Passenger Railway Services (Public Ownership) Bill

Viscount Hanworth Excerpts

Committee stage
Wednesday 23rd October 2024 Lords Chamber

[Lord Sikka (Lab)]

My Lords, Amendment 44 requires the Secretary of State, within 12 months of enacting the Bill, to publish an annual report on the relationship between the provisions of the Bill and the leasing of rolling stock to public sector companies. My preference would have been to end the private ownership of rolling stock, but the Bill officer suggested that such an amendment was beyond the scope of the Bill—hence this silly weak amendment that I am putting forward.

The background is that, during Second Reading, on 7 October, the noble Baroness, Lady Blake of Leeds, laid down the principles of the Bill. She said:

“This Bill will ensure that trains are run for the benefit of the British public, not for the profits of shareholders around the world”.


She added that, by ending the current franchise system for passenger railways,

“the taxpayer will save between £110 million and £150 million a year in fees”.—[Official Report, 7/10/24; cols. 1831, 1833.]

The Government have already said that they will not bring rolling stock back into public ownership. However, the new system, operated by a public company, will still need rolling stock, and the Government have not provided a great deal of clarity on that so far. By leaving the rolling stock in private hands, they will be negating their own principle, which was to deny profits to shareholders around the world.

The Bill will not facilitate public ownership of passenger railway services. Instead, it will facilitate what I call “rent a carriage”. That will guarantee massive profits for rolling stock companies—roscos—which do not build or commission trains but make huge profits. Last year, roscos charged £3.1 billion for leasing out rolling stock and had a profit margin of 41.6%. That is a profit of £1.29 billion in one year, extracted from customers and the public purse. The actual amount which the shareholders have extracted from roscos is likely to be much, much bigger—more of that in a moment.

I looked at the accounts of one of the roscos and it is full of financial engineering. The £1.29 billion profit which it declared for a year is far greater than the savings for the passenger services that the Minister said would be £110 million to £150 million a year. There is no justification for the profiteering of roscos, especially as the payments are guaranteed and in future will be guaranteed by the state—at worst, it can simply print the money—so the risk is very low. The return should be no higher than the yield on any government bond, which is technically called a risk-free rate of return.

The actual returns extracted by rosco shareholders are much bigger than the dividends. Let me illustrate that with quotes from the accounts of Porterbrook, which is one of these companies. It is owned by foreign shareholders: Canadian pension fund manager Alberta Investment Management; Luxembourg-based Allianz Capital Partners; EDF Invest, which is owned by the French Government; and Australian infrastructure investor Hastings Funds Management. Porterbrook’s 2023 accounts show a payment in dividends of £150 million. In 2022, it was £285 million. That is £435 million in dividends in just two years, which is far greater than the expected total saving of £110 million to £150 million for the publicly operated passenger service.

The company also shifts profits through intra-group transactions. In 2023, it paid £154 million interest on its debt, which included £153.5 million to other entities in the same group—not to an outsider, but within the same group. In 2022, it made interest payments of £162.4 million, which included £161.2 million to other group entities. In the absence of additional information, it is hard to know whether such payments are genuine. They are probably not.

Of course, profits are also shifted to avoid taxes. Interest payments give the company a tax-deductible expense, even though the transactions are not arm’s length and may lack economic substance. This company paid no corporation tax in the last two years, dividends are paid to foreign investors, and they did not pay any UK tax on those. This really is organised looting, permitted by the last Government, and I urge the Minister to ask HMRC to investigate these companies. Over the last two years, Porterbrook extracted at least £750 million in returns for its shareholders, or an average of £375 million a year. This is far greater than the £110 million to £150 million which the Government hope to save by ending passenger rail franchises.

I have referred to only one company, which is by no means the largest one, but I am sure the Minister gets the substance of my arguments. Billions of pounds can be saved by ending the role of current roscos in the railway industry. Leasing out rolling stock is effectively a licence to print money. I understand from rail company executives that the useful economic life of a carriage is around 30 years or more. The cost of a carriage is normally recovered through rental or leasing arrangements over a period of five to seven years. This being so, the rental charges of 23 to 25 years are pure profit, nothing else. There is absolutely no economic justification for this. The Government can help by stopping the use of current roscos. They can buy direct from manufacturers or set up a Great British Railways leasing company. All of these options are preferable to the current practice.

I hope that, as a first step towards ending profiteering, the Minister will agree to publish the annual report that this amendment calls for. It should provide data about the returns extracted by shareholders in dividends, intragroup transactions, related-party transactions and various profit-shifting techniques. Of course, my preference is to end this roscos circus altogether.

[Viscount Hanworth (Lab)]

My Lords, I offer my support to Amendment 44 and, beyond that, want to support and reiterate what my colleague has just asserted.

I agree that, consequent upon the Bill, the whole of the rail system needs to be kept under review during the period of transition. The privatisation of British Rail imposed costs on rail users and taxpayers. There were costs that resulted from the disorganisation of the system which might have been alleviated by rational central planning. There were also costs that arose from the profit-seeking and rent-seeking of the agents of privatisation.

Some of the main train operating companies have been paying large dividends to their ultimate owners. These include consortia of foreign banks and foreign national rail companies, as we have heard. The companies that own the rolling stock and lease it to the train operating companies have been deriving large and exorbitant rents. These companies are of course called the roscos.

