Infrastructure Bill [HL]

Lord Whitty Excerpts

Wednesday 18th June 2014 Lords Chamber

[Lord Whitty (Lab)]

My Lords, one might ask why we need another piece of legislation, given that we had an infrastructure and planning Bill only a couple of years ago and a national infrastructure plan only last year. The Bill reads as though it consists of things that were left out of those previous government initiatives, or were thought of or seen as problems since. It is a bit of a hotchpotch of a Bill. Luckily for me, I am interested in quite a lot of the hotches and potches, even though they are disparate. That might not be good news for the Minister. I am also interested in some rather more primary questions, such as what counts as infrastructure. For example, housing sometimes counts as infrastructure, but it is not included in the infrastructure plan. More esoterically, improving energy efficiency in buildings, which is a major challenge and would give huge returns on our energy policy, does not count as infrastructure and is therefore not judged on the same basis as major infrastructure projects.

It is also not clear how one infrastructure project is judged against another. I am familiar with roads and flood defence. With roads you can occasionally get—at least in the tail-end of the programme—a net present value cost-benefit ratio of 2:1. For flood defence you are lucky to get a project that returns 7:1, or indeed 13:1. There is no consistency in our approach to infrastructure. There is then, of course, the issue of who pays. By and large, these days it is the consumer, whether in energy prices, road tax or water charges. That method of financing infrastructure is regressive. It tends to be the poorest who make the biggest contribution to and, quite often, the least use of that infrastructure.

I will talk mainly about Part 1. Those of you who have been in this House for some time might recall that for three or four years I was the Roads Minister, which was an interesting job—I am sure the Minister is finding it so. I find the proposals on the Highways Agency interesting and I am not opposed to them. However, I do not believe some of the alleged benefits that are set out in the advocacy of them. It could be constituted as a government-owned company, although I hope we find a better name for it than “GoCo”. I do not object in principle; I would object were this to be a step towards privatisation, but from government statements and the Minister shaking her head earlier today, that is clearly not the objective.

The proposed model has some potential advantages. A company would be freer to enter new forms of contract for road building, road operation, maintenance and so on. In the present climate, it would probably be able to offer salaries for expertise and management that it cannot as part of the Civil Service. It could also probably finance or make use of innovative approaches rather more than an agency closer to the department could. I support such a model, at least tepidly, for those reasons, although, as others have pointed out, there are down sides in a new organisation requiring all the overheads that a relatively lean organisation, as the Highways Agency currently is, does not. I would be in favour of such an entity—“GoCo”, “Highways Agency Plus” or whatever we call it—if the Government were to make more of the need for it to have new methods of managing our motorway system. There are advances in road design, telemetry and traffic control that our system does not make full use of and that an innovative organisation could make more of for benefits of safety, speed control and traffic management, and to improve journey times. Of course—be it whispered—it could also provide the basis for the introduction of variable road-user charging. I do not think that in the long run we will be able to pay for a modern, competitive national road network unless some form of road charging is introduced. However, that is politically toxic and at this stage before a general election nobody on the Front Bench of any party is going to advocate it, but I think that we will return to it.

It is arguable that an arm’s-length company would be better able to carry out that kind of strategic objective. However, what it will not of itself do is deliver the Government’s main point in their documentation—a stable, clearly viable, long-term strategic programme for road building and road maintenance.

Being a Roads Minister is a lightning conductor for everybody who wants their bypass improved, a new junction or the introduction of safety measures and so forth, and that is not going to change. No Secretary of State and no Minister for Roads will avoid all that, however arm’s length we ostensibly push the organisation that is going to deliver it. However, more important than giving Ministers a quiet life is the fact that the change of status does not of itself in any way give certainty of long-term financing.

Going back to the creation of the Highways Agency in 1994 under the previous Conservative Government, pretty much the same benefits were claimed. That Government developed a roads programme and the previous Labour Government developed several roads programmes. However, there were changes in those programmes. One of the A303 routes, which the noble Lord, Lord Cameron, referred to and which I sometimes frustratingly drive past on my way home, was mentioned in 1994 at the time of the creation of the Highways Agency. It was in the last roads programme of the previous Tory Government. It was also in the programme that I announced and it was still in the programme when I left the job. It has subsequently gone. I cannot pinpoint the exact Minister at the moment but this Government certainly did not restart it and not a sod has been turned.

Projects such as that run into all sorts of difficulties. There are changes in local circumstances, different sorts of objections, planning difficulties that are unforeseen and technical difficulties. There were technical difficulties with the A303 tunnelling process. However, at the end of the day the reality is, for one reason or another, that Ministers change their mind, and the main reason they do so is that the Treasury tells them that they cannot have the money.

It is not at all clear how this new structure will alter that situation one iota. Because the Highways Agency is a government-owned company rather than an agency, the Secretary of State will have to argue the toss with the Treasury. It is not clear from the proposition whether this new company will be allowed to raise its own money by going to the market for bonds. I should like a clearer answer on that. There is a reference in Clause 12 to the Secretary of State being able to guarantee various issues, but whether that means guaranteeing—in effect, underwriting—the company going to the market for loan capital is not clear. I should have thought that if that was the Government’s intention, they would have made rather a bigger thing of it. The reality is that the roads programme will never be sufficiently secure, sufficiently long-term or sufficiently constant if it is down to the Secretary of State and the Treasury to sort it out. If some money could be raised as loan capital—I stress “loan capital”—it would be possible to smooth it out a bit, but not otherwise. I do not believe that the Bill gives the power to the company to do that—at least, not on any significant basis.

Therefore, I think there is a danger of there being a false promise to the motoring organisations, the motoring correspondents and Jeremy Clarkson that at last we will have a proper roads programme in this country. I do not think the Bill guarantees that at all. While there may be some advantages in other respects, changing the name on the door does not deliver it. Another issue in relation to the position of the Highways Agency is that the original proposition talked about a single company but this allows for more than one company. I do not understand that. Why would we want more than one company to manage our motorway system? Or are we going to distinguish between the motorways and the trunk roads that the Highways Agency owns? Is it going to be a regional thing, in which case the interface between the new body and local authorities will be quite difficult, or are we going to reclassify and de-trunk or re-trunk roads to create separate companies? I do not see the benefit of even postulating that there is a possibility of having several companies operating in this field.

My noble friend referred to the oversight and engagement bodies. It is not immediately obvious that Passenger Focus is the most appropriate organisation to deal with roads. I am a great admirer of Passenger Focus and I have defended it in this House against the possibility of abolition and against the cuts that unfortunately have been made to its budget. However, it has dealt with fare-paying passengers, not with motorists or hauliers, which are a different proposition. On balance, Passenger Focus probably could take that on but it would not be easy and it would require significant funding to recruit the people capable of doing it.

It is even more bizarre to give the responsibility for monitoring to the Office of Rail Regulation. It has an entirely different franchise system from the road system. It is not just a question of monitoring. If a company is genuinely at arm’s length, it will require heavier regulation than that. There should be a separate regulator. The responsibility should not be added to the already rather difficult task of the Office of Rail Regulation.

While I do not oppose the concept, there are a lot of issues relating to the Highways Agency. I have views on other parts of the Bill, which I shall leave until Committee, although I have copious notes here. As regards the Highways Agency, there is a germ of a good idea but a lot of questions need asking and answering. I hope that we will be clearer by the end of the Bill’s progress through this House.