Infrastructure Bill [HL]

Baroness Kramer Excerpts

Wednesday 18th June 2014 Lords Chamber

Moved by

[Baroness Kramer]

That the Bill be read a second time.

[The Minister of State, Department for Transport (Baroness Kramer) (LD)]

My Lords, it is four years since the general election, when the coalition partners made a pledge to the British people to cut our deficit and get our economy growing once again. I am pleased to say those promises are very evidently being delivered. From the start we were clear that poor infrastructure in our country was among the biggest obstacles to growth.

We set out the most ambitious programme of investment and improvement for generations, investing a record £100 billion in schemes to improve our roads and railways, build affordable homes and boost our internet access. After decades in which successive Governments neglected our infrastructure, we also had to find ways to modernise the delivery of that infrastructure, to overcome administrative hurdles and to accelerate planning. This Bill will establish a new framework to allow stable long-term funding, to get better value for money and relieve unnecessary red tape. It will improve planning processes and allow us to get on with our building programme. It will help us to direct funding towards the best projects, improving returns and creating the right conditions for sustainable growth. It will boost jobs and economic competitiveness across areas such as transport, energy and housing, and it will speed up infrastructure development while ensuring that communities remain involved.

Your Lordships will be aware that the Government have committed more than £24 billion to upgrade England’s strategic road network between 2011 and 2021. We are also investing in maintaining our network, resurfacing 80% by 2021. We want roads to be in top condition to keep traffic running smoothly and are working with industry suppliers to accelerate delivery of road renewal. We are making the biggest investment in roads since the 1970s. Our national road network is being transformed to provide a world-class strategic network, tackling congestion, improving reliability and supporting jobs and growth.

Part 1 of the Bill will turn the Highways Agency into a government-owned company, with the stable, long-term funding needed to plan ahead effectively. We are also introducing in the Bill the framework for a roads investment strategy. The strategy will be agreed by the Government and the new company. It will set out the Government’s longer-term strategic vision for the strategic road network, investment plans and performance criteria, along with the necessary funding, just as happens for the railways. The new delivery model will allow the company to better prioritise its spending in terms of both maintenance requirements and capital demands. This is bound to lead to better asset management than we have now.

These measures are expected to save the taxpayer at least £2.6 billion over the next 10 years and will make the new arm’s-length company more directly responsible for delivery. Performance will be assessed through an independent monitor specialising in roads, based in the Office of Rail Regulation. Road users will also be given a voice through a road user watchdog based in Passenger Focus.

It is vital that we invest in our infrastructure. The Government have made a huge financial commitment to 2021. Now we need to get the best return on that investment, and putting an end to the stop/start nature of managing the supply chain is essential. To give but one example, since the 1950s it has been planned to upgrade the A453 from Nottingham to the M1 to a dual carriageway. Proposals have started and stopped four times in the intervening years as Governments have changed their minds and gone back to the drawing board. It was only in 2012 that the work finally started. It is important that we end stop/start. It is also important that we look after our infrastructure.

Part of looking after our infrastructure is controlling the invasive non-native species that pose serious threats. The cost to the transport sector from invasive non-native species in Great Britain was estimated in 2008 to be about £81 million a year. The total cost to the economy of invasive non-native species is estimated at £1.7 billion per annum. This burden affects agriculture, horticulture and infrastructure.

In contrast to powers available under animal and plant health legislation to combat disease and pests, the nature conservation bodies have no powers to require landowners to act or powers of entry to carry out work themselves in respect of invasive non-native species, and they have to rely on reaching voluntary agreements. While most landowners are willing to enter into voluntary agreements, experience has shown that about 5% are not. The changes included in Part 2 will give powers for Ministers and nature conservation bodies in England and Wales to make species control orders that will require landowners to take action against invasive non-native species or permit the bodies to do so.

Early eradication is key to reducing eradication costs. The cost of eradicating water primrose has been estimated to be £73,000 if we eradicate it at its initial stage but more than £240 million if we allow it to become widespread in Great Britain.

When planning nationally significant infrastructure projects, it was never the aim to make the process burdensome for obtaining further development consents. Part 3 shows the Government’s commitment to increasing the pace of delivery for new developments and to manage our land assets more effectively. The Government are committed to securing investment in new nationally significant infrastructure projects as part of their efforts to rebuild the economy and to create new jobs. We want to speed up the process and get Britain building for our future.