The three largest companies, Porterbrook, Eversholt Rail Group and Angel Trains, own 84% of the UK’s rolling stock. They were established in 1994, at the time of the privatisation. They acquired their rolling stock at vastly undervalued prices and substantial profits were reaped when they were sold on to subsequent owners. These companies have complicated structures of foreign and domestic ownership. Between 2012 and 2018, the three largest roscos passed on a total of £1.2 billion to their parent companies in the form of dividends. We have heard that this sum has recently become even more exorbitant. The Government appear to have concluded that it would be far too expensive to bring these companies into public ownership.

It should be observed that the era of the roscos has coincided with the demise of our railway manufacturing industry, the remnants of which have now fallen into the hands of foreign owners. This demise has been due, in part, to the activities of the rolling stock companies. Instead of providing a steady flow of orders for new rolling stock, they have often opted to refurbish their existing stock. This has made it unprofitable to manufacture trains in the UK. The train manufacturers are now in foreign hands, and they may decide to retreat abroad.

To avert this, there needs to be a consistent stream of rolling stock replacements, subject to a centrally managed plan. The question is how this can be achieved. Others may have opinions to offer on this matter, but I believe that, when Great British Railways is properly established, it should undertake this task. Great British Railways would not be remitting exorbitant dividends to financial consortia, such as the owners of the existing roscos do, and it would not be paying eye-watering salaries to its executive staff. As a consequence of such savings, it would be able to offer attractive rates of return to funds borrowed from capital markets, which might assist investment in new rolling stock.

Transport System: Failings

Viscount Hanworth Excerpts

Thursday 25th April 2024 Lords Chamber

[Viscount Hanworth (Lab)]

My Lords, Britain was once a great innovator in transport. It was the first of the European nations to create a modern transport network. In the late 18th century, John McAdam and Thomas Telford, known to his contemporaries as the Colossus of Roads, were at the forefront of an endeavour to construct a serviceable network of highways that expedited travel in an unprecedented way.

At the same time, a network of canals was under construction that enabled goods and freight to be conveyed over long distances. Then, from the middle of the 19th century, a vast network of railways was under construction. This was achieved by speculative private enterprise, which often resulted in private ruin. In Lewis Carroll’s poem, “The Hunting of the Snark”, we hear of threatening a person’s life with a railway share. The process was a free for all, and it endowed the nation with a network that was arguably full of replication and redundancy. It was fit for pruning. It was eventually reduced drastically and, in retrospect, far too extensively, in the 1960s under was aegis of a certain Dr Beeching. He was an engineer and physicist who had worked for Imperial Chemical Industries before he was charged with this task, which made him a prominent public figure.

By the middle of the 20th century Britain’s transport network had fallen into disrepair, and its roads were no longer to be admired. Britain lacked the autobahns, autostrada and routes nationales of its European neighbours, some of which had been inspired by dictators with militaristic intentions. Belatedly, in the 1960s Britain indulged in a feverish process of catch-up that created our own inadequate motorways.

Our rail system had also fallen into disrepair, and it still compares unfavourably with those of its continental neighbours. They have benefited from national investment programmes that have been absent from Britain. Worse was to come when the Conservative Government of John Major denationalised the railways and sought to re-establish the system of large railway companies that had dominated the industry in the 1930s, which was arguably its heyday.

Now, at the end of the first quarter of the 21st century, Britain’s transport network faces an unprecedented challenge on two fronts. The first challenge is to provide the means of transporting goods and people in a manner that will cater to the demands of the modern economy. The second challenge will be to staunch the emissions of the greenhouse gases to which transport is a major contributor. Current estimates indicate that transport contributes one quarter of all the nation’s domestic emissions. Most of these emissions come from road vehicles. The additional emissions of international transport are not part of this reckoning.

An inescapable judgment is that the present Government have failed adequately to meet these challenges. The denationalisation of British railways has resulted in a system that lacks the strategic oversight needed to maintain an orderly investment programme. The procurement of rolling stock has become disorganised and sporadic, and much of it is provided nowadays by foreign suppliers. The once great engineering works at Derby that served the London, Midland and Scottish Railway has passed into foreign ownership. It was acquired in 2001 by the Canadian company Bombardier and in 2021 it passed to the French company Alstom. Given the current hiatus in the procurement of new trains, it now seems to be destined for closure. Its demise represents a paradigm of national mismanagement and illustrates the danger of allowing our industries to become offshoots of foreign enterprises.

It must be acknowledged that rail transport contributes only a small proportion of the nation’s emissions of carbon dioxide and of greenhouse gasses more generally. However, there are two reasons why attention should be paid to the matter of its reform, and an incoming Labour Government would be committed to do that. First, there are numerous diesel-powered trains on the network that contribute significantly to pollution and need to be eliminated. Next, an expansion of the network would enable people and freight to be transferred from the roads. This would be an effective way of reducing emissions from road vehicles.

The modest size of the total emissions coming directly from the rail network is a testimony to its energy efficiency, and to the fact that much of the traffic is powered by electricity. There must be concern for how the electricity is generated, for it is not free of emissions. Nevertheless, further electrification should be seen as a means of eliminating diesel power. But Britain faces some difficulties in this connection that do not affect continental railways to the same extent. Many of the old bridges and tunnels have small apertures that prevent the installation of overhead electric cables. To overcome this difficulty, trains must be available that are powered by batteries and fuel cells. Here, there has been virtually no progress, for which there can be little excuse.

