Infrastructure Bill [HL]

Baroness Maddock Excerpts

Wednesday 5th November 2014 Lords Chamber

[The Lord Bishop of St Albans]

My Lords, in speaking to Amendment 108A, I should like to thank the noble Lord, Lord Berkeley, for co-sponsoring it. I bring forward this amendment out of concern that the standard proposed in the Bill is significantly lower than that already agreed through cross-industry consensus. I fear that an excessive focus on off-site carbon savings will undermine the effectiveness of the proposals and that an exemption for small sites will create confusion by causing the emergence of a two-tiered regulatory system. It is essential that housebuilders meets the carbon compliance standards that have already been agreed through cross-industry consensus. This was endorsed by the Government back in 2011 and strongly supported by around 70% of those responding to their consultation. I am therefore troubled by the proposal of a new on-site energy performance standard for zero-carbon homes that is lower than the one already agreed. It is not clear why this reduction is necessary. The proposed exemptions from the standard for homes built on small sites and for starter homes would also serve to undermine the main purpose behind the zero-carbon standard: namely, that of prioritising carbon reduction. It is to address the lack of measures necessary to realise the Government’s stated commitment to carbon neutrality that I have tabled this amendment which requires the previously agreed carbon compliance standard to be met on-site before allowable solutions can be undertaken. It also requires all homes to meet that standard, ensuring that no exemptions are allowed.

First, I will address zero-carbon standards. Your Lordships’ House will be aware that the zero-carbon homes standard was originally created by the Zero Carbon Hub set up by the previous Government. This involved the green technology industry, developers and the Government. Together the decision was taken to set the standard based on what was technologically available back in 2010-11. As this Bill is addressing homes that will be built after 2016, what is technologically achievable will be far greater than the minimum standard set out back in 2011. The cost and viability of these technologies will have improved along with their accessibility and reliability. It is therefore difficult to see on what basis the Government have drawn their conclusion that the previously agreed standards are now unworkable. Surely standards must be set at the optimal point, which has been previously agreed through intense cross-sector scrutiny, and must be consistent across the board. There should be a common standard regardless of the size of the development.

It is essential that these agreed standards apply to all homes, especially starter homes where tight budgets are more likely to squeeze out energy-saving measures. The proposed exemptions for small sites are problematic as such sites are much more likely to be in rural areas that are off the gas grid and therefore expensive to heat. We must not allow this Bill to be a means of compounding the desperate situation of those households already struggling with fuel poverty. As we have already heard, there is currently a lack of clarity over what comprises a small site. A consultation on small sites was promised before the summer but has yet to take place. It would be very helpful if, in his summing up, the Minister could tell the House when the consultation can be expected. As many as 12.5% of homes a year could come under the small sites exemption if these sites are classified as 10 units or fewer.

It is also as yet unclear which parts of the zero-carbon policy the exemption refers to. Does it refer only to the allowable solutions flexibility mechanism, which can be used to top up the carbon savings from code level 4 to level 5, or will developers of small sites be exempted even from the code level 4 on-site standard? The proposed reduction to code level 4 is in itself damaging and unnecessary. Three of the country’s largest housebuilders have recently shown that code level 4 compliance can be achieved primarily through improved efficiency of the building fabric, in the form of insulation and glazing, and not requiring any expensive renewable energy technologies. Furthermore, these developers have stated that they expect to be able to build these code level 4 homes, when delivering at scale, to the same price as it currently costs to build to the 2010 code level 3 building regulations.

In the immediacy of economic pressures, we must not lose sight of the overriding purpose for which the zero-carbon standard was designed. The recently published IPCC report reiterated the very real dangers of anthropogenic global warming and the concurrent impact on humanity across the world. Carbon reduction is essential to climate change adaptation and mitigation.

Briefly, and in passing, I am also glad to say that my own church, the Church of England, is playing its part. Vicarages and other properties are now normally being built to the highest green standards and more than 400 of our church buildings, many of them medieval, now have some form of renewable energy.

In conclusion, the Bill would lead to confusion in the supply chains and among house buyers, a two-tier regulatory environment and greater fuel poverty. Moreover, the large-scale exemptions signal a retreat from a full-blooded commitment to reducing carbon emissions, the goal on which the future flourishing of our country as part of the global community depends.

[Baroness Maddock (LD)]

My Lords, I have a great deal of sympathy with the comments of the right reverend Prelate the Bishop of St Albans. I spoke on these issues in Committee. As has been said by both previous speakers, we managed to get such agreement across the building sector and all the organisations that care about these issues as to what the standard would be. When we came in as a coalition Government, we stuck to that. For some reason, we changed our minds. I would really like the Minister to explain what made us question the agreements we had and the standards we had wanted.