Applications are large and detailed documents—up to 50,000 pages or more. Allowing inspectors to be appointed once the application has been accepted, rather than once it has been publicised, will give inspectors an additional six to eight weeks to become familiar with the issues. In addition, we will allow two inspectors to be appointed as examiners: at present one, three, four and five are allowed but not two. Since the workload is often too much for one inspector but not enough for three, around £200,000 a year can be saved by developers if an examination is conducted with two inspectors rather than three.

Currently, the process for making changes to a development consent order once consent has been granted is lengthy. The process is the same as if a completely new application is being submitted. A simpler process is required but only for very minor changes. This the Bill will now allow.

It is equally important to improve the procedure for discharging planning conditions so that local projects can proceed without unnecessary delay. The Bill introduces a deemed discharge for certain types of planning conditions which will help to ensure that conditions which require the approval of the local planning authority are discharged in a timely manner so that development, including new housing, that has already received planning permission can proceed, providing much needed certainty for applicants as to when decisions can be expected.

The issue of improving the outcomes for applicants around discharge of planning conditions is not new. A key recommendation of Joanna Killian and David Pretty’s comprehensive review of the planning application process in 2008 was that the Government should seek to speed up the process for discharging planning conditions. This included looking to introduce a default approval.

One of the ways in which we can stimulate the economy is by getting better use of public sector land assets by utilising surplus land that the Government own. The Homes and Communities Agency, the HCA, is a non-departmental public body that funds new affordable housing in England. We want to make it easier for the agency to work with local partners to create new affordable homes and thriving neighbourhoods.

The new public sector land programme from 2015-16 will see the transfer of a significant amount of surplus land from government departments and government arm’s-length bodies to the HCA. Land transfers from arm’s-length bodies can be administratively burdensome in terms of time and cost because they cannot be made to the HCA directly; instead the land has to be transferred first to a parent government department. We would like to ensure that in the future these transfers can be made more quickly and with reduced administration, so the Bill allows for a direct transfer to the HCA.

The Bill also corrects what was frankly an oversight in the legislation that set up the Homes and Communities Agency, the Greater London Authority and the mayoral development corporations. At present when these bodies purchase land they, like every other government body, override existing easements. However, unlike every other government body they cannot sell the land with the override in place. This Bill eliminates this anomaly, although it will not be used by bodies such as the Forestry Commission or National Parks, contrary to some recent, wholly unfounded, speculation. This applies only to private rights and not to those that are public.

The purchase and indeed development of property requires good, timely, accurate information. The Bill therefore sets up the framework for the Land Registry to modernise and digitise property searches. It will centralise and digitise local land charge information from the 348 local authorities that currently hold and deliver it. The result will be a far more efficient and cheaper service. The Land Registry will set a standardised national fee and turnaround time in contrast to the existing postcode lottery. Fees currently range between £3 and £96. A single source for improved access to property information will support a more streamlined conveyancing process and improve the ease of registering a property in England and Wales. We want our renewable energy developers to work with local communities, allowing them to share in the benefits of renewable energy infrastructure projects. Part 4 would give communities the right to invest in their local renewable electricity schemes, transforming how they engage in these types of projects. It would give them the opportunity to have a real stake and sense of ownership in projects happening on their doorsteps.

The measures that I have discussed above are on the face of the Bill. In the Queen’s Speech and in other discussions, the Government have however drawn attention to other measures that are not on the face of the Bill at present but may be included by future amendments. These measures have specifically been: enhancing the United Kingdom’s energy independence and security by opening up access to shale and geothermal sites, maximising North Sea resources, and the construction of zero-carbon homes.

A third of UK energy demand is met by gas. If we do not develop shale, by 2025 we expect to be importing close to 70% of the gas that we consume. The Government therefore support the development of our own indigenous energy sources in a safe and sustainable manner. We believe that shale gas and oil and deep geothermal energy may hold huge potential for adding to the UK’s energy sources, helping to improve energy security, create jobs and meet carbon targets. We consider that the existing procedure for gaining underground access to be burdensome and unfit for new methods of drilling. A public consultation on underground access was opened on 23 May and will conclude on 15 August.

