Highways (Financing) Bill (Fourth sitting)
(1 day, 8 hours ago)
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The Committee divided: - Ayes: 1 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 1 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 10 - Question accordingly negatived.
The Chair
I remind the Committee that with this we are discussing the following:
Amendment 78, in clause 4, page 4, line 27, at end insert—
“(v) any mayoral combined authority, combined county authority or local highway authority whose area includes, or is likely to be affected by, a highway specified in the proposed licence.”
This amendment would require licensing authorities to send a copy of the notice to mayoral combined authorities, combined county authorities or local highway authorities who may be affected.
Amendment 87, in clause 4, page 4, line 27, at end insert—
“(c) prepare, consult upon, and publish a report assessing—
(i) the anticipated impact of the specified highway on traffic volumes, congestion, and highway wear across local road networks maintained by adjacent local highway authorities; and
(ii) the specific traffic management, infrastructure, and financial mitigation measures required to address any adverse impacts identified under subparagraph (i).”
This amendment requires the licensing authority to publish a comprehensive local road impact and mitigation report prior to granting any licence, ensuring that traffic displacement onto surrounding local council roads is fully evaluated and mitigated in advance.
Clause stand part.
Olly Glover (Didcot and Wantage) (LD)
It is a pleasure to serve under your chairship, Ms Lewell. I think where we got to before we adjourned was that we would withdraw amendment 45, but press amendment 87 to a Division, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 87, in clause 4, page 4, line 27, at end insert—
“(c) prepare, consult upon, and publish a report assessing—
(i) the anticipated impact of the specified highway on traffic volumes, congestion, and highway wear across local road networks maintained by adjacent local highway authorities; and
(ii) the specific traffic management, infrastructure, and financial mitigation measures required to address any adverse impacts identified under subparagraph (i).”—(Olly Glover.)
This amendment requires the licensing authority to publish a comprehensive local road impact and mitigation report prior to granting any licence, ensuring that traffic displacement onto surrounding local council roads is fully evaluated and mitigated in advance.
The Chair
With this it will be convenient to discuss the following:
Amendment 49, in clause 6, page 6, line 3, at end insert—
“(4) The ORR must review each licence it issues at intervals of no more than five years, or at such shorter intervals as the ORR considers appropriate.
(5) The matters the review must examine include, but are not limited, to—
(a) whether the licence holder is abiding by the terms of the licence,
(b) the satisfaction of road users with the services provided by the licence holder,
(c) whether the tolls charged represent value for money for road users,
(d) the financial performance and resilience of the licence holder, including the returns generated from toll revenues, and
(e) the impact of the operation of the highway and the tolls charged on traffic volumes and congestion on surrounding roads.
(6) The ORR must publish the results of the review required under subsection (4).”
This amendment would require the ORR to review each licence every 5 years to ensure that the licence holder is providing a good service.
Clause 6 stand part.
The Parliamentary Under-Secretary of State for Transport (Justin Madders)
It is a pleasure to see you in the Chair this afternoon, Ms Lewell. You missed some exciting debates this morning; I hope we can maintain the standard this afternoon.
The clauses in this group relate primarily to the licensing regime. They are about making sure that the regime works, not just when the licence is granted but throughout its life. The Bill provides a clear process for applications, the duration of licences and continuing regulatory oversight to ensure that licence holders are properly held to account.
Clause 5 makes provision for applications for licences under the new licensing regime. It allows the Secretary of State to make regulations setting out how applications must be made. Those regulations may cover the form and manner of an application, the information and documents that must accompany it, and any application fee. The Secretary of State must consult the Office of Rail and Road before making such regulations.
The clause also enables a licensing authority to require an applicant to provide any further information or documents that it reasonably needs to determine the application. That will help to ensure that licensing decisions are made on the basis of sufficient and relevant information. Once a decision has been made, the licensing authority must notify the applicant as soon as is reasonably practicable. If the application is refused, the notice must explain the reasons for that decision and give the applicant at least 28 days in which to request reconsideration. That ensures that the applicant understands the basis for the refusal, and has an opportunity to ask the licensing authority to reconsider it.
If the licensing authority upholds its decision not to grant a licence after the reconsideration period, the applicant may appeal to the Competition Appeal Tribunal. Clause 5 establishes a clear and transparent application process, while providing flexibility to specify detailed requirements in regulations and appropriate safeguards where an application is refused. I commend the clause to the Committee.
Clause 6 makes provision for the duration of licences granted under the Bill. A licence may be granted for a specified period. Where no period is specified, the licence will remain in force until it is revoked. That allows the duration of a licence to reflect the circumstances and requirements of the particular project.Where a licence has been granted for a specified period, the ORR may extend that period with the approval of the licence holder. This ensures that a licence cannot be extended without the agreement of the licence holder.
The clause also requires the ORR to give the licence holder appropriate notice of its intentions. At least one year before the end of a specified licence period, the ORR must tell the licence holder whether it proposes to extend the licence.This requirement provides the licence holder with certainty and sufficient time to plan for the extension or expiration of the licence and the future operation of the highway.Clause 6 therefore establishes a clear and flexible framework for the duration and extension of licences, while ensuring that licence holders receive suitable notice before a time-limited licence is due to expire.I commend it to the Committee.
I will turn briefly to amendment 49 once we have heard from the shadow Minister.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve with you in the Chair this afternoon, Ms Lewell. Let us see if we can rise to the Minister’s challenge of maintaining this morning’s quality of debate.
Amendment 49, tabled in my name and that of my hon. Friend the Member for Bognor Regis and Littlehampton, essentially requires the ORR to review each licence at least every five years and to publish that review. The review would include compliance, user satisfaction, value for money, financial performance and resilience, toll returns and—continuing a theme of some of the amendments we discussed this morning and that flows through the entire Bill—the effects on surrounding roads off the trunk road network and the strategic road network that are the feeders to the new infrastructure: the lower Thames crossing and potentially others that the Bill enables.
I put it to the Committee and particularly to the Minister: why should a long-term licence not be subject to a mandatory review period published at least every five years, although I am open to other suggestions on the period? This is something that will impact motorists from across the whole country, particularly in the case of the lower Thames crossing. The hon. Member for Dartford has already expressed concerns about the impact on local roads. If a licence is granted for much longer than that—and I cannot see how it would not be, in order to bring realistic commercial payback under the tolling arrangements—what if it is a complete disaster? What if things do not pan out as everyone expects them to?
We do not want things to go wrong, but let us face it: sometimes they do. Often they do not go wrong due to any eventuality that has been foreseen. We would not have done it in the first place if there was a plan that saw things going wrong. But when things do go wrong, we need clear answers from those accountable to those paying the tolls on these roads, and indeed to the Government who will have set up the scheme in the first place. That goes in many respects to the conditions that the Minister spoke to in clause 6 around timely notice.
I gently say to the Minister: yes, it is important for an operator to get timely notice of any change, whether that is termination of a licence as it comes up to its expiration or an extension, but what is missing in clause 6 is anything that addresses the point about things going wrong. What if the Government need to step in and salvage a pretty horrendous situation that we might conceive of in future?
Jim Dickson (Dartford) (Lab)
The hon. Member is making a good case; clearly, things need to run well in the interests of road users, the infrastructure provider and local residents. However, clause 11 already provides for the modification of the licence after the grant, which surely includes most of the things he is calling for—that is, an ability to issue a notice and to say that the licence needs to be modified for some reason to do with the operation of the infrastructure.
Greg Smith
I am grateful to the hon. Gentleman for that intervention. He is right that there are measures in clause 11 that would address that issue, but we are currently discussing clauses 5 and 6, and the Minister’s comments reflected the fact that clause 6 only refers to extensions of a licence as opposed to reviews of a licence.
I cannot imagine that any of us, whatever walk of political life we find ourselves in at any one moment, would not want to have a statutory review period, so that all of us can question whether a contract is working as well as we want it to. Frankly, there are many projects I can think of that I wish we had had review periods for in the past, because we might have been able to pick up things that were going the wrong way.
If the Minister and the Government do not wish to have a five-year review period, I would welcome suggestions about what sort of review period would be acceptable to them. If they do not want a review period at all, there needs to be a pretty good case for that.
Shivani Raja (Leicester East) (Con)
My hon. Friend makes a compelling point. Once a company gets a road licence, it should not just be left to run it indefinitely, without any checks. A review every five years would force the regulator to consider the facts, including whether drivers are getting value for money and whether tolls are pushing extra traffic on to surrounding local streets. Publishing those findings would keep the operators accountable to the public.
Greg Smith
My hon. Friend makes the case incredibly well. This discussion is about transparency; it is about openness. It is about saying to those who in the future might receive a licence to run the lower Thames crossing or any other piece of road infrastructure that might be financed through this model that they are still accountable to the public and to the Government, be that the current Government or any future Government.
Such reviews will give us transparency and a clear light on what is going on, so that—to go back to the earlier debate today—any future schemes, which no one can name yet, that might be financed under the scheme created by the Bill could be improved upon by reviews of the operation of the lower Thames crossing in the future. Let us not put a date on when it will actually get built; every state project ends up being built more slowly than originally intended. But five years into the operation of the lower Thames crossing, why would all of us collectively—as parliamentarians or as the general public—not want to know how it was going?
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
I was also reflecting upon the fact that the tolling is almost open-ended. From a competitive perspective, in any regular private sector organisation it would be expected that at the end of a licence or a contract, there would be a competitive tender period. If a road has already been built and, as we now know, the maintenance of that road will then become part of a tolling operation, surely we should consider regularly—my hon. Friend said potentially every five years, but I am open to other suggestions—and on a competitive basis which company should operate it going forward, because once a road is built there is no reason why it should be the original road builder that does so.
Greg Smith
My hon. Friend makes some interesting suggestions. I challenge the Government to reflect upon—[Interruption.] One Government Back Bencher is leaving already, it seems.
Greg Smith
It’s getting closer! [Laughter.]
Maybe the Government can go back and reflect on that, and before Report, when the Bill returns to the whole House, they will have a sensible suggestion or counter-proposal on the table for how we properly monitor and review the operation of these licences.
Justin Madders
I am grateful to the shadow Minister for his contribution. I enjoy when he and the hon. Member for Bognor Regis and Littlehampton riff off of each other—it is like a remake of “Dempsey and Makepeace”; I hope they put themselves forward for the leading roles. To be fair to the shadow Minister, I think that he is coming from the right place on this. It is important that we have assurances that the licences work and deliver the appropriate standard of service, and I agree that we need to hold licence holders to account, but I will explain why I do not believe that amendment 49 is the right vehicle for doing that, if Members will pardon the pun.
First, I do not think that we should fix a five-year review cycle in primary legislation. The appropriate level and frequency of any regulatory scrutiny could change over the life of a licence. A newly established licence may require a different approach from a mature licence, and different projects may present different issues. If this amendment was accepted, we may not actually have the lower Thames crossing operational five years into the licence. When we looked at how best to frame this, because the shadow Minister raised an important matter—
Greg Smith
The amendment is very clear in saying, “review each licence”. That is not to say, “treat each licence as if they are identical,” because of course as time passes there might be different regulatory set-ups or safety standards that a new licence is granted under. We are very clear that each licence must be reviewed every five years, as opposed to—as I think the Minister is trying to argue—treating them all the same.
