development is wrong-headed. That is why we believe that the overall housing target needs to be based on household projections, as it once was, rather than on the current standard method. However, we would stick rigidly to our target of 150,000 social homes.
Patrick Spencer (Central Suffolk and North Ipswich) (Con)
I appreciate the hon. Gentleman’s point about housing targets. I remind the Committee that we are interrogating the Bill. One of my criticisms of the Bill is that the forecast for new, additional houses, certainly in the impact statement, is to some extent inaccurate. Can he speak to his disappointment that the Bill does not create the new houses that he and his party clearly want to see?
Gideon Amos
To be fair to Conservative Members, which is something I do not often say, they raised the point in earlier sittings that there is too little in the Bill to secure the delivery of social homes—the really affordable homes that we need to see. That is why our new clause 1, the very first amendment that we tabled, would insert such a target into the Bill.
Let me return to the objective of the delivery of social homes. The Budget gave an extra £1.5 billion to the programme, which is incredibly welcome.
Gideon Amos
I almost echo the “Hear, hears”. However, that money would struggle to add about 1,000 social homes per year to the current 18,000, which is the closest thing to a target that we can divine from the Government’s policy announcements—about 18,000, 19,000 or maybe 20,000 a year. We need a whole lot more than that. The National Housing Federation and Shelter believe that we need at least 90,000 a year. The current level of ambition really is not high enough. I encourage the Government to focus their attention less on issuing thousands more planning permissions. We need planning permissions to keep coming through, but since we already have a million plots with planning permission not built for private housing, they should focus their attention instead on the delivery of social housing and on setting a target—if not this one, a target of some sort.
John Slinger (Rugby) (Lab)
Perhaps the hon. Gentleman was going to come on to this point, but what practical steps would he suggest for his Liberal Democrat local government colleagues? I think it is fair to say that they do not have the greatest reputation for approving housing developments in their areas. He has, admittedly, said that he is more in favour of social home building than private dwellings, but what practical steps would he take to encourage his local government colleagues on his target?
Gideon Amos
I welcome the hon. Gentleman’s question, which anticipates the Liberal Democrats being in government and in a position to ensure delivery of housing. I point him to Eastleigh council, which has taken over a development of 2,000 homes not being delivered by its developer. It has made it a local authority development and is now driving it through. I recently went down to visit Liberal Democrat-run Cornwall council. The previous Liberal Democrat administration set up a housing company that is building 180,000 homes a year—sorry, I mean 180; I wish it were 180,000—and is using the profits from that to build social rent homes.
I invite the hon. Gentleman to join me in my constituency, where we are building 400 council homes on the North Taunton estate and have retained our council housing stock. Sadly, because of right to buy, it is not the 30,000 units it used to be—it is now only 6,000 homes—but we are doing what we can. My colleagues in Somerset council are bringing new council houses to parts of Somerset for the first time in a generation. I encourage the hon. Gentleman to look at the activity of Liberal Democrat authorities on the ground.
New clause 1 would set a target of 150,000 social homes a year, which would something for the Government to aspire to. If not that target, what target will the Government set and when? The new clause does not require that many to be built; it is not a money resolution. It would simply require the Government to publish a strategy for what would be required to reach the target. If the Government are serious about the housing crisis, they should have no objection to setting a target of this kind. In our manifesto, we set an allocation of £6 billion a year towards that achievement. I appreciate that it would take a number of years to reach 150,000.
In the interests of time, I will move on to new clause 4, concerning borrowing restrictions on local authorities. I will give some “Hear, hears” to the Government for the Prime Minister’s words about reviving council housing and delivering a lot more of it, though I fear there are more words than pounds in his pronouncement. Shelter has commissioned research from Savills examining the impact of the housing revenue account debt on councils’ ability to build new social homes. The research found that writing off HRA debt could unlock between 190,000 and 284,000 dwellings.
Shelter also recently published research with Pragmatix Advisory that assesses the economic and financial case for cancelling HRA debt and investing in social housing. The central conclusion is that the policy would be compliant with the Government’s fiscal rules, while generating a substantial long-term economic benefit of £140 billion over a 60-year timeframe. My colleagues in Somerset council told me that if were not for the Government’s self-financing debt rules, they could build out another 630 council houses on top of the ones that I outlined to the hon. Member for Rugby.
I appreciate that the costs of writing off that debt would be significant—I am sure that the Minister has made that point—but if the Government will not write off all that debt, will they write off some of it? In our manifesto, the Liberal Democrats put an extra £2 billion a year into this area. Will the Government put in £2 million to write off some HRA debt? It is important to get councils building again. Those that have their housing revenue account maxed out have the political will, and in many cases the experience, to do so, but they lack the necessary financial headroom. If we want to get councils building, we need to look seriously at the HRA debt.
Gareth Bacon (Orpington) (Con)
It is a pleasure to serve under your chairmanship, Sir Roger. I rise to speak to my new clause 34. I regret that my pointing out that the Bill will not create a single new social home appeared to get under the Minister’s skin on Tuesday, but the fact is that the Bill does not create any extra housing. That is not a surprise, as it comes from a Government who have built just 26% of their target in nearly 50% of their time in office. None the less, it is simply not good enough.
Moreover, in the places—few and far between—where the Government have tried to get Britain building, that has nearly always come at the cost of green belt protections, despite the fact that research from the Campaign to Protect Rural England shows that a large proportion of the Government’s lofty housing target could swiftly be met using brownfield land that already has planning permission. The CPRE estimates that up to 1.41 million homes could be built on existing brownfield land in England, based on data from local planning authorities’ brownfield land registers up to 2024.
Deirdre Costigan
The hon. Member talks about the importance of building on brownfield land first. That is certainly the policy of this Government. Would the hon. Member agree that although the previous Government professed to want to focus on developing brownfield land, they did absolutely nothing to make that viable, whereas this Government are putting money into the brownfield land release fund, which will help to clean up that land? Those are steps that the previous Conservative Government absolutely failed to take.
Gareth Bacon
The hon. Lady makes a reasonable point, but we are looking forwards, not backwards.
Gareth Bacon
The hon. Lady says that the Government are making brownfield land development more viable. Where are the signs of that? There is no development happening. Development in this country has ground to a standstill under this Government. That malaise did not start under this Government—I will accept that criticism—but it is most certainly being exacerbated by this Government. They are doing nothing to turn back the tide. In fact, they are pushing it further.
Those 1.41 million starts would amount to 93% of the Government’s manifesto pledge. That is why I have tabled new clause 34, which seeks to require the Government to publish a strategy for prioritising brownfield land for social housing development.
Lewis Cocking (Broxbourne) (Con)
It is a pleasure to serve under your chairmanship, Sir Roger. I will speak in support of new clause 34, which is about prioritising brownfield for development. We always hear from the Government that they want to protect the green belt. I often laugh when they say that, because there is nothing in legislation: they never want to put anything on the face of the Bill or issue anything to protect the green belt.
Labour’s favourite think-tank, the Institute for Public Policy Research, has found that 1.4 million brownfield sites have been left unbuilt since 2007. As I said on Second Reading, that number is rather close to the Government’s commitment to build 1.5 million homes, which they have all but admitted they will not meet.
Danny Beales (Uxbridge and South Ruislip) (Lab)
I am slightly worried to say that I agree with an Opposition Member, but I share the hon. Member’s frustration at the fact that there are many homes, often on brownfield sites, that have permission but have not been built. I see that in my constituency of Uxbridge and South Ruislip. However, from my experience of speaking to landowners and developers, the reason why those homes have not been built is that the Liz Truss mini-Budget crashed the financial models of those schemes, and that the Building Safety Regulator and the roll-out of new regulations, including second staircase rules, under the last Government stymied and slowed down development and changed the viability.
Fundamentally, in the hon. Member’s patch and mine, Conservative councils are taking far too long to approve development on brownfield sites, if they ever do. Again, that is pushing against viability. This Government have taken measures on all the things I mentioned. Does the hon. Member not agree that it is slightly rich for the Opposition to claim that this Government are somehow responsible for those homes not being built out more quickly?
Lewis Cocking
I am slightly bewildered. I have great respect for the hon. Gentleman, who invited me in a debate in the Chamber to visit a pub in his constituency. I did not take him up on the offer, but maybe I should have, because I could have corrected him on a lot of the things he has just said. I am slightly bewildered by the nonsense that has just been spoken.
I was a council leader. The planning system is not why these houses do not get built. When I speak to developers in my constituency, lots of them say that it is now difficult to employ people because of the day-one employment rights that this Government have brought in. Lots of businesses speak to me about the increase in national insurance contributions. The Opposition have a plan to take £50,000 off the cost of building a new home, which will include social homes and increase the supply. This Government have done nothing to increase supply; all they have done is attack local councils for giving out planning permission. Local councils get punished when they do not have a five-year land supply, which is something that they have very little control over. The Government need to do much more to develop brownfield sites.
John Slinger
I very much like and respect the hon. Gentleman, but does he agree that education and health resources, for example, in towns—where brownfield sites invariably are—are often relatively busy or full up, and face real challenges and pressures? Other conurbations such as villages, which admittedly do not have all the transport links that make town brownfield sites the most prominent in the planning system—let us not forget that they are prioritised by this Government—also need additional housing and social housing. Quite often, when I talk to people in those villages, their pubs and schools are struggling because they do not have enough people who want to use them.
Lewis Cocking
I thank the hon. Member for his kind words; I have great respect for him too. He makes an interesting point, but it is a wider issue than that. It is about appropriate development in the right place, followed up by infrastructure.
I agree that brownfield sites are usually in the centre of towns. As I said on Second Reading, we are all fed up with driving past sites with all the hoarding up. The sites have planning permission: either they have gone through the planning committee, and the local council has said, “Yes, we will give permission based on these circumstances,” or unfortunately it has not, but permission has been won on appeal. It creates a certain feel in a town centre when someone goes down and sees all the hoarding up on the brownfield sites.
In the heart of my constituency, in Cheshunt, we have a care home waiting to be built. It is a long-overdue facility in the local community that we really want to see built, but it has been left empty for years and years, and we just see the hoarding up. It creates a real sense of loss of pride in a place when someone goes down to the town centre and sees site after site like that. We have sites in Hoddesdon that got planning permission in 2014 and have only just started moving through this process.
Lots of things affect house build-out rates, but this Government could do much more to give powers to local councils to get these brownfield sites off the ground, because there are thousands of sites across the country that have planning permission but remain unbuilt.
The Minister for Housing and Planning (Matthew Pennycook)
Can the hon. Gentleman give us an example of the powers he has in mind that councils do not currently enjoy, but should?
Lewis Cocking
I know that the Minister has a lot of expertise in this area. One example is that when standard planning permission is issued, a developer might get three years to build. As we have seen in my local area, that does not necessarily mean that something gets built; it just means that they have started on site. That could be digging a hole or building the first wall; nothing is actually produced at the end of it. I would like councils to have a “use it or lose it” power, which would mean that someone cannot necessarily finish building just because they have started digging on site.
Matthew Pennycook
That is a very interesting line of argument. Is it now the Conservative party’s official position that “use it or lose it” powers should be introduced for brownfield sites?
Lewis Cocking
I think we have to explore all options. I want to protect as much of the green belt as possible. We all have brownfield sites in our constituency that we want used to meet the social housing targets and bring down waiting lists.
Unfortunately, the Bill talks about stopping the right to buy. I just want to put it on the record that if we do that, the people who bought those houses will still be in them. Those people, and the waiting lists, will not magically disappear if we get rid of the right to buy.
Gideon Amos
The hon. Gentleman is being generous with his time, as always. I welcome the Conservatives’ move towards “use it or lose it” permissions. I assume that they agree that “lose it” should mean the compulsory acquisition of sites that have not been built out within a reasonable period, as the Liberal Democrats argued during the passage of the Planning and Infrastructure Act 2025. Otherwise, what does “lose it” mean? How does it have effect?
Lewis Cocking
As I say, we need to explore all options, and I want brownfield sites to be built out first. I want to protect as much of the green belt as possible. That means looking at how to use areas that have planning permission and have already gone through the planning process—areas in our town centres that residents drive past all the time. The Government need to look at those sites, because there are loads of unbuilt planning applications; we have all had consultations and spoken to our residents about them. All options must be on the table.
We see this in our constituencies all the time. People come to see me at my local surgery to ask why a site has not been built out. We desperately want a care home built on a brownfield site in the middle of Cheshunt town centre. It would be good if the Government gave local councils tools to enable those sites to get built out quicker.
Patrick Spencer
I think it would be appropriate to remind the Committee that the purpose of new clause 34 is to force the Government to bring forward a strategy for utilising brownfield sites. It is not about bouncing Opposition parties into make policy on the hoof; it is for the Government to come up with ideas. Will my hon. Friend reaffirm that his point is that the Government should bring forward a strategy to indicate their intent?
Lewis Cocking
Absolutely. New clause 34 says that the Government must bring forward a strategy for brownfield sites, which could include a multitude of options. When they do so, the Opposition will look at the benefits of all the items in the strategy, which could include a “use it or lose it” power. That is one example that the Government could review to see what could happen.
The new clause is about using brownfield sites first. I do not think that anyone disagrees with that, so it would be good if the Government accepted it. If they do, the Bill might actually be about building more social housing. At the moment, it does nothing of the sort.
Edward Argar (Melton and Syston) (Con)
I rise to speak in support of new clause 34, which stands in the name of my hon. Friend the Member for Orpington. I have listened very carefully to hon. Members’ exchanges, and I have to say that I do not see what is particularly contentious about my hon. Friend’s proposal. It is not unreasonable to focus on the development of brownfield land first, as the previous Government did. We should therefore have a strategy to draw the strands together as we look towards the future. However many more years of this Government we have, the power is in their hands to do this. I do not see what is contentious about doing what my hon. Friend’s new clause proposes.
I listened carefully to the hon. Member for Rugby, but I have a counterpoint to his point about development on brownfield sites. My constituency has a couple of towns in it and is right on the edge of Leicester, but it goes way up into rural north-east Leicestershire. The reality is that the developments on the edges of the towns or nearer the city often work most effectively, because there are bus routes and there is access to more schools, shops, businesses and employment opportunities.
The challenge that we face locally is that in Leicester city, which has a Labour mayor and which I go through on my way from the station to my constituency, there are undeveloped, unmodernised and un-utilised brownfield sites or commercial sites that have fallen into disuse. Nevertheless, the mayor says that he cannot meet his housing targets and has therefore farmed them out to the rural areas in the county. That means a significant amount of development on the edges of villages—often with no bus route or only a sparse service, a full village primary school and a GP practice serving a whole range of rural communities—that are unable to meet the needs of the additional development. The pressure on local services is a real challenge. I have been pushing for a long time to see whether, when these applications are brought forward, there is a way of having “i” before “e”—infrastructure before expansion—so that at least we know the services are there.