I know that two of my honourable friends who have been Liberal Democrat Ministers in the department have pushed to row back from where we were going, and we have now gone forwards again. However, we have not managed to get any farther. We are owned an explanation from the Minister tonight of why we have ended up in this position when we had such a good agreement back in 2010.

[Lord Teverson (LD)]

My Lords, I welcome both these amendments; indeed, they are very similar to amendments I tabled in Committee. I am grateful to both the noble Lord and the right reverend Prelate for pushing these further to see what response we get from my noble friend the Minister.

I will try not to repeat everything that I said in Committee. On the minimum number of houses to which this would relate, the Bill takes everything the wrong way. It is absolutely clear that smaller builders—whom this clause does not target very effectively, as the noble Lord, Lord McKenzie, said—are more capable of building better-quality homes than the large builders. They are in no way constrained by technology. The clause somehow conveys a government view that small-scale builders are merely jobbing builders with no skills. That is absolutely wrong and sends completely the wrong message. They can deliver a high standard of homes as well as any other building business.

I agree with the right reverend Prelate. I certainly live in a very rural area. A number of the developments there are small scale, and they are all off the grid. I am off the grid. Local developments in villages around me are off the grid. We therefore have the problem that we institutionalise for another 50 to 100 years, or whatever the life expectancy of the property is, potential fuel poverty for those who live in those houses—that or we have an expensive retrofitting programme in the future, which we are already struggling trying to make work. In fact, DECC’s own figure for the cost of retrofitting the current housing stock to get it up to a proper level is £60 billion. That is quite a big sum. We should not be starting to add to that figure.

I welcome the proposal to keep a minimum number of houses; I suggested five in Committee, but 10 is quite reasonable. I welcome that fact that my noble friend the Minister, judging by our conversations, does not see the figure being any greater than that. Clearly, we are having a consultation process at the moment and I am sure that he cannot be specific until that is closed, but I welcome the fact that the Government have recognised that that number cannot be too large. We certainly need a sunset to this clause. I hope that that will come out of this as well.

My noble friend Lady Maddock has gone through the questions surrounding the standards for zero-carbon homes very well, and how that issue appears to have moved backwards and forwards and backwards. I look forward to enlightenment in that area. I again come down to what the right reverend Prelate said about allowable solutions. I am not at all against them in concept, but wherever possible the targets need to be met within the building itself or very close to it. Once again, if we do not do that, the people who live in those houses will have increased energy bills for as long as they live there. We might neutralise carbon emissions globally—ensuring that is much more difficult on allowable solutions than actually on the property itself—but then you still have the problem that that property requires more energy to heat it and to keep it to the right standards.

Infrastructure Bill [HL]

Baroness Maddock Excerpts

Tuesday 14th October 2014 Grand Committee

[Lord Teverson]

My Lords, I congratulate my noble friend on putting forward this excellent amendment. It would be very good if something like this appeared in the manifestos of however many parties we have in the general election next year.

This comes down to the stewardship of the proceeds of non-renewable resources. That is the point. My part of the world, Cornwall, was one of the richest mining areas in the 19th century. Over a period of about 60 years it had the equivalent of billionaires and some of the greatest exports. It was certainly one of the richest parts of the UK. Where is it now? It is one of the poorest EU regions and receives some of the highest forms of EU aid in the European Union. Not one penny of that income from tin, copper and arsenic was retained, so we have an example of how that generational opportunity was very soon dissipated and lost to today’s generation. Perhaps that is a very simplistic illustration, but it is a very real one. We have one small quasi-sovereign wealth fund in the UK: the Shetland Charitable Trust. There are issues around that, but that local authority has managed to keep some of the proceeds from North Sea oil.

The noble Lord, Lord Hodgson, made the point extremely well. As he said, the Norwegian fund is so large that for each citizen—some 5 million of them—it would be something like $200,000 within a three-year period.

Having spent the income from North Sea oil, I do not see that within a European context overall we are wildly ahead of some of our neighbours because we had that asset. Clearly it is a challenge to government, and I suspect that the Treasury is not so keen in this area, particularly when we are tackling a £90 billion per annum deficit. It may be that this is a difficult time to persuade the Treasury that we should start banking it rather than paying off the mortgage. However, I think this is an important area. It is intergenerational. We think more about those issues these days. You have to start somewhere with something like this. You start when you start to explore and use a new non-renewable resource, and unconventional gas or oil is one of those. The start may be modest but I hope that as we reduce the deficit in our public expenditure such a sovereign wealth fund can take up the slack and be of benefit to future generations.