Justin Madders
The hon. Gentleman may unwittingly be making my point for me, which is that we want to have regular consideration and an ongoing process from the regulator. We looked at how existing licencing regimes work, including, for example, the Civil Aviation Act 2012. As I am sure he realises, there is no review period specified in that Act, because in practice the Civil Aviation Authority regularly reviews and updates the licences that it has issued. The fact that there is no specified review period has not hindered it in carrying out that role. It is apparent from how the Civil Aviation Authority operates that it takes a proactive approach; that is what we are trying to do here. It does not wait five years to spot a problem and deal with it, but deals with problems as they arise. I am sure that the hon. Gentleman will see that as a preferable approach to waiting five years between reviews.
Secondly, a number of the issues listed in the amendment are already reflected in the ORR’s statutory duties. Clause 1 puts the interests of road users at the heart of the ORR’s role. It also requires the ORR to have particular regard to efficiency and economy, and the ability of the licence holder to finance its activities, as well as to have regard to matters including safety and impacts on the strategic road network. Under clause 1(5), the Secretary of State can provide guidance to the ORR about how they would like it to interpret or carry out its duties, and the Secretary of State can update that if they are not satisfied with that interpretation. Those duties are continuing duties under clause 1; they do not suddenly trigger after five years or at any other arbitrary point.
Compliance with the licence is also already covered by the Bill’s regulatory regime. Part 4 gives the ORR powers for monitoring and information gathering, and provides for enforcement when licence conditions are not met. Clause 7(5) requires the ORR to keep tolling conditions imposed on the licence in clause 7 under review. As my hon. Friend the Member for Dartford said, clause 11 gives powers to amend licences. The shadow Minister talked about the absolute disaster scenario, which we hopefully will not see, but clause 12 gives powers to revoke licences. Therefore, there would be no need to wait five years, and I think it is clear that the flexibility and ongoing review that the Bill sets out is the correct approach.
Douglas Lumsden (Aberdeen South) (Con)
The amendment is asking for a couple of specific things to be in the review:
“the financial performance and resilience of the licence holder, including the returns generated from toll revenues, and…the impact of the operation of the highway and the tolls charged on traffic volumes and congestion on surrounding roads.”
In the interest of transparency, does the Minister not think that it would be good for the general public to see the main criteria in the amendment?
Justin Madders
I was about to sit down, but there are publication requirements in clause 78, which will deal with a number of the issues that the hon. Member referred to, so I request that the Committee reject the amendment.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6 ordered to stand part of the Bill.
Clause 7
Tolling and other mandatory conditions
Olly Glover
I beg to move amendment 39, in clause 7, page 6, line 11, at end insert—
“(c) a condition requiring the holder of the licence to compensate affected local highway authorities for extraordinary maintenance costs, traffic management or congestion mitigation arising from any increased traffic as a result of vehicles avoiding tolls on the chargeable highway.”
This amendment ensures that local authorities are compensated for the knock-on costs of increased traffic on local roads as a result of drivers aiming to avoid the toll road.
The Chair
With this it will be convenient to discuss the following:
Amendment 40, in clause 7, page 6, line 11, at end insert—
“(c) a condition requiring the holder of the licence to establish a scheme for issuing automatic partial or full refunds of tolls to users in the event of significant traffic delays as a result of roadworks on the specified highway.”
This amendment would ensure that license conditions must include automatic refunds for drivers who face severe delays as a result of roadworks.
Clause stand part.
Amendment 72, in clause 103, page 67, line 18, leave out lines 18 to 21 and insert—
“after the Secretary of State has published a report setting out the proposed licence conditions including proposed arrangements for setting toll levels and approving any increases.”
This amendment would prevent the Act from coming into force until after the Secretary of State has published a report setting out the proposed licence conditions including tolling arrangements.
Olly Glover
It is a pleasure to serve under your chairship, Ms Lewell. Amendment 39 would create a mechanism for compulsory compensation for local councils as a result of additional traffic due to people avoiding tolls.
Local council taxpayers must not be forced to subsidise private toll road profits by picking up the repair bill for local roads damaged by heavy diverted traffic. As Declan Pang of the Road Haulage Association noted in front of the Committee last week, local A and B roads are heavily used by small businesses and hauliers, and severe wear caused by toll evasion can hurt the wider local economy.
Placing compensation in clause 7 would make it a binding legal condition so that private operators cannot bypass or negotiate away the wider impacts. One of the reasons I have tabled the amendment is because of the problem with the current roads funding formula. It is based overwhelmingly on miles rather than use levels. Higher use of existing roads would not necessarily lead to more funding for local authorities as a result, so we need a mechanism to deal with that.
Amendment 40 would, in effect, extend the delay repay concept from the railway to toll roads. It would mean an automatic toll refund scheme that issues partial or full refunds to drivers trapped in severe congestion, roadworks or operator-induced disruptions would come into existence. Motorists paying premium commercial tolls expect a reliable, free-flowing journey and should not be charged full price when the operator fails to maintain traffic flow.
Drawing on European tolling models, the Italian network has a motorway refund system, which creates a direct financial incentive for operators to clear incidents and manage roadworks efficiently. Currently, operators do not always manage to do that here. We are not necessarily saying that that is the right system for the UK context, but it is an illustration of what is possible and an example that the Minister may wish to consider.
As Edmund King told the Committee last week, if drivers pay a higher toll under an independent business model, it must work both ways, giving drivers money back when the road fails to operate properly. I look forward to hearing the Minister’s comments.
Greg Smith
I largely wish to comment on amendment 72 in my name and that of my hon. Friend the Member for Bognor Regis and Littlehampton, but before I do so, I will speak briefly to amendments 39 and 40.
The hon. Member for Didcot and Wantage makes a good point about the increased use of local roads that feed vehicles on to new infrastructure, such as the lower Thames crossing, or indeed bring motorists—be they private motorists or haulage operators—off those pieces of new infrastructure. The current modelling that finances local highway authorities—predominantly councils—up and down the land has no mechanism whatsoever for acknowledging the point that the hon. Member makes. When traffic flows are massively increased on an existing road, those surfaces very quickly degrade and start to resemble the surface of the moon. I am sure we all see that in our own constituencies. It something that drives all of our constituents—and me—absolutely potty on a daily basis.
I see that in my own constituency, where we have seen a large amount of big infrastructure being built over recent years, such as East West Rail. That happens where compounds are put in for heavy goods and groundworks vehicles. The traction zones where those vehicles are accelerating to pull out, or braking to come in, as they go to site, move earth away and bring aggregate in, very quickly degrade.
It makes sense to take into account where an existing local road—one that is owned by a local highway authority and is the responsibility of local council tax payers—is suddenly asked, as they will be in the case of the new lower Thames crossing and potentially other schemes in the future, to be used for infrastructure projects. There should be a flow of funding, either from the licensee or from the Government through the Department for Transport, and ultimately the Treasury, that ensures that council tax payers in local areas are not asked to pick up the bill—as my council has been asked to do for roads broken by HS2 construction—for the construction of the lower Thames crossing and other schemes under the Bill. Indeed, they should not be asked to pick up the bill for the ultimate operation of them, either. I have some sympathy for amendment 39 tabled by the hon. Member for Didcot and Wantage.
Amendment 40 is a more problematic proposition. I do not disagree with the sentiment. No one can tell us what the toll on the lower Thames crossing would ultimately be, but we can presume it to be commensurate with the M6 toll, where an average vehicle pays £7 or £8. Therefore, it makes eminent common sense, and is surely reasonable, that someone would be entitled to some sort of compensation, or money back, if they paid the toll but then got snarled up in a traffic jam and just sat in a queue that they could have sat in on the original M6 anyway. I have sat in a jam on that road many times over my life.
The problem with the proposition that the hon. Member for Didcot and Wantage has put forward is how that would be determined. With trains, delay repay is very straightforward: what time does the train ultimately pull into the destination station? That is very clear: it is either on time or a number of minutes late. Certainly, since Chiltern Railways was nationalised, I have been on late trains from my constituency every single day, but that is beside the point.
However, how is that level of delay really determined in a private vehicle? Everyone’s journey will be slightly different. What is to stop someone from deliberately driving slowly in order to avoid paying the full toll, artificially making their journey seem longer? Is it for the ORR to determine whether someone has had a longer than usual journey? How will they determine that without—and I do not want to sound all conspiracy theorist—some level of state snooping on people’s exact movements in order to determine how long that journey actually took them?
Olly Glover
The shadow Minister gives me an opportunity to say something I omitted from my notes—despite everyone’s obsession with Google, it is incapable of formatting a document properly when it is printed, but that is for another day. The Italian model calculates a base amount for roadworks, plus an extra amount for time lost. One qualifies after any delay on a trip up to 30 km, after a 10-minute delay on trips of 30 to 50 km, or after a 15-minute delay on trips over 50 km. I do not know how they determine that. It may be through some sort of monitoring system, and we already have that in many formats, such as automatic number plate recognition. The Italians are not generally well known for welcoming state surveillance. That is just one mechanism, and I am sure that many options are available using 21st-century technology.
Greg Smith
I am grateful to the hon. Gentleman for that clarification. I am sure that the Italian model works well to make the number of minutes delayed commensurate to the compensation paid, but he himself acknowledges that he does not know the manner in which it is determined. I would be happy to work with the hon. Gentleman to look at options—
Greg Smith
There are no coalitions here. There is only one audition going for the next general election, and it will not be looking toward our side of the House.
If there is a sensible solution that does not involve state snooping on our motorists as they use this new infrastructure, the principle that someone has paid their money and should expect a quick journey time is a fundamentally good one, and it should apply.
Amendment 72 would prevent the Bill from coming into force until after the Secretary of State has published a report that sets out the proposed licence conditions, including—this is the $64,000 question, though I hope not literally—tolling arrangements. Throughout the debates so far, a number of questions have been asked about that. I understand the technical nature of the answers, but bluntly, that does not cut it with our constituents. No one can answer how much it will actually cost motorists to use the lower Thames crossing or how the tolling mechanism will be regulated to give clear, unambiguous rules about how a toll must be set and if there will be any caps on it, so that drivers, motorists, private cars and hauliers alike can have confidence in what is coming.
That is simply what amendment 72 seeks to do. The public should know how tolls will be set and how any increases—an equally important point—will be approved before the regime starts operating. It is not good enough for the road to be built and for people to then find out that they cannot afford to use it. Why should Parliament commence the Act before those conditions are published? If the Minister can come back with some clear guidance and rules around that, we will be much closer to full-throttled support for what he is trying to do. We want the lower Thames crossing, but we do not want it at a rate that nobody can afford to use.