There is one big challenge that previous Governments I served in did not solve, and which I suspect this Government will struggle to solve, because it comes down to the viability of development. We can, and local authorities do, ask developers for capital contributions for those services, but often the problem is the ongoing revenue cost of running them. That means that we can get an extra room in a surgery, but will the local NHS integrated care board be willing to fund the salary costs and commission extra GP practice services?
Danny Beales
Perhaps I am going to get in trouble, but once again I agree with a lot of what the right hon. Member says. It is frustrating that the future benefits of infrastructure have not often been realised because of the funding models in place. Local leaders and local mayors have said, “The case is clear for this infrastructure: it will unleash housing and growth,” but to get that capital they have to go to the Treasury to make a business case, with begging bowl in hand. It takes too long.
This Government are changing that. The Budget yesterday gave significant new powers to mayors: in London and around my patch, they include the tax increment financing scheme for Euston, the Bakerloo extension and a number of other projects. The Government are looking to give mayors a greater share of business rates and taxation to invest up front in infrastructure and the benefits of growth to come. Are the Government not doing exactly what the right hon. Member is saying should happen?
Edward Argar
I hesitate to disagree with the hon. Gentleman, for whom I have a lot of time, but no, they are not doing that, certainly not in my constituency. There is a Mayor of Leicester, but there is no mayor of Leicestershire, so we do not get any of the benefits. The Minister’s colleague—the Under-Secretary of State for Housing, Communities and Local Government, the hon. Member for Oldham West, Chadderton and Royton (Jim McMahon)—will make a statement in the Chamber in about 20 minutes, so he may be about to change the position, but currently we do not have those benefits.
A lot of the challenges around service provision are not addressed by what the Chancellor set out yesterday. Take the NHS funding model, for example: in my area, the Leicester, Leicestershire and Rutland integrated care board is having to make in-year savings to live within its financial envelope. We have GP practices that are full—one practice in Melton Mowbray has 37,000 patients on its books—and yet the ICB says it sees no reason to expand to meet the need. The development has not happened yet in Melton, so it will not expand until the need is demonstrably there, by which time a whole range of people will have moved into the new development but will not be able to get on the list for the surgery, or will be waiting a very long time. I am not saying that this is a challenge that suddenly appeared in July 2024. Governments of all political complexions have grappled with it. I have a lot of time for the Minister; I hope this issue is on his radar.
On brownfield sites, the proposal from my hon. Friend the Member for Orpington should not be contentious; it is a sensible approach to draw together all the different strands of work that the previous Government did to push the development of brownfield sites. Let me give a few examples. The national policy planning framework had a clear focus on the issue. We required local authorities to publish reports and registers of available brownfield sites for development. We reviewed permitted development rights and changes in use class rules to make it easier for commercial sites to be repurposed for development into housing. Alongside that, we put £4.3 billion into the housing infrastructure fund and £550 million into the brownfield housing fund. That is tangible investment to persuade and support local authorities to prioritise brownfield first.
The problem in my patch is that the Labour Mayor of Leicester simply did not do it. We can see the brownfield sites everywhere, and we can see the development being pushed out into the county because the city has failed to do what it needs to do.
My hon. Friend’s modest amendment would compel the Government to draw together all the strands of work that the previous Government did, and that this Government are also doing, into a clear and coherent strategy that would prioritise brownfield sites much, much more and would give local authorities and others the means, the support and the policy back-up to make this work a genuine reality on the ground. I will finish by simply emphasising my support for my hon. Friend.
Patrick Spencer
The reality is that when one serves with such an august group of gentlemen, one’s own speech gets slowly whittled down after they have made theirs. However, these are pet projects of mine, because as I said earlier, I am one of those on the Committee who represents a rural community, and in Suffolk we have seen the reality of building houses in areas that are just not suited to it. We have had a number of major weather events over the past 10 to 15 years, and I have not read a single section 19 flood report that did not identify urban sprawl and house building in rural areas, on floodplains or on low-lying land as a major contributor to massive flooding risks in rural England.
As my right hon. Friend the Member for Melton and Syston mentioned, many homes built in rural areas are not near schools, transport infrastructure or high streets. These are not houses that young people want to move into. I use this anecdote all the time, but in my village, which is in the middle of nowhere, we have had 30 units built on the side of the town. Not only are they too expensive, but we do not have any of the utilities that the young people we are trying to solve the housing crisis for want. At the same time, I have Ipswich in my constituency, and it is a mine of brownfield sites.
The new clause could be a huge opportunity for the Government to align their social housing policy with their broader economic agenda of empowering regions, because our economic future is in towns and cities. That is an inevitability: it is where the jobs will be made and where the growth will happen. That is where educational institutions—those anchor institutions, which are so important for the long-term economic viability of these towns—are based. That should not come as a surprise to hon. Members here representing Rugby, Wolverhampton and Durham. The Members for all those places would say, “We want jobs, young people and institutions that embed economic growth, and”—critically—“affordable homes to sit beside them.” What is the point of a thriving town without affordable housing?
John Slinger
Does the hon. Gentleman agree that the need for social homes—and for affordable homes, although we are talking about social homes here—exists not only in our towns, but in our villages? If we are to deal with the long-standing problems with the high cost of homes on the private market, we will need social homes across the range of conurbations in our country.
Patrick Spencer
We would not argue against that statement one bit. I am not trying to expunge social tenants from rural England. Suffolk is not just a load of farms and tractor driving; we have a lot of working-class towns. We need social housing, but we are talking about the future of social housing, the future of our economy and the future of our dynamism. We have always moaned jealously about the French, the Germans and the Americans for having dynamic economies with engines of prosperity outside the capital city, while we are stuck with a unimodal economy that is so rooted in London—it is crazy that I am making the Prime Minister’s arguments for him from the Opposition Benches, but anyway.
Surely this is an opportunity. If we are going to build 50,000 to 100,000 or 150,000 homes, and if we are going to tackle the 1.3 million people who are stuck on the waiting list for social houses, why do we not make sure that that is aligned with our responsibility for economic growth? We are all bored with hearing from experts, friends and family members about the lack of joined-up policymaking across Government. This Bill, which is not an inconsequential Bill but is one piece of a wide patchwork of legislation, is a good example of how we can align with a wider economic agenda that we can all get behind.
Matthew Pennycook
It is a pleasure to continue our proceedings and to see you in the Chair, Sir Roger. After the Opposition’s—to put it candidly—languid approach in our previous sittings, I welcome the fact that they have clearly woken up and are now fully participating in the debate. Partly for that reason, we had a remarkably productive first day in Committee on Tuesday. Our debates on many of the clauses and amendments were predictably spirited; nevertheless, they remained civil and, in the main, constructive. I hope we can proceed in that vein today.
Before I respond to the new clauses, I will make a general point—a point that the shadow Minister is clearly struggling to grasp. Our ambitions to deliver the biggest increase in social and affordable house building in a generation will benefit from the Bill, but they are not entirely dependent on this one piece of legislation. The supply statistics speak for themselves. Let me give the statistics from 2024-25. Overall social and affordable house building: 64,921, the highest level since 2014-15. Social housing on its own: 12,267, the highest level since 2012-13. Council-delivered homes: 10,600, the highest level since 1991-92. That is this Government’s record on social and affordable housing—and, by the way, this was all prior to the initial allocations from our social and affordable housing programme, which have now been made. We have increased supply, we will increase it further, and the Bill will make a material impact on doing so.
I turn to new clause 1. As the hon. Member for Taunton and Wellington is fully aware, we are committed, in line with our manifesto, to delivering the biggest increase in social and affordable house building in a generation, to prioritising the building of new social rented homes and to supporting councils and housing associations to make a greater contribution to affordable supply. In the 27 months for which we have been in office, we have faithfully sought to honour those commitments. We have made the biggest long-term investment in social and affordable housing in recent memory, an investment that was topped up in yesterday’s Budget by a further £1.5 billion pounds, as the hon. Member rightly recognised. We are vigorously prioritising social rented housing, we are rebuilding the capacity of councils and housing associations to borrow and invest in new and existing homes, and we are reinvigorating council house building.
In his more generous moments, the Liberal Democrat spokesperson acknowledged the transformative impact of what this Government have done on social housing supply. I understand—indeed, I welcome and embrace—his encouragement and support for raising our ambition further. However, given the nature of our inheritance from the Conservative party, with social housing supply averaging a historical low of fewer than 8,000 units per year from 2013 to 2024, following the purposeful and deliberate pivot to affordable rented tenures, a target of 150,000 new social homes per year is not currently realistic. A statutory requirement to produce a strategy for delivering such volumes within 12 months of Royal Assent is not a proposition that we can support.
I say gently to the hon. Member for Taunton and Wellington that his party continues wildly to underestimate the costs of supplying social housing on the scale that he proposes. The Government’s estimate of the grant funding required to support the delivery of 150,000 social homes is in excess of £20 billion per year. For obvious reasons, the hon. Member’s party has escaped the kind of scrutiny to which the Government and the official Opposition are subject, but if his party wants that 150,000 figure to be taken seriously it will have to set out a credible funding strategy. To date, it has not done so.
Gideon Amos
We shall certainly be setting that out prior to going into government. The Minister makes an extensive argument that 150,000 is not the right target. Shelter and the National Housing Federation say that a minimum of 90,000 are needed per year. What is the Government’s target?
Matthew Pennycook
As the hon. Gentleman knows, because we have had this debate many times, to date we have not set a national social and affordable housing target. That is because, as I have explained on numerous occasions, social and affordable homes come through grant funding and through the section 106 process; it is for local authorities to set out the needs for their particular areas as part of local plans. As he knows, through the NPPF we have strengthened some of the expectations in that area.
I turn to the hon. Gentleman’s new clause 4. The Government have already taken several steps to rebuild the capacity of councils to borrow and invest in new and existing homes, including the fundamental reform of the right-to-buy scheme at the heart of the Bill, as well as a 10-year social housing rent settlement, and social rent convergence.
In the Budget yesterday, it was confirmed that preferential borrowing rates for council house building will remain in place until at least March 2028 to support councils to borrow more cheaply for house building. There are no current restrictions exercised by central Government on the amount that councils can borrow via their housing revenue accounts for house building purposes. Councils are now free to borrow in line with the prudential code, which requires them to demonstrate that any borrowing is affordable, prudent, sustainable and proportionate. Those are precisely the types of test that the hon. Member’s new clause envisages. They are essential to ensure that local authority finances are managed sensibly and sustainably while ensuring sufficient flexibility to meet local housing targets. As such, in our view it is not necessary to accept the new clause as there are no restrictions to remove.
I turn to new clause 34, which was tabled by the hon. Member for Orpington. The Government are strongly committed—as was the previous Government, as several hon. Members have fairly pointed out—to a brownfield-first approach, including for the development of social housing. Let me be clear. I say this on every occasion I can: once permissions are granted, we expect to see them built out as quickly as possible. Opposition Members will not have to wait long for the build-out transparency package, on which we consulted some time ago, to be brought forward.
On 17 August, the Government published a new national planning policy framework that makes it clear that authorities should plan to meet as many of their development needs as possible on brownfield land. To strengthen support for the development of brownfield land, the new NPPF encourages higher densities in sustainable locations and greater intensification of urban and suburban sites. It also introduces a presumption that development inside settlements should be approved unless any adverse effects would substantially outweigh the benefits of doing so.
Furthermore, through the English Devolution and Community Empowerment Act 2026, the Government have committed to make regulations requiring strategic planning authorities to have regard to the desirability of prioritising development on previously developed land. That arose from a challenge we received from the Opposition during the passage of the Act. Taken together, those measures demonstrate the Government’s strong and continued support for brownfield development in national policy.
On social housing in particular, national planning policy reflects our commitment to the delivery of social rent homes. It requires local planners to set out minimum proportions of social rent required on new development. As everyone knows, the NPPF is a material consideration of critical importance in planning decisions and local plans are required to be prepared with regard to it. It is therefore the right place to set clear expectations for how and where development should come forward. A requirement to produce a separate brownfield land social housing development strategy would be unnecessary and duplicative, as existing policy and relevant plans already sufficiently achieve its aim.
On the point made by the hon. Member for Central Suffolk and North Ipswich, policy in this area is already aligned; we do not need a separate brownfield land strategy. Such strategies are, as I have previously dubbed them, the last refuge of an Opposition scrabbling around for meaningful policy amendments to a Bill. For those reasons, and having given those assurances, we cannot accept the new clauses.
Gareth Bacon
This is starting to become quite fun. I do not accept the Minister’s comments. We will seek to divide the Committee on new clause 34 at the appropriate moment.
Gideon Amos
Simply put, a target of 150,000 homes per year would not be a meaningless review; it would set the target that, so far, the Government have not put in place. The Minister welcomes our encouragement to challenge them to go further on social housing, so we will do so by pressing this matter to a vote. I encourage the Government to come up with a target for the number of social homes that they intend to produce.
Question put, That the clause be read a Second time.
The Chair
The hon. Member for Orpington has indicated that he wishes to press new clause 34 to a Division. For the benefit of those who are unfamiliar with this arcane process, let me explain that although new clause 34 was grouped with new clause 1, the Division on it will happen later in our proceedings. It will not be forgotten.
New Clause 2
Power of local housing authorities to suspend or abolish right to buy
“Before section 121(A) of the Housing Act 1985 insert—
‘Power of local housing authorities to suspend or abolish right to buy
(1) A local housing authority in England may make a determination that the right to buy does not arise in relation to dwelling-houses in its area.
(2) A determination under subsection (1) may apply to—
(a) all dwelling-houses within the authority’s area, or
(b) dwelling-houses of a description specified in the determination.
(3) The Secretary of State may by regulations make provision about the procedure to be followed by a local housing authority in making a determination under this section.’”—(Gideon Amos.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 53—Regulatory inspection at tenants’ request—
“(1) The Secretary of State must, by regulations made by statutory instrument, make provision enabling tenants of a registered provider of social housing to request an inspection of their dwelling by the Regulator of Social Housing.
(2) Regulations under subsection (1) must specify—
(a) the proportion of tenants required to support a request,
(b) the grounds on which a request may be made, and
(c) the circumstances in which an inspection may be refused.
(3) A statutory instrument containing regulations under this section is subject to annulment pursuant to a resolution of either House of Parliament.”
This probing new clause would enable tenants of a registered provider to request an inspection by the Regulator of Social Housing.