A major reduction in emissions must come from a major reduction in the number of road vehicles powered by internal combustion engines. There too, the steps taken so far have been wholly inadequate. The Government have backtracked on their original commitment by deferring a ban on the sales of such vehicles to 2035—five years later than originally proposed. The ban on sales of petrol-powered and diesel-powered vehicles should provide a stimulus to our automotive industry, which must adopt batteries and hydrogen fuel cells as a means of powering road vehicles. It will be an effective stimulus for the industry only if there is an accompanying development in the industries that provide batteries and fuel cells.

It is doubtful whether our automobile industry will be able to rise to the occasion. It is in the hands of foreign and international owners who see their British factories as offshoots of their main enterprises. They will be willing to close them and to move their operations elsewhere if this becomes a more profitable option. Manufacturers are liable to be drawn to places where a supply of batteries is closer to hand. The UK has failed to develop an industry that can manufacture batteries in the numbers required. There is only one manufacturer of batteries that operates on a large scale—a plant in Sunderland that supplies the Nissan car factory. It is run by the Chinese company Envision and is small in comparison with the genuine gigafactories that exist elsewhere in Europe and in China. The other automobile manufacturers in the UK rely on imported batteries. Unless we can develop our battery manufacturing, we will be in danger of losing the majority of our motor manufacturers.

Transport: Hydrogen

Viscount Hanworth Excerpts

Monday 13th September 2021 Lords Chamber

[Baroness Vere of Norbiton (Con)]

The noble Baroness is quite right: aviation is one of the modes that we think will have a great future in using hydrogen for propulsion. She mentioned airports, and I know that work is being done on whether some of the tenders used at airports can be switched to hydrogen. Obviously, a significant amount of torque is needed to drag planes across the tarmac. She will know that we consulted over the summer on jet zero as a whole. We anticipate that many of the responses will cover hydrogen. We will be collating those responses and looking at them in detail, but I reassure her that significant funding is going into R&D for many sources, be that for planes or the vehicles in airports.

[Viscount Hanworth (Lab)]

Britain has three major manufacturers producing zero-emission buses, including hydrogen fuel cell buses. If those manufacturers are to be able to compete in international markets, they need the stimulus of a large domestic market. The Scottish SNP-Green alliance has proposed a target to scrap half of Scotland’s diesel buses by 2023, to be replaced by zero-emission buses. Would Her Majesty’s Government consider pursuing a similar objective throughout the UK by mandating local authorities and bus companies to purchase zero-emission vehicles?

[Baroness Vere of Norbiton (Con)]

I could happily spend many hours answering that question, but I will not on this occasion. The Government have a target of supporting 4,000 zero-emission buses by the end of this Parliament, and we are about to start a further consultation on the phase-out date for new diesel buses. We are investing £120 million in the ZEBRA scheme—the Zero Emission Bus Regional Areas scheme—which does precisely what the noble Lord is asking: it encourages local authorities and the bus operators in their area to switch over from diesel buses to either battery electric or hydrogen fuel cell buses.

Transport: Zero Carbon Target

Viscount Hanworth Excerpts

Tuesday 27th April 2021 Lords Chamber

[Baroness Vere of Norbiton (Con)]

I can confirm that all these things are under consideration at the current time. It is a complex picture and there are many uncertainties as to what we will need our energy for. We are absolutely committed to ensuring a sufficient supply of low-carbon electricity. We need to ensure that the grid can cope and that we make the best use of smart energy solutions that are able to make use of plentiful renewable supply.

[Viscount Hanworth (Lab)]

According to a widely accepted analysis, the electrification of transport would require a 75% increase in generating capacity. The decarbonisation of the economy will create numerous additional demands. However, the energy White Paper proposes a doubling of the capacity by 2050 in the context of a reduction of a third in overall energy consumption. This would have to be accompanied by the continued deindustrialisation of the economy, a virtual cessation of manufacturing and the immiseration of much of Britain’s working population. How do the Government react to these inescapable conclusions?

[Baroness Vere of Norbiton (Con)]

I am afraid I have not read the report to which the noble Viscount refers. But it seems obvious that, over time, motors et cetera will become more efficient. It could be therefore that the amount of energy used will decline on a relative basis. The Government are also focused on flexibility. Flexibility is key, which is why we need smart technology that will centre on storage, demand-side responses and interconnectors to make sure we get the power to where it needs to be when it needs to be there.

Draft Heavy Commercial Vehicles in Kent (No. 1) Order 2019

Viscount Hanworth Excerpts

Monday 7th October 2019 Lords Chamber

Finally, I ask the Minister about local lorries. The second order specifies that drivers making local collections and deliveries will have to supply evidence. If you are, let us say, taking materials from one building site to another, there is no reason why you should have any documentation with you. It will be a real issue for local lorries to have to provide sufficient evidence to prove that they are not on a longer journey and intent on going abroad. The impact of that is that all lorries in Kent will have to carry significant legal documentation at all times to prove that they are complying with those regulations.

[Viscount Hanworth (Lab)]

My Lords, the regulations on custom safety and security, which we have already discussed, have arisen from HMRC’s assessment that the haulage industry and ferry operators will be unable to meet the new requirements that will be imposed on imports and exports in the event of our leaving the EU by 31 October. The regulations will give them leave to submit the necessary safety and security declarations with a delay of up to 12 months.