Alison Griffiths
When I spoke earlier to amendment 82 to clause 3, it was with this exact issue in mind. We failed to get that amendment passed, so the improvement and maintenance of these roads will be paid for through tolling. However, we know that the “fair and transparent code” the ORR will decide on will not be put to a vote in Parliament. It therefore becomes even more important that on the tolling for these roads, we require a report from the Secretary of State that sets out the conditions and proposed arrangements for toll levels and the approval of increases. Without that, there is no control or stopgap for these tolls. The tolling does not end when costs have been recovered by the operator, so we could have a very open-ended tolling situation.
Given that it is going to one operator, we do not know how cost-effective maintenance will be. Will they be required to go out to tender on this? If a report is coming to the Secretary of State before we set tolling, that will create a position where we have greater control.
Jacob Collier (Burton and Uttoxeter) (Lab)
I am trying to understand the Opposition’s position, because it seems that they want the Government to intervene in setting the tolling price, but they have also called for a strengthened and independent regulator. I am trying to understand their proposed position.
Alison Griffiths
We are looking for clarity and making sure that our constituents are looked after in this process. At the moment, our constituents are left liable for whatever costs are coming down the track, with only the ORR’s code, which this place will have no say in, to set what those costs will be. Given that the Government do not wish to put in place a limit on the length of a licence, all these things concurrently are creating a situation where constituents, quite rightly, may be wondering what exactly it is that they are paying for.
Shivani Raja
We are generally in agreement that it is essential that both transparency and cost control sit at the heart of this framework. Drivers and local businesses deserve to know exactly what they are being asked to pay before any tolling arrangements are introduced. We cannot expect motorists to accept potentially significant and unexpected costs without first having a clear understanding of what those charges will be, and how they will be determined.
Amendment 72 is about ensuring proper scrutiny before decisions are made and effectively locked in. By requiring licence conditions and proposed toll levels to be published before the Act comes into effect, Parliament has the opportunity to examine the arrangements and understand the potential impact on roads users and motorists.
Ultimately, people deserve transparency, accountability and certainty. We must ensure that the interests of drivers and local businesses in all our constituencies are properly protected, and that no one is left facing unexpected costs without having had the opportunity to understand them.
Justin Madders
I thank the hon. Members for Mid Buckinghamshire and for Bognor Regis and Littlehampton for their amendment.
The hon. Member for Didcot and Wantage tried to make a noble case for something that this Government are already dealing with through the record funding for highways maintenance that we have announced and are already delivering on. I understand the thrust of his argument about compensation to local highway authorities for displaced traffic. The right approach is to undertake an assessment of the whole strategic road network, to understand what improvements and likely increases to overall capacity could achieve more widely. Then, we should assess the impact if we do not proceed.
Of course, the whole thrust of the Bill is to reduce congestion, not increase it. As my hon. Friend the Member for Dartford has said on many occasions, we know that his part of the country is already at bursting point. We know what happens when things go wrong at that vital section of the strategic road network. There are already local problems as people try to find alternatives to avoid the congestion it has caused. That is clearly not because people are trying to avoid the toll, which has been in place for many years; it is actually about the lack of reliability at that vital pinch point. The answer is not to compensate people for delays caused by trying to avoid that unreliability; the answer is to make the Dartford crossing more reliable so that people actively choose that road.
Olly Glover
The Minister, as he has in a few of his speeches, is talking as if the Bill is only about the lower Thames crossing, but it is not. It is much broader than that, as he has acknowledged, although it is focused on the lower Thames crossing. If the Bill was just about the lower Thames crossing, I might well agree with his argument, as there are no alternatives in that particular case. But as drafted, it is not just about the lower Thames crossing, is it?
Justin Madders
The hon. Gentleman is absolutely correct that the Bill is scheme-agnostic, but as the lower Thames crossing is the only scheme we currently have in mind, it is helpful to draw examples from that for why the amendment is not acceptable.
It is probably also worth pointing out that I am not aware of any other such toll schemes operating in this country at the moment. Is it his position that this compensation measure should be extended to the Mersey tunnels or the Mersey Gateway crossing, for example? My local transport authorities might be interested to hear that, and they might wonder where the funding would come from.
As I have said, the whole purpose of the Bill is to create the regulated asset base model that will fund the crossing. It will be a separate income stream from the general roads budget, and those who benefit directly from the new infrastructure will pay for it. It will improve the reliability of the whole network, which is the correct approach and is far more effective than trying to compensate people for an already overstretched and failing network.
Greg Smith
I genuinely do not think the Minister and I are that far apart, because I do not disagree with anything he has just said about getting the new infrastructure to work in the interests of motorists. Where I think he has perhaps missed the point that the hon. Member for Didcot and Wantage and I have made is that, in order to get traffic flows on to that new infrastructure, in many cases it is conceivable that local roads will see a much higher level of use than they do today. Therefore does the Minister acknowledge that getting new infrastructure up and running well, in the interests of motorists at a price they can afford, will have an impact on the rest of the road ecosystem, mainly falling on those local authority-owned and financed roads?
Justin Madders
I understand the hon. Member’s point, but I cannot say I agree with it because the traffic is already on the local road network. The whole purpose of the Bill is to take that traffic away. It is worth reiterating that we do not intend to do a deal at any cost. We need to do the right deal for road users and make sure this legislation has the necessary protections in place for them. Heaping more costs on to the project by bringing in a wide and broad compensation package would have unintended consequences.
The hon. Member for Didcot and Wantage mentioned the perceived unfairness of the road maintenance formula, which the Department is committed to reviewing, but I cannot accept his amendment and I say the same about amendment 40. That would insert a mandatory licence condition requiring an automated refund system to be provided by a licensee. As I have already stated, the amendment would be contrary to what we are trying to achieve. The shadow Minister talked amusingly about people driving deliberately slowly to try to get a repayment. I am not sure people would be that Machiavellian, but maybe those are the circles he mixes in.
It is fair to say that road users rightly expect well-maintained roads, and they expect operators to minimise disruption in line with their network management duties. However, safe roads require maintenance, and maintenance sometimes requires roadworks. An automatic refund requirement would disincentivise operators from undertaking necessary maintenance and roadworks. It would give them a financial incentive to postpone what might be necessary maintenance. The better approach is to hold operators to account for how they manage expenditure and deliver the service, rather than create an incentive to put off essential work.
Olly Glover
I am grateful for the Minister’s comments. On amendment 40, the Minister said that delay repay could incentivise toll road operators to do less maintenance, but I disagree. It would incentivise them to do maintenance efficiently and at appropriate times, such as overnight, rather than making a case for recreating the Conservative party’s cones hotline of the 1990s. One sometimes sees plenty of cones and lane closures out there with very little work taking place.
In light of the shadow Minister’s offer to work collaboratively on a proposal, and of my offer to help him with his conspiracy theories of state suspicion, I will leave amendment 40 for another day. However, I will press amendment 39 to a Division.
Question put, That the amendment be made.
Justin Madders
I beg to move amendment 1, in clause 8, page 7, line 23, leave out paragraph (l).
This amendment removes paragraph (l) from clause 8(2) because the provision is considered unnecessary.
Justin Madders
Amendment 1 is a small amendment to remove an unnecessary paragraph from clause 8(2). Paragraph (l) currently specifies that a licence may have a condition prohibiting transfer of the licence unless it is done under the provisions set out in clause 14. That is not necessary, as compliance with the provisions is already required by clause 14 itself. This is therefore a minor tidying-up amendment to remove an unnecessary provision, which I hope the shadow Minister will be able to support.
Clause 8 allows a licensing authority to include additional project-specific conditions in a licence, which will sit alongside the conditions that must be included under clause 7. That flexibility is important because each project will be different, and the licence needs to reflect the particular road, works and arrangements involved.
Conditions may set out what the licence holder must, may or must not do. They may also control how the licence holder carries out its activities. For example, conditions may cover the use of land, the licence holder’s financial arrangements, and requirements relating to the design or operation of the highway. A licence may also require the licence holder to follow directions from the Secretary of State or the ORR on matters specified in the licence. Conditions may cover the provision and publication of information, co-operation with highways and planning bodies, and the referral of particular matters to the ORR for a decision. A licence may also require the licence holder to meet costs incurred by the Secretary of State in carrying out functions connected with the licence.
The list in clause 8 is not exhaustive, and it is not designed to be. That ensures that a licence can include any other appropriate conditions needed for the project. I think the overarching principle is pretty clear from the list in subsections (2)(a) to (2)(k), but I will give the Committee a bit more detail.
Paragraph (a) is about making sure the licence holder is financially stable and resilient. It gives the ORR the option to lay out things such as the level of debt the licence holder can have.
Paragraph (b) is about making sure that all the things a licence holder must or may do in respect of the road are spelled out in the licence, such as that it must construct the road, for example.
Paragraph (c) is about how the licence holder does the things that are spelled out in the licence. For example, that might be abiding by the planning conditions laid out in the planning permission for a scheme.
Paragraph (d) is about detailing the consents that the licence holder will or will not need for certain actions.
Paragraph (e) makes it clear that the licence holder must abide by directions from the Secretary of State or the ORR.
Paragraph (f) makes sure the licence holder refers appropriate matters to the ORR.
Paragraph (g) makes sure the licence holder is clear that it has to pay the Secretary of State for any costs incurred by the Secretary of State on its behalf.
Paragraph (h) makes sure the licence holder co-operates with National Highways or a local highway authority, for example, when fulfilling its duties under the Highways Act 1980, to give one example.
Paragraph (i) is about the information that a licence holder may be required to share with the ORR or others.
Paragraph (j) is about making sure that land acquired for the building of any scheme under the RAB model—for example, land acquired for environmental mitigation of the lower Thames crossing—is used for its intended purpose and not for some other purpose. For example, if the land was designated for environmental mitigation but the licence holder tried to build a housing estate on it instead, that would be a breach of the licence.
Lastly, paragraph (k) is probably the easiest to explain, because it is there to ensure that the licence holder abides by the licence, particularly in making sure that the correct standards of road construction and operation are used.
Clause 8 therefore provides the flexibility to tailor each licence, while ensuring that the licence holder’s responsibilities are clear. Because the licence will change over time, depending on the stage of the project, the clause needs to reflect that. For example, the road that the licence holder is required to construct will be complete at some point, so a construction condition will then no longer be needed. As I have said, the clause is not an exhaustive list but is designed to ensure that a licence can include any appropriate conditions needed for an individual project. I commend the clause and amendment 1 to the Committee.
Clause 9 enables the Secretary of State to determine standard conditions for licences granted under the Bill. These conditions will provide a clear, consistent baseline across the new licensing regime to give licence holders, investors, the ORR and road users certainty about the core obligations that apply while avoiding unnecessary repetition in individual licences. These standard conditions must be published and provided to the ORR, and they will then be incorporated into each licence by reference, unless the Bill provides otherwise. Conditions published after a licence is granted will not apply to the licence automatically.