Gideon Amos
I am grateful for the opportunity to move the new clause, which stands in my name and in the name of my Liberal Democrat colleagues. Regulatory inspection of housing associations is particular to where there has been bad practice or responses to tenants have been poor. I acknowledge that most housing associations do an excellent job and fulfil a vital role in delivering the social homes that we need. However, where they are particularly bad or fail to deliver an adequate level of service and repairs to tenants, the Regulator of Social Housing may eventually carry out an inspection, but only years after tenants have been disadvantaged and not served.
Deirdre Costigan
The hon. Gentleman’s new clause 3 is very similar to the official Opposition’s new clause 53, which I believe they describe as a probing amendment. I have a probing question for him. How does he see things moving beyond the changes that the Government have already brought in, on a cross-party basis? Awaab’s law will allow tenants to report problems with repairs and have them dealt with by their housing provider within a very short timescale, and it will enable them to sue for breaches or go to the ombudsman. On top of that, there is the new right in the Bill to manage provision, which will allow tenants to get rid of the repair provider completely and bring in their own. How does he see his new clause moving things beyond that? What gap would it fill?
Gideon Amos
The hon. Lady makes some excellent points about measures that we have supported; Awaab’s law is one of them, as is the Renters’ Rights Act 2025. We certainly welcome the new standards to which tenants will have access. The import of this new clause is that it would cover a much wider range of poor practice: across a whole estate, for example, rather than individual dwellings, or indeed across all of a registered provider’s homes.
The regulator already inspects registered providers, but, as I say, its inspections tend to come after the scandal is all over—after things have been running for years and after tenants have complained, had recourse to complaints mechanisms and so on. Our new clause would allow tenants, where a reasonable percentage of them have signed up, to trigger an inspection by the regulator at an earlier stage. That would make it a proactive power of inspection, rather than making tenants wait until the end of the process for the regulator to look into it. Of course, there are details to be worked out, such as what we mean by an estate, which is why we made provision in the new clause for regulations, to be approved in this place, to set out those more detailed arrangements.
Fundamentally, this is about giving social housing tenants an extra lever: a power to bring in the regulator, where that is justified, to carry out an inspection in a proactive way. It is a constructive new clause and is tabled for that purpose. I am delighted that the Conservatives have followed suit with something similar; we could even be persuaded to vote for their new clause in the unlikely event that the Committee does not agree to ours today. Our new clause stands on its own merits. It would give an extra lever to social housing tenants, some of whom are really badly served by their housing associations. I commend it to the Committee.
Gareth Bacon
I rise to speak to my new clause 53. Many people in social housing have come into their new home after a past marred by hardship and a lack of safety. When tenants finally have a roof over their head and a place to call home, they must not be left to face unsanitary or unsafe living conditions because of their property owner or manager. That is why we tabled new clause 53, which the hon. Member for Ealing Southall was absolutely correct to describe as a probing amendment. It would add an extra layer of protection for tenants and a fresh route to direct accountability for registered providers.
The new clause would enable tenants of a registered provider to request an inspection by the Regulator of Social Housing, giving tenants new powers to ensure that their home is not just four walls, but a sanctuary. It is vital that social housing tenants be able to make the most of the regulator’s functions and that the regulator be not just a bureaucratic machine, but a voice for the vulnerable.
Matthew Pennycook
I thank the hon. Members for Taunton and Wellington and for Orpington for tabling and speaking to their new clauses. This Government are determined to ensure that social housing tenants live in safe and decent homes, and that they are listened to and have access to redress when things go wrong. However, I am not persuaded that these amendments are necessary.
In the spirit of cross-party generosity, I will say that the powers taken under the Social Housing (Regulation) Act 2023 under the previous Government did not do all bad things; there were some good things that the previous Government did, and we should acknowledge them. The Act provided the powers for that regulatory framework, which provides strong mechanisms for tenant voice and regulatory oversight.
In 2024, the regulator introduced a new proactive regulation regime and has since begun inspecting all large landlords at least once every four years. The regulator issues a consumer grading after those inspections, so that it is clear to tenants and the public how well the landlords are performing. In addition, the regulator retains the ability to engage with landlords outside these routine inspections if concerns are raised.
Lewis Cocking
I thank the Minister for giving way; he is always very generous with his time. Does he believe that the Regulator of Social Housing has enough powers to deal with the issues that he describes? That is just me, in a good spirit, asking a genuine question about how he thinks it is operating.
Matthew Pennycook
I am always open to evidence that it does not have sufficient powers. My judgment is that it does, and that the consumer ratings it hands out—we are getting a steady stream of them now—really do have an impact in driving improvements in landlord behaviour.
Central to the regime is the regulator’s independent and risk-based approach. That allows the regulator to target its engagement and interventions to areas where there is the greatest risk of harm to tenants. It is worth clarifying that tenants and other members of the public can refer matters to the regulator where they believe that a registered provider may not be meeting the outcomes of the standards, and the regulator may take those concerns into account as part of its wider regulatory activity, including inspections. However, in our view, introducing tenant-triggered inspections risks cutting across that approach by potentially diverting regulatory resource away from higher-risk providers or issues, while undermining the regulator’s ability to act independently. Our view is that the existing framework already ensures that tenants’ concerns can inform regulatory action, by allowing the regulator to determine where intervention is most needed.
On new clause 53, which the shadow Minister made clear is a probing amendment, I would have particular concerns about introducing a mechanism whereby the regulator would inspect individual tenant’s dwellings. Although individual tenants can escalate issues to the regulator, as I have made clear, it considers performance against the regulatory standards at a landlord level and seeks assurance that the landlord is delivering the outcomes set out in the regulatory standards.
The regulator directly inspecting individual homes would move away from its co-regulatory approach and would require significant additional resource. In addition, tenant views already play an important role in the existing regime, and the regulator draws on a range of sources as part of its inspections, including through the landlords complaints process, the Housing Ombudsman and direct referrals. The existing framework ensures that tenants already play an important role in the system, without the need for a statutory mechanism to trigger inspections.
For those reasons, I respectfully ask hon. Members not to press their new clauses.
Gideon Amos
I wish to press new clause 3 to a vote.
Question put, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 12—Review of access to social housing for rehabilitated offenders—
“(1) The Secretary of State must undertake a review of the level of access to social housing for rehabilitated offenders.
(2) The review must assess—
(a) whether current allocation schemes give sufficient priority to rehabilitated offenders seeking to resettle in the community,
(b) the adequacy of provision for rehabilitated offenders with vulnerabilities or other needs arising from their offending history or period of custody, and
(c) the effectiveness of existing support in assisting rehabilitated offenders to access and sustain social housing tenancies.
(3) The Secretary of State must lay a report of the review before Parliament within 12 months of the day on which this Act is passed.”
This new clause requires the Secretary of State to review and report to Parliament on the extent to which rehabilitated offenders are able to access social housing.
Gideon Amos
The new clause stands in my name and in the name of my Liberal Democrat colleagues. The run-up to Remembrance Sunday and Armistice Day is the appropriate time to consider and take account of the needs of service personnel and veterans under the Bill. About 3% of rough sleepers are veterans, according to the No Homeless Veterans campaign. Government research found that 2,180 veteran households were assessed as at risk of experiencing homelessness. One of the most significant reasons for that is post-traumatic stress disorder, which obviously affects many veterans, and one in three veterans are also disabled.
The new clause would require the Secretary of State to review and report to Parliament on the provision of social housing for former members of the armed services. To anticipate the point that this is simply a review, surely no group can be more important to review the performance of social housing for than our veterans and those who have put their lives at risk for our country.
I shall speak now to new clause 12, which also stands in my name and those of my Liberal Democrat colleagues, rather than having to sit down and stand up again—a great tradition in this House. New clause 12 is on reviewing access to social housing for rehabilitated offenders. There has been a staggering 26% year-on-year increase in the number of households requiring homelessness support due to leaving care, custody or hospital.
When it comes to rehabilitated offenders, the last thing we want are offenders whose rehabilitation is not sustained or supported due to their having nowhere to live. One in 10 of those sleeping rough were recently discharged from an institution. That is a massive number. We need to do better by those who need that support. One in six prison leavers had no fixed abode on their first night in 2025-26. About 1,000 a month were released to rough sleeping in 2024-25, up about 40% in a year. I therefore respectfully submit both new clauses to the Committee for consideration.
Matthew Pennycook
As the hon. Member set out, new clauses 5 and 12 would require the Secretary of State to publish reports on access to social housing for former members of the armed forces and for former offenders, respectively.
We want to ensure that the social housing allocation system works fairly and effectively. Current and former members of the armed forces community benefit from strong protections within the allocations framework, including receiving the highest preference where they have a housing need. Where local connection or residency tests apply to determine who qualifies for an allocation of social housing, legislation exempts the armed forces community, regardless of when they last served. That ensures that they are not disadvantaged when applying for social housing due to the mobility required by service life. New clause 23, which we debated on Tuesday, will also ensure that veterans do not face local-connection barriers when seeking homelessness assistance.
Statutory guidance is in place on improving access to social housing for members of the armed forces. There are not specific protections in the system for former offenders, who will have their housing need considered in the same way as other groups. They may fall within other existing statutory reasonable preference categories—for example, where they are homeless, need to move on welfare grounds or need to move because of medical or other relevant needs. Work is already under way to update statutory guidance on social housing allocation to ensure that allocations reflect local need and effectively support vulnerable households. Our call for evidence on this issue recently closed, and we are now working with partners to prepare updated guidance. We plan to consult on that updated guidance next year.
With that comprehensive review already under way, we do not consider that there is a need to conduct separate reviews for specific groups such as former members of the armed forces or former offenders. On that basis, I hope that the hon. Member for Taunton and Wellington is sufficiently reassured to consider withdrawing the new clause.
Gideon Amos
New clause 5 is not a burdensome amendment; it is a review of access to social housing for former service personnel. I hear what the Minister says about the Government keeping these matters under review, but surely a Social Housing Bill should commit to supporting our veterans and armed service community in this way. I will press the new clause to a vote.
Question put, That the clause be read a Second time.
Gideon Amos
I beg to move, That the clause be read a Second time.
The new clause relates to the requirement for wheelchair-accessible social housing. Social tenants are worse served now than they were in terms of access to wheelchair- accessible housing. In 2022-23, a third of wheelchair users in the social sector were placed in homes that were neither accessible nor adapted, according to Age UK.
The planning system is also something of a postcode lottery. Only 170 out of 311 local plans set targets for wheelchair user homes. Nationally, one wheelchair-accessible home is planned per 538 people; the south-west plans one per 810 people; London plans one per 210 people; and the north-west plans one per 2,006 people. The NPPF does not require any M4(3), which relates to homes that are wheelchair-accessible under the building regulations. It leaves it to local plans to assess need, and we have already seen how this is something of a lottery.
London already has a 10% requirement in its local plan, which proves that 10% is achievable. The Minister may say that this is a matter for devolution, so that local communities rather than central Government can decide, and that councils are free to follow that example. However, we say that a minimum floor of 10% is reasonable, and it has been considered by a previous Government. We respectfully submit that 10% of new social housing should be wheelchair-accessible.
Matthew Pennycook
New clause 6, tabled by the hon. Member for Taunton and Wellington, seeks to ensure that at least 10% of new social housing dwellings meet the M4(3) wheelchair-accessible standard in the building regulations. I very much commend where he is coming from with the new clause.
The Government recognise the importance of increasing the supply of housing for older people and those with disabilities. The hon. Gentleman is right that for many years it has been something of a postcode lottery. That is why the new national planning policy framework recognised the need to drive up, through planning policy, rates of M4(2) requirements, and we have set a minimum floor of 40%. It is also why, when it comes to M4(3), the NPPF requires plans to set out the proportion that should be delivered to that standard to meet or exceed identified need. In our view, that is a significant step forward in ensuring that more wheelchair-accessible housing is delivered. However, we recognise that M4(3) is a specialised product for wheelchair users, with levels of need differing considerably between local areas.
Our approach acknowledges that local authorities are best placed to assess accessible housing needs in their areas and to set out appropriate exemptions. A blanket 10% M4(3) requirement would risk undermining policies set at a local level. To support the locally led approach, we have committed to producing guidance to assist local authorities in assessing the housing needs of disabled people, to ensure that assessments of need are robust and consistent. Social and affordable homes programme funding can also be used to support the delivery of much-needed new supported housing, including new accessible homes.
In our view, national policy remains the most effective route through which planning reform should be pursued. Imposing such a requirement in legislation rather than in policy, as this new clause seeks to do, would be unduly rigid, could limit an authority’s ability to respond to local circumstances and could constrain growth. We therefore think it is right to continue addressing these matters through planning policy and guidance.
For those reasons, I kindly ask the hon. Member for Taunton and Wellington to withdraw the new clause.
Gideon Amos
I hear what the Minister says, but we have had these expressions in guidance and policy before, and we are still a long way from having suitable provision for wheelchair-accessible homes. With the leave of the Committee, I will therefore press new clause 6 to a vote.
Question put, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 9—Zero-carbon standards for new social housing—
“(1) The Secretary of State must by regulations require that all new social housing dwellings constructed in England are constructed to a zero-carbon standard.
(2) The Secretary of State must make regulations under subsection (1) within 12 months of the day on which this Act is passed.
(3) Regulations under this section must be made by statutory instrument.
(4) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
Gideon Amos
I appreciate that we are in the meat of the main new clauses that I and the Liberal Democrats have tabled, but this one is particularly important, given the experience we had in the summer. It is about the mitigation of overheating and cooling standards—the cool rule, as we would term it.
The new clause would require that where passive measures are not sufficient to achieve a reasonable level of cooling in new social homes, there is active cooling to supplement that passive cooling, sufficient to achieve a temperature of around 21°C during periods of high external temperatures.
We have had an extraordinary summer, have we not, Sir Roger? We witnessed five heatwaves. Cobra was convened. People died in overheated homes. We approved the Hazards in Social Housing (Prescribed Requirements) (England) (Amendment) Regulations 2026 just last week, adding excess heat to the prescribed hazards that social landlords must address. The Bill is an opportunity to ensure that new homes do not end up in the same state as the homes that I have described.
The initial responses to the requirement for active cooling are the energy considerations, and perhaps considerations relating to the urban heat island effect. When one examines both of those, it becomes absolutely apparent that we need active cooling in our homes, given the change in climate that we have had.
On the energy consumption, let us remember that we paid, I think, £260 million to generators of solar and wind energy this year to turn off that generation of electricity and to stop using it. We have surplus electricity being generated, particularly in the hotter months in the summer, which we are not using and cannot use. In fact, there is an argument for electrification in a whole range of other fields as well, so that that electricity can be used and the renewables industry can be recompensed for generating it, and we are not using taxpayers’ money to turn off that ability to generate electricity. There is therefore no shortage of electricity for active cooling, which we desperately need in our homes.