Of course, these easements are on the side of the UK, and there can be no presumption that they would be met by similar easements on the side of the European Union—a point made persistently by my noble friend Lord Tunnicliffe—but perhaps it is now more interesting to consider the associated statutory instruments that concern the heavy goods vehicles that carry our exports and imports to and from the Channel ports. Some 90% of this traffic passes through the Port of Dover. The roads leading to the port would be subject to severe congestion in the event of a hard border with the European Union. The statutory instruments speak of the likelihood of utter chaos. They are a belated wake-up call, albeit that warnings arose months if not years ago. An indication of what is in store arose as long ago as 2015, when the French ports were beset by strikes. Then, there were tailbacks on Kentish roads of 12 miles or more. These circumstances were met by a set of powers and provisions given to the transport authorities that were described as Operation Stack. The controls were widely evaded, as we have heard, and huge costs were entailed.

To meet the eventuality of a hard border with the European Union, much more extreme powers are now envisaged. The new enhanced powers that supersede those of Operation Stack are known collectively as Operation Brock. Tailbacks much longer than those of 2015 will occur. I talk of a “hard border” because that is what we must envisage in Ireland in the event of the Brexit deal being proposed by the Government, notwithstanding their protestations to the contrary. In this case, logistical difficulties of the sort I have been describing will affect the Irish border. We must also contemplate extreme political difficulties of a sort familiar to those such as me, who witnessed them directly in the 1970s and 1980s, but which are being wilfully ignored by many of the party in power.

[Lord Rosser (Lab)]

I thank the Minister for setting out the reasons for and intended objectives of these two statutory instruments. As has been said, the department laid three instruments, each with an Explanatory Memorandum. The first is a draft affirmative instrument, which confers new powers on traffic officers that will enable them to identify cross-Channel heavy goods vehicles and control their movements in Kent. It also makes provisions relating to enforcement. The second order is also an affirmative instrument and allows for the use of such vehicles to be restricted to the motorway network and other approved routes by prohibiting access to local roads in Kent. The third order follows the negative procedure and allows for the use of such vehicles on the M20 motorway in Kent to be restricted, and makes other provision to facilitate more effective enforcement.

As the Minister has said, these three instruments form a package that allows for the movement of cross-Channel heavy goods vehicles in Kent to be regulated during periods of severe disruption to travel via the Channel Tunnel at Folkestone and the Port of Dover. As has been said, the DfT has indicated that it,

“has worked closely with the Kent Resilience Forum on developing traffic management plans, known as Operation Brock, to be used as a contingency in the event of severe disruption to travel via the Channel Tunnel at Folkestone and the Port of Dover. These instruments support Operation Brock”,

which has been designed to ensure that the M20 motorway in Kent will be kept open and traffic will continue to flow in both directions. Operation Brock is intended as a replacement for Operation Stack during periods of severe and protracted disruption. Operation Stack did not prove an unqualified success, hence the new Operation Brock.

As I have said, the first draft order enables the movement of cross-Channel heavy goods vehicles in Kent to be controlled during periods of severe disruption by conferring new powers on traffic officers. These new powers will be used to tackle non-compliance with the scheme, which would cause or contribute to severe traffic congestion. The new powers are conferred under Section 8 of the Traffic Management Act 2004. Apparently, the draft No. 1 order is the first use of the Section 8 power. As has been indicated, these powers will enable traffic officers to detect and direct vehicles that are not compliant with the traffic restrictions imposed by the second and third orders.

The Explanatory Memorandum notes that, in particular, traffic officers will be able to require the production of documents to establish a vehicle’s destination and to demonstrate readiness to export goods. Powers to direct the driver of a heavy goods vehicle in Kent to proceed to a specified motorway in Kent, or to direct such a driver not to proceed to the Channel Tunnel or Port of Dover except via a specified route or road, are also provided to traffic officers. This order also creates an offence of failing to comply with a traffic officer exercising such powers. The noble Baroness, Lady Randerson, has already said that in many ways, it is difficult to understand the full potential consequences of these orders on the movement of goods and traffic in Kent.

--- Later in debate ---

[Baroness Vere of Norbiton]

I am doing my best, but I might have to go back through Hansard to try to understand the noble Lord’s exact point. To my mind there are two separate issues here. The first is whether these powers—the operation block enforcement powers—can be used in circumstances of industrial action or severe weather: yes, they can. Secondly, and entirely separately, there is the issue that we might get to whereby drivers’ hours or working time directive regulations might need to be suspended. We do not want that to happen, obviously. I thought that the noble Lord had asked whether that had happened before; I am not aware that is has and will have to write to the noble Lord on that. In doing so, I will ask whether those circumstances arose.

I believe that I have covered as much as I am able to today. I will certainly go back through the notes—

[Viscount Hanworth]

Are the Government confident that they will be able to recruit a sufficient number of officers, with a sufficient commitment to their duties, if they are going to offer only a three-month contract with a possible extension? It strikes me that rather few people would be prepared to accept those terms of employment.

[Baroness Vere of Norbiton]

The noble Viscount raises an important point, but those people are already recruited. Although it sounds like a huge and responsible role, the temporary traffic officers will have a very specific role—which is for the M20, to do the border-readiness checks. They are recruited and are undergoing training.