Clause 9 also preserves appropriate flexibility. The licensing authority may exclude or modify standard conditions when granting a licence, where that is justified for the project. Clause 10 requires publication, consultation and protections against undue competitive disadvantage before the licensing authority may do so. Clause 9, therefore, provides a combination of regulatory consistency and proportionate project-specific flexibility.
Clause 10 sets out the safeguards that apply where a licensing authority proposes to exclude or modify a standard condition when granting a licence. Before excluding or modifying the condition, the authority must publish a notice setting out the proposed change, its effect and the reasons for it. The notice must be sent to the other licensing authorities, each relevant strategic highways company and any other appropriate persons, and at least 28 days must be allowed for representations. The licensing authority may proceed only if it considers that the change will not unduly disadvantage either the licence holder concerned or any other licence holder in competing with others. If it proceeds, it must publish the final change, explain its effect and reasons, and state how representations were taken into account. This clause therefore ensures that project-specific flexibility is exercised transparently, proportionately and without distorting competition.
I commend these clauses to the Committee.
Greg Smith
I am grateful to the Minister for his explanation of these clauses and Government amendment 1. He will be pleased to know that His Majesty’s loyal Opposition do not object to Government amendment 1. We might ask why such an obvious duplication in the Bill was not picked up before it was published, but we will perhaps leave that for another day.
Speaking more widely to clauses 8 to 10, though probably more in the realm of clause 8, I would be grateful if the Minister could visualise some of the scheme-specific variations that he spoke of. With only the lower Thames crossing really in anyone’s eye under the provisions of this Bill, can he give us some practical, concrete examples of where such scheme-specific variations may come about, to help the House, the Committee and our constituents to fully understand the scope?
Clause 8(2)(a) talks about conditions
“relating to the financial resilience of the holder of the licence or otherwise relating to the holder’s financial arrangements”.
The Minister directly referred to how much debt a licensee might be allowed to have, under the scheme of a licence. I do not object to that as a core principle, but if it is to be the case that something can be laid down as clearly as how much debt-gearing an operator or licensee is permitted to have, surely it can also be written into any licence not necessarily the exact pounds and pence of what any toll can be, but some sort of ruling that says a toll must be proportionate to, for example, the overall build cost over a certain number of years. Maybe, as we are talking about debt-gearing to build infrastructure such as the lower Thames crossing, a licence could say that the toll must not be any more than the total debt divided over how many years the Secretary of State or the ORR deems the licence to cover.
That is the most important question flowing through all the amendments and all the debates on this Bill: how much are the tolls actually going to cost people to use these roads? I fully accept that a pounds and pence figure is very difficult to conjure up, but surely clause 8(2)(a) would give us the ability to set the parameters of a toll. If we can set the debt limit, we can surely set limits for the tolls.
Justin Madders
I think the shadow Minister supports the amendment, which is good to hear. On his question about other potential variations, conditions could cover the use of land, the design or operation of the highway, information sharing and co-operation with other bodies. Because the Bill is scheme-agnostic and creates a framework designed for the long term, it really is not possible to be any more specific than that; indeed, I think it is prudent for us to keep a broad thrust in the Bill.
On the shadow Minister’s other point, the Bill already contains safeguards for tolling levels; he need only look at clause 7 on tolling conditions, which sets out some of the safeguards through the ORR. I hope that gives him some reassurance. I acknowledge that he recognises—I think—that we are not going to be able to set a precise toll in legislation. I say there are sufficient safeguards to ensure that it will be set at a proportionate level; I suspect he does not agree, but I believe that those safeguards are clear in the Bill.
Amendment 1 agreed to.
Clause 8, as amended, ordered to stand part of the Bill.
Clauses 9 and 10 ordered to stand part of the Bill.
Clause 11
Modification of licence conditions after grant
Justin Madders
I beg to move amendment 2, in clause 11, page 10, line 13, at end insert—
“(9) Nothing in this section prevents the modification of a licence by a scheme—
(a) under paragraph 1 of Schedule 1 (transfer schemes) in reliance on paragraph 2A(3)(b) of that Schedule, or
(b) under paragraph 1 of Schedule 3 (highways administration transfer schemes) in reliance on paragraph 5(6)(b) of that Schedule.”
This amendment is consequential on amendments 29 and 35.
The Chair
With this it will be convenient to discuss the following:
Clauses 11 to 13 stand part.
Government amendments 3 and 4.
Clauses 14 and 15 stand part.
Justin Madders
I will start by addressing the clauses in general; if I dive straight into the amendments, it may overcomplicate the debate on what is already a fairly complicated Bill. The clauses set out how a licence can end or be transferred, where the licence holder has requested it. Further to amendments 2 to 4 and 22 to 25, licences can also be transferred under the provisions set out in schedule 1.
For the regulated asset base model to function properly, it is important that transfers of licences can take place and that the process is set out clearly. For some schemes under the RAB model, the same person might hold a licence for a very long time. At some point, however, the licence may well need to change hands. The clauses will allow for that to happen, and set out clearly the conditions that the regulator may deem it appropriate to apply in granting its consent.
Government amendment 2 allows for licences to be transferred under the transfer schemes in schedule 1 as well as under clause 14, and ensures that Government amendments 29 and 35 achieve their objectives. Those amendments allow for the transfer of a licence through a transfer scheme, as well as under clause 14. Amendment 2 makes it clear that provisions relating to modifying licence conditions post grant do not impinge on the ability to make incidental modifications to a licence when it is partially transferred under schedule 1 or schedule 3, once amendments 29 and 35 are made. When only part of a licence is transferred under those schedules, incidental modifications to the terms and conditions of the licence may be necessary to ensure that the licence can be split and continue to operate effectively.
Once it has hopefully been amended, clause 11 will enable a licensing authority to modify licence conditions after a licence has been granted. That power is necessary, because the licences may govern major infrastructure over long periods. The conditions may need to respond to changing operational, financial or regulatory circumstances, and the clause provides a controlled process for doing so. Before making a modification, the authority must publish the proposed change, the effect of it and the reasons for it, and must allow at least 28 days for representations.
If the authority proceeds, it must publish the final decision, explain how representations were considered and give at least 28 days’ notice before the change takes effect. The licence holder may appeal specified modifications to the Competition Appeal Tribunal. During the consultation period, the Secretary of State may also direct the ORR not to make a proposed modification. Clause 11 balances the necessary flexibility with transparency, accountability and effective rights of challenge. I therefore commend amendment 2 and clause 11 to the Committee.
Clause 12 provides a clear process by which the ORR can revoke a licence with the agreement of the licence holder or in accordance with the terms of the licence. That is necessary because a long-term licence may need to end before its stated expiry date, which the clause ensures can happen through an orderly and—importantly—transparent statutory process.
Before revoking a licence, the ORR must publish its proposal, explain its reasons and specify the proposed revocation date. It must allow at least 28 days for representations. If it decides to proceed, it must publish the decision and the date on which the licence will be revoked. The notices must be brought to the attention of those likely to be affected, and copies must be sent to the Secretary of State, each relevant strategic highways company and any other appropriate persons. During the representation period, the Secretary of State may direct the ORR not to revoke the licence. The clause therefore provides necessary flexibility, and contains transparency, oversight and an orderly transition.
Clause 13 provides for the revocation of a licence where necessary in the interests of national security. Strategic road infrastructure may be of national importance; therefore, the statutory framework must contain a clear mechanism to act where continued operation under a particular licence would present a national security concern. The power is deliberately narrow. The Secretary of State may direct the ORR to revoke a licence only if satisfied that revocation is necessary in the interests of national security.
The ORR must then publish a notice of the direction in a manner appropriate to bring it to the attention of any persons likely to be affected, and must send that notice to the licence holder, each relevant strategic highways company and any other appropriate persons. The notice must specify the date on which the licence is revoked. Clause 13 provides a focused national security safeguard, while the wider provisions in the Bill ensure that responsibility for the highway can continue after revocation. I therefore commend clauses 12 and 13 to the Committee.
Government amendment 3 ensures that clause 14 refers to both the conditions and terms of a licence in relation to transfers—[Interruption.] I hope that wasn’t a comment on my amendment.
Justin Madders
Amendment 3 makes it clear that licence transfers under clause 14 are subject to the conditions of the licence, as well as its terms. Conditions relating to licence transfers may be imposed on licences under clauses 8 and 9, as the Committee discussed previously. The conditions may affect how and when licence transfers are made, and thus it is important that licence transfers under clause 14 are subject to them.
Government amendment 4 ensures alignment between clause 14 and schedule 1, once the schedule has been amended by Government amendment 29. This amendment is therefore interlinked with amendment 29 and is consequential on it. The Committee will come on to discuss amendment 29 later in its consideration, but by way of brief explanation, it allows for transfer of all or part of a licence through a transfer scheme. Without amendment 4, clause 14(1) would prevent transfer of the licence under schedule 1. The amendment fixes that and ensures that clause 14 aligns with schedule 1, which permits transfer of the licence through a transfer scheme, once the schedule is amended.
Clause 14, alongside the processes set out in schedule 1, establishes the statutory basis for transferring the whole or part of a licence. The licences may operate over long periods. It is therefore sensible to provide for a change of licence holder or a transfer of part of the licensed responsibilities, where appropriate. However, a transfer cannot take place without regulatory control.
The licence holder must obtain the ORR’s consent and comply with the procedure under clause 15, and with any relevant terms or conditions of the licence. The Secretary of State may direct the ORR not to consent where that is necessary in the interests of national security. Subject to that safeguard, the ORR may refuse consent only if it considers that the proposed transferee is not a fit and proper person to hold the licence or the part that is being transferred. The ORR may also impose appropriate conditions, which may ensure that the necessary property, rights and liabilities are transferred or created between the parties. Clause 14 therefore provides commercial and operational flexibility without allowing licence obligations to be transferred free from regulatory scrutiny. I commend it to the Committee.
Finally, clause 15 sets out the procedure that the ORR must follow before consenting to the transfer of a licence or part of a licence under clause 14. Before giving consent, the ORR must publish a notice stating that it proposes to consent and explaining its reasons. The notice must allow at least 28 days for representations about the proposed transfer. If the ORR decides to proceed, it must publish a further notice setting out its decision and the date on which the transfer will take place. Both notices must be published in a manner appropriate to bring them to the attention of persons likely to be affected. The ORR must also send copies to the Secretary of State, each relevant strategic highways company and any other appropriate persons. When sending the proposal to the Secretary of State, the ORR must identify any conditions it proposes to impose on the transfer under clause 14. Clause 15 therefore ensures that transfers are considered openly and on an informed basis, while providing a clear route for an approved transfer to take effect.
I hope that I have been clear for Committee members. Clauses 11 to 15, as amended, will provide the certainty that licence holders need with regard to how their licence may come to an end, or be transferred or revoked. They also provide assurance to the ORR and to the public of the clear processes for how the end of a licence should be managed. I therefore commend the clauses and Government amendments in the group to the Committee.
Greg Smith
I have never been considered a Tory wet, Ms Lewell, but my notes now are, after my acrobatics with them. I particularly apologise to the Hansard reporters when my notes eventually make it to the Official Report at the end of the sitting.