Subject to that consultation, future amendments to the Bill would provide companies with access for shale and geothermal extraction 300 metres or more below the surface without requiring individual landowner permission. In return, a payment would be made to the community. As I said, the Government’s consultation on this policy continues until 15 August 2014 and the legislation is entirely dependent on the outcome of that consultation.

I am well aware, however, that some noble Lords are concerned about the potential environmental impact of extraction from shale. The UK has over 50 years’ experience of regulating the onshore oil and gas industry. More than 2,000 wells have been drilled onshore during that time. The Government are confident that the UK oil and gas industry, including shale gas, will continue to be well regulated and any risks, particularly environmental risks, will be effectively mitigated.

The UK oil and gas industry is of national importance; it makes a substantial contribution to the economy, supporting around 450,000 jobs, and had record capital expenditure in 2013 of around £14 billion. Oil and gas will continue to be a vital part of the energy mix as we transition to a low-carbon economy, with indigenous oil and gas production supplying the equivalent of about half the UK’s primary energy demands.

Sir Ian Wood’s independent report in 2014 recommended changes to the recovery and stewardship regime, estimating that full and rapid implementation would deliver at least 3 billion to 4 billion barrels of oil equivalent—more than would otherwise be recovered over the next 20 years. The report, in turn, estimates that this would bring over £200 billion additional value to the UK economy.

The Government accepted Wood’s recommendations in full in February 2014, and plan to introduce measures in the Bill to put the principle of maximising economic recovery of petroleum in the UK into statute. We also intend to introduce a power so that the costs of funding a larger, better-resourced regulator can be paid for by industry rather than by the taxpayer as is currently the case. This legislation is still being developed and will be made available at the earliest opportunity. It is our intention to introduce it before the end of Committee.

The Government have made a public commitment to ensure that new homes in England are zero carbon from 2016 onwards. Emissions from all homes represent over one-quarter of the total annual output of carbon emissions in the United Kingdom. It is crucial that we reduce this. The key consideration for the Government is to ensure that environmental policies are balanced against the need for continued economic growth in the housing sector.

The average bill for heating and lighting an older home is around £1,200 a year. In new homes, the amount would be less, and government changes to the building regulations have already reduced this amount by £200, with a further tightening of regulations having just come into force. New homes will be required to reduce all carbon emissions from energy used to heat and light those homes to zero. There will be a stronger energy-efficiency requirement, met by insulation measures, which may be augmented by on-site renewable energy measures such as solar panels. Where it is not possible to abate all these carbon emissions through energy efficiency measures—for example, through insulation or on-site renewable energy measures such as solar panels—the Government will allow developers to off-set those emissions that represent the difference through “allowable solutions”.

The principle of allowable solutions has been broadly accepted by the development industry as the most cost-effective way of delivering zero-carbon homes. A typical allowable solution measure might be either the retrofit of existing homes, particularly through solid wall insulation, or financial contributions for investment in low-carbon or renewable energy infrastructure. An explanation of how these schemes may work will be available for Committee stage.

In summary, the measures in the Bill will help create a better environment for investment in infrastructure across the transport, energy and land development sectors. The Government firmly believe in making it easier, quicker and simpler to get Britain building for our future. The Bill will help us build a stronger and more competitive economy that creates jobs, and provides families and businesses with better and reliable infrastructure to help us compete in the world.

--- Later in debate ---

[Baroness Kramer]

My Lords, this evening really has been a testament to the range of knowledge in this House. I thank all noble Lords, but give a special note of thanks to two who have not spoken in the debate, my noble friends Lady Verma and Lady Stowell, who are supporting me in taking the Bill through the House and whose support, both moral and in terms of knowledge, is frankly invaluable. I will try to respond to as many questions as I can, but there have been so many that I already know that failure is stamped upon me, and I will follow up in writing where I am unable to cover issues here on the Floor.

