Highways (Financing) Bill (Third sitting)

Douglas Lumsden Excerpts

Committee stage
Tuesday 3rd November 2026 Public Bill Committees

[Justin Madders]

I thank hon. Members for their contributions, and I welcome the hon. Member for Guildford to the Committee and thank her for moving her amendment. The concern she raises through the amendment is that the impact of licensed roads on the surrounding network should be properly considered. However, that does not mean that we need to extend the Office of Road and Rail’s general duties in clause 1, nor does it mean that the licence holder would be free to disregard the impact of its activities on surrounding local roads, because clause 1 reflects the scope of the licensing regime concerning trunk roads. The Bill deals with the impact on local roads in other, more appropriate ways elsewhere, for example under clause 4.

Before a licence can be granted, the licensing authority must consult appropriate persons exercising functions in relation to highways. That enables local highway authorities to feed in their views where roads may be affected. The relationship does not end once the licence is granted; clause 8 also allows the ORR to require the licence holder to co-operate with other highways authorities as part of the licence. The framework for the Bill provides a route for local road impacts to be addressed, without extending the ORR’s overarching duty beyond the roads it is regulating. Local roads are considered as part of the Bill, which provides appropriate ways for their interests to be considered without extending the overarching statutory duties beyond the scope of the licensing regime. The existing provision provides the appropriate balance between ensuring that the wider impacts are considered and giving the ORR a clear and workable statutory duty.

In terms of the specifics of the lower Thames crossing, it is difficult to see what this other local road crossing the Thames would be and how it would be affected. As my hon. Friend the Member for Dartford has explained so clearly, that is one of the reasons why this project is crucial. I would therefore ask the hon. Member to withdraw her amendment.

I turn to amendment 47 from the shadow Minister, the hon. Member for Mid Buckinghamshire. It would remove the ORR’s duty to contribute to sustainable development when carrying out its duties under the Act. We have deliberately designed those duties as a balanced package. The ORR’s principal focus remains the interests of road users, alongside the efficient and economic delivery of highways and the ability of licence holders to finance their activities. Sustainable development is one of the wider considerations that the ORR must have regard to when carrying out those functions—it does not override the principle considerations.

This is not a novel duty; it is an approach consistent with established economic regulatory regimes in the energy and water sectors, where sustainable development forms part of the wider statutory framework within which independent regulators operate. Projects put forward under this legislation will involve significant infrastructure works, including the construction and improvement of roads. This can have significant environmental and wider impacts, therefore it is right that sustainable development, including the consideration of environmental impacts, is expressed in the duties in the Bill.

[Douglas Lumsden (Aberdeen South) (Con)]

It is a pleasure to serve under your stewardship, Mr Dowd. Can the Minister give us any idea of how much the sustainable measures are actually costing on the project?

[Justin Madders]

I do not have any particular details on that, so I will write to the hon. Member. The requirements on sustainable development originate from the Environment Act 2021. I know he was not here at that time, but that was a piece of legislation brought in under the then Conservative Government. Under section 19 of that Act, Ministers are required to have due regard to the Government’s environmental principles policy statement when making policy. Those principles ensure that environmental considerations are built into policy making from the outset, as is the case in this Bill, so we are not breaking new ground or doing anything different from what has been done before on sustainable development.

There are real factors to bear in mind in delivering major infrastructure, and it is right that we consider them as part of our consideration of the Bill. I am sure that my hon. Friend the Member for Dartford, whose constituents are affected by this Bill, would want the local environment to be considered.

I turn now to amendment 48. I think the general thrust of the arguments here will be the same, because the approach we are taking is consistent with established economic regulatory precedents, as seen in the energy and water sectors. The Secretary of State’s primary focus remains the interest of users of trunk roads in England, particularly the efficient and economic delivery of highways and the ability of the licence holder to finance its activities. As I have already stated, sustainable development does not override those considerations. Decisions under this framework should take into account the wider public interest factors set out in the clause and not focus on any single consideration in isolation.

To respond to the questions that the hon. Member for Mid Buckinghamshire asked about diesel, as we have already heard, the evidence is clear that this is at best a marginal issue in terms of costs. As my hon. Friend the Member for Northampton South suggested, reopening this question could lead to significant delay on the project.