Greg Smith
The Minister suggests an improvement to my notes—I certainly cannot read them any more.
I do not think that there is particular disagreement between the official Opposition and the Government on this part of the Bill, so I just want to pose a couple of questions to the Minister on clauses 12 and 13 on the revocation of any licences. Clearly, a licence may well need to be revoked if things are going horribly wrong, or indeed—as the Minister highlighted in his remarks—if there is a national security concern. The first duty of any Government is to keep citizens safe, and given a national security concern, it is absolutely right that there should be the power to revoke a licence.
What is missing from clauses 12 and 13 is what happens if a licence is revoked, but there is no one out there willing to take it on so that clauses 14 and 15 would come into effect. Who becomes the licensee by default? Is it the Department for Transport? Is it the ORR? Is it someone else? That is not a disagreement with the clauses—they seem relatively comprehensive, and certainly the power given any national security concerns is absolutely right—but who takes over?
What if no company wishes to take on that liability—that licence—and the cost of operating the lower Thames crossing or anything else that is granted a licence? We need clarity on that. Although the procedure set out in the clauses is unobjectionable, the net result in some circumstances is not. I hope those circumstances never come to pass, but we must plan for the worst. We need an answer on that point.
Justin Madders
I am grateful for that important question. The simple answer is that National Highways would become the operator of last resort. As it already operates the adjoining parts of the network, that would be an entirely sensible move. Let us be honest, we do not want to be in that position. At this stage, it is difficult to foresee the circumstances in which that would apply, because the whole purpose of the RAB model is to provide certainty over the long term—although it is of course right that we have safeguards in the Bill. I hope that response has addressed the shadow Minister’s question.
Amendment 2 agreed to.
Clause 11, as amended, ordered to stand part of the Bill.
Clauses 12 and 13 ordered to stand part of the Bill.
Clause 14
Transfer of licences
Amendments made: 3, in clause 14, page 11, line 21, after “terms” insert “or conditions”.
This amendment clarifies that a transfer of a licence must be in accordance with any conditions of a licence relating to its transfer (as well as any terms).
Amendment 4, in clause 14, page 11, line 38, after first “under” insert
“a transfer scheme made under Schedule 1 or”.—(Justin Madders.)
This amendment is consequential on amendment 29.
Clause 14, as amended, ordered to stand part of the Bill.
Clause 15 ordered to stand part of the Bill.
Clause 16
Holder of licence to be highway authority and traffic authority
Question proposed, That the clause stand part of the Bill.
Justin Madders
Clauses 16 to 21 engage the fundamental legislative scaffolding required to operate licensed highways by plugging it into the existing legislative framework. The clauses establish clear responsibility for operating and maintaining licensed highways. They give licence holders the legal status and functions they need while retaining specified statutory powers with a public body.
The clauses allow a licensee to delegate, without removing its responsibility or the ORR’s oversight, and protect continuity by allowing a strategic highways company to intervene when a licence holder cannot properly perform its functions. The clauses allow relevant responsibility to pass automatically to the relevant strategic highways company when a licence ends without a replacement. I trust the clauses are uncontroversial but I will go into a little more detail for the benefit of the Committee.
Clause 16 makes the licence holder the highway authority and traffic authority for each highway specified in its licence. That gives the licence holder the legal status to carry out the day-to-day highway and traffic authority functions required to operate and maintain the licensed road. The clause is concerned only with trunk roads covered by the licence, not with the wider responsibilities of highway or traffic authorities. A licensed highway is treated as a highway maintainable at the public expense for the purposes of the Highways Act 1980. That keeps the legal status of the licensed highway clear, even though the works and operation of it are to be privately financed. These arrangements take effect from the date stated in the licence or, if no date is stated, from when the licence is granted. That provides a clear point at which statutory responsibility moves to the licence holder.
Where legislation gives a strategic highways company functions because it is the highway authority or traffic authority for a trunk road, those functions will generally be exercisable by the licence holder for the licensed highway. Development consent orders under the Planning Act 2008 are expressly excluded from that rule. That avoids the automatic transfer of project-specific consents in a DCO. These consents will need to be considered separately as part of specific licensing decisions and can be dealt with separately, as appropriate, either under the Bill’s transfer provisions or under specific provisions of the DCO itself. That also gives much needed flexibility when establishing a new scheme.
Subsequent clauses retain certain functions to the relevant strategic highways company, which is of course National Highways, and provide safeguards for delegation and operational continuity. Clause 16 therefore places responsibility for the licensed highway with the body that will operate it, while preserving the wider statutory framework for trunk roads and other highways.
Clause 17 sets limits on the functions that a licence holder may exercise as the highway authority and traffic authority for a licensed highway. Although clause 16 gives the licence holder that status, certain functions should remain with a public body because of their nature and legal effect. The licence holder may not exercise functions relating to the making of schemes or orders under the Highways Act 1980. It may not exercise compulsory purchase functions under that Act, or functions relating to the making of orders or giving of directions under the Road Traffic Regulation Act 1984. These are delegated forms of legislation and it is important to have proper public scrutiny of their use.
For those unfamiliar with the details of those pieces of legislation, order-making powers include matters such as changing speed limits, making trunking orders, restricting access to a road or introducing one-way systems. These functions will instead be exercised for the licensed highway by the relevant strategic highways company, which ensures that significant statutory powers, including compulsory purchase and most traffic regulation powers, remain with a public body.
The clause also allows the Secretary of State to make regulations about who may exercise highway and traffic authority functions for a licensed highway. It may, for example, be appropriate for certain functions to be exercised by a local highway authority, depending on the specific scheme. Those regulations may provide for a specified person other than the licence holder to exercise one of the functions retained by the clause. They may also allow another specified person to exercise other functions instead of, or alongside, the licence holder. The regulations may also make the modifications needed so that existing highways and traffic legislation operates properly where functions are exercised under the new licensing framework. Clause 17, when read together with clause 16, therefore ensures that the licence holder has the functions needed to operate the highway, while keeping specified statutory powers with an appropriate public body and allowing responsibilities to be allocated clearly.
Clause 18 allows the licence holder to authorise another person to exercise functions conferred on it under this chapter of the Bill, which includes clauses 16 to 22. That provides practical flexibility in how the licence holder carries out its highway and traffic authority functions. It allows another person with suitable operational capability to exercise a function on the licence holder’s behalf. Where the licence holder authorises a strategic highways company to exercise a function, the clause also allows that company to delegate the function further under the Infrastructure Act 2015, subject to the modifications set out in the Bill.
Of course, the ORR must be able to oversee all of these arrangements. The licence holder must therefore provide any information or documents that the ORR reasonably requests to review how a delegated function is being exercised. Importantly, delegation of the function does not transfer responsibility for it. The licence holder remains responsible for the exercise of the function even when another person carries it out. Clause 18 therefore provides operational flexibility while preserving clear responsibility and regulatory oversight.
Clause 19 provides an important safeguard to ensure that essential highway functions continue if a licence holder cannot properly perform them. It allows the relevant strategic highways company to exercise a licence holder’s function instead of the licence holder in two circumstances. The first is an emergency that the ORR considers has seriously affected the licence holder’s ability to carry out the function. The second is where the licence holder has failed or is unable to discharge the function properly, that failure amounts to a breach of a licence condition, and the ORR has issued a contravention notice. In those circumstances, the ORR must notify both the licence holder and the strategic highways company when the function transfers. If the circumstances justifying the intervention come to an end, the ORR must notify both parties and the function will then return to the licence holder.
The strategic highways company may recover from the licence holder any expenditure reasonably incurred in carrying out the function. Clause 19 therefore protects road users and supports operational continuity while ensuring that the responsibility returns to the licence holder when intervention is no longer required.
Clause 20 deals with the acquisition of land needed to carry out works under a licence. I must emphasise that this does not circumvent the normal planning process. For major works, the development consent order will invariably set out the land to be acquired for the scheme in question. It is possible, however, that in the course of a licence for the construction, operation and maintenance of a licensed road, additional land will at some point be required to complete works required to fulfil licence obligations. In some cases, the land needed for those works may not be available to buy by agreement. The clause therefore allows the relevant strategic highways company to use its existing compulsory purchase powers to acquire land needed for the licensed works.
The power will not be given to the licence holder. It remains with the strategic highways company as the accountable public body. The power may be used only where clear statutory tests are met. The strategic highways company must be satisfied that the licence holder has made reasonable attempts to acquire the land by agreement. It must also be satisfied that alternatives have been considered, that compulsory purchase is the better course of action, and that there is a compelling case in the public interest.
Before acquiring land compulsorily, the strategic highways company must consult the ORR. Once acquired, the land must be transferred to the licence holder as soon as reasonably practicable. The strategic highways company may recover from the licence holder the reasonable costs it incurs in exercising the power. Clause 20 therefore ensures that essential land can be acquired where necessary, while keeping compulsory purchase powers with a public body and making their use subject to clear safeguards, as I am sure the Committee would expect.
Clause 21 deals with what happens to responsibility for a licensed highway when a licence expires or is revoked. It is important that the ending of a licence does not create uncertainty about who is responsible for the highway. The clause applies where the highway was covered by the licence immediately before it ended and is not covered by another licence. On the day the licence expires or is revoked, the relevant strategic highways company automatically becomes the highway authority for the highway.
The highway is also treated as a highway maintainable at the public expense for the purposes of the Highways Act 1980. The transfer takes effect automatically. That provides a clear and immediate change of responsibility when no replacement licence is in place. Clause 21 therefore ensures that there is no gap in highway authority responsibility when a licence comes to an end. I hope that answers the shadow Minister in more detail.
Greg Smith
I have a few questions on this group. We have no problem with clause 16. In respect of clause 17, the Minister referenced the setting of speed limits as an example of where functions should be exercisable by persons other than the licence holder—the state, for lack of a better phrase. I do not disagree with the premise—it would be unusual, to say the least, to allow a private company to set speed limits outside our national scheme—but it prompts a question for the whole Bill.
Let us say that a scheme is built, and its original consent, set by the appropriate body, is for a 40 mph speed limit. If the licence holder then makes a representation to the appropriate body in conjunction with the local police force or local authority, it could be determined that the scheme should be converted to a variable speed limit road—we are seeing a lot of those popping up across the country. That could involve quite considerable expense, putting up gantries and having repeater signs with changing speed limits. Where does that fit in with some of the other provisions we have debated? Would that be a capacity change? In theory, variable speed limits speed up the overall journey time and manage congestion spots before they appear, by slowing the whole road down for a bit so that there is not a pile-up. Can the Minister assure the Committee that there would be no back door for a licence holder to negotiate with the appropriate bodies to charge a higher toll because of a change to a variable speed limit system?