The noble Lord, Lord Adonis, opened the debate. I think he was grudgingly supportive of the Bill, but I have to say that some of his comments seemed to ignore the fact that he was part of a Government for 13 years who invested very little in infrastructure. To talk about lack of investment in new power generation, suddenly having found the light when the coalition Government are in place and seen the need for investment, was a little strange, I thought. I will not reiterate the very extensive investments that the coalition Government are making but, as I said earlier, there has been £100 billion for roads, railways, building affordable homes and boosting the internet, as well as a lot of private money going into areas such as power generation. I thought the noble Lords, Lord Teverson and Lord Jenkin of Roding, answered the question so well that I will just pray in aid their comments and add mine from the Queen’s Speech rather than continue with that point.

More generally, I say to the noble Lord, Lord Skidelsky, that we are taking on one of the largest infrastructure investment projects in a generation, as I have just described. The purpose of the Bill is to ensure that there are delivery mechanisms that are fit for purpose to deal with that. That is the theme that links the various parts of the Bill and by definition the range is broad.

The noble Earl, Lord Lytton, asked whether infrastructure was more than roads. My goodness, just looking at the Bill makes it very clear that it is. Of course, there are many other avenues of opportunity. We have talked extensively about our investment in rail, sustainable transport and a wide range of other necessary infrastructure.

I will say a word on procedure, if I may. It is difficult to go through this in detail without taking up too much time. We are very much looking forward to detailed scrutiny. Many noble Lords, including the noble Lord, Lord McKenzie, just a moment ago, gave a very clear indication of wanting to go through the Bill in great detail in Committee, and we welcome that. We think that is a very important part of the role of this House.

I will provide some clarification for the noble Lord, Lord Jenkin of Roding. It is our intent, subject to the usual channels—and I say this to those who have looked at Forthcoming Business—that further time will be allocated after the Summer Recess to ensure effective debate on all the clauses of the Bill. We recognise that that is important. I reassure noble Lords that, where important decisions have not yet been finalised, the House will be given clear guidance and information about our intentions in Committee. A number of people asked why the consultation will start in June or August. Obviously, the secondary legislation documents that are to be consulted on will be very important in informing the debate in Committee and the other stages in this House.

[Baroness Miller of Chilthorne Domer]

Before my noble friend leaves the point of procedure, perhaps she shares my disappointment that the noble Lord, Lord Hunt of Chesterton, who brought up procedure, is not in his place to hear her remarks on the procedure of the Bill.

[Baroness Kramer]

I hope that my noble friend will encourage him to read my comments.

Moving on to more substantive issues, we had actually very little discussion of shale gas. My noble friend Lord Teverson spoke about geothermal extraction. I think that is rather positive. There is clearly an appetite in this House to ensure that this is a successful project. I know that many people are waiting for the detail, and that is exactly right. I would encourage anyone with an interest in this area to look at the consultation that is under way until 15 August because they may wish to participate in it as well as use it to inform themselves of what may happen, since the Government will not be making their final decisions until that consultation is complete and its implications are understood. We do not want to prejudge.

My noble friend Lord Teverson asked for more information on geothermal. I suspect that he knows this area far better than I do, but I remind him that geothermal power projects are eligible for support through the renewables obligation, and that under the contracts for difference the department has set a final strike price for geothermal power of £145 per megawatt hour until 2016-17 and £140 per megawatt hour thereafter. Indeed, there are a lot of measures to exploit geothermal, of which I think everyone recognises the potential.

In the same vein, my noble friend Lord Purvis mentioned the Wood review. We recognise that the oil and gas industry in the UK is of national importance and will be a vital part of the energy mix. While investment levels in the UK continental shelf are rising and near-term prospects are strong, there are new challenges for exploration and production. The environment is, frankly, very different from the circumstances when production peaked approximately 15 years ago. We will be responding very shortly to the Wood review. Details of how this will be carried forward will be available in Committee—I think my noble friend might have thought it would be later but it will be in Committee.

On zero-carbon homes, my noble friend Lord Teverson constantly reminds us that as well as talking about the supply side for energy we must focus on the demand side. This part of the Bill is absolutely critical in this area, and we will see those clauses before the Summer Recess. We recognise, as I suspect all noble Lords did in their speeches, that making all homes zero-carbon “on site” is sometimes not physically feasible or cost-effective for housebuilders. There are technical limits. Of course, we will be exploring the whole issue of allowable solutions. My noble friend Lord Teverson said he was concerned that we were focusing on potential exemptions for small sites, but we must recognise that small housebuilders face a very different economic framework from that faced by the big housebuilders, lacking economies of scale. But it is an important industry throughout the UK and we rely on it heavily for housebuilding in this country, and we must always keep in mind that the industry needs to be successful.