Infrastructure Bill [HL]

Viscount Hanworth Excerpts

Thursday 10th July 2014 Grand Committee

[Lord Davies of Oldham]

My Lords, this amendment and the others grouped with it seek to add to the list of those who have a crucial part to play. None of us has anything but great respect for the work of the Environmental Audit Committee in the other place, which has done a tremendous job in reviewing invasive non-native species and highlighting what needs to be done and how we can improve the situation. It would surely be hugely beneficial to have it involved in the process of issuing, revising or replacing the codes of practice for invasive non-native species. That committee is on record as being very supportive of the implementation of the Law Commission’s proposals and some time ago highlighted the need for this to be a priority for the Government. We think that there is a clear role for that committee, particularly against the background of there being more limited resources to hand for the Government in carrying out this crucial evaluative work.

Our remaining amendments involve the local authorities and local nature partnerships. The simple fact of the matter is that most local authorities do not have the capacity or the ability to assess biosecurity risks and to take a proactive or intelligence-led approach to reducing them. Two-thirds of our local authorities no longer employ any ecologists, according to the Association of Local Government Ecologists. The evidence suggests that ecological capacity within local government is stretched very thin indeed, but it has a very wide policy agenda. We are here debating this Bill because that agenda is extending, and we are trying to respond to those difficulties. There is clearly an ecological skills gap within the planning system and a clearer understanding of the specialist ecological competence is required, especially in understanding exactly what the discharge of statutory obligations involves. Having that clearer understanding would enable local government to allocate better its resources against the risks associated with the fact that it no longer has the level of technical expertise that it once had. When dealing with biosecurity issues such as diseases, pathogens and invasive non-native species, 75% of local government ecologists indicate that only “basic” or “capable” levels of competence are required at that stage. There is a worry about the ability of local authorities to play their part effectively, and that is why we would like a reference to local authorities in the Bill in addition to the crucial role of the Environmental Audit Committee.

It may be thought that I am putting enormous stress on a committee of the other place, but so much competence for dealing with these areas has been swept away that inevitably we have recourse to those obvious locales where expertise exists and can be called upon. The Environmental Audit Committee report has been of the greatest significance in the development of policy. I am seeking to strengthen the role of those who have some capacity to assist the Government, with their limited resources, in carrying out the necessary functions under the Bill. I beg to move.

[Viscount Hanworth (Lab)]

My Lords, the comments that I wish to make may have some relevance to the codes of practice that will accompany the Bill. Amendment 71, in the name of the noble Lord, Lord Berkeley, which has already been debated, could have been a cue in its own right for a wide-ranging and interesting debate.

The noble Lord, Lord Berkeley, proposed the definition of a species. A species is commonly defined as the largest extent of a group of organisms that is capable of interbreeding and producing fertile offspring. That is similar to the definition that the noble Lord, Lord Berkeley, was advocating, which also mentioned the exchange of genes. However, his definition did not include the fertility of the offspring as one of its conditions. Moreover, we know that bacteria of widely differing species can exchange genes via plasmids, which are small DNA molecules that can be separated physically from the chromosomal DNA. One might wish to exclude bacteria from the definition.

These are abstruse matters and I do not wish to pursue them further. Instead, I propose that in place of “invasive non-native species”, the legislation should be talking simply of “pests”. I assert that it is inappropriate to talk only of non-native species. The objection might be raised that the word “pest” is too vague to serve the purposes of this legislation. What is a pest in one context might be a harmless organism in another context. However, this is one of the realities that ought to be taken into account. I will mention the well known example of the English rabbit. When transferred to Australia, it became a major pest that threatened the viability of Australian agriculture. Rabbits destroyed the grazing land and by eating native plants and grasses exposed the top-soil and left it vulnerable to erosion. One way of overcoming an infestation is to alter the ecology by introducing a predator of the pest, or by some other means. In Australia in the 1950s, the ecology of the rabbits was altered radically by the introduction of a malign myxoma virus, which causes myxomatosis in rabbits.

The point I wish to make is that we need to consider pests within their ecological contexts, and ecology can be severely disturbed by inadvertent human interventions. Often the effect of a human intervention is to diminish the diversity of the ecology by eliminating some of its organisms, which may allow others to propagate without restraint. Thus an organism that has hitherto been regarded as harmless may become a pest as a consequence of such disruption. This is an ever present hazard in intensive modern agriculture. The matter of whether an organism is native or non-native is beside the point.

An ancient example will serve as an illustration. It is provided by a variety of grasshopper that was originally confined to the Middle East, which has latterly invaded the entire African continent. This is the locust, of which the pestilential effects emerged when the advent of agriculture upset an ecological balance. The Book of Joel in the Old Testament provides a graphic description of a locust plague in the Middle East.

The point that I wish to make is that we should approach the problem of ecological imbalance not by programmes of localised pest control but in a holistic manner that takes a far wider ambit. Instead of relying on local pest control officers to deal with outbreaks of invasive species, we should be relying on our public sector research establishments to monitor our natural—and our unnatural—environments so as to guard against pestilential outbreaks and to suggest the necessary countermeasures. This reinforces a point that has already been made by my noble friend Lord Davies, and I hope that his comments might be taken into account at a later stage when we come to review the Government’s deliberations.