Justin Madders
Those were some interesting questions from the shadow Minister. On the first point about the operation of clause 17 and what we have loosely described as “capacity-enhancing improvements”, it is of course the case that the gateway to the licensing regime is through capacity-enhancing improvements in any event. The eligibility for a licence would already have been established under the Act, so I am not sure why additional capacity would create anything different, because the licence would already have been issued by that point. Unless I misunderstood the hon. Gentleman—
Greg Smith
I am happy to explain further. My point is that, with speed limits being set, rightly and properly, by other authorities—there is no disagreement on that point—speed limits could then be used to essentially create new conditions on that road, which could then be used as a springboard to a higher toll or a different set of conditions. The ORR and the licensee could find themselves in a vicious doom loop of disagreement on that point. What I am trying to get across to the Minister is how something that is fundamentally and, I double underline, rightly set by a different authority could become a point of disagreement in the set of licence conditions for any licensee.
Justin Madders
I am grateful for the hon. Gentleman’s explanation; I think I now understand what he is trying to say. We are entering the realms of speculation at this point—
Justin Madders
And the hon. Gentleman is doing it well. He is speculating that any improvements of that nature would probably improve traffic flow and increase the number of vehicles going through the network. I would say that that was probably more of an argument to reduce returns than to increase them, but the prospect is probably rather too remote for us to say anything more concrete at this stage.
Similarly, in response to the hon. Gentleman’s questions about when an emergency under clause 19(2) might be called, it would be rather risky for me to set out every circumstance in which that might happen here. It is important to remember that the clause is about the ORR’s view of the licence holder’s ability to undertake its obligations under the licence. There are obviously already a number of provisions in the legislation about the kind of things that the ORR would be able to consider. Trying to pin us down on the specific instances where an emergency might be called would unnecessarily tie the ORR’s hands.
Greg Smith
I understand why the Minister does not want to give an exhaustive list of examples, but if I may slightly confine the question, will he look at the wording in the clause and make it clear, either now or on Report, that when the ORR “must have regard”, the definition of an emergency is specific to that licensee, as opposed to something affecting everyone, such as extreme heat on the road surfaces?
Justin Madders
I will take that away. The test under the clause is the license holder’s ability to undertake the licence. It is probably inappropriate for me to speculate om whether that would apply to the rest of the network or specifically to the licence holder. My instinct is to say that that would not be the question. It is about the ability of the licence holder to undertake its functions, and if they are significantly impaired in the ORR’s view, the source of that impairment is probably not relevant. If it is an emergency that has created the impairment, clause 19(2) would come into effect. However, if, having consulted with officials, I have more to say on that, I will of course write to him.
The Chair
Maybe next time.
Question put and agreed to.
Clause 16 accordingly ordered to stand part of the Bill.
Clauses 17 to 21 ordered to stand part of the Bill.
Clause 22
Litter functions
Greg Smith
I beg to move amendment 79, in clause 22, page 16, line 23, at end insert—
“(2A) Regulations under this section must ensure that—
(a) a single authority or licence holder is designated as responsible for litter clearance on each highway specified in a licence;
(b) the identity and contact details of that responsible body are published;
(c) members of the public may report litter and make complaints directly to that responsible body; and
(d) that the responsible body remains accountable for litter clearance notwithstanding any arrangements made with another person to carry out the work.”
This amendment would establish clear responsibility and public accountability for litter clearance on licenced highways.
Greg Smith
Amendment 79, which stands in my name and that of my hon. Friend the Member for Bognor Regis and Littlehampton, tries, like most of our amendment today, to give more clarity about what happens in the event of the scourge that is littering. I cannot imagine that there is any Member of this House who has not been out litter picking along the roads and highways in their own constituencies—not the motorway, but on certain parts of the strategic road network and A roads. I certainly see groups in my constituency doing that on a regular basis. All our constituents are rightly upset when they see litter on the verges and sides of the roads. It gets me incrediblyangry too.
The point that the amendment makes is that a motorist or local resident should not be left guessing who is responsible for litter on a licensed road. Will the Government accept a named and published accountable body and a direct route for complaints under each licence that is issued? If work is outsourced, who remains legally responsible for ensuring that the highway is kept clear? The public-facing accountable body should, in my opinion, at least be clearly defined in the regulations when they come to pass and provision to ensure that is the case—as amendment 79 would—should be written into the Bill.
It would be a disaster if we get this wrong and an accident happens because of severe fly-tipping or litter on any one of these roads. We have all seen severe fly-tipping in our own constituencies and the impact it has, particularly on safety. During debate on the previous group we discussed the extreme heat. There were significant fires in that extreme heat, and glass dumped on the side of the road only exacerbates that particular problem. While I do not want to labour this point at length, I think it is incumbent upon the Government to properly consider this amendment and to see if we can strengthen the Bill through its inclusion.
Justin Madders
I am grateful to the hon. Member for moving this amendment as it gives me an opportunity to promote an upcoming litter pick in my constituency, alongside the father of the Whip, my hon. Friend the Member for Worsley and Eccles, on Saturday morning. We will be doing our bit, as we always do. I pay tribute to all the volunteers up and down the country who do a fantastic job in showing great community spirit. However, I make it clear that the trunk road network is not a place for such activities. Instead, it should be handled by an appropriate body, which is indeed what clause 22 seeks to do.
Regarding amendment 79, the shadow Minister is right to raise the issue of clear lines of responsibility for litter clearance on licensed highways. He is right that there should be a clear responsibility. That is why clause 22 exists. He will not be surprised that existing litter legislation was not drafted to account for privately operated highways under the new licensing framework. Clause 22 therefore allows the Secretary of State to make regulations so that existing litter duties can operate properly for licensed highways. That does not mean that responsibility could be handed out arbitrarily. The purpose of the regulations is to ensure that litter functions sit with the appropriate body for the licensed highway and with a clear responsibility for them to carry them out. My objection is not to providing clear information as the hon. Member wants; it is about prescribing detailed requirements about contact details for complaint handling on the face of primary legislation. Clause 22 already provides a regulation-making power to establish how these functions will operate.
Clause 22 ensures that the existing framework for litter under the Environmental Protection Act 1990 can be applied appropriately to the highways specified in relevant licences. The clause therefore allows the Secretary of State to make regulations so that litter responsibilities can operate effectively on licensed highways. The regulations may apply existing duties to keep land clear of litter and refuse to highways covered by a licence. They may also allow the litter enforcement functions to be exercised by or on behalf of a licence holder. In some cases, those functions may sit alongside another body’s responsibilities, in others they may be exercised instead of them. That flexibility ensures that the responsibility can be allocated appropriately for the licensed highway.
The regulations may also make appropriate changes to how existing litter legislation applies to a private licence holder so that it works effectively with licensing frameworks. This will ultimately help ensure that there are clear lines of accountability and no gaps in the management of licensed highways. I therefore commend clause 22 to the Committee.
Greg Smith
I recognise the arguments that the Minister has put forward, but I still think the Bill would be stronger with the exact wording of my amendment. However, I accept his assurances and at this moment, although we might return to it on Report, I am happy to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 22 ordered to stand part of the Bill.
Clause 23
Transfer schemes
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendments 22 to 31.
Schedule 1.
Justin Madders
I will take clause 23 and schedule 1 stand part together as clause 23 simply introduces schedule 1. I will then turn to the Government amendments.
Clause 23 and schedule 1 set out how transfer schemes operate under the Bill. The provisions are necessary to make sure that the assets, rights and liabilities necessary for performing the role of the licence holder can be transferred to them. It is vital to enable the seamless transition from a previous licence holder to a new one. The amendments to schedule 1 will ensure that the provisions cover the scenarios that we envisage transfer schemes will need. They enable the transfer schemes to be made from a strategic highways company to its wholly owned subsidiary, permit the transfer of a licence under specified circumstances beyond those set out in clause 14, and allow for a transfer scheme to provide for compensation to be paid to a transferor or third party.
Clause 23 introduces schedule 1, which makes detailed provision for transfer schemes. A licence holder may need property, contractual rights and other legal interests in order to construct, operate, maintain or improve the highway specified in its licence. Existing rights and liabilities may also need to move between the Secretary of State, a strategic highways company, a licence holder or another appropriate person.
Transfer schemes provide an efficient statutory mechanism for making those changes. They can transfer existing property, rights and liabilities and make the supplementary provision needed to ensure that a transfer operates effectively. The detailed powers, procedures and protections are set out in schedule 1. Together, clause 23 and the schedule support an orderly transition into the licensing regime, as well as when a licence is revoked, expired or transferred to a new licence holder. This ensures that responsibility for a licensed highway is matched by the assets and legal arrangements needed to discharge it.
Government amendments 22 and 23 allow for a transfer scheme to provide for transfers of property, rights and liabilities from a strategic highways company to its subsidiary. Amendment 23 adjusts wording to ensure that subsidiaries of strategic highways companies are referenced explicitly in the list of persons for whom the Secretary of State can make a transfer scheme. This is vital to ensure that the transfer of assets, including the Dartford crossing and the lower Thames crossing project, from National Highways to its subsidiary can take place before the transition to the private sector.
The current drafting of schedule 1 only allows a transfer scheme to be made transferring assets to a subsidiary if that entity already holds a licence or is intended to in the future. That would not allow for scenarios in which an intermediate vehicle is set up to hold the assets before a further transfer. This amendment makes that possible and is essential for the proper functioning of these provisions, for scenarios that are likely to occur.
Amendment 24 follows on from amendments 22 and 23 and enables transfer schemes to provide for the transfer of property, rights and liabilities from subsidiaries of strategic highways companies to licence holders. This amendment ensures that where assets, rights and/or liabilities have been transferred to a subsidiary of a strategic highways company, they can then be transferred on to a licence holder or person due to hold a licence. That, in combination with amendments 22, 23 and 25, provides for a scenario in which the strategic highways company sets up a wholly-owned subsidiary to hold assets, rights and liabilities due to be the responsibility of a licence holder. It allows for the Secretary of State to then transfer those assets, rights and liabilities on to the licence holder or person due to hold a licence.
Government amendments 25 and 26 reflect the changes in amendments 22 to 24 to enable transfers to and from subsidiaries of strategic highways companies. They make consequential changes to ensure that the definition of “subsidiary” in paragraph 1 of schedule 1 and other references to subsidiaries in the paragraph accurately align with the new drafting in amendments 22 to 24.
Government amendment 27 makes it clear that transfer schemes can include provisions that come into effect at different times. It does not specify that different dates must always be included in provisions. In many cases, it may be more appropriate for the whole transfer scheme to come into effect at once. However, there may be circumstances where it may be appropriate for particular parts of the transfer scheme to come online at the point when the relevant responsibilities in the licence do too.
For instance, in the case of the Dartford crossing, the existing design, build, finance and operate contract will run beyond when the transaction to the private sector is due to take place. When the transfer scheme is made for the Dartford crossing, the scheme will be able to set a later date for certain responsibilities under that contract to transfer, ensuring they can remain with National Highways and its DBFO contractor until the end of that arrangement. Were this not possible, the licence holder would need to delegate their responsibilities to National Highways who would then delegate them to the contractor. While not infeasible, that complicated arrangement can be avoided through the amendment.