Matthew Pennycook
I thank the hon. Member for Taunton and Wellington for tabling new clause 7, which I will start with. He is absolutely right to draw attention to overheating, and I assure him that the Government recognise the scale of the challenge it presents.
Overheating in homes is already a severe public health issue, and one that will grow only more acute in the years ahead, for the reasons that the hon. Gentleman has rightly stated. We know there are health risks and implications for excess deaths for particularly vulnerable populations. We take it extremely seriously, and we agree that new homes should protect everyone from the risks of overheating. That is why part O of schedule 1 to the Building Regulations 2010 requires that new residential buildings in England are built to mitigate the risk of overheating. The Government continue to keep these requirements under review, and a full technical review of part O is currently under way to ensure that the framework remains effective and proportionate. These requirements already apply to newly built social housing, ensuring that residents benefit from the same standards of overheating mitigation regardless of their tenure type. The accompanying statutory guidance, approved document O, sets out how these requirements can be met.
The new clause would require active cooling, such as air conditioning, to be installed wherever an indoor temperature of 21°C cannot be maintained. Conversely, part O assesses the risk to health posed by overheating through an evidence-based methodology and does not rely on a single prescribed temperature threshold. Part O also prioritises passive measures, such as shading and natural ventilation, which help to prevent homes from becoming too hot in the first place. In many cases, overheating can be effectively mitigated through passive measures alone, so part O helps to create homes that are resilient to hot weather while limiting energy use, carbon emissions and energy bills for residents.
Gideon Amos
I apologise for interrupting the Minister’s flow. To clarify, the new clause proposes active cooling only where that temperature cannot be achieved otherwise. The priority of passive measures would continue with this new clause.
Matthew Pennycook
I welcome that clarification. I was going to say that part O does not prohibit any form of active cooling where designers can demonstrate that it is appropriate.
As I say, part O encourages passive design measures before relying on mechanical systems. In many cases, as I have said, overheating can be effectively mitigated through passive measures. Mechanical cooling, such as air conditioning, can be used to mitigate overheating where all reasonably practicable steps have been taken to minimise it through passive means. For those reasons, we think that the new clause would likely increase the unnecessary use of mechanical cooling, with associated costs for both developers and residents. I therefore ask the hon. Member kindly to withdraw the new clause.
New clause 9 concerns zero-carbon standards for new social housing. The Government fully recognise the importance of ensuring that new homes, including social housing, support our legally binding net zero target. We share the hon. Gentleman’s ambition to deliver homes that are energy efficient, low carbon and fit for the future. That is exactly what the future homes standard will achieve. The reassurance that I was going to give him in my intervention was that that is not affected by the Chancellor’s announcement yesterday of an effective moratorium on major new regulations, setting aside the qualifications that he set out at Dispatch Box with regard to building safety issues.
The Government legislated for the future homes standard in March, and it will come into force for non-higher-risk buildings from 24 March 2027, and for higher-risk buildings from 24 September 2027. It will apply to all new homes, including social housing. Homes built to this standard will have high levels of energy efficiency, use low-carbon heating and, in most cases, generate renewable electricity on site. These homes will also be zero-carbon ready, meaning that they will produce very little carbon and will become zero carbon once the national grid is fully decarbonised, without requiring further retrofit.
That is the really important point: we are retrofitting homes that have been built over recent years—at great cost—because of a previous Government’s decision to remove the required standards that were in place. We could go into that and the costs that that entails, but they are outside the scope of the Bill. We are ensuring that the new homes that come forward, once the standard is in place, are zero-carbon ready, so they will not require further retrofit.
The Government have also worked carefully to set a standard that delivers substantial carbon savings while remaining proportionate, technically feasible and deliverable at scale. In our view, introducing further new standards would risk creating a separate and potentially inconsistent regulatory regime for social housing, as well as additional cost and delivery pressures for the sector. Although I agree with the objective behind the new clause, I consider that the future homes standard already provides the appropriate means of achieving its aims. For those reasons, I respectfully ask the hon. Gentleman not to press new clause 9 to a vote.
Gideon Amos
On new clause 7, the cool rule, I appreciate that, as the Minister points out, there is no prohibition on active cooling being used in new homes, but the fact is that we need to secure cooling. We cannot just leave it so that only the most luxury accommodation has cooling in the extremely hot summers that we are having. Just as we have habitable standards for space, daylight and heating, we need a statutory standard for cooling. If it does not come today, I believe it will come, so I wish to press new clause 7 to a vote.
Question put, That the clause be read a Second time.
The Chair
Before we come to new clause 10, I remind Members that where a lead amendment is grouped with others, they do not need to seek permission to speak to those other amendments. Only the lead amendment is moved at that time, but Members may speak to any of the amendments grouped with it. If they are reached, and if a Division is required, that will take place later in the proceeding. I said it was arcane, and it is.
New Clause 10
No reduction in social housing secured through planning permissions or obligations
“(1) A local planning authority must not agree to any modification or discharge of—
(a) a planning obligation entered into under section 106 of the Town and Country Planning Act 1990, or
(b) a condition attached to a planning permission,
where the effect of the modification or discharge would be to reduce the number or proportion of dwellings secured as social housing under that obligation or permission.
(2) Subsection (1) applies to any planning obligation or planning permission entered into or granted before, on, or after the day on which this Act is passed.”—(Gideon Amos.)
Brought up, and read the First time.
Gideon Amos
I beg to move, That the clause be read a Second time.
I am incredibly heartened by your experience of Parliament, Sir Roger, and your statement that you find it arcane. If you find it arcane, I can only imagine how those of us who came into the House only recently find it, so I appreciate your clarification.
I will speak briefly on the new clause, really to highlight the frustration that many people feel when they see social housing quotas reduced. That frustration comes from seeing quotas promising a certain level of genuinely affordable housing for local people go through the planning system and be negotiated, only for the applicant to re-negotiate that consent, argue viability and, as frequently happens, remove all affordable housing.
My hon. Friend the Member for St Ives (Andrew George) brought to my attention the example of an exception site that included around 40% social housing. The permission was in place, but as the Government’s new standard method renders nearly all authorities unable to meet their five-year housing supply, the Government’s inspector had no alternative but to remove all the social housing from that permission on appeal and revert it all to private housing.
The Government’s new standard method has created a free-for-all. An exception site that was granted permission only because it would deliver social housing is now entirely private market housing, which local people in Cornwall will not be able to access or benefit from. I think communities are very frustrated at seeing such consents undermined at later stages. The new clause seeks to rectify that by preventing social housing numbers from being argued down, and I respectfully commend it to the Committee on that basis.
Matthew Pennycook
New clause 10 seeks to prevent local planning authorities from agreeing to any reduction in the number or proportion of social homes required through a planning obligation or condition. The Government are committed to strengthening the system of developer contributions to ensure that new developments provide necessary affordable homes and infrastructure, and we have already taken a number of steps to that end.
The new NPPF, published on 17 August, seeks to promote greater clarity on expected contributions at the plan-making stage, and to reduce cases of unnecessary site-specific viability assessment by clarifying when it may be appropriate at the decision-making stage. That certainty will help to minimise lengthy negotiations over developer contributions, including affordable housing, on specific sites. At the same time, the framework will retain flexibility for cases where negotiation is genuinely needed to enable sites to come forward.
We are also acting to minimise friction and reduce the complexity involved in the negotiation of section 106 agreements, which are, and will remain, an essential mechanism for delivering social and affordable housing, but which in recent years have become synonymous with inefficiency and delay. The new NPPF formally introduces the category of “medium development”—sites of up to 2.5 hectares with between 10 and 49 units. It also provides the basis for the use of model obligations, as policy DM6(4) states:
“Where national model planning obligations are relevant to the development, they should be used unless there are strong reasons for using a different planning obligation.”
Following that, we launched a consultation on four standardised planning agreements for medium-sized sites, which will be expected to become the default for relevant applications in future. The consultation closed on 20 October 2026, and we are considering the responses received.
The proper process for modifying or discharging planning obligations is set out in section 106A of the Town and Country Planning Act 1990. I know that the hon. Member for Taunton and Wellington knows this; he has great experience in this area from before he came to the House. As set out in my letter to the Planning Inspectorate earlier this year, attempts to revisit fundamental issues of viability or planning obligations through section 73 applications should be carefully scrutinised and supported by robust justification, with due weight given to the impact of any reduction in affordable housing delivery and to the wider merits of the scheme.
Gideon Amos
I am grateful to the Minister for engaging on all these amendments, including this one. My question is whether he and the Government recognise that, as in the example I cited, most authorities in southern England cannot meet the five-year housing supply because of the standard method, and that, as a result, social and affordable housing is being removed from planning permissions. Are the Government concerned about that? Are they doing any assessment of how much this is happening?
Matthew Pennycook
I am going to be careful, because—as the hon. Gentleman will be fully aware—given the role of Ministers in the Ministry of Housing, Communities and Local Government in the planning system, I obviously cannot comment on particular local plans or applications, and I do not know the specific circumstances of the case he cites.
I make the general point—picking up on something that I think the hon. Member for Orpington mentioned earlier—that when we arrived in office, house builders across the country were telling us that the planning system was, in the main, probably the biggest barrier to house building they faced. Following the reforms we have made to national planning policy, they no longer say that; as the hon. Member for Taunton and Wellington rightly highlights, viability is the chief concern at the moment. Viability pressures are acute across the country, and in certain parts they are particularly severe—London is a good example—so they are bearing on schemes and what they can bring forward.
If I am honest, I struggle to see the direct link between the standard method, the five-year housing land supply and the housing delivery test concerns that I know the hon. Gentleman has raised in the past, but he and I could have a wider discussion on that outside the Committee. I am trying to remain focused on the intent behind the new clause, which concerns planning obligations and conditions.
Let me just set out the Government’s position on section 73. Alongside ongoing work relating to the implementation of section 73B of the Levelling-up and Regeneration Act 2023, the Government intend to undertake a wider review of the statutory framework for modifying or discharging existing planning obligations, and we will provide further details about this in due course. I hope that will reassure the hon. Member for Taunton and Wellington on section 73B, but I am clear that our intention in reviewing this matter is not to allow developers to more easily reduce planning obligations already entered into, including for affordable housing.
The Government have also acted to deal with the detrimental consequences of a declining market for section 106 affordable homes. We have already taken a number of steps to support demand for section 106 units, not least spending review measures designed to rebuild the capacity of registered providers. As a result, we are seeing tentative signs of improvement in appetite for acquiring section 106 homes.
However, despite that positive shift in sentiment post spending review, we know there are still housing schemes where developers remain unable to secure an RP buyer for the affordable homes set out in an original section 106 agreement, and where local planning authorities and developers have not discussed or reached agreement on variations to planning obligations, with the result that many of these sites are stalling.
It is for that reason that we made it clear in a written ministerial statement on 28 January that we expect all local planning authorities to take advantage of existing planning flexibilities to renegotiate section 106 agreements, and to allow the tenure of homes to be varied to secure a buyer where affordable homes secured in section 106 agreements remain uncontracted or unsolved. As the hon. Member for Taunton and Wellington will know, this can be effected by a deed of variation that makes amendments or revisions to existing section 106 agreements, either by agreement of the parties to the section 106 agreement, or by formal application under section 106A of the Town and Country Planning Act 1990.
To pick up directly on new clause 10, which was tabled by the hon. Member for Taunton and Wellington, our concern is that it could create unintended consequences that may be contrary to our shared objective to boost the supply of social and affordable housing. Notwithstanding his concerns, which I recognise, it is important that the system retains sufficient flexibility for local planning authorities to respond to significant changes in site or economic circumstances after planning permission has been granted, such as a recession or a similarly significant economic change. We are concerned that new clause 10 could unduly restrict that flexibility, which could—this is the ultimate point—cause sites to stall and subsequently reduce overall housing delivery, including overall social and affordable housing delivery.
I suspect that I will not have convinced the hon. Gentleman entirely, but I hope he agrees that, as it stands, the system carefully balances the need for that flexibility with trying to ensure that we maximise the amount of social and affordable housing supply that can be secured. We should avoid legislation that imposes, in our view, an unreasonable degree of rigidity, while obviously continuing our efforts to increase affordable housing delivery overall. On that basis, I hope he might be persuaded to withdraw the new clause on this occasion.
Gideon Amos
I appreciate the Minister’s correct analysis that there is a balance to be struck with individual sites, and I accept that. There is a direct link between the standard method and the loss of social housing. The standard method, having been introduced, means that most local plans now cannot meet their five-year housing supply, which means that most of them are no longer effective.
Therefore, if a developer presents an inspector with a site that has both social housing and private housing, the inspector will be forced to conclude, on the section 73 application to amend the plan, that there is no longer an exception that justifies social housing, because all the sites have to come forward, and they all have to be market housing. That is the effect of imposing the standard method and rendering so many local plans no longer effective.
Matthew Pennycook
I am not responding to the hon. Gentleman’s point, but I want to make an offer to him, because he will know that I am genuinely interested. He will know that we have tried to strengthen national policy on rural exception sites through the NPPF, so I am very interested in whether he thinks there are particular reasons why that strengthening will not have the desired effect, or whether there are other barriers to bringingforward those sites. We want more of those sites to be brought forward, precisely for the reasons that he has set out.
Gideon Amos
That is very generous of the Minister, and I will take up the offer by writing to him with the appeal decision. That is now a completed decision, so it would not involve Ministers interfering in any way. He will be able to see the effect, and I think we need to understand how much that is happening across the country, if we are losing social homes all over. On that note, I will press new clause 10 to a vote.
Question put, That the clause be read a Second time.
Highways (Financing) Bill (Second sitting)
Thursday 29th October 2026
(1 day, 13 hours ago)
Public Bill CommitteesRead Full debate Highways (Financing) Bill 2026-27 View all Highways (Financing) Bill 2026-27 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 29 October 2026 - (29 Oct 2026)
The Chair
We are now sitting in public and the proceedings are being broadcast. Before we start to hear from our witnesses, do any Members wish to make a declaration of interest in connection with the Bill?
We will now hear oral evidence from the Centre for Policy Studies and Britain Remade. We have until 2.35 pm for this panel. Would the witnesses please briefly introduce themselves for the record?
Ben Hopkinson: I am Ben Hopkinson, head of housing and infrastructure at the Centre for Policy Studies.
Sam Dumitriu: I am Sam Dumitriu, head of policy at the campaign group Britain Remade.