[Baroness Maddock (LD)]

My Lords, I am happy to support this amendment. It is probably two weeks ago today that I was in Norway on an Inter-Parliamentary Union visit. We were privileged to have a presentation about the Norwegian sovereign wealth fund: how it started, where it was and the fact that during the recession we have all suffered, the sovereign wealth fund did not suffer. It was interesting to see it from that point of view, but we need to be aware of two things that are very different there.

Infrastructure Bill [HL]

Baroness Maddock Excerpts

Thursday 3rd July 2014 Grand Committee

[Lord Berkeley]

If I may just respond to the noble Lord, Lord Teverson, let me say that I, too, congratulate the Minister on what has been announced today about the things happening in Cornwall. To go back to the noble Lord’s comment about the long-term finance, I certainly agree with him that if this change enables the longer-term finance that Network Rail has at the moment, it will be a major step forward. I worry that I do not see that in the Bill—maybe I cannot find it, and perhaps the Minister will be able to put me right. However, I worry further, that although Network Rail has it for the next five years, where is the commitment beyond that for the railways? If that does not happen for the railways, it probably will not happen for the roads. I was going to raise this later, but since the noble Lord raised it, let me ask: is there the opportunity to have a discussion before Report committing the financing of this new agency—the Highways Agency and maybe Network Rail—to a five-year programme? If that does not happen, it would need primary legislation to change it. That is probably a bit of a tall order, but it would be interesting to explore.

[Baroness Maddock (LD)]

My Lords, I declare my interests as in the register, although I do not think that any of them have any particular relevance to what we are talking about today.

Following my noble friend Lord Teverson, of course we all have our favourite roads. Many people will be familiar with the A1 north of Newcastle and the issue of dualling it. Therefore, as I have lived with that, having now been married to the MP there for 13 years, I would be grateful to know how the Bill might help or hinder what has been a rather sorry tale of getting quite advanced on the dualling of that road, and then it all going backwards. It is now going forwards again, but I would be grateful for any information my noble friend can give me on that.

[Baroness Kramer]

My Lords, I will start by referring to two roads. First, the A303 is part of a feasibility study, the details of which should be announced later this year. Secondly, on the issue that was raised about the A1, the noble Baroness is quite right to say that that is advancing. That illustrates exactly some of the problems which we are trying to counter with the work that is going on here. Your Lordships will understand that this clause allows the Secretary of State to appoint a strategic highways company, conferring duties and functions for it to operate as a highways authority. Our aim—I think this is now well understood—is to create a different model to deliver road infrastructure from that which we have now, with a separate legal body from government responsible for our strategic road network, advising government on how it can best achieve its vision for our national network and being responsible for delivering that vision in the most cost effective way. These parts of the Bill are an implementation measure.

We consider the most effective model to be one where a company is created under the Companies Act 2006. I understand that there are questions about why a separate company is needed, so I will take a moment to set out some of the rationale. We have decades of experience across Administrations of different political complexions showing that the current arrangements have not encouraged a long-term approach to planning infrastructure or to securing funding. The noble Lords, Lord Davies of Oldham and Lord Whitty, asked why we do not do it under the existing structure. I say to them that we have lived with the existing set of arrangements for a very long time and it has not worked in terms of delivering the element of long-term certainty that is needed. Funding has been changed arbitrarily—sometimes at very short notice. I think we all recognise this and we recognise that it comes with high costs in efficiency and the quality of our infrastructure. The noble Lord, Lord Berkeley, underscored how Network Rail, with its more arm’s-length relationship—it calls its funding periods “Control Periods”—has delivered significant increases in the efficiency with which it implements new rail infrastructure, and we want to capture the same for roads.

Some noble Lords have asked what our sources were for the numbers. I refer them to Alan Cook’s A Fresh Start for the Strategic Road Network, published in 2011. There are further, more detailed calculations set out in the impact assessment, which is published on the DfT website. That might be a very good source for people who want to understand more of the nitty-gritty around those numbers. However, I do not think that most people looking closely at this will challenge the underlying reality that, once there is a longer-term framework in which to operate, efficiency is far easier to achieve.

Many have raised—not today but in various contexts—the importance of maintenance and balancing new-build and maintenance; looking at the whole life of a road; looking at the longer-term life of the asset; and approaching asset management in that way. It is far more possible to do that with a greater certainty of funding. I will just underscore the problems that we face today. Our road infrastructure, to which the noble Lord, Lord Davies, referred, is now rated only 28th in the world by the World Economic Forum—we all know that hinders our competitiveness. I suspect that arguing for the status quo will not allow us to make the changes needed to get the improvements that our economy requires.