Government amendment 28 sets out requirements for when transfer schemes transferring property, rights and liabilities away from a licence holder can be made by the Secretary of State. It means that the Secretary of State cannot make a transfer scheme without the consent of the licence holder and the transferee, where that transferee is not the Secretary of State herself or a strategic highways company, except where the scheme is being made in connection with a licence revocation or expiry.
Setting out conditions that must be met before the Secretary of State makes a transfer scheme will reassure investors that transfer schemes would not be made on an ad hoc basis. In circumstances where the licence is either not being revoked or has not expired it is right that the Secretary of State be required to obtain the transferor’s consent before making the transfer scheme.
Government amendment 29 allows for transfer schemes made under schedule 1 to provide for the transfer of licences granted under clause 3. A transfer scheme may transfer the whole or part of the licence. Clause 14 already sets out a process for the ORR to consent to licence transfers. Where a licence is transferred under clause 14, the Secretary of State will have to make a separate transfer scheme under schedule 1 to transfer the relevant assets, rights and liabilities alongside the licence.
In some cases, it will be more efficient to transfer the licence alongside the relevant assets, rights and liabilities, rather than running two separate processes under clause 14 and schedule 1. That will generally be where a licence transfer is initiated by the ORR rather than the licence holder, for example to split the licence between two licence holders. The amendment will allow for more efficient and streamlined licence transfers in appropriate cases where the ORR initiates a transfer.
Where only part of a licence is being transferred, the amendment also allows for the apportionment of rights and liabilities under the licence and incidental modifications to the licence’s terms and conditions.
I turn to Government amendment 30. Paragraph 3 of schedule 1 allows transfer schemes to provide for the payment of compensation. Currently, schemes can only provide for the Secretary of State to pay compensation to third parties who are adversely affected by the scheme. The amendment extends that provision to also allow schemes to provide for the transferee to pay compensation. That ensures that transfer schemes can require the transferee to pay compensation if the Secretary of State considers it appropriate in any given case. For instance, in some circumstances it may be appropriate for a new licence holder to pay compensation instead of, or as well as, the Secretary of State.
Douglas Lumsden
I am trying to think of possible compensation schemes. If, for example, a person’s property has been blighted by a new road that has been constructed, who would be liable for that? Would it be the licensee? Would that transfer to a new owner as well?
Justin Madders
The clauses are about the transfer of assets, rights and liabilities. That is why the amendment is in there—to ensure that if there is an outstanding compensation claim, there is a power for the transferee to pay that. We do not want to be in a situation where a party who is trying to exit the arrangements is refusing to meet its obligations. This is a complicated set of amendments, but they are effectively trying to cover all bases in terms of whether there is compensation. It is also about whether a party leaving the agreement is seeking some compensation for costs that they have occurred.
This is a fairly broad amendment, but it is necessary. We obviously hope not to have many situations where licences are transferred in whole or part, but it is prudent to have provisions in the Bill to ensure that those circumstances are catered for.
Douglas Lumsden
I am trying to work out who is responsible for property blight. Would it be the licence holder? Would it be the Highways Agency? Who would it be?
Justin Madders
Property blight would probably be dealt with by development consent orders and the planning process rather than this Bill, which is about the financial and regulatory framework for operating highways. It would probably come before we got to the issuing of licences. I hope that answers the hon. Gentleman’s question.
Government amendment 31 further extends the existing compensation provision in schedule 1 to allow transfer schemes to provide for compensation to be paid to transferors as well as third parties. In some cases, it may be appropriate for compensation to be paid to a transferor—for example, where a licence has been revoked on a non-consensual ground set out in the licence. Under amendment 30, the scheme could provide for the compensation to be paid by the Secretary of State or the transferee, as appropriate. The drafting is not prescriptive. Compensation will not always be needed for either the transferor or a third party, but the provision is drafted to make it possible for all relevant scenarios to be covered.
Greg Smith
I will not speak at length; I merely ask some questions of the Minister about the taxation provisions at the end of schedule 1. I think many of our constituents would be surprised to find in the Bill the following provision:
“The Treasury may by regulations make provision for varying the way in which a relevant tax has effect”
in relation to a transfer. The Bill even says that income tax could be varied.
I can conceive of a situation where the ORR finds itself in a sticky spot trying to transfer a licence— perhaps there are not many willing participants—and tries to create an incentive for it to be taken on. Surely, however, to be as explicit as providing for the varying of taxes from income tax to corporation tax and beyond is highly unusual within legislation. Our constituents would normally expect a tax to be a tax. Although there may be, in Budgets from time to time, provisions that allow reliefs, to nakedly change corporation tax or income tax—as my reading of schedule 7(1) suggests—seems an extreme measure. I would be grateful for an explanation from the Minister.
Justin Madders
I will have to disappoint the shadow Minister. I will not be able to give him a detailed explanation today. All I would say is that the schedule does require such proposals to be approved in a statutory instrument subject to the affirmative procedure, but I will seek counsel from Treasury colleagues about what possible circumstances this may apply in and write to the shadow Minister.
Question put and agreed to.
Clause 23 accordingly ordered to stand part of the Bill.
Amendments made: 22, in schedule 1, page 68, line 7, after “company” insert
“, a subsidiary of a strategic highways company,”.
This amendment is consequential on amendment 23, which allows for a transfer scheme to provide for transfers from a strategic highways company to a subsidiary of a strategic highways company.
Amendment 23, in schedule 1, page 68, line 9, after first “to” insert “—
(i) a subsidiary of a strategic highways company, or”.
This amendment allows for a transfer scheme to provide for transfers from a strategic highways company to a subsidiary of a strategic highways company.
Amendment 24, in schedule 1, page 68, line 10, at end insert—
“(ba) from a subsidiary of a strategic highways company to a person who holds, or is to hold, a licence;”.
This amendment allows for a transfer scheme to provide for transfers from a subsidiary of a strategic highways company to a licence holder or prospective licence holder.
Amendment 25, in schedule 1, page 68, line 13, after “company” insert
“or a subsidiary of a strategic highways company”.
This amendment is consequential on amendment 26 (which leaves out provision that a reference to a strategic highways company includes a reference to its subsidiary).
Amendment 26, in schedule 1, page 68, line 18, leave out sub-paragraph (2) and insert—
“(2) In sub-paragraph (1) ‘subsidiary’ has the same meaning as in the Companies Act 2006 (see section 1159 of that Act).”
This amendment is consequential on amendments 23 and 24.
Amendment 27, in schedule 1, page 68, line 36, after “date” insert “or dates”.
This amendment clarifies that different parts of a transfer scheme may come into effect at different times.
Amendment 28, in schedule 1, page 69, line 10, at end insert—
1A “(1) The power to make a transfer scheme within paragraph 1(1)(c) is exercisable only if the Secretary of State obtains the consent of—
(a) in the case of a transfer within paragraph 1(1)(c)(i) or (ii), the proposed transferor;
(b) in the case of a transfer within paragraph 1(1)(c)(iii) or (iv), the proposed transferor and the proposed transferee.
(2) The consent of the proposed transferor to the making of a transfer scheme is not required where the scheme is made in connection with or in pursuance of the revocation or expiry of a licence.
(3) In this paragraph ‘proposed transferor’, in relation to a transfer scheme proposed to be made, means the person who is proposed to be the transferor; and ‘proposed transferee’ is to be read accordingly.”
This amendment clarifies the circumstances in which a transfer scheme may be made under paragraph 1(1)(c) of Schedule 1.
Amendment 29, in schedule 1, page 70, line 20, at end insert—
2A “(1) A transfer scheme may include provision for the transfer of a licence held by the transferor to the transferee.
(2) Provision under sub-paragraph (1) may relate to the whole or any part of the licence.
(3) Where a transfer scheme provides for the transfer of a part of a licence, the scheme may include provision—
(a) apportioning rights or liabilities under the licence;
(b) making incidental modifications to the terms and conditions of the licence.”
This amendment provides that a transfer scheme may include provision for the transfer of the whole or part of a licence.
Amendment 30, in schedule 1, page 70, line 23, after “State” insert “or the transferee”.
This amendment provides that a transfer scheme may provide for compensation to be payable by the transferee, in relation to the scheme, as well as by the Secretary of State.
Amendment 31, in schedule 1, page 70, line 23, leave out
“any person, other than the transferor or transferee,”
and insert
“the transferor or any person”.—(Justin Madders.)
This amendment provides that a transfer scheme may provide for compensation to be payable to the transferor as well as any third party whose interests are adversely affected by the scheme.
Schedule 1, as amended, agreed to.
Clause 24
Charging of tolls
Greg Smith
I beg to move amendment 50, in clause 24, page 17, line 14, leave out lines 14 and 15.
This amendment would remove the power of the Secretary of State to specify any circumstances in regulations about how tolls must be paid.
The Chair
With this it will be convenient to discuss the following:
Amendment 51, in clause 24, page 17, line 20, leave out lines 20 and 21.
This amendment would remove the power from a licence holder to specify equipment to be carried in or fitted to a road vehicle while it is on the highway.
Amendment 53, in clause 24, page 18, line 6, at end insert—
“(9) Before setting the levels of tolls to be charged, the holder of a licence must consult—
(a) road users likely to be affected,
(b) local businesses,
(c) local residents,
(d) local highway authorities whose areas may be affected.”
This amendment would require consultation before tolls can be charged.
Amendment 54, in clause 24, page 18, line 6, at end insert—
“(9) A tolling scheme made under this section may not come into force unless it has been approved by Parliament.
(10) On any occasion that the licence holder wishes to increase the level of a toll which is already being charged under a licence, this must be approved by Parliament.
(11) To meet the requirement in subsections (9) and (10), the Secretary of State must make regulations setting out the tolling scheme and levels of tolls to be charged under it.
(12) Regulations made under subsection (11) are subject to the affirmative procedure.”
This amendment would require parliamentary approval of road user charging under this Act on each occasion that it was implemented.
Clause stand part.
Greg Smith
The amendments in this group stand in my name and that of my hon. Friend the Member for Bognor Regis and Littlehampton. The crux of much of what we have spoken about today, and I am sure will continue to speak about at length on this Bill, is the way in which tolls are charged. Our amendments in this group seek to get the clarity that many of our constituents, I am sure, will want on that very question.
The lead amendment is about removing the power of the Secretary of State to specify circumstances in regulations for how tolls must be paid. Amendment 51 is about removing the power from a licence holder to specify equipment to be carried in or fitted to a road vehicle while it is on the licensed highway. Amendment 53 requires consultation before tolls can be charged. Amendment 54 requires parliamentary approval of road user charging under the Bill—assuming that it becomes an Act—on each occasion on which it is implemented.
The power to determine how a motorist pays should not be an open-ended power to require equipment in vehicles. I simply do not get the necessity or the proportionality of that requirement in the Bill, which is why we seek to remove it. The requirement for equipment in vehicles is almost like taking 10 steps backwards in order to use a tolled road. Certainly, tolls can have those little boxes in a windscreen, which beep as someone goes through a barrier, but as has now been widely proven—over multiple decades—that is just straightforwardly unnecessary.