Greg Smith (Mid Buckinghamshire) (Con)
Q
Clearly, this is a Bill of two halves: there is the specific stuff on the lower Thames crossing, and then it is a pretty open-ended book for other projects going forward. Can I have your initial assessment of whether this is the right model to solve both the question of getting the lower Thames crossing built and issues relating to future trunk road projects that may be required or identified in the country? Will it actually deliver value for the motorist and haulage businesses using the scheme? Do we even know that it will deliver to certain metrics? No one can give us an answer yet on what the toll would be on the lower Thames crossing, for example.
Ben Hopkinson: We have quite serious concerns about the regulated asset base model. This will certainly be the first time it is been used for roads. The main issue is that there are quite limited incentives for cost control within a regulated asset base. If you are the private contractor, you have significant incentives to increase the capital expenditure on the regulated asset base to make it as large as possible, because that means you get as large a return on your investment as possible.
The organisation standing in the way of that is the Office of Rail and Road in this case, and it has never overseen a RAB before. It would not even be able to look at other organisations or regulators that have overseen a RAB for roads, because there are none internationally.
We have a better model through concessions. France has built more miles of motorway this century than the UK has in total. It has done that with the private sector working through concessions. Under a concession, there are strong incentives for private contractors to keep their costs as low as possible, because it directly impacts their bottom line, which is completely the opposite for a RAB model.
Greg Smith
Q
Ben Hopkinson: The Bill is focused on delivering a RAB model. It is a completely different set-up to use a concession model. There is a second challenge with RAB in so far as the Department for Transport does not really bear any of the costs either. That is why you get it doing things like banning diesel construction vehicles for the lower Thames crossing. That is a policy goal it has otherwise that does not actually lead to a better overall road. It is an example of “everythingism”, where it has plenty of different goals, none of which is necessarily delivering the best road project for motorists at a very reasonable cost.
Greg Smith
Q
Ben Hopkinson: I do not have a specific number for it, but it is a regulation that might lead to a different form of construction than they would have chosen were they going purely for value for money. Across the piece, the lower Thames crossing has been racked by planning delays, which I am sure we are all aware of. It was designated a national priority project in 2011 and it took 14 years, 360,000 pages and £300 million to get planning approval. That all adds cost. When the project started going through, it was projected to cost about £4 billion. Then international events got in the way and it is now projected to be over £10 billion. Moving quickly saves costs. Our slow planning system has been a real driver of added cost here.
Sam Dumitriu: Cost control is one of the most important issues here. If you look at road building generally, the big problem in the UK is that we have a very large construction cost premium. Britain Remade has looked at 345 infrastructure projects across the world, of which 121 were road projects. On average, the UK pays about 65% more to build a given mile of road or railway. It is a bit less for road on average, but when you look at more complicated projects like the lower Thames crossing, it tends to creep back up.
Many people often dismiss our problems around infrastructure as a problem of too little money going in, but over the past five years or so—a period that includes covid, but also years either side of it—we spent about £308 per head on Government public infrastructure investment. In France it is more like £271 and in Germany about £251. When you account for that cost premium, we end up getting about £180 of what the French or the Germans would get. For me, that is the No.1 problem.
About £300 million has been spent on the planning process for the lower Thames crossing. If you add together the world’s longest road tunnel, which was built in Norway, and a tunnel built 282 metres under the sea, you just about reach that. They are building much more complicated projects for much less. You can talk about how it is more difficult to build due to UK geographical or geological issues, but fundamentally, just those front-loaded costs make it very difficult to build anything cost-effectively. Because of that, there is a risk that this model is adopted as a way of taking some of those costs off the books without the right level of scrutiny.
Greg Smith
Q
Sam Dumitriu: One thing is that a lot of major road projects have been cancelled recently. The first road investment strategy was much more ambitious than the ones that followed. That was partly due to covid, but now we are out the other end, we see reduced ambition on road building. Road maintenance has gone up a bit, which is positive, but at the same time, we are not building the projects.
It is important to look at which projects are appropriate for tolling; bridges and tunnels make perfect sense. In America, lots of additional lanes that have their own toll are built. Based on our geography and the amount of road infrastructure we have, you probably could not do that—when you are adding a super-fast lane on a seven-lane motorway, that works; it does not really work here—but clearly there are lots of bottlenecks and opportunities to finance things via tolls.
The question we have to ask is, as fuel duty revenue declines, because people are switching to electric vehicles, will there be the same impetus to put money into the roads? Currently, motorists do not get a very fair deal: they pay a lot in tax, but they do not see the same return in road building, as the money tends to go into the general pot. You might want to, say, hypothecate that revenue—that is one thing—but road user charging gets around the question of politicians attempting to use infrastructure money generally to put it towards your primary, day-to-day spending, whether that is on the NHS or £100 to deal with the cost of living, et cetera.
There needs to be some way of insulating long-term infrastructure funding from those, and that is the advantage of tolling. The problem is that motorists will only bear or accept it if they are confident that they are not being hit by all these other taxes and are getting something genuinely new in return. I do not see many motorists complaining about the Silvertown and Blackwall tunnels being tolled, because they have new infrastructure and congestion has fallen. It would be different if an existing road were tolled without a noticeable improvement.
Ben Hopkinson: There is nothing inherently wrong with road user charging. It is quite sensible that the people who use and get the benefits of an infrastructure asset pay towards its construction and maintenance. The challenge is that we already have quite high fuel duty, and it is more than solely the combination of carbon output and what we spend on roads and maintenance. If fuel duty were solely for mitigating the externalities of carbon emissions, combined with the upkeep, maintenance and addition of roads, it would be around 35p, rather than the about 52p it is now, so fuel duty is already higher than the economic impacts of roads and emissions.
If you kept fuel duty where it is, or cancelled out the 5p cut—the scrapping of which is perennially promised—and added road user charging on top, that would be quite a significant burden for motorists to bear. But ideally, new infrastructure would be funded through some form of road user charging. The people who drive get the benefits, so that is only fair.
The Parliamentary Under-Secretary of State for Transport (Justin Madders)
Q
Ben Hopkinson: I am well aware that there are safeguards and that the regulator is tasked with ensuring that there are not runaway costs. However, the ORR has never done this before. No regulator has ever done a RAB for a road before. There is a real risk that if it sets the return too high, motorists will pay significantly more, but if it sets the return too low, then no one will want to invest.
While in theory the model makes a lot of sense, I am a little worried about the practicalities of the ORR accidentally setting a rate too high or too low. In other sectors where rates are set by regulators, there are often risks, especially when there are macroeconomic shifts—higher interest rates, for example. Regulators are sometimes slow to update to that. There are concerns there. With a concession model, as used in France and around the world, there are much better incentives for contractors to keep costs down because they are the ones bearing them, not the potential motorists.
Justin Madders
Q
Ben Hopkinson: Well, there is a bit of control. There is also the market pushback; if tolls are set too high, people simply will not use the new asset. In that circumstance, the private constructor bears the revenue risk of it being set too high. There is also the overall agreement that the concessionaire strikes with the state initially.
One other concern that I have about the RAB is that there is not necessarily a sunset clause. In France, it is very common for roads to return to public ownership after about 60 or 70 years. There is a chance here, under the RAB, that there is no sunset and so they are permanently away from state ownership. I know that the Bill does provide for some sunset clauses if they impose them, but that is not the default here. That is another concern that I have about the RAB model.
Justin Madders
Q
Sam, you spoke about the planning delays and have set out the significant costs and delays because of that. In terms of the lower Thames crossing, is it your understanding that those risks are now past?
Sam Dumitriu: In general, it appears so. However, we have seen some cases for example, in energy infrastructure, where you can have a development consent order passed and construction under way, but then encounter further planning-related delays.
For example, the Hinkley Point C nuclear power station is potentially the most expensive nuclear power station that the world will ever see. One of the issues is that, after spending around £700 million on fish mitigations, it is still in the process of trying to get the permit that unlocks the final phase of construction. If it does not get that permit, it then has to apply for a DCO variation, so there can still be planning risk even if you address the up-front challenges. Hopefully some of the changes in the Planning and Infrastructure Act 2025 around environmental delivery plans—if they start being rolled out much further than the initial pilot—and potentially also changes to judicial review, which can delay some of these things as well, will address those.
In terms of the point about safeguards, there is one reason to be slightly less pessimistic than Ben. One advantage with the ORR that you do not have with Ofgem or Ofwat is that in National Highways you have a state-owned body with access to cost information. What you tend to see with these other sectors is more opaque, because it is fundamentally people in industry paying very expensive economic consultancies to produce lengthy PowerPoints to tell you how much something should cost. If you have National Highways building toll projects funded via RAB, you have that information, which should allow you to see through some of the perhaps excessive claims on cost that you can see in other sectors. That is a positive, but you still have the fundamental problem of the RAB, which is slightly less incentive to keep costs down unless you have very good information and a regulator that is very on it.
Olly Glover (Didcot and Wantage) (LD)
Q
Ben Hopkinson: I completely agree that the UK has a long historical challenge with delivering infrastructure cheaply and quickly. HS2 is the most expensive railway ever built, and the Bakerloo line extension will be one of the most expensive underground lines ever built. Tramlines are double the cost here compared to other European countries. We have the most expensive nuclear power plant ever built. There is a real long-term failure to build infrastructure quickly and cheaply.
On the Bill, it is good that we are getting private financing in, and that will help ease some of the burden on the state, when we are already pushed up against our fiscal limits. As I have mentioned, I have a little concern about the incentive structure, especially insofar as the private constructor has incentives to escalate costs as much as they can get away with under the ORR. A concession model might work a little better.
Sam Dumitriu: One of the important things when it comes to infrastructure delivery is ensuring you have a pipeline of projects, you know what you will build next and you can plan appropriately. We have many reasons why, in the UK, those pipelines get knocked about. Sometimes you have a road that you want to build, and everyone wants it built, but someone has brought a lawsuit against the road and it is delayed by a year. That makes planning for that really challenging.
One of the other problems is that sometimes those delays mean that you get pushed into different funding windows—the Treasury can reopen conversations about value for money, especially when in every Budget someone is trying to squeeze things into the fiscal rules and moving things from one period into another period, and cost-saving measures that are really delays. Those things tend to happen, and have happened for ever.
One thing that was really impressive under the last Government was the road investment strategy approach, which essentially said “We will set out a strategic case for all the big roads we want to build, we will give a pot of money and then we will give a delivery body the freedom to execute that.” The freedom to execute was slightly constrained by the planning system and all those delays, but fundamentally that is a very good approach. The challenge comes when the money is not quite there from the public purse, in part because the fiscal situation is tighter, but also because different choices are being made. In that case, private finance can fill the gap and ensure that you have a much more stable pipeline. I am in favour of that aspect and I think that will speed up delivery.
Tristan Osborne (Chatham and Aylesford) (Lab)
Q
Ben Hopkinson: It is a good question. First, in the French example, I am well aware that it is quite expensive to drive on a French motorway. On the other hand, they have many more miles of motorway, and if it is too expensive you can take the equivalent of an A road for certain journeys. Judging by the number of people who drive on French motorways, I think people are generally willing to accept the costs, especially given that they have built many more miles of motorway just this century than we have in total.
I could be proved wrong if it works really well, but the main challenge with the RAB model is the sheer uncertainty of whether the ORR is up to the task and has the right staff in place. It has never done this before. I know there have already been some concerns about capacity issues and general commercial experience within the ORR. I would be concerned if the private sector had large commercial control and contract teams and the public sector did not have them and was out-negotiated. That is certainly possible if civil servants are not able to properly push back on price increases.
I think the fundamental incentives in a RAB model are not right for delivering one-of-a-kind, unique pieces of infrastructure. It works a lot better for infrastructure that has very clear unit costs—for example, the cost of laying 100 metres of pipe. That is good because a regulator is clearly able to understand how much 100 metres of pipe costs to lay and can apply that across its base, whereas the cost of one lower Thames crossing is up in the air. Some additions from the private contractor might seem sensible; they might get away with that. Having a more environmentally friendly construction process certainly seems sensible on the face of it, but that also adds cost. I would want to be reassured that the ORR is up to the task and has both the capacity and the know-how to properly understand the arrangements it is entering into.
Sam Dumitriu: You mentioned price gouging. It is important to work out what the main risks are. Roads are, in most cases, natural monopolies, and the best thing about being a monopoly is a quiet life. It is not necessarily that you have all these opportunities to gouge your customers; it is that the lack of competition means you are not forced to adopt cost-saving measures, or become more customer-friendly and so on. You might have a situation where various people are claiming quite high margins or they are being aggressive in that sense, but the UK has the other problem, where people are not on it around costs. They are not working out what the best structure is to ensure that costs keep falling.
On Ben’s point, one possible way of resolving the issue is quite a radical reform that is probably beyond the scope of the Bill. I have always wondered whether it makes sense for the UK to have Ofgem doing RAB regulation for energy networks, Ofwat doing it for water, the ORR for road and rail and Ofcom for telecoms, or whether it makes sense to have a specialist economic regulator that deals with the costs of natural monopoly networks. That would have a bunch of advantages. It would potentially resolve some of the revolving door problems that you might see. It would also ensure that there is a similar expertise and a standard approach. You do not want varying approaches between all the regulators, because that suggests that they are doing something wrong when you have essentially the same economic problem to solve. As I say, however, that would be far beyond the scope of the Bill.
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
Q
In a situation such as we have at the moment, where diesel is at £2 a litre and the sustainable version another 50p on top of that, costs are going right up not only for the build, but for the corporate budgets of the haulage companies and for everyday individuals, who have to manage their household budgets. If the cost goes up to a level beyond the right balance of pricing that is commercially viable for the operator, or absorbable for the family or the business, what happens?
At the moment, I am worried about a white elephant across the Thames. In such circumstances, in the end all the costs would get absorbed by the taxpayer and this model goes up in smoke. I am keen to hear from you how concerned I should be about that and what alternative models there are elsewhere.
Ben Hopkinson: The ultimate backstop is the Exchequer. Already the Exchequer has had to bear the cost of bringing the lower Thames crossing through planning. I think it is expected to spend about £3.1 billion on the lower Thames crossing even before private investment is brought in. If we have a circumstance where the toll is not paying back what is necessary and the private body that has financed the road falls into difficulty, the Bill states that the Exchequer is able to top up or provide payments, guarantees or low-cost loans. The backstop is therefore ultimately the taxpayer, combined with higher charges for motorists on the road.
Alison Griffiths
Q
Ben Hopkinson: I am not sure if that would be an appropriate thing for the Bill itself, but trying to make the project as low-cost as possible will definitely be appropriate as we go on to construction and working with National Highways and whatever private company wins the contract. That will be about ensuring that the Office of Rail and Road is set up properly to oversee the costs that are being put through.