[Baroness Kramer]

My Lords, those of us who were privileged to participate in the Defra visit the other day—an opportunity that many of your Lordships took up—will have been very impressed to see the care and control and the deliberate and constant testing and assessment that Defra uses before enabling any biological controls to be used for some of these invasive species. Obviously, that is one direction that is under examination for Japanese knotweed, that much-hated plant, but it sits outside the scope of this legislation, which focuses very much on new invasive species that are not ordinarily resident and where there is a potential for eradication to succeed. The Bill has a narrower target, but other pieces of legislation sit alongside it that tackle, for example, invasive non-native species that are a threat to plant and animal health. So the Bill sits within a much broader context.

The amendments focus on the need for wider consultation on the code of practice. It has always been the Government’s intent to engage a great deal with expertise, with stakeholders and with others on the code of practice, which will be a substantial and complex document that will certainly need a great deal of thought and care. We continue to think about how we should carry out that engagement, and we would like to take a little more time to consider those issues, including the option of undertaking a full public consultation on the code. I can commit that I will have a response on the issue before Report, but I assure your Lordships that it is our intent to have that kind of intensive engagement, including with a number of parties that have been named today. We would like to take this away and think a little more on it, as the code of practice will be complex. However, it is indeed the Government’s wish to be able to tap into that expertise and thinking in order to make the code as effective as possible.

On that basis, I hope that the noble Lord will feel able to withdraw the amendment.

Infrastructure Bill [HL]

Viscount Hanworth Excerpts

Tuesday 8th July 2014 Grand Committee

[Viscount Hanworth (Lab)]

My Lords, I wish to lend strong support to Amendment 56 in the name of my noble friend Lord Berkeley. In the phraseology of the Labour Party, paragraph (b) in his amendment contains an injunction to think in a joined-up manner and to envisage road and rail as parts of an integrated transport system.

The perspectives from which our party views matters of transport policy differ greatly from those of the Conservatives. We envisage an integrated system. The Conservatives, by contrast, tend to place road and rail in quite different categories. The railways were regarded by them as a prime example of a loss-making nationalised industry that required to be privatised. The roads have been regarded as a means whereby our citizens have been able to exercise a fundamental liberty to come and go as they please throughout the land, and for this the road users have been heavily subsidised.

The consequence of this dichotomy—or should I call it a schism?—has been a failure to envisage how these different modes of transport might interact or have a clear idea of their relative advantages. For example, the damage inflicted on the roads by HGVs has not been properly taken into account, and therefore the benefits of transferring road freight to the rails have been largely ignored.

We have before us an Infrastructure Bill that is liable to make joined-up thinking in respect of our transport system even more difficult to achieve. By putting the strategic highways company at arm’s length from the ministry, it will be out of mind and out of sight as far as the Secretary of State is concerned. The only respect in which the Bill proposes to join the roads with the rails is by asking the Office of Rail Regulation to monitor the highways company and by giving the oversight of road users’ interests to the Passengers’ Council, which is ostensibly a body that was intended to serve the interests of rail passengers.

[Lord Judd (Lab)]

My Lords, frankly, I am not very optimistic about the messages that are being put forward from this side of the Committee being taken very seriously by the Minister because she seems to be completely preoccupied with drivers and passengers as the paramount interests at which we should be looking.

If one were looking at the United Kingdom from another galaxy, the first thing that would be said is, “My God, look at the size of the population of that country. Look at the different, complex dimensions to that society. Look at all the issues that arise, the different groups of real communities and real industry and commerce. How can all that be reconciled?”. From that standpoint, where is the evidence of a strategic approach? This talk about being in silos is exactly what frightens me. It is a mad way to look to our interests as an integrated, complex, interdependent nation; it is crazy. We should be looking at what strategies are required, what the interests of the community are as a whole and how to bring them together to maximum effect. That must mean a closely integrated approach towards our railway and road development—but we just do not have that. Successive generations at the Ministry of Transport and the Department for Transport have completely failed to grasp that it is just not in the interests of the British people to go on operating in this way; we have to bring it all more closely and constructively together. From that standpoint, I applaud the amendment.

Infrastructure Bill [HL]

Viscount Hanworth Excerpts

Thursday 3rd July 2014 Grand Committee

[Lord Davies of Oldham]

My Lords, there currently appears to be a gap in the Government’s draft licence for the strategic highways company. It says:

“Provisions relating to commercial activity and charging for services are still under consideration. We expect that the Licence holder will, where legislation allows, be able to continue to undertake commercial services or charge for services, on a non-discriminatory and cost-recovery basis, where this represents the continuation of current practice by the Secretary of State, in his role as highway authority for the network”.

My amendment is intended to probe this position and to ascertain in what precise circumstances the Government envisage the strategic highways company charging for services. There is some concern in many quarters that the model that is being constructed allows for the strategic highways company or companies to charge for road use. Although the company will have to be wholly owned, Clause 8 includes extensive powers for the strategic highways company to delegate functions, which could mean that many roads are contracted out in the future.

Our history on charging schemes for roads is not a particularly happy one. The toll road on the M6 was supposed to take 75,000 cars a day; in fact, it averages just over 40,000. As the embattled public who travel on it will testify, the equivalent stretch of the old M6 takes up to 180,000 vehicles a day. Therefore, road pricing and toll roads raise very real issues. There are also concerns that if the Government significantly increase the number of roads for which people have to pay, there will be increased congestion on other roads and more accidents as a result. The M6 toll road stands as a bleak beacon of warning. I beg to move.