Of course, the DCO has been settled for a considerable period. It has brought significant benefits already, in particular large landscape-scale environmental enhancements of semi-natural habitats, woodlands, species-rich grasslands, open mosaic habitats, and wetlands. This approach will support a greater, more diverse range of wildlife than areas such as agricultural land or amenity grasslands. By making LTC a tunnel and extending it, the project will avoid protected wetlands on the banks of the River Thames, helping to reduce impacts on environmentally sensitive habitats such as the marshes special protection area and Ramsar site. That will be of benefit to the wider community, and the suggestion that we withdraw that element of the Bill is regrettable.

Amendment 68 is in this group of amendments, but I do not think the shadow Minister spoke to it, so I seek your advice, Mr Dowd, as to whether we are dealing with it now.

--- Later in debate ---

[Greg Smith]

Or Wales.

Can the Minister rise to the challenge? Can he make a legislative commitment in line with his words at the Dispatch Box and in oral evidence, and accept amendment 82? If the Government are reluctant, or straightforwardly do not want, to accept the amendment, I fear those questions are forever going to persist in the minds of British motorists and of all road users, be they driving a car themselves or reliant on a car’s passenger seat to be taken wherever they want to go. That is an important point of principle on which the Minister must surely accept the view out there in the country, and the view of His Majesty’s loyal Opposition. He should put it on the face of the Bill.

[Douglas Lumsden]

I am struggling to understand something about the Bill. If an improvement is made on a small section of a 100-mile road, is it clear whether tolls could be introduced for the whole road or just for the section that was improved?

[Greg Smith]

I am grateful to my hon. Friend for that question, which is really one for the Minister. He highlights one of the key points that the public out there—all our constituents—will be asking about what this really means. As best, the current scope of the Bill allows for a bit of a lawyer’s paradise and for the issue to be argued over for many years and decades to come; at worst, it straightforwardly allows precisely the fear that my hon. Friend outlined.

Let us just have clarity. It is a simple amendment. We are not asking for the world. We are saying we are broadly with the Government on introducing this model for the lower Thames crossing, but there has to be that legislative certainty that does not allow for mission creep from where the current Minister sees the world, under this legislation, compared with where any future Government might wish to try to take it. The Opposition do not believe that tolls should apply beyond the construction of wholly new roads. There should not be the mission creep that is currently allowed, which is why my hon. Friend the Member for Bognor Regis and Littlehampton and I tabled amendment 82.

Also in this group is Opposition amendment 81, which would

“require consultation with relevant local and mayoral authorities before granting a licence for a road that is to become a trunk road.”

There is considerable concern in the country about this issue, particularly from councils and a number of mayors. There is certainly concern from the Mayor of Cambridgeshire and Peterborough, who is arguably the best mayor in the country at the moment—he is a very old and dear friend of mine, if I need to declare an interest. Whenever I try to do the journey from Buckinghamshire to Suffolk, where my in-laws are, I am frustrated by the fact that, the minute I hit Cambridgeshire, the traffic stops and everything seems completely dug up. I will immediately phone him to have a go, but he will continually push back and say, “But the Government haven’t given me any highways powers or authority!”, whereas we know that other mayoralties in the country have them.

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[Douglas Lumsden]

Last week, we heard that the Bill is potentially a Trojan horse. We could have narrowed its scope earlier to just the lower Thames crossing with amendment 46, but that was ruled out. We also have issues with what constitutes an “improvement…increasing the capacity”. We have heard that that is not necessarily a new road, or even a new lane built along the whole length of the highway; it could just be smart cameras or other little improvements that increase capacity slightly.

We have had some assurance from the Minister that this will not be a Trojan horse Bill and that it will be used only for the lower Thames crossing, but as we know, Ministers change, Governments change. We are meant to put that all down to trust. The amendment therefore makes it quite clear that this has to be a new road, and the measure would only be able to be used on that new road.

As things stand, I think we are leaving too much down to interpretation—leaving too much to having faith in Governments that may come and go. This is probably the most important amendment that we will look at today, so I think it is vital that it is included in the Bill to make it as clear as possible that the Bill applies just to new roads. It even should apply just to the lower Thames crossing.

[Justin Madders]

I thank hon. Members for their contributions on this group. Without doubt, the scope of the licensing regime is an important subject, including which road schemes can be brought in and—as amendment 81 refers to—how local authorities should be consulted.

Turning to amendment 82, I thank the shadow Minister for raising the issue of the circumstances in which a licence can be granted for improvements to existing highways. He asked why the licence would extend beyond the construction period. The simple answer to that is that the model is deliberately designed around the whole life cycle of major infrastructure, not simply the point at which it is built. That is why the Bill provides not only for construction, but for qualifying capacity-enhancing improvements and the subsequent operation and maintenance of infrastructure within the regime.