Sam Dumitriu: It is worth remembering, however, that the families who may pay higher tolls to cross either the Dartford crossing or the lower Thames crossing, in the absence of a lower Thames crossing bear very high costs, too, as does freight traffic between two of our major ports. The crossing is crucial to the whole wider freight economy—there are really big problems there. I think it is worth remembering that the projects should be made a priority and that, ultimately, they need to get built.
Alison Griffiths
Q
The Chair
Order. That brings us to the end of the time allotted for the Committee to ask questions. On behalf of the Committee, I thank our witnesses for their evidence.
Examination of Witness
Thomas McLennan gave evidence.
The Chair
We will now hear evidence from the British Vehicle Rental and Leasing Association. We have until 2.55 pm for this panel. Could the witness please introduce themselves for the record?
Thomas McLennan: Hi, I am Thomas McLennan. I am the director of policy and public affairs for the British Vehicle Rental and Leasing Association.
Greg Smith
Q
Thomas McLennan: Thank you for the question. For wider context, we have more than 1,000 members, and between them there about 4.6 million vehicles, representing about one in 10 cars, one in six vans and one in six trucks on UK roads. Our members own those vehicles, but other people use them. Right at the core of the problem with almost any measure or change of this scale is the technical detail. Perhaps that is not as interesting as the macro questions around how things are funded and so on, but it is what really impacts us and everyday users.
We have seen in a number of major changes in how road funding and wider funding happens, such as the eVED scheme, that the technical detail has not been considered up front. That has led to huge stress for the sector and potentially administration bills in the hundreds of millions of pounds. We want to see, in any change of this scale, especially if it will encompass an expansion of barrierless charging to more current barriered toll operations, that technical detail is guardrailed in right from the start.
At the end of the day, what we want to see is good user experience, as well as good business experience for both our members and their customers. It is in no one’s interest to have a system that is bureaucratic, challenging and leads to abrasion, when you are reducing the barriers to reduce abrasion and exactly that kind of thing. If you are just moving it elsewhere, it does not really meet its purpose. We are keen to see that this is as technically guardrailed as possible to make sure that end customers have a good experience.
Greg Smith
Q
For example, here in London, we have the congestion charge. It is dressed up as an environmental scheme, but we all know it is just road charging. Equally, other schemes are popping up. Arriving at my party’s conference in Birmingham, I remember saying to a passenger in the car, “Quick, panic—look up whether I have to pay a charge for this new clean air zone”—or whatever it might be. Is one of the things you are looking for in that answer something that simplifies the experience of the British motorist across schemes built under this model, as well as everything else?
Thomas McLennan: Short answer: yes. The long answer is that consistency is key. A lot of the burden in this model, and in any of these charging models, falls on the registered keeper. On your point, Greg, of needing a passenger to pay, not everyone has a passenger. There are lots of instances where people do not pay and there are inconsistent lengths of time that you have in which to make that payment—it might be 24 hours or six days. There might be an inconsistency in the ramping up of charges if you do not pay, or in how that charging is structured and the portals that you can use—it is all varied.
If you can create a national framework for individual specificity—I am not saying that everyone has to be exactly the same in what they are delivering, but you need to have the same guardrails and structure that enable someone to have consistency of experience. That would enable fleets to advise their customers, who might be someone running grocery stores across the country or a tourist who is arriving at an airport in the north or the south, and to train their staff to be able to give consistent advice and experience. Having every scheme with its own approach could be deeply challenging.
Greg Smith
Q
Thomas McLennan: That is a very good question. I am afraid we have not done that modelling, but we can look into it. The more pernicious point for us is that the more points of friction you have in your usership, the less likely you are to be able to make the usership work for you. We have unfortunately seen that even in great measures, and in London the level of friction has meant that some car club companies had to fold. It is challenging to operate where you have a split, with every borough having its own rules—all of those interactions have been deeply challenging. With more consistency, we can have a strategic vision on how to deliver within that framework. That is a much stronger approach to enable the investment from ourselves and the customers to be able to keep mobility moving in this country.
Justin Madders
Q
Thomas McLennan: We have had very mixed experiences with barrierless charging, so I do not think we can give a pure vision on that right now. We have had some use cases where currently there is not even the ability to transfer liability to someone who has hired a vehicle—the operator does not allow it. Then there are other instances where you can do bulk uploads, the system works really well and it is effectively smooth sailing.
What we always see is that the removal of barriers means a lot more penalty charge notices. That obviously makes sense, because previously you had to pay to get across, and then the barrier is removed and lots of people do not pay, so there is a sharp increase in penalty charge notices. All of our members have reported that to us.
The question is what happens after that. The inconsistencies mean that you can then have a duplicative effect of enormous administrative burdens on everyone involved, which have to be paid to make that work. We would say that if we are going towards barrierless charging from the get-go, which we understand has congestion benefits and so on, it needs to be done so that you do not shift the burden of someone paying at the barrier downstream to someone then having to figure out how to transfer liability or chase up on that, removing people’s ability to challenge the fines because they have just been paid, and so on. We need to look at all those things in the Bill from the start and structure them there.
Justin Madders
Q
Thomas McLennan: I have a concern that there is too much emphasis on downstream consultation in the Bill. We want to see a requirement to enable things such as the transfer of liability in the Bill because that has not been consistent in the market to date. We need to see that embedded from the start.
The Chair
If there are no further questions from Members, I will thank the witness for his evidence and we will move on to the next panel.
Examination of Witnesses
Will Godfrey and Matt Palmer gave evidence.
The Chair
We will now hear oral evidence from the Office of Rail and Road and National Highways. We have until 3.35 pm for this panel. Will the witnesses please introduce themselves briefly for the record?
Will Godfrey: Good afternoon. My name is Will Godfrey, and I am director of economics, finance and markets at the Office of Rail and Road. I am leading our preparations for the licensing arrangements and the regulatory framework that you have under consideration today.
Matt Palmer: Good afternoon. I am Matt Palmer, and I am the National Highways chief exec for the lower Thames crossing.
Greg Smith
Q
Given the significant new responsibility that the Bill will give to the Office of Road and Rail in particular, is the organisation suitably equipped to take on a new licensing regime? Does it have a skills base that has looked at other parts of the world or other sectors that have adopted a RAB model? Does it have the necessary interactivity with road users to ensure that early projects do not end up with more teething problems than anybody would have wanted? I am not saying that anybody would want teething difficulties, but we know that that happens when big change comes about.
Will Godfrey: We do not underestimate the significance of this work. It is important work, and it builds very significantly on the experience that we have from both rail and road. Our interactions on the rail side cover publicly and commercially funded infrastructure, and managers and operators. I could refer to a number of examples, including the work that we do on price controls on the high-speed link down to the Channel tunnel, and interactions with international passenger operators looking to expand operations there.
On the road side, we obviously have experience as the monitor and the organisation responsible for holding National Highways to account. We are certainly looking to build on the engineering, economics and finance operations. We also have consumer policy experience across both road and rail.
I started out in economic regulation just over 25 years ago. I have worked in the water sector, and I worked in telecommunications for a number of years, including overseeing the arrangements that led to the roll-out of superfast broadband, among other things. A number of colleagues have worked in other sectors, spanning aviation, water and others.
Your question about the risk of teething problems is well placed. I am confident that we have the lead time to build in the necessary arrangements and resourcing to get ourselves ready for the new arrangements. One of the important things to bear in mind is that the regulator’s role takes place once a licence has been awarded. A licence for the lower Thames crossing—the first scheme that will be enabled by the Bill—is some way off yet. The process for awarding that licence currently sits with the Government, but we are in discussion with the Department about our future resourcing to deliver this work.
Greg Smith
Q
Will Godfrey: There are two parts to that question. One is where we are at with, for example, the lower Thames crossing. There is a lot of debate about the risk of cost overruns and so forth, but this is not a new project; it is already significantly advanced. There has been significant work, and perhaps Matt will talk to it in a moment, on preparation—literally the groundwork—to get this project ready, so it is not a completely new project. That comes with the advantage of some teething issues already happening.
In terms of the ORR’s capability, we are working closely with the Department to look at the arrangements that might apply to, for example, licensing. This is an important point I want to stress: the Bill gives us the duties and powers that we want to see, but the really important thing for making a lot of these schemes work is that the licensing arrangements are the right ones, and that you have the licence conditions in place to hold the company to account properly and scrutinise its delivery not just on construction but on operation, its approach to tolling and so forth.
In terms of having the resource in place to do that, I am currently working with a small team. We are looking at the suite of skills and capability that we anticipate needing across, for example, corporate finance, supporting the stakeholder group—that is an important part of the Bill—and the engineering and operations capability. I am confident that we have the lead time to get in place the team that we need. We are in discussion with the Department about the resourcing necessary to secure that.
Greg Smith
Q
Matt Palmer: I am an historic mega-project constructor. I have done many big projects across the world and in the UK. Let’s talk about diesel and its cost. It is part of lower Thames crossing’s requirements, which were set in 2022, for us to construct to carbon neutral, and actually, it ends up with us being in line with the sixth carbon budget. That has been a requirement in our project. We have executed it. It is in part of our development consent order. It is required now by law and by statute through the development consent order. The vast majority of our diesel is being replaced by HVO, for which we are currently paying £1.70 per litre.
Greg Smith
Q
Matt Palmer: We pay £1.70; our contractors do not pay VAT on it. It is marginally over a current diesel cost, but we ran a competitive process and it was competitively bid.
Greg Smith
Q
Matt Palmer: It is comparable to diesel. Actually, the total operating cost of some of our equipment that we are starting to bring out is cheaper. The electric kit is actually cheaper per total operating cost, which is what you would experience in your EV and so on.
Greg Smith
Q
Matt Palmer: No, it does not. That is why we are using HVO and electric.
Greg Smith
Q
Will Godfrey: Matt has covered the construction side of things. Was there a part of your question about licensing arrangements?
Greg Smith
Yes.
Will Godfrey: In terms of the construction of this particular project, as I say, the way you hold the company to account relates to what is in the licence, and it is important to draw a distinction between what is in the development consent order and what is in the licence. The regulator’s role is not to hold the company to account on the DCO—that remains subject to the separate process for the scrutiny and delivery of that.
What the ORR would be doing under these arrangements is holding the company to account on the licence itself. The first price control settlement, if you like, would be set by the Department as part of a competition toward the first licence. Those would set the commercial terms—the expectation around allowed revenue and so forth—and then the ORR would come in as the regulator at the start of the price control and hold the company to account against that, by monitoring and scrutinising the delivery against the relevant milestones on the construction.
Justin Madders
Q
Matt Palmer: The lower Thames crossing has been developed in detail over the last six years. Our development consent order fixes that scope very tightly; we cannot build any more or any less, so the scope is very well known. We are now running at 90% designed, so we literally are fully designed, and it has been competitively bid for. It is operating—we are currently on site with 3,300 people—and operating well against that very defined scope.
It is, I am afraid, just a simple road. My colleagues back at base will kick me for that, but as a project it is a simple thing to build. We are not building a complex signalling system or a control system for a nuclear power station; we are just building a simple dumb asset. As for our ability to control that, control on road construction is historically very good. If you take a similar project, which would be something like Thames Tideway, a similar RAB-based model, it is another simple dumb asset—that is no disrespect to my colleagues who built that. These are simple projects to build. They are large, but they are simple, and we know how to build them in the UK. The cost control on it is predominantly driven by the fact that we know what we are building and what it costs.
Justin Madders
Do have anything to add, Mr Godfrey?
Will Godfrey: I would reiterate the point that the development consent order tightly defines the scope of what is being delivered. As Matt said, the project is already well advanced.
There are a few other points to bring up. Getting the cost forecast right, which underpins the allowed revenue for the first control period, is really important. That is the baseline against which you are holding the company to account. The instruments thereafter are what you specify in the licence, and that is really important to get right. That is not stuff you put in the Bill, but it is really important that you get it right in the licence and that you have the right incentives for the privately financed entity to deliver against that schedule. You need to make sure that the balance in the allocation of risk is right and that end users are ultimately protected from the risks of cost overruns.
As I say, this project is fairly well advanced already; it is not like we are talking about starting one from scratch.
Olly Glover
Q
Will Godfrey: I think the ORR’s role, as envisaged in the Bill, would not be to advise on those questions. That would be more of a question to address to Government. It is perhaps relevant here that it is important to take account of the risk-adjusted cost of financing. You have already made the point about whether things are on the balance sheet or not. Another point to bring in is the certainty around the funding and delivery arrangements. RAB-based price controls are a commitment to a certain cycle of, typically, five-year reviews in which you set the funding requirements, the price control limits and what is delivered in that period. You reset each time but the point is that it is not potentially subject to Government reopening the arrangements for the funding, which is sometimes encountered in other publicly funded arrangements. I think that is as much as I am able to say. That is more of a question for Government.
Olly Glover
Q
Matt Palmer: If you talk specifically about the lower Thames crossing, its strategic case is incredibly strong and it was introduced by Government to be built because of the broader economic benefit for the country. There is a mixture of models that the Government could choose to fund it. There was a discussion about concessions and RAB-based models earlier. They will all carry the same carrot and stick for driving cost performance. In the end, it is the Government’s decision to bring a project forward. If it is of a strategic nature then this Bill will allow you to fund it.
Olly Glover
Q
Will Godfrey: One distinction I would draw with the Railways Bill is that that Bill was so significantly concerned with the creation of Great British Railways, which will be responsible for something like 75% of all traffic on the network—not quite the whole market but a very significant proportion of the market. People are therefore understandably keen to see what arrangements are in the licence for that entity. This Bill is enabling and economy-wide. Clearly, the main project that we are talking about currently is the lower Thames crossing, but in principle several other licensed entities could be out there. That is one distinction that I would draw.
As to whether a particular licence is essential to inform the scrutiny of a Bill, my feeling is that the Bill gives you, as a regulator, the kind of duties, functions and powers that you would expect. On the licence, clearly there is work to be done there, but one advantage is that the licences will be put out to competitive tender. That provides a different level of scrutiny from the arrangements under the Railways Bill, in which the licence is awarded to GBR as the given entity that will receive it.
Tristan Osborne
Q
“There are, however, likely to be gaps such as those relating to construction phase price controls, project specific
I know you said that you had confidence in that area, but that report was published just last month. Can I get some clarity? Are you saying that the report is not entirely right and that you are confident that the three aspects it raised will be covered going forward?
Will Godfrey: We very much welcome that independent review of the ORR. It is always helpful to have that sort of outside-in look and scrutiny.