We feel that for long-term funding certainty and planning, it is crucial for the Department for Transport to be able to have a transparent and binding relationship with a separate legal entity that will be set out in the road investment strategy. The RIS—if I can use that short term—sets out the Government’s requirements and investment plans and sets the funding to deliver them. If the Highways Agency remained part of the DfT, then in practice it would be much easier to change. Setting up a strategic highways company as a new company, operating under company law with a well established governance and financial framework, will reinforce the clarity and robustness of the relationship.

The company structures and disciplines will also help support a more commercial approach. We have seen international examples, which are enormously varied, and I have written about them in quite a detailed letter to some Members of your Lordships’ House. For example, in the Netherlands and Sweden, where roads delivery bodies have been given long-term funding certainty and a more independent relationship with transparent requirements, large efficiency savings have been possible. We have all acknowledged that this is not about privatising the roads. This will be a company that has one shareholder, the Secretary of State, and if he ceases to be the shareholder, in effect the company is terminated.

I will try to pick up a couple of the other issues that were raised. We will discuss some of them in more detail as we come to the various amendments targeted on them. My noble friend Lord Teverson talked about echoing the advantages that have come through the Network Rail structure, and that is exactly what I have been describing. I do not think it has to be identical to the Network Rail arrangements. Network Rail came to its current arrangements through the rather strange route of nationalisation, privatisation and part-privatisation. But we can pick up the essentials that seem to be the important levers, and that is what we have been doing.

The noble Lord, Lord Davies of Oldham, seemed to suggest that if we had a national infrastructure commission we would not need any of this. This is really practical, coalface implementation of infrastructure building and maintenance, and it is absolutely crucial. It is not a big strategic sweep—obviously, strategy will be deeply embedded in the road investment strategy—but it is creating the delivery mechanism to make that a reality on the ground.

The noble Lord, Lord Berkeley, asked whether we would have five-year certainty. We will talk in some later amendments about the timeframe for the RIS. At this point I would just say that we have to give a bit of flexibility because we will have a road investment strategy before the company is in place. We can talk about timeframes a bit later.

The noble Lord, Lord Whitty, and the noble Baroness, Lady Neville-Rolfe, raised an issue that, again, I think we will cover in some later amendments, about whether the company could go directly to the financial markets. To do so, it would have to have the permission of the Secretary of State. We have been quite clear that cheaper borrowing is available through the Government. We are therefore not minded to use those mechanisms. We are going to go for the cheapest borrowing. Frankly, in an era when one is trying to bring down government spending on all fronts and watching every penny, that is an entirely appropriate strategy to focus on. It might be possible, with the Secretary of State’s permission, to finance individual road projects directly in the markets but we will be making all those decisions based on the implications for the cost of financing.

The noble Lord, Lord Berkeley, raised the interesting issue of the role that the Office of the Rail Regulator has played, through its enforcement powers, in driving efficiency in the Network Rail system. That is an interesting question which we will want to think about and explore. We are determined that efficiency is going to be one of the major outcomes of this project.

Having covered that range of issues, I hope I have provided the reasons why this clause should stand part of the Bill. I hope very much that your Lordships will support its inclusion.

Transport Infrastructure: North-east England

Baroness Maddock Excerpts

Monday 23rd January 2012 Lords Chamber

[Earl Attlee]

My Lords, I thought that someone would ask me a devolution question. There are very good road connections from the highly developed conurbation on Tyneside—Newcastle upon Tyne and Gateshead—but that is via the M6 corridor up through Carlisle. The journey time by car is shorter via Carlisle than it is via Berwick-upon-Tweed.

[Baroness Maddock]

My Lords, given that Northumberland is a more dangerous place to drive in than London according to figures released by the BBC on 19 January—32 deaths per 10 million hours of driving, compared with 23 in London—will the Government prioritise the value of road safety in transport appraisal calculations? Also, given that single-carriageway A roads like the A1 in Northumberland have the most serious accidents, does that not strengthen the case for dualling particularly dangerous parts of the A1 such as the Mousen bends, especially as that scheme is ready to go?

[Earl Attlee]

My Lords, first of all, the schemes on the A1 north of Morpeth are not ready to go, because they have been abandoned since 2006. However, my noble friend is absolutely right when she describes the dangers of a single carriageway, and I asked my officials precisely those questions. Interestingly, though, the accident rate for this section of the A1 was 154 per billion vehicle miles. This compares with 306 accidents per billion vehicle miles on all rural A-class roads within England. The rate for the A1, therefore, is approximately half that for rural A-class roads nationally.