On roads reform, there was a very wide range of questions. A number of noble Lords, including the noble Lords, Lord Whitty and Lord Adonis, and my noble friend Lord Bradshaw—and there may have been others—talked about the importance of ensuring that reforms to the Highways Agency were seen within the context of spending on local authority roads, particularly the maintenance of those roads. It is obviously a very important point. Your Lordships will know that the Government are investing more than £6 billion in this Parliament—£12 billion in the next—on highways maintenance for strategic and local roads, enough to resurface 80% of the national road network and fill 19 million potholes a year on local roads. I also want to make it clear that there are benefits from that integration between the strategic highways network and local roads that come from our proposals for changes to the Highways Agency. The licence agreement for the reformed Highways Agency will include a duty to co-operate that will foster and improve partnership working with local authorities.

The new company will be a traffic authority and have the same legal responsibilities to ensure that traffic runs smoothly on its own network and the local network. These changes will strengthen the interplay between local authorities and the Highways Agency.

[Lord Adonis]

The Minister just referred to the “new company”. Many noble Lords in the debate asked whether we are talking about a company or companies because the Bill says “companies”. Do I take it from what the Minister just said that it is the Government’s intention to set up just one highways company?

[Baroness Kramer]

Yes, it is the Government’s intention to set up just one company. It is standard template language in legislation, I understand, to create the option of further entities. It has no sinister meaning at all behind it. The intention is for a single company, but of course the lawyers always think about what-ifs in the most extraordinary way. I guess we did not really kick back against that but, yes, it is one company.

A number of your Lordships seemed to think that we might be looking at privatisation. Indeed, I was not sure whether or not the noble Lord, Lord Adonis, was proposing that, but we are certainly not proposing it on this side. This will be a company with a single shareholder, the Secretary of State. Any change to that would require primary legislation, so there is no backdoor mechanism.

[Lord Adonis]

For the record, my Lords, I was not.

[Baroness Kramer]

A number of other noble Lords asked whether the body would go out and seek private finance. It could do so only with the authority and approval of the Secretary of State, so it is no different from the current situation of the Highways Agency. The Government do not anticipate that that is what it will do. Quite frankly, borrowing through government costs significantly less, and this is an on-books entity. That is not something that this is meant to facilitate, if that is helpful.

[Lord Skidelsky]

Does the Minister expect that the Government will in fact borrow for their trunk road programme?

[Baroness Kramer]

I am expecting that the Government will borrow to fund the SHC—I hesitate to use the words “in exactly the same way”, but they will have a commitment, if you like, to the funding stream as a result of the roads investment strategy. They will fund the SHC in the same way as they would in effect have funded the Highways Agency. It is not a change. I understand that the noble Lord, Lord Skidelsky, would like to see the entity going out directly to the bond markets itself, but that is not anticipated; it could do so, but only with the approval of the Secretary of State.

[Lord Skidelsky]

But it is anticipated that the Government will fund it by their own borrowing; is that right?

[Baroness Kramer]

The noble Lord is talking to someone who does not understand quite how the government books work, but I do not recognise government borrowing being segregated into line items. However, I will follow up on that and write to the noble Lord before I tangle us in something that I have not explored in such detail. If the noble Lord is looking for imputed returns, we can discuss all that later.

The noble Lords, Lord Whitty and Lord Judd, raised the issue of Passenger Focus as a consumer watchdog. It strikes me as a superb representative of the road user. One of your Lordships suggested that the AA or other existing bodies act as a voice for the road user, but they tend to act as a voice for a limited number of views, typically those of car drivers. There are many other road users, and it is important that a much broader sweep, including cyclists, get represented. Using Passenger Focus, with its consumer skills, strikes me as a very important mechanism.