On what it describes as gaps, the other point that Dr Richard Judge brought out was that we are not building from scratch, so this is about providing incremental capacity. I think he was right to draw out those areas as ones where you would want to make sure that the gaps have been filled by the time you are past Royal Assent, the first licence has been awarded and you are into the start of the first price control, which is a long way from today. The point I am making is that, from the discussions I have been having with the Department, I am reasonably confident about being able to resource what I would describe as incremental gaps, rather than starting from a blank sheet.
Shivani Raja (Leicester East) (Con)
Q
Will Godfrey: At the heart of the regulator’s responsibilities would be furthering the interests of current and future users. Those are exactly the kind of considerations that would be at the heart of how you approach the regulation, how you set up the instruments—I am referring specifically to the licence—and how you then hold the company to account against that licence.
For the first control period, in the case of the lower Thames crossing, the licence would be awarded by the Department, so the particular tolling structure and the level of tolls would be set through that competition for the first licence. Thereafter, the way that the ORR operates is that the code that the ORR would be responsible for creating on the approach to tolling arrangements will clearly be important once you are past that first point.
My feeling is that the arrangements necessary to provide protections to end users around, for example, tolling and toll shocks and so on feel about right to me in the enabling legislation. What is really important is what goes into the licence and what we put into the code, and then how the company responds. I hope there will be a virtuous circle, in which there is a clear signal of what is expected, we hold the company to account, it delivers and implements it, and we then take the feedback from the market. I do not know if you were anticipating a different concern, but I will pause there in case I have not answered your question.
Shivani Raja
No, that is fine. Do you have anything to add, Mr Palmer?
Matt Palmer: I think it is beyond my scope—National Highways is here as an operator and a constructor. I think Will has probably answered the question properly.
Mike Reader (Northampton South) (Lab)
Q
Matt Palmer: I think all of us recognise that annualised costs on major projects, especially mega-projects, are very difficult to deal with. They drive perverse cost behaviours, where you are trying to fit into a 12-month window, and the Government are currently moving, with the mega-projects piece, towards more of an envelope-type conversation. This is just another extension of that. You end up with a cost envelope that you are working within, with a driven timeframe that you have to deliver to, which then allows the flexibility to execute at the right time—depending on the weather and so on. It is that flex that you need in order to execute efficiently. If you are constraining yourself on cost to a budget every year, which is common, it does drive cost. This model gives you the flex that allows you to drive an efficient construction project.
Mike Reader
Q
Matt Palmer: The base cost of the scheme—the cost without inflation—has been fixed since 2020. The great thing about a development consent order is that the scope is fixed. We are still building 52 bridges, 22 km of road and 4.3 km of tunnel. The cost difference between now and previously is essentially driven by inflation. You have got great cost control sat there inside the direct consent order. Our contracts with our contractors then drive to that same scope and control, and there is a pain/gain share: they get into pain if they exceed and they get incentivised to deliver below, which is normal with any project of this scale.
Mike Reader
Q
Will Godfrey: I hope my earlier answers go to some of that. If your question is specifically about the scope of what you were just asking Matt, it is important for us that the arrangements around what will be LTC Co. and its relationship with its contractors, and in turn what it is allowed to charge to end customers, is not a simple pass-through-type arrangement. That is really important.
You need to make sure that there are the right liability caps in relation to the pain/gain sharing. Are those at the right level? Has LTC Co. or any company licensed under these arrangements—let us concentrate on the LTC example—got the right incentives to be able to control the relationship with the contractors? Through the licence and the price control arrangements we need to create arrangements in which there remains that discipline to control those costs, so it is not a set of arrangements in which, beyond a certain threshold, end users are ultimately on the hook for cost pass-through.
The importance that the Bill places on efficiency in the economy and that being at the heart of our duties is something that we would take really seriously and very much welcome. It gives us the authority to be able to act on getting to those kind of price control licence arrangements. Of course, as I said earlier, the first price control arrangement would be set by the Department through that first competition for the first licence. In terms of how we operate on it thereafter, we would look to make sure there is not just a simple mechanistic pass-through in the event that costs overrun, whether for inflation or other cost shocks.
Douglas Lumsden (Aberdeen South) (Con)
Q
Will Godfrey: I think “without any level of scrutiny” is something I would take issue with, certainly as I would see the arrangements working. We have had good discussions with old colleagues of mine at Ofwat about the arrangements they had, for example, for the Thames tideway tunnel. There, both the rhythm—by which I mean the frequency of reporting, monitoring and scrutiny of costs during construction—and the importance of having a dependable, expert, independent technical assurer on the costs are really important for making sure you have that right level of visibility and scrutiny. I would question the nature of unchecked costs. I am not denying that cost pressures would arise, but that is the whole point of having arrangements like an independent technical assessor.
Douglas Lumsden
Q
Will Godfrey: I will go to both costs and schedule. There are instruments that you can bring in through a licence—such as cost-sharing rates. The point I was trying to make earlier is that you do not necessarily design a price control—at the moment, if there is a cost shock, it just goes through to end-user prices, so cost-sharing arrangements are one example. You can also bring in thresholds to make sure that the company is incentivised to remain on schedule as well.
Douglas Lumsden
Q
Will Godfrey: Before we get to that point, it is worth bearing in mind whether there are other potential investors willing to buy out the company that is struggling. There may be particular reasons why—maybe it was not well managed or well financed. There is the potential in principle for someone to come in through normal mergers or acquisitions and take responsibility. In the event that the company is really struggling against a particular settlement, that is a challenge for a regulator to manage. There are certain provisions on the limit, where things ultimately are pushed to the point of non-recoverability, which are envisaged within the Bill.
One of the jobs of the regulator is, first, getting that first price control settlement right. As I say, at the moment that is being set by the Department, but getting that projection on the allowed cost is key—get it right at the start. Then, that rhythm of regular monitoring is really important to make sure that you anticipate that point. What you do not want to be doing, particularly with a construction project like this, is to get to that point with some element of surprise. What you need to do is keep that regular rhythm of monitoring and scrutiny, so that you can act before you get to that point that the company has nowhere to go.
Douglas Lumsden
Q
Will Godfrey: At certain points it is possible that a regulator could introduce things like cost limits, beyond which there was then a redetermination of a price allowance, but not necessarily one that was a simple “costs have overrun by CX, therefore tolls increase by the same amount.” It would not be an automatic pass-through; it would be subject to that efficiency and economy test.
Jim Dickson (Dartford) (Lab)
Q
Matt Palmer: We are moving at pace. The Chancellor at the last autumn Budget—not this one—announced funding to get us to private finance, and we are well into that. We are moving at pace. There is a misunderstanding that we have not started. We have very definitely started: 2,000 people are on site, we have 14 sq km of land and there is a lot of mud at the moment, I am afraid. We are moving well and at pace. Our target is to get a tunnel boring machine, which will be the largest in the world at the time, in the ground in 2028, which will line up roughly with when we go to private finance. All of that is contingent on the fact that we need the legislation through to allow us to get the equity to move on thereafter.
Jim Dickson
Q
Matt Palmer: The logic is that the economic benefit of the scheme is great. Not only does it solve the problem in the local area; it is a national-level project, so we move at pace, we start the construction and we take a lot of the difficult, time-consuming activities like land assembly—putting plots of land together—and that is what we are doing at the moment. All of that enables a much more stable platform for investors to come in.
Alison Griffiths
Q
Matt Palmer: In construction in the UK, about two thirds of our constructors use HVO as standard. For a project, you will find that a number of constructors bid with HVO—it is just in the costs. That is the case with lower Thames crossing. Two thirds of our contractors bid with HVO.
Alison Griffiths
Q
Matt Palmer: But we have never—what I am saying is that we went to market and asked them to build us a project. They did that with HVO as the base bid. We did not see the cost with diesel.
Alison Griffiths
Q
Matt Palmer: We did not go out with a diesel-based product because the market typically comes forward with an HVO product.
Alison Griffiths
Q
Matt Palmer: I think I have explained myself. They are comparable. £1.70 is what we are paying. I have been clear that that is what we are paying for HVO at the moment.
Alison Griffiths
As I say, when I asked each of these sources specifically about construction projects—I have not asked them about retail; I asked them about construction—they have been clear that there are substantial additional costs to using HVO. I just wanted to make sure that that was clear.
The Chair
If there are no further questions from Members, I thank the witnesses for their evidence.
Examination of Witnesses
Roger Forsdyke and Andrew Truscott gave evidence.
The Chair
We will now hear evidence from Wates Construction and John Laing. We have until 4.10 pm for this panel. Could the witnesses please briefly introduce themselves for the record?
Andrew Truscott: I am Andrew Truscott. I am the chief executive officer of John Laing, which is a global investor in infrastructure projects. We are a 178-year-old UK business. Our specialism is investing in greenfield projects, by which I mean projects that go through the construction cycle. We have delivered about 180 greenfield construction projects across the world over the last 25 years.
Roger Forsdyke: My name is Roger Forsdyke. I am UK operations director for Wates Construction. Wates is a business privately owned and incorporated in 1897, and has been working in infrastructure and house building since then.
Greg Smith
Q
Andrew Truscott: We applaud the use of RAB in this regard. Why? This is a complicated project. Listening to the previous panel, the feature of RAB that feels very relevant to LTC is the ability to have intra-cycle changes, subject to the way that, in particular, traffic operates in the future.
I am speaking purely from an investor perspective, so please excuse me; I look at Tideway as a really well delivered project, from an investor perspective, and a similar model was used there. The model used at Heathrow has also been relatively successful. Being totally transparent, when we first started talking to Government about this project, I felt that a more traditional concession model might be more appropriate, but the way in which the project is now being procured, and in particular the addition of the bridge, means that the RAB model looks really very interesting and, I would probably argue, more attractive from an investing perspective.
Greg Smith
Q
Andrew Truscott: Yes: uncapped construction cost risk being transferred on to an investor. I am being overly simplistic, so please excuse me, but that is something that we would not do, and I would argue that we are a relatively good proxy for investors of our type. Some work and some thought need to go into how to manage that cost overrun risk.
Echoing the comments from the previous panel, this is a well thought through project. We applaud the way it has been developed. Hopefully it can be delivered on time and on budget, but of the 180 projects that we have delivered, I can probably count on the fingers of one hand how many actually have been. As a contractor, an investor or a Government, all stakeholders have to be prepared for the expectation of cost overrun. Asking an investor to take uncapped cost overrun into its accounts does not necessarily mean that it is a terrible outcome; it just means that I cannot price equity.
Greg Smith
Q
Andrew Truscott: Plan for the worst, and really plan for the worst around cost inflation. It was interesting listening to the Chancellor yesterday. Every element of the supply chain and the cost is increasing globally for all these sorts of projects. Plan for the worst and plan for an expectation that, unfortunately, even though it is not the intention, you will end up with a project that costs more than you expected it to on day one.
Greg Smith
Q
Andrew Truscott: Again, I will focus on cost for a minute, and then I would love Roger’s view because he is at the coalface; I am just a simple investor in my ivory tower.
What is important is that there are mechanics in the construction process or the construction phase that incentivise contractors to stick to budget as much as they can. Again, credit to the way in which the Bill is written and the way LTC is being procured—this idea of cost sharing and certain elements of cost being shared between contractor and Government and rolled into RAB. Having those sorts of features that really—no disrespect to Roger—hold the contractor’s feet to the fire in terms of cost control are very sensible. These projects can be delivered on time and on budget. We have just finished the North East Link project in Melbourne where we tunnelled under the Yarra, which is quite a complicated river. We did it on time and on budget.
Greg Smith
Q
Roger Forsdyke: It is about responsibility for outcomes, and Andrew is right: put it where the responsibility lies. As a contractor, we are in control of only some of the process. I often think the contractor is being presented with all the risk, when the design, the planning and the procurement are in some other court.
For me, the most important thing is to get the planning done, so that you do not start before you are ready. A lot of projects start under pressure, without the outcome and the scope having been fully detailed and the risk apportioned correctly. You have to look at the stages that we need to go through so that, when we put a shovel in the ground, the scale and scope have been determined. In the majority of cases, cost overruns come from uncertainty, which is often there before we start work; things have not been properly nailed down with the appropriate parties. Yes, hold the contractor’s feet to the fire, but there are other parties and elements: the designers, the ecology—all the other things that go into a proper, well-delivered project. There needs to be some measure of accountability there also. Often, at the other end of the contract, we find that being transferred—not necessarily fully realised—into the contractor’s risk. That is where you get problems.
Greg Smith
Q
Roger Forsdyke: Potentially. It is a question of appropriateness. If it is blanket HVO—well, there is some plant, some stuff, you need to use diesel for, so it is a question of appropriateness for me. There is an uplift in use of that type of fuel—HVO. If that is a key stakeholder requirement and the public purse can afford it, it is something that should be done, but those are decisions outside a contractor’s position.
Greg Smith
I appreciate that that is outside the contractor’s position. That is why I came with the question.
Roger Forsdyke: That is not a variable cost to me; it is just an additional cost. The risk comes from variable costs that I cannot control.
Greg Smith
Q
Roger Forsdyke: I think you have answered your own question.
Greg Smith
Fair enough.
Andrew Truscott: There is only one thing I would add, and this is a bit naughty, so apologies. You are building a road; people have diesel cars that drive on the road. One of the things that we at John Laing do is this. We own toll roads; we own availability roads all around the world, and we couch our stage 1 and stage 2 emissions on each of our roads with a path to net zero in 2050. The one thing we cannot control is the vehicles that run on the roads that we build. We can control the operations and we can have input into the way they are built, but ultimately these are polluting events, because people drive diesel and petrol cars on them.
Olly Glover
Q
Andrew Truscott: My biggest concern about this project is the ultimate cost to the end user. That is a piece of maths that we all, collectively, need to get right, because we cannot end up with a wonderful project that unfortunately saddles the user with an uneconomic toll for the next 50 or 60 years. How can we manage that? We can manage it by, obviously, trying to keep the cost of construction as low as we possibly can. Other things in our toll roads and our businesses globally include dynamic tolling, where we encourage road use by differentiated pricing depending on the time of day—I would love to explore that with the Government at the right time—and differentiation for different types of vehicles. I think there is a way of getting the end users’ experience to be a little fairer than if there was just a flat toll.
In terms of the overall costs and delivery, obviously, the cost of financing at the moment is as high as it has been in my career. That is a factor that we all have to be aware of. I am sure you guys all know this, but infrastructure is a diversifier in pension fund portfolios. We are a spread to the risk-free investor. That is how we calculate our returns, so unfortunately, as risk-free rates go up, the expectation of the returns on our capital also goes up.