In particular, things such as the lower Thames crossing, a very expensive project, will need consistent and persistent maintenance and repair. That matters because one of the benefits we seek from this model is strong long-term management of assets. The regulatory framework provides ongoing oversight, with incentives to manage operating costs and maintenance investment efficiently over the life of the infrastructure. Removing capacity-enhancing improvements would unnecessarily restrict the framework. It would mean that the model could not be used for major upgrades to existing road infrastructure, simply because the project involves improving an existing road rather than constructing an entirely new one. For example, a significant reconstruction of an existing bridge to add capacity, or a new tunnel that increases the capacity of an existing highway, could be excluded from the regime.

[Douglas Lumsden]

I asked this question of my hon. Friend the Member for Mid Buckinghamshire and I will ask the Minister the same. When this Bill comes into play, if an improvement were made on one small section of a road, could a toll be introduced for the whole length of that highway, or could it be introduced only for the small section where the improvement was made?

[Justin Madders]

That would be where clauses 1 and 2 come in, which should give the hon. Member sufficient reassurance. It is important to say—I will use scouse terminology, if you do not mind, Mr Dowd—that I think the arguments coming forward are a bit jarg. I do not know if that is a phrase the Committee is familiar with, but it is a bit of a scaring-the-horses moment—a bit of a ride on the ghost train. Unfortunately, that is what we have come to expect from the Opposition. They are trying to create a scare story where none exists. I have to be clear, as I was on Second Reading and in the evidence sessions, that improving an existing road does not mean that the road will automatically be brought into the regime or be subject to tolls.

Highways (Financing) Bill (Fourth sitting)

Douglas Lumsden Excerpts

Committee stage
Tuesday 3rd November 2026 Public Bill Committees

[Justin Madders]

The hon. Gentleman may unwittingly be making my point for me, which is that we want to have regular consideration and an ongoing process from the regulator. We looked at how existing licencing regimes work, including, for example, the Civil Aviation Act 2012. As I am sure he realises, there is no review period specified in that Act, because in practice the Civil Aviation Authority regularly reviews and updates the licences that it has issued. The fact that there is no specified review period has not hindered it in carrying out that role. It is apparent from how the Civil Aviation Authority operates that it takes a proactive approach; that is what we are trying to do here. It does not wait five years to spot a problem and deal with it, but deals with problems as they arise. I am sure that the hon. Gentleman will see that as a preferable approach to waiting five years between reviews.

Secondly, a number of the issues listed in the amendment are already reflected in the ORR’s statutory duties. Clause 1 puts the interests of road users at the heart of the ORR’s role. It also requires the ORR to have particular regard to efficiency and economy, and the ability of the licence holder to finance its activities, as well as to have regard to matters including safety and impacts on the strategic road network. Under clause 1(5), the Secretary of State can provide guidance to the ORR about how they would like it to interpret or carry out its duties, and the Secretary of State can update that if they are not satisfied with that interpretation. Those duties are continuing duties under clause 1; they do not suddenly trigger after five years or at any other arbitrary point.

Compliance with the licence is also already covered by the Bill’s regulatory regime. Part 4 gives the ORR powers for monitoring and information gathering, and provides for enforcement when licence conditions are not met. Clause 7(5) requires the ORR to keep tolling conditions imposed on the licence in clause 7 under review. As my hon. Friend the Member for Dartford said, clause 11 gives powers to amend licences. The shadow Minister talked about the absolute disaster scenario, which we hopefully will not see, but clause 12 gives powers to revoke licences. Therefore, there would be no need to wait five years, and I think it is clear that the flexibility and ongoing review that the Bill sets out is the correct approach.

[Douglas Lumsden (Aberdeen South) (Con)]

The amendment is asking for a couple of specific things to be in the review:

“the financial performance and resilience of the licence holder, including the returns generated from toll revenues, and…the impact of the operation of the highway and the tolls charged on traffic volumes and congestion on surrounding roads.”

In the interest of transparency, does the Minister not think that it would be good for the general public to see the main criteria in the amendment?

[Justin Madders]

I was about to sit down, but there are publication requirements in clause 78, which will deal with a number of the issues that the hon. Member referred to, so I request that the Committee reject the amendment.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6 ordered to stand part of the Bill.