The noble Lord, Lord Whitty, and others also asked whether the Office of Rail Regulation was an appropriate body. It will act as a monitor, not as a regulator; that is an important distinction. The logic follows these lines. The SHC does not require an economic regulator in the way that Network Rail does. It is not dealing with track access charges and the users of the system are not paying in the way that passengers do, so there is really no role for an economic regulator here. There is not a number of TOCs all in competition with each other and with a complex relationship with Network Rail. It will advise the Secretary of State, who will then be able to enforce. It will monitor the operations of the new company.

[Lord Berkeley]

The noble Baroness is absolutely right in what she says. On the other hand, one of the roles of the rail regulator is to regulate the efficiency and costs of Network Rail. Would it not be a good idea to have some independent monitoring of this new company’s costs in the same way?

[Baroness Kramer]

The monitoring will indeed be there. That is crucial because of the way in which the SHC is being constructed.

The noble Lord, Lord Adonis, asked: where on earth do you get those savings from? It is covered in detail in the impact assessment and business case published by DfT on 6 June. It is important to understand that certainty of funding, which will come out of the road investment strategy, combined with the arm’s-length relationship, gives us a structure which is similar enough to the structure which has worked effectively in the rail industry. For example, the Government have committed £24 billion to road investment until 2021. Far more detail on all of this will come out of the road investment strategy.

The road investment strategy is set up in such a way that once established, if a future Secretary of State wants to change it, he or she obviously could—we cannot bind a future Parliament—but it would have to be done transparently, publicly and with consultation. Such pressures are an inhibitor which provides enough satisfaction to the industry to understand that it can look with reasonable certainty over the long term for the funding to be available. That leads to efficiency. We expect the SHC to approach asset management in a different way because it has such clear strategy and certainty of funding. It will also be set up as a company, with the roles that companies have, with its directors and chief executive. The sole shareholder will be the Secretary of State. I think that it will achieve its purpose. One could go over the top and try to reinforce that, but the question is: is that sufficient for the purpose to be achieved? If it is, that is the point at which we should stop.

Yes, the SHC will be subject to the Freedom of Information Act, so there should be no concern on the issue. I have addressed the issue of multiple companies. My noble friend Lady Miller of Chilthorne Domer mentioned—I am told that I have only two minutes left. Is that seriously true? If I have only two minutes left, I shall do one thing which is terribly important. I switch completely to address the issue that has been floating through the media and mentioned today: concern that land transfers could affect the Forestry Commission and the national parks. I addressed that issue briefly at the very beginning of my speech. I am looking hard to find the comments; if anyone can hand them to me I will love them for ever.

[Lord Adonis]

While the noble Baroness wrestles with her papers, I invite her to respond to another big concern raised in the debate, which is that there were discussions in government about privatising the Land Registry. Are there are indeed such discussions?

[Baroness Kramer]

I can tell the noble Lord only that there will be no such clauses in this Bill. I can provide that absolute clarity.

[Lord Adonis]

Are there any discussions about privatisation of the Land Registry at a later date?

[Baroness Kramer]

There will be a response to the consultation, but it is not the intention of the Government to provide for that in the Bill or, as far as I know, in any future legislation.

[Lord McKenzie of Luton]

If it is not the intention to seek privatisation by this mechanism, can the Minister confirm that it is not the Government’s intention to seek it in any other legislative arrangement?

[Baroness Kramer]

I certainly have no knowledge of any other intentions. As I said, there will be a proper response to the consultation. That may be helpful in clarifying any remaining questions for the noble Lord, Lord McKenzie.

I confirm that the Government are committed to England’s public forest estate and national parks remaining secure in public ownership for the people who enjoy them and the businesses that depend on them. The measure that we discussed for the HCA is about transferring surplus land from government agencies. The public forest estate and our national parks are in use; they are therefore not surplus and none will therefore be transferred to the Homes and Communities Agency. This measure does not apply to them.

[Lord Judd]

I am very grateful to the Minister for taking up the issue of national parks, but I point out that although she has covered one important aspect, she has not covered the aspect of the responsibility of government and government departments to respect and enhance the purposes for which the parks exist.

[Baroness Kramer]

I think at this stage I have to say that I will write to respond to questions. I apologise that I have used slightly more than the 20 minutes I am allowed but I very much appreciate the debate that has taken place.

Bill read a second time and committed to a Grand Committee.