[Viscount Hanworth (Lab)]

My Lords, in lending my support to my noble friend Lord Davies, I speak to my Amendment 39. It proposes that:

“The power to set a toll or a tariff on a strategic highway may not be delegated to any company or person but must remain the sole prerogative of the Secretary of State”.

We have heard from the Minister that there are no immediate plans for privatising the highways company, which is set to replace the Highways Agency. However, this does not allay our anxieties about the privatisation of our strategic highways network. Nothing that the Government have said will preclude them from asking private contractors to administer parts of the network under concessions. The contractors would derive their income from tolls.

We need only look across the Channel to see an example of a strategic highways network that is largely under the control of private profit-making agencies. The example is provided by France, where 45% of the motorway network is now operated under commercial concessions, including all the main arteries. This circumstance has been the result of a major sale to private investors of the state’s holdings in autoroute companies, which began in 2005, under the Villepin Government, during the presidency of Jacques Chirac. Initially, the tolls on the roads were set by the French Government, but the private companies have been permitted to make year-on-year increases in the tolls. There is now widespread discontent at their exorbitance and at the excessive profits of the companies, which acquired their assets at knock-down prices. Clearly, the French Government ought to have retained the sole prerogative to set the levels of the tolls.

The only example of a tolled motor road in the UK is the M6 toll road of a mere 27 miles in length, which bypasses the Birmingham conurbation. This is controlled by the Australian company Macquarie, which holds the concession until 2054. In contrast to the French toll roads, this under-used road appears to be a commercial failure. In 2012, the operator, Midland Expressway, claimed to have made a loss of £41 million. I have no way of confirming this figure, which seems to have been exaggerated; there would have been a tax advantage in exaggerating the loss. The recourse of the company was to increase the tolls. This may have increased the company’s revenue, but it would certainly have diminished the traffic on the road, thereby reducing its social utility and increasing the costs of congestion and physical depreciation that are borne by the adjacent M6 freeway.

These circumstances should serve to emphasise a fundamental principle. Road charges need to be set by a central authority with an overarching concern to maximise the utility of the roads. High tariffs should be levied to deter vehicles from travelling on congested roads. High tariffs that deter traffic from using empty roads should be lowered or abolished. It might seem to be redundant to declare such principles at a time when there appear to be no immediate plans to impose additional tolls and tariffs on our roads. However, I believe that such charges are certain to be imposed sooner rather than later.

There are two factors here. The first is the likelihood that this Government, or a future Government, will desire to raise revenue to finance additional construction and maintenance. The second is the availability of new and effective technology that will greatly facilitate road-charging. My concern is that, unless the Government think ahead and resolve to take a strategic oversight of the matter, a piecemeal and dysfunctional system of road-charging will arise that will reproduce the problems that can be clearly discerned in other countries that have already applied tolls and tariffs to their roads.

Finally, whenever private enterprise is charged with undertaking motorway projects, it has been expected to raise the finance for those purposes from the open market. That has certainly been the case for the French toll roads, and it has been the case with our only toll road company, which administers the M6 toll. By going in their own right to the market, the companies have been denied the advantage of the superior creditworthiness of the Government. In consequence, they have had to bear much higher interest rate charges. There should surely be a way of conferring the benefits of the Government’s creditworthiness on all borrowings in favour of investment in social infrastructure, whoever undertakes them.

[Lord Bradshaw]

I shall add some comments to those just made by the noble Viscount, Lord Hanworth. The Government have a very major problem stalking up on them—namely, the lack of tax revenue that they will get from motoring. People are buying cars that are free of revenue tax and of fuel tax—or rather they pay very much less. Therefore, the flow of revenue that the Government are expecting to receive from fuel duty or vehicle excise duty is going to decline quite rapidly.

We are talking about the future of the highways network and we will have to find some other means of financing it. We are talking about the long term, but people are quick to pick up on ways of avoiding tax legitimately. I therefore believe, despite what the noble Viscount, Lord Hanworth, said, that the technology is available to charge people to use roads. How you do it and who sets the toll will be matters for future consideration, and what the noble Viscount said about this is important.

You also have the problem of people diverting away from the tolled road on to secondary or non-Highways Agency roads. Again, the technology exists to prevent most of this, and modern logistics companies cannot afford to send lorries around circuitous routes because drivers’ hours regulations, if properly enforced, mean that most of them programme their drivers to get the maximum out of the 10 and a half hours for which they are allowed to drive. If these people take more circuitous routes to avoid paying tolls, they will therefore bust the drivers’ hours regulations in almost every case.

I am going to speak about this later, but there are a number of strategic issues—one of which is how we pay for the use of roads—which have to be faced, not by the immediate Government who have brought this legislation forward but by successive Governments of whatever colour. They will have to find a method of financing a road network with declining revenues from the present system of taxation.

Infrastructure Bill [HL]

Viscount Hanworth Excerpts

Wednesday 18th June 2014 Lords Chamber

[Viscount Hanworth (Lab)]

My Lords, I wish to question the Minister about the intentions that underlie the parts of the Infrastructure Bill that relate to our highways. However, at the outset, I will discuss the opinions of economists regarding the rules that should govern our access to highways.