Clause 7

Tolling and other mandatory conditions

--- Later in debate ---

[Justin Madders]

I will take that away. The test under the clause is the license holder’s ability to undertake the licence. It is probably inappropriate for me to speculate om whether that would apply to the rest of the network or specifically to the licence holder. My instinct is to say that that would not be the question. It is about the ability of the licence holder to undertake its functions, and if they are significantly impaired in the ORR’s view, the source of that impairment is probably not relevant. If it is an emergency that has created the impairment, clause 19(2) would come into effect. However, if, having consulted with officials, I have more to say on that, I will of course write to him.

[Douglas Lumsden]

Will the Minister give way?

[Justin Madders]

Sorry, I have just finished.

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[Justin Madders]

I will take clause 23 and schedule 1 stand part together as clause 23 simply introduces schedule 1. I will then turn to the Government amendments.

Clause 23 and schedule 1 set out how transfer schemes operate under the Bill. The provisions are necessary to make sure that the assets, rights and liabilities necessary for performing the role of the licence holder can be transferred to them. It is vital to enable the seamless transition from a previous licence holder to a new one. The amendments to schedule 1 will ensure that the provisions cover the scenarios that we envisage transfer schemes will need. They enable the transfer schemes to be made from a strategic highways company to its wholly owned subsidiary, permit the transfer of a licence under specified circumstances beyond those set out in clause 14, and allow for a transfer scheme to provide for compensation to be paid to a transferor or third party.

Clause 23 introduces schedule 1, which makes detailed provision for transfer schemes. A licence holder may need property, contractual rights and other legal interests in order to construct, operate, maintain or improve the highway specified in its licence. Existing rights and liabilities may also need to move between the Secretary of State, a strategic highways company, a licence holder or another appropriate person.

Transfer schemes provide an efficient statutory mechanism for making those changes. They can transfer existing property, rights and liabilities and make the supplementary provision needed to ensure that a transfer operates effectively. The detailed powers, procedures and protections are set out in schedule 1. Together, clause 23 and the schedule support an orderly transition into the licensing regime, as well as when a licence is revoked, expired or transferred to a new licence holder. This ensures that responsibility for a licensed highway is matched by the assets and legal arrangements needed to discharge it.

Government amendments 22 and 23 allow for a transfer scheme to provide for transfers of property, rights and liabilities from a strategic highways company to its subsidiary. Amendment 23 adjusts wording to ensure that subsidiaries of strategic highways companies are referenced explicitly in the list of persons for whom the Secretary of State can make a transfer scheme. This is vital to ensure that the transfer of assets, including the Dartford crossing and the lower Thames crossing project, from National Highways to its subsidiary can take place before the transition to the private sector.

The current drafting of schedule 1 only allows a transfer scheme to be made transferring assets to a subsidiary if that entity already holds a licence or is intended to in the future. That would not allow for scenarios in which an intermediate vehicle is set up to hold the assets before a further transfer. This amendment makes that possible and is essential for the proper functioning of these provisions, for scenarios that are likely to occur.

Amendment 24 follows on from amendments 22 and 23 and enables transfer schemes to provide for the transfer of property, rights and liabilities from subsidiaries of strategic highways companies to licence holders. This amendment ensures that where assets, rights and/or liabilities have been transferred to a subsidiary of a strategic highways company, they can then be transferred on to a licence holder or person due to hold a licence. That, in combination with amendments 22, 23 and 25, provides for a scenario in which the strategic highways company sets up a wholly-owned subsidiary to hold assets, rights and liabilities due to be the responsibility of a licence holder. It allows for the Secretary of State to then transfer those assets, rights and liabilities on to the licence holder or person due to hold a licence.

Government amendments 25 and 26 reflect the changes in amendments 22 to 24 to enable transfers to and from subsidiaries of strategic highways companies. They make consequential changes to ensure that the definition of “subsidiary” in paragraph 1 of schedule 1 and other references to subsidiaries in the paragraph accurately align with the new drafting in amendments 22 to 24.

Government amendment 27 makes it clear that transfer schemes can include provisions that come into effect at different times. It does not specify that different dates must always be included in provisions. In many cases, it may be more appropriate for the whole transfer scheme to come into effect at once. However, there may be circumstances where it may be appropriate for particular parts of the transfer scheme to come online at the point when the relevant responsibilities in the licence do too.