Here in our capital city, we cannot drive a vehicle without paying the toll that is the congestion charge. That does not involve anyone having to have a little box in their windscreen or any other equipment in their car, because we all have those very straightforward things that have been on our cars for many, many years called number plates. The cameras can very straightforwardly pick any vehicle up as it goes by. By law, we have to have a number plate. If we have not paid a toll, the congestion or ULEZ—ultra low emission zone—charge, the Birmingham clean air toll or whatever against the registration of our vehicle, we get a penalty charge notice in the post. It works. Some of us might not particularly like it, but it works. Why on earth should any toll operator suddenly require any motorist seeking to use the toll roads to stick things in their windscreen or put chips in their car, or whatever it might be?
Richard Quigley (Isle of Wight West) (Lab)
Does the hon. Gentleman agree that there is a problem with ghost number plates and other forms of avoiding ANPR, automatic number plate recognition? What would his solution to that be?
Greg Smith
I take the hon. Gentleman’s point—there is certainly a problem with ghost plates, but that is an enforcement problem for the authorities, for police forces, for the Government to crack down on to stop a criminal practice that he is right to say is happening on our streets. I am not convinced, however, that we should legislate for a scheme that will involve the tolling of new infrastructure, such as the lower Thames crossing, and require the expense of technology not only going into cars, but to read that technology in cars in order to pay the tolls, when we have a registration system on all our vehicles in the first place.
On those registration plates, we have agreements with many other countries whose citizens could conceivably drive to the United Kingdom from abroad, to ensure that their plates are recognisable as well. In particular in London, therefore, any visitors driving over from France, Belgium, the Netherlands or wherever will, equally, not need to start strapping devices to their windscreens in order to visit our country, to spend their money here and to enjoy the wonderful things we have to offer in England.
I put it to the Minister that this could be a much simpler Bill if we simply get rid of those provisions. I do not want to relitigate the argument about exactly how much the toll is going to be—we still do not know—but before any toll level is set, affected road users, businesses, residents and local authorities should be consulted. Surely that is a straightforward ask.
We heard a lot of evidence from the haulage sector in our oral evidence sessions. The sector already operates on tiny margins; it is very common for a haulage operator, certainly those that I visit in my own constituency, to be operating on as low as a 1% margin. If haulage operators are to be charged these tolls, it is vital that they should have their say, and for that to be put clearly on the record. We should also bear in mind that ultimately all the costs get added to the cost of the goods being transported, so this is an inflation-fuelling measure.
We all know how consultations go sometimes—we do not always get what we want—but the impact that any tolls could have should be clear and on the record, so that when that toll rate is set, it takes into account, if nothing else, the market conditions that will dictate whether people are willing to use that road or will take any measure conceivable to avoid getting on it in the first place.
Any new tolling scheme or any increase to an existing toll should require Parliament’s approval. Why should that decision be left to operators, Ministers or the ORR alone? We need safeguards to prevent unnecessary equipment requirements, and parliamentary control to apply to the level of any charges.
Justin Madders
Amendment 50 would amend the ability of the Secretary of State to reassign responsibility for payment of a toll through regulation. The shadow Minister argues that the amendment would remove the power to specify any circumstances in regulations about how tolls would be paid. The amendment would remove important flexibility from the tolling system and the ability to make someone other than the registered keeper responsible for paying a toll in specified circumstances.
This provision matters, as it is not always possible to trace the registered keeper of a vehicle and there may be situations where it is appropriate for another party to be pursued for payment. That could include hired or leased vehicles, as I am sure the witnesses from last week would attest to. It could also be important where vehicles are registered overseas or following a change of vehicle ownership. Ultimately, it will normally be right for the registered keeper to be held liable for any charges, but that will not always be the case, for the reasons I have set out. It is important that we maintain flexibility.
Clause 24(2)(b) allows regulations to address precisely those circumstances, providing for someone other than the registered keeper to pay the toll where keeper liability would be inappropriate. The question is not whether tolls should be paid, but who should be responsible for them. We would retain the flexibility to make that distinction, rather than impose keeper liability in every case. I therefore ask the hon. Member to withdraw the amendment.
Amendment 51 would amend the ability for a licence holder to require equipment to be carried in or fitted to a vehicle. It is worth pointing out that just because something is in the legislation, that does not mean there is some dastardly, secret plan to implement it. I will give a practical example of why this power is in the Bill. At the Dartford crossing, before the toll barriers were removed, those who wished to do so were able to set up an account and place a smart tag in their vehicle. The smart tag would speak to the toll booth and open the barriers, charging the registered account. It meant that those who had the tag did not need to open their windows to drop a coin into the bucket at the booth, and it sped up their journey. A similar arrangement applied at the Mersey tunnels.
There are, of course, no longer barriers at the Dartford crossing and the charges are based on the number plates of those who cross. We have already heard why that is not necessarily a foolproof process. But—this is the point of having the clause in the Bill—we do not know what might happen in the future in terms of technology in cars. It is possible that we might not even have number plates at all. Perhaps there will be chips attached to vehicles that have all the user’s data on them, which will be important in tracing the registered keeper. The fact that we do not know how vehicles will develop in the future means that it is important to keep the Bill technology-neutral. That is the purpose of this clause.
Douglas Lumsden
The Minister is right that we do not know what the vehicles of the future will look like, but it should not be up to the holder of the licence to dictate what should be in people’s cars. If we think about the Bill, this is not about just the lower Thames crossing; it could be used for schemes right across the country. Surely the Minister is not suggesting that we would have a different piece of equipment in our car for every scheme that we may be passing through, from one end of the country to the other?
Justin Madders
I am grateful for the intervention, but I am not suggesting that at all. I am suggesting that it is important that we keep the Bill technology-neutral because we do not know what might happen further down the line.
Alison Griffiths
I think it is quite interesting that, in an age of acute cyber-security risks, the Minister considers this a technology-neutral position. We have an analogue system that works very effectively and systems that could be controlled by the Government rather than the licensee, which would ensure appropriate cyber-security. The position that the Minister is suggesting is technology-neutral is actually the reverse: it exposes us to acute cyber-risk over which we will have very little control.
Justin Madders
I am grateful to the hon. Lady, but I would say that she is making my case for me: we need to keep up with important changes and risk in the cyber-security world. That is why keeping the Bill as technology-neutral as possible is important, because we simply do not know what will be coming next. Giving operators the flexibility to be able to determine what technology is used is an important part of cyber-security moving forward.
Amendment 53 would insert specific consultation requirements into the Bill before a toll can be set. I agree that local communities and those who use the tolls should have a voice. The question is not whether they should have a voice, but how best to secure that engagement within the Bill’s framework of independent regulation. As it stands, the framework places responsibility with the regulator to set tolling requirements through its code and licence conditions, and to enforce compliance. Consultation requirements should sit within those arrangements, rather than be prescriptive in the Bill.
In exercising its functions, the ORR must have regard to the principles of transparency, accountability, proportionality and consistency, and keep the interests of users at the heart of its decision making. That is an important safeguard in the Bill, and I hope that it addresses some of the shadow Minister’s concerns. He will know that the Bill establishes a stakeholder group that will directly advise the ORR. Again, I hope that will address the point about the voices of users being heard in this process. I do not believe that the amendment would improve engagement. Instead, it would constrain the regulator’s discretion to determine how best to take forward individual users’ voices, so I ask the Member not to press it.
Jim Dickson
Without wishing to prolong proceedings, it is very important that the exact level and differential of tolls between the Dartford crossing and the lower Thames crossing—this legislation is being used to construct the lower Thames crossing—is properly considered. My constituents are particularly keen that there should not be a differential between the two crossings so that a financial incentive is created to use one rather than the other, somewhat negating the fact that we have the new infrastructure in place. We need to try to balance the traffic between the two crossings, and tolling will obviously be an important part of that. Would the Minister note that? Perhaps we can ensure collectively that that is in the thinking of the licence holder going forward.
Justin Madders
My hon. Friend is absolutely right. We believe that it would not be in the interests of the licence holder to have a differential scheme, but he is right to raise the importance of that local voice and we believe the legislation as it stands will enable that to happen.
Amendment 54 would, if enacted, see a requirement inserted for Parliament to approve each new tolling scheme. Making pricing dependent on parliamentary approval would introduce uncertainty for investors about the revenues on which a scheme depends. We need a framework that combines effective public controls with the predictability necessary to attract long-term private investment. The Bill seeks to strike that balance through independent regulation. The ORR is a strong independent regulator with a reputation for boosting investor confidence by fostering stable, predictable investment conditions, and it has responsibility for setting tolling requirements and enforcing them. That is the right approach, with robust regulatory oversight within a stable, predictable framework, rather than making prices subject to a separate parliamentary decision.
My concern is therefore not with scrutiny itself, but with the uncertainty the amendment would create for financing schemes under the Bill. It would make those schemes, including the lower Thames crossing, less attractive to investors and harder to finance. I therefore ask the Member not to press the amendment.
Greg Smith
I am grateful to the Minister for his response to the amendments. On the equipment in vehicles point, as I said in my earlier remarks, we are in danger of taking several steps backwards, as he himself acknowledged that there were schemes in the past where we used to wind our window down—literally wind it down, rather than press a button—and then throw a few coins into a basket. That has gone—it is over—and so should that be gone and over and moved to an ANPR system, albeit with the challenges we have around ghost plates to enforce against.
I just do not understand why we would have any interest—this is not a party political point; this is just a practical point for all our constituents—in trying to bring about a scheme that involves boxes and chips and all sorts of things being required to be put into heavy goods vehicles and private vehicles, rather than just using the number plate system that by law we are all required to have on our vehicles.
On the point about consultation, the hon. Member for Dartford made the point incredibly well. Preventing the disincentives to use a new scheme if the toll turns out to be higher than the existing Dartford crossing scheme is a sensible point. The hon. Gentleman knows his constituency far better than any of us. If he reports that that is a live concern among his constituents, I would urge the Minister to listen so that the good people of Dartford do not find themselves with that disincentive to use a new scheme because it is priced higher than the existing one.
I am content to withdraw amendments 50 and 53, both of which I suspect we will come back to on Report. I really do invite the Minister to think about how that consultation, in the interests of his colleague the hon. Member for Dartford as much as any future schemes, could be addressed before we get to that stage. On amendments 51 and 54, particularly the point on parliamentary approval—not for Parliament to set tolls—given the Minister declined the rules that we suggested around tolling regimes earlier, if there will not be guidance and upper limits as there are on the debt that any licensee may hold, that only leaves the option for us in Parliament to vote on those tolling arrangements as they come along on each and every occasion.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 51, in clause 24, page 17, line 20, leave out lines 20 and 21—(Greg Smith.)
This amendment would remove the power from a licence holder to specify equipment to be carried in or fitted to a road vehicle while it is on the highway.
Question put, That the amendment be made.