One of the first people to think systematically about the economics of highways was the 19th-century French engineer and economist, Jules Dupuit, who considered the effects of imposing a toll on travellers for their passage over a bridge. He observed that if the toll were fixed with the object of maximising revenues, it would be liable to discourage the use of the bridge, thereby reducing its utility. Therefore, in most cases, the passage should be free.

The manner in which tariffs and tolls can diminish the utility of a capital investment is well illustrated by British experience. The case in point is the M6 toll road, which skirts the Birmingham conurbation and is the one UK example of a tolled motorway. It was opened in 2003 and is operated by Midlands Expressway Ltd—owned by Macquarie—which holds the concession until 2054. By all accounts, the road is underused; as regards HGVs, it appears that the overwhelming majority have chosen to remain on the congested M6 road. As a result, the maintenance costs faced by the Highways Agency for the M6 are disproportionately high.

However, there is a lacuna in Dupuit’s analysis, which concerns the costs of congestion. When road traffic has been slowed through congestion, any vehicle that is added to the stream exacerbates the problem. Not only does it bear its own direct costs, it can also add greatly to the costs of others by worsening the congestion. Those are its externalised costs. If the vehicle could be made to bear its externalised costs as well as its own direct costs, it might be deterred from adding to the congestion. British experience also serves to illustrate that point. There are two other significant cases of direct charges for road use: the bridge at the Dartford crossing and the Severn Bridge, which carries the M4 motorway. The congestion on both bridges is often so severe that it has been argued that a heightened toll should be imposed at the times of day when the bridges become all but impassable.

It must be conceded that, far from being governed by economic logic, the building and the administration of trunk roads and major highways is greatly influenced by social and political ideology. Thus, the autobahns in Germany and the autostrade in Italy, which were built in the period between the two World Wars, were intended to be seen as expressions of the purposiveness of the respective fascist regimes. In Britain there was no such motive and the programme of motorway building began much later, in the late 1950s, when it was overseen by the Conservative Minister of Transport, Ernest Marples.

Very little has been done in recent years to extend or upgrade Britain’s system of trunk roads and highways. The UK road network is one of the most heavily congested among the OECD countries. An OECD report of 2011-12 placed the UK in 26th position for the quality of its roads, which was towards the bottom of the list of developed countries. It has been doubted whether, nowadays, the Department for Transport has the skills to oversee the major investment projects in roads that seem to be required.

In those circumstances, the Government are making their proposals in the Infrastructure Bill to reform the management of our strategic highways. They propose to transform the Highways Agency into a government-owned company that would operate independently of the Department for Transport. The Government propose that the planning horizon of the Highways Company should be lengthened, and have declared an earnest commitment to provide stable long-term funding to support a road investment strategy.

The provisions of the Infrastructure Bill are best described as enabling legislation that will provide the framework for subsequent developments. They give us few indications of what, if anything, might materialise from a new approach to the management of the strategic road network. For further enlightenment, one might look to the document Action for Roads, which was issued by the Department for Transport in July 2013 and is full of hopes and good intentions. However, it needs to be assessed also on what it fails to mention and its major lacunae.

The document extols the new technologies that should enable information on the state of the traffic to be provided to drivers and enable rapid responses to accidents and breakdowns. However, there is barely a mention of road charging and no mention of congestion charging, both of which have been enabled by recent technological advances. That is understandable in view of the unpopularity of such schemes. Indeed, the national road pricing schemes that were promoted by the Labour Government of 1997 to 2010 were abandoned due to public opposition.

Here, we can see the effects on the management of our road network of a deep-rooted social ideology. Many of our citizens regard it as their inalienable right to travel freely without let or hindrance on the Queen’s highways. They are barely mindful of the vast resources that are devoted to the maintenance of the highways, or of the great environmental cost that is associated with the exercise of their right to travel freely by road. Notwithstanding those deep-rooted attitudes, the Government should continue to pursue strategies of road pricing and congestion charging with a view to their eventual adoption in the appropriate circumstances. Such pricing mechanisms should be used primarily to ease congestion and with the secondary purpose of raising revenue to finance the development of the highways.

British attitudes to road pricing contrast markedly with those of the French. In France, there are numerous toll roads and those who wish to travel rapidly and for great distances have no alternative but to use them. The French seem to be wholly accepting of that. Another marked contrast between France and the UK is the French acceptance of a privatisation of the highways of a sort that I trust would not be acceptable in this country. Many of the French toll roads have been constructed by and are run by private companies, who have been granted long-term concessions. That is how the French have attempted to overcome the effects of the financial stringency of central Government, which might otherwise have inhibited the development of their national road network.

When faced with enabling legislation, one looks for hidden agendas and undeclared intentions. One can reasonably expect that there are plenty lying behind the Infrastructure Bill. It is remarkable, for example, as other noble Lords have mentioned, that whereas much of the accompanying documentation talks of a unique government-owned strategic highways company, the legislation talks of a plurality of such companies. Can the Minister say what, if anything, lies behind that legislative provision? I also seek an assurance that, notwithstanding the example of the M6 toll road, there is no intention to privatise large parts of our national road network, which would subject the roads to revenue-maximising tolls. In asking that, I observe that there are French consortia that are ready and waiting to take long-term concessions. I see grave disadvantages in ceding the ownership of yet more of our national infrastructure to foreign companies.