For instance, in the case of the Dartford crossing, the existing design, build, finance and operate contract will run beyond when the transaction to the private sector is due to take place. When the transfer scheme is made for the Dartford crossing, the scheme will be able to set a later date for certain responsibilities under that contract to transfer, ensuring they can remain with National Highways and its DBFO contractor until the end of that arrangement. Were this not possible, the licence holder would need to delegate their responsibilities to National Highways who would then delegate them to the contractor. While not infeasible, that complicated arrangement can be avoided through the amendment.

Government amendment 28 sets out requirements for when transfer schemes transferring property, rights and liabilities away from a licence holder can be made by the Secretary of State. It means that the Secretary of State cannot make a transfer scheme without the consent of the licence holder and the transferee, where that transferee is not the Secretary of State herself or a strategic highways company, except where the scheme is being made in connection with a licence revocation or expiry.

Setting out conditions that must be met before the Secretary of State makes a transfer scheme will reassure investors that transfer schemes would not be made on an ad hoc basis. In circumstances where the licence is either not being revoked or has not expired it is right that the Secretary of State be required to obtain the transferor’s consent before making the transfer scheme.

Government amendment 29 allows for transfer schemes made under schedule 1 to provide for the transfer of licences granted under clause 3. A transfer scheme may transfer the whole or part of the licence. Clause 14 already sets out a process for the ORR to consent to licence transfers. Where a licence is transferred under clause 14, the Secretary of State will have to make a separate transfer scheme under schedule 1 to transfer the relevant assets, rights and liabilities alongside the licence.

In some cases, it will be more efficient to transfer the licence alongside the relevant assets, rights and liabilities, rather than running two separate processes under clause 14 and schedule 1. That will generally be where a licence transfer is initiated by the ORR rather than the licence holder, for example to split the licence between two licence holders. The amendment will allow for more efficient and streamlined licence transfers in appropriate cases where the ORR initiates a transfer.

Where only part of a licence is being transferred, the amendment also allows for the apportionment of rights and liabilities under the licence and incidental modifications to the licence’s terms and conditions.

I turn to Government amendment 30. Paragraph 3 of schedule 1 allows transfer schemes to provide for the payment of compensation. Currently, schemes can only provide for the Secretary of State to pay compensation to third parties who are adversely affected by the scheme. The amendment extends that provision to also allow schemes to provide for the transferee to pay compensation. That ensures that transfer schemes can require the transferee to pay compensation if the Secretary of State considers it appropriate in any given case. For instance, in some circumstances it may be appropriate for a new licence holder to pay compensation instead of, or as well as, the Secretary of State.

[Douglas Lumsden]

I am trying to think of possible compensation schemes. If, for example, a person’s property has been blighted by a new road that has been constructed, who would be liable for that? Would it be the licensee? Would that transfer to a new owner as well?

[Justin Madders]

The clauses are about the transfer of assets, rights and liabilities. That is why the amendment is in there—to ensure that if there is an outstanding compensation claim, there is a power for the transferee to pay that. We do not want to be in a situation where a party who is trying to exit the arrangements is refusing to meet its obligations. This is a complicated set of amendments, but they are effectively trying to cover all bases in terms of whether there is compensation. It is also about whether a party leaving the agreement is seeking some compensation for costs that they have occurred.

This is a fairly broad amendment, but it is necessary. We obviously hope not to have many situations where licences are transferred in whole or part, but it is prudent to have provisions in the Bill to ensure that those circumstances are catered for.

[Douglas Lumsden]

I am trying to work out who is responsible for property blight. Would it be the licence holder? Would it be the Highways Agency? Who would it be?

[Justin Madders]

Property blight would probably be dealt with by development consent orders and the planning process rather than this Bill, which is about the financial and regulatory framework for operating highways. It would probably come before we got to the issuing of licences. I hope that answers the hon. Gentleman’s question.

Government amendment 31 further extends the existing compensation provision in schedule 1 to allow transfer schemes to provide for compensation to be paid to transferors as well as third parties. In some cases, it may be appropriate for compensation to be paid to a transferor—for example, where a licence has been revoked on a non-consensual ground set out in the licence. Under amendment 30, the scheme could provide for the compensation to be paid by the Secretary of State or the transferee, as appropriate. The drafting is not prescriptive. Compensation will not always be needed for either the transferor or a third party, but the provision is drafted to make it possible for all relevant scenarios to be covered.

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[Justin Madders]

Amendment 50 would amend the ability of the Secretary of State to reassign responsibility for payment of a toll through regulation. The shadow Minister argues that the amendment would remove the power to specify any circumstances in regulations about how tolls would be paid. The amendment would remove important flexibility from the tolling system and the ability to make someone other than the registered keeper responsible for paying a toll in specified circumstances.