Innovation around how we can collectively deliver a financing package against that backdrop that is as cheap and deliverable as possible is also quite important. How do we do that? Certainty of outcome, high-quality regulation and ensuring that everybody who commits capital understands the limits of their capital and is therefore able to calculate their returns accordingly.
Olly Glover
Any thoughts from you, Mr Forsdyke?
Roger Forsdyke: Not on the subject of financing; it is outside my experience.
Tristan Osborne
Q
Andrew Truscott: I would slightly reject your first statement, if I am honest. As an infrastructure investor, we provide, candidly, the lowest cost private capital that is available across the world. If you are attracting John Laing and people like us, I can guarantee that you are getting the lowest cost of equity capital that you can possibly attract and therefore the risk transfer needs to be accordingly appropriate.
I will slightly repeat my opening comments: when we first started interacting with DFT about this project, I was quite nervous about the RAB model. I am not a RAB nerd; there are lots of RAB nerds, and I am not one. RAB can be incredibly complicated, and it can take a huge amount of time to drill down. There is not a regulator. There is an awful lot of work that needs to be done. Am I nervous that that is going to take longer than it should do or could do? Yes, I am, but again, credit to DFT and the Treasury, they seem to be well on track. Maybe the better answer to your question is that we as investors will need absolute certainty—and I mean absolute certainty—about what that regulatory model is, who the regulator is and how that regulation is going to work before we will put in a dollar, a pound, or a euro—whatever currency you like.
Alison Griffiths
Q
Roger Forsdyke: It is really interesting that you say that from your experience it is the commercial pressure. The most important thing in the tendering process is to have measurables beyond just the cost. If it is first past the post, you are destined to push the price down to the lowest-quality bid, which often creates the problems you are describing and that we described earlier. You have to look at how you will measure the quality of the tenders in real terms, beyond the cost of the lowest bid. I do not think that is regularly done effectively, so you end up with cheap materials, optimistic programming, optimistic budgeting and all those things just to get to a price that is probably optimistic in the first place. That echoes what Andrew said.
Alison Griffiths
Q
Roger Forsdyke: I think so. If you have gateways where you build the price through detailed submissions, you can then control it. You do not want uncontrollable cost and excellent quality, but you need to create some gateways through the process so that you can control the quality as you go through. That is my experience. Those sorts of two-stage processes create the best outcomes.
You then have to make sure there is no undefined scope. As you cross the line to secured and the responsibility moves to the contractor, you do not want any change. That is sometimes very hard to achieve, but it is a really important step. It is often, “Oh, we just need to get started,” and the pressure of starting often means that the project will start prematurely, before the scope is defined. That is where the optimism bias goes in—the provisional sum might be light or whatever—and then you end up with escalation, notwithstanding the delays to resolving the issues themselves.
Andrew Truscott: I do not have a huge amount to add, because Roger has put it beautifully. I will just say one thing, and he can kick me under the table: contracting is a hard business. They do billions of pounds-worth of revenue for 2%, 3% or 4% margins—it is hard—and there is therefore little scope in their business models for mistakes. They will always enter into these sorts of projects with an expectation that mistakes do not land at their desk, because otherwise they go bust, and they have done globally.
Again, credit to the way LTC is being procured. I think separating church and state a little bit—separating equity and financing from contracting, rather than having one single proposal—is arguably a way of getting more certainty around deliverability than amalgamating all those elements into one. Where we have seen material cost overruns, it tends to be in the big projects where one single solution is given to a customer. We have been looking at a lot of US projects recently in the road space where single projects— equity, traffic and revenue, as well as construction—are lumped into one big unit and presented to a customer, who then tries to aggregate and always aggregates to lowest cost, and that is not always the right solution.
I am giving my previous panellists an awful lot of credit today, which is wonderful. I think disaggregating elements could be a way of managing that risk and that cost and delay overrun quite well.
Jim Dickson
Q
Andrew Truscott: Hopefully not.
Jim Dickson
In terms of investor attractiveness, how would you rank the scheme globally against other schemes of similar size, or other comparable schemes? Do you think we are set to have a competitive and very interested set of players looking to bid?
Andrew Truscott: It is a really good question. I will try to keep my answer brief, because I could bore you for about a month on this.
The short answer is that the big attention for the main global contractors—of which there are, let us be honest, a handful—is currently on the US. The US is undergoing a big programme of what they are calling managed lanes projects, which are about upgrading existing roadways to be either tolled or semi-tolled or managed. I am sure you have not seen Ferrovial or Cintra—all the big Spanish contractors are very focused on the US. Australia is sporadic but yes, there are some large projects—not necessarily transportation projects—that are attracting interest from investors and contractors in Australia. In Europe, you can count it on the fingers of one hand. Actually, that is where LTC may get more attention, as a consequence of the lack of other available opportunities.
However, this is a big project. This is a big equity cheque and there will be an awful lot of investors who say—well, I am certainly yet to meet the investor who will be able to write a single cheque for the entire amount. My guess is that this will come down to pools of consortium of capital, very much like those that ended up being on Thames Tideway, who come together because the amount of capital required is just so huge.
Do I expect it to be competitive? Unfortunately, yes. Do I expect you to have 10 to 15 single-asset bidders all vying to buy 100% of the equity? Not in the slightest.
Douglas Lumsden
Q
Andrew Truscott: Not for the contractor; for the investor. Sorry—if I said “contractor”, I meant “investor”. Apologies. I do not care about the contractors. [Laughter.]
It is not because we do not understand and price risk; that is what we do for a living. It is just that I cannot go to my investment committee and, when asked, “Okay, Andrew, what is the maximum amount of equity you are going to put into this project and therefore what is the return you are expecting to get on it?”, give the answer, “I don’t know.” That is not a conversation—well, it could be a conversation, but it would be the last conversation I have with my investment committee.
Douglas Lumsden
Q
Andrew Truscott: Again, I am getting well over my skis, so apologies, but it is about being smart. I am not just suggesting that this all lands on the country balance sheet, whether it is the National Wealth Fund taking excess risk above a certain threshold and therefore becoming an equity investor as a consequence, but it would be sensible to be smart and think innovatively about how to cap the number, so that I can then go to my investment committee and say, “This is the amount of capital we’ll commit, with any excess being provided by somebody else in exchange for an economic interest.” Rather than trying to give answers, I would say that being thoughtful and innovative about how that cap can be constructed is definitely worth putting on the agenda.
Douglas Lumsden
Q
Andrew Truscott: I think it will.
Douglas Lumsden
Q
Andrew Truscott: I cannot speak for the entire investment community, but I can repeat what I said earlier. I think we are fairly typical—I mean, we are brilliant, but we are fairly typical—and an uncapped equity commitment is almost impossible for us to write.
The Chair
If there are no further questions from Members, I thank the witnesses for their evidence. We will move on to the next panel.
Examination of Witness
Justin Madders MP gave evidence.
The Chair
We will now hear oral evidence from the Minister. We have until 4.30 pm for this panel. Will the Minister please briefly introduce himself for the record?
Justin Madders: Good afternoon. I am Justin Madders, the Parliamentary Under-Secretary of State in the Department for Transport.
Greg Smith
Q
Justin Madders: We are pretty clear that it is not a backdoor to road pricing. The hon. Member may have an amendment that he thinks will deal with that, but I can assure him that we have gone through extensive discussions with the Office of the Parliamentary Counsel on this. I refer him to Logistics UK’s evidence this morning. They said that they thought the Bill was relatively strongly drafted in terms of closing the loopholes.
It is probably worth saying that, as the hon. Gentleman will know, the Bill’s intent is also important. My statements on the record on Second Reading, probably a number of times in Committee, I imagine, and today will all be relevant should, at some point in the future, a future Secretary of State want to do something that is clearly outside the scope and intention of the Bill. I will say, again, for the record, that this Bill does not provide a backdoor for widespread tolling.
The Bill is creating an additional financing option for major strategic road infrastructure, specifically for trunk roads in England. It is deliberately a framework because, rather than legislate for one individual project, it is possible that there may be more suitable projects in the future, but that does not mean—I want to be clear—that this will become the default model for road investment. Any future use would need to meet the requirements of the Bill and be considered on its own merits. As Steve Gooding from the RAC said this morning, I am happy to confirm that, at the moment, there are not any other schemes that are being considered for use under this Bill.
It is important to say that the Bill narrowly defines when a licence can be granted: for a new road, a capacity-enhancing improvement or the continued operation of a road that has been previously licensed under this regime. This is about major strategic infrastructure; it is not about, as in the example the hon. Member gave, putting in tolls when a new camera or something is introduced. That clearly is not the case. Some of the evidence earlier also suggested that our geographical constraints would make that very difficult anyway, even if that was what we wanted to do, which, I will state again for the record, is not the case.
Greg Smith
Q
Justin Madders: I am afraid I am going to disappoint you. We are not going to give figures for tolls for a nine-year window in advance, because that will be part of the ongoing analysis and development of the project and part of the discussions with potential investors. We are clear that the Bill will set out the framework for how that will work. It is about the economic and efficient costs of provision. It is very clear that we believe tolls must remain affordable and they must represent good value for road users. Future projects would be undertaken on the same basis, so although I cannot give any figures in pounds and pence, I can give assurances that there will be sufficient restraints in place to ensure that this is not an unlimited blank cheque for increased tolls for evermore.
Greg Smith
Q
Justin Madders: I thought the evidence from National Highways was very clear on that. It is saying that there is not an increased cost as a result of that. It also said very clearly that this was a requirement set in the development consent order in 2022, when your party was in government. I am not entirely sure where you are going with this.
Greg Smith
Q
Justin Madders: I would gently push back and say that, rather than evidence from people who are not working on the project, or from ChatGPT or whatever the source—
Greg Smith
The market, Minister.
Justin Madders: We had very clear evidence from National Highways that this is not having an overall impact on costs. I am happy to provide further information. I will ask it to put something in writing about the detail of that. You will be aware that this Bill is scheme agnostic, so it is not appropriate for such restrictions to be placed in the Bill, but I am happy to facilitate a further conversation, because I understand you are concerned about that.
Jim Dickson
Q
Justin Madders: I understand why you ask that question. The Bill sets the framework for the RAB model, and that will establish the independent regulator. Its remit is clear, and it is there in the first few clauses of the Bill: to take account of the interests of road users. There will be fair pricing, transparency and long-term sustainability as a result of that. You will also be aware that there will be a stakeholder group in which users will have the opportunity to feed in. We have a pretty robust set of reassurances that I hope will satisfy you and your constituents.
Olly Glover
Q
Justin Madders: First, as it made clear, the Treasury will not fund the totality of the project, so we have to look at other models. There are different views about how that would work. If we want to compare it to the private finance initiative, which has been the major funding source for a number of crossings in recent years, costs under the RAB model tend to be lower.
Clearly, we have an independent regulator that will, as I have explained and you have heard in evidence, be able to limit cost recovery, to make sure it is economic and efficient. There will be regular requirements set out to review that under the licence. Ultimately, the Government will not be left, as they would be under PFI, with repaying a debt over many years. That might be off the balance sheet, but it still ends up coming to the taxpayer.
Olly Glover
Q
Justin Madders: As this is a road, the Office of Rail and Road seems to be the appropriate regulator.
Olly Glover
Q
Justin Madders: There is a different approach because this is a different situation. This is the regulated asset base model, which is about a long-term investment, balancing the interests of users and investors and having a strong regulator that understands the sector. As we have heard, the ORR is already working on it. That is absolutely the right balance to make sure this delivers for everyone.
Olly Glover
That is an interesting answer, because railways also have both users and investors, but perhaps that is a debate for another day. I will happily let other people come in now.
Tristan Osborne
Q
Again, speaking to the investor spokesperson today, they said that regulatory certainty was absolutely critical for them. I want to understand the operational capabilities, the engagement between the DFT and the ORR, and whether or not we will have that structure and that robust regulatory regime in place, and how confident you are about that.
Justin Madders: I am confident about that, because that is what the Bill intends to do. It sets it out very clearly. We have heard from the investors that that certainty will be a very attractive opportunity for the long-term investment we are seeking to deliver. There will be a need for some additional capability and capacity in the ORR, but I was very impressed with the evidence we heard today. It is very much on top of this, but there is much more to be done, and the Bill will enable it to do that.
Douglas Lumsden
Q
Justin Madders: I am not too familiar with the factors he takes into account when investing, but my advice from officials is that the soft market testing that has been taking place has shown a lot of interest in this. He also said in his response that there would be quite a lot of people who would be looking to invest in this. That conversation is ongoing.
Having the legislation on the statute book will actually help give more certainty to investors. Clearly one of the reasons why the project has already started is to de-risk it to some extent. All the indicators I am getting are that we are putting this in a strong position to attract investment.
Douglas Lumsden
Q
Justin Madders: I do not think that this is covered by the Bill anyway, but I will certainly take it away to see if there is anything to reflect on. I assure you that this would not be proceeding if there were no interest in investment.
Mike Reader
Q
Justin Madders: I think it will. Obviously the Treasury decision on how this is going to be funded is driving us in a direction where we have to secure private investment. I think the model gives us the opportunity to give the investor certainty over a long period. Clearly, guardrails in there will protect users as well, but as I say, the indications I have had so far are that the long-term nature of the project and the way in which it has been de-risked make it an attractive proposition.
Mike Reader
Q
Justin Madders: As I probably made clear, the Bill is scheme agnostic, so an amendment to require a certain type of fuel would not really help us at all. Look, we have had quite a lot of evidence and, as a Committee, we should take confidence in the measures that are in place to ensure that the costs are kept under control.
Mike Reader
Q
Justin Madders: I suppose, to pick up from one of the witnesses, I will reference the fact that the road investment strategy—which was started by the previous Government —has set us up with a very sustainable model to develop these large projects over a longer term, giving confidence to the supply chain to keep control of costs and to deliver on time and within scope. I think that National Highways is now very well skilled at doing that, which should give us all confidence.
Mike Reader
Q
Justin Madders: The tolls will ultimately be part of part of the licence, which is covered by the Bill—
Mike Reader
Q
Justin Madders: That will be part of the licence conditions, and probably a little too specific for the Bill. Obviously, there are safeguards in the Bill about the things that will need to be considered by the operator.
Mike Reader
Q
Justin Madders: Yes, we are happy to do that.
The Chair
As there are no further questions from Members, I thank the Minister for his evidence. That brings us to the end of the sitting. The Committee will meet again at 9.25 am on Tuesday 3 November to begin line-by-line consideration of the Bill.
Ordered, That further consideration of the Bill be now adjourned.—(Michael Wheeler.)