This provision matters, as it is not always possible to trace the registered keeper of a vehicle and there may be situations where it is appropriate for another party to be pursued for payment. That could include hired or leased vehicles, as I am sure the witnesses from last week would attest to. It could also be important where vehicles are registered overseas or following a change of vehicle ownership. Ultimately, it will normally be right for the registered keeper to be held liable for any charges, but that will not always be the case, for the reasons I have set out. It is important that we maintain flexibility.

Clause 24(2)(b) allows regulations to address precisely those circumstances, providing for someone other than the registered keeper to pay the toll where keeper liability would be inappropriate. The question is not whether tolls should be paid, but who should be responsible for them. We would retain the flexibility to make that distinction, rather than impose keeper liability in every case. I therefore ask the hon. Member to withdraw the amendment.

Amendment 51 would amend the ability for a licence holder to require equipment to be carried in or fitted to a vehicle. It is worth pointing out that just because something is in the legislation, that does not mean there is some dastardly, secret plan to implement it. I will give a practical example of why this power is in the Bill. At the Dartford crossing, before the toll barriers were removed, those who wished to do so were able to set up an account and place a smart tag in their vehicle. The smart tag would speak to the toll booth and open the barriers, charging the registered account. It meant that those who had the tag did not need to open their windows to drop a coin into the bucket at the booth, and it sped up their journey. A similar arrangement applied at the Mersey tunnels.

There are, of course, no longer barriers at the Dartford crossing and the charges are based on the number plates of those who cross. We have already heard why that is not necessarily a foolproof process. But—this is the point of having the clause in the Bill—we do not know what might happen in the future in terms of technology in cars. It is possible that we might not even have number plates at all. Perhaps there will be chips attached to vehicles that have all the user’s data on them, which will be important in tracing the registered keeper. The fact that we do not know how vehicles will develop in the future means that it is important to keep the Bill technology-neutral. That is the purpose of this clause.

[Douglas Lumsden]

The Minister is right that we do not know what the vehicles of the future will look like, but it should not be up to the holder of the licence to dictate what should be in people’s cars. If we think about the Bill, this is not about just the lower Thames crossing; it could be used for schemes right across the country. Surely the Minister is not suggesting that we would have a different piece of equipment in our car for every scheme that we may be passing through, from one end of the country to the other?

[Justin Madders]

I am grateful for the intervention, but I am not suggesting that at all. I am suggesting that it is important that we keep the Bill technology-neutral because we do not know what might happen further down the line.

Highways (Financing) Bill (First sitting)

Douglas Lumsden Excerpts

Thursday 29th October 2026 Public Bill Committees

[Jim Dickson]

Q It has been suggested that the requirement to sign in separately to use each tolled arrangement in the UK—the Mersey tunnels, the Tyne tunnel, the M6 and elsewhere—is a burden on a whole variety of road users. Mr Whelan, what do you think of the opportunity to create interoperability among tolled arrangements, thereby making it better for the logistics industry and consumers who use multiple tolled arrangements?

Michael Whelan: We fully support that and are looking at it as an industry—some operators of toll roads have come together to discuss that. Having one account makes a lot of sense, particularly for freight and logistics organisations. On top of that, interoperability can be expanded into other things, such as signage. Anywhere else in the world, toll roads will have a unique colour or symbol. That is important, because it helps to make sure there is some consistency and knowledge for the customer of what they are approaching, such as about when to pay. When it comes to free-flow tolling, it is important that people understand in advance what the rules are. Hence, we fully support part 7, with some minor amendments that we would like to see to clauses 92 to 94. Those are outlined in the pre-reading, but I think we might have run out of time to go through them now.

[Douglas Lumsden (Aberdeen South) (Con)]

Q Mr Whelan, we heard from the previous panel about the potential to offer discounts to local residents. Does M6 toll do that at present? How would that work?

Michael Whelan: We have done that. About two and a half years ago we put in place a new toll system—we spent £20 million on it—and that enabled us to introduce new toll pricing. We reduced prices for locals to £4, and we have held that there for the two and a half years. We have not increased it. That is something we are conscious of and have actively looked at, as well as having new products, some with discounts and some without. Interestingly, the account product that does not have a discount is our most popular one.

[Douglas Lumsden]

Q Which one is that?

Michael Whelan: The Lite account.

[Douglas Lumsden]

Q What does that do?

Michael Whelan: It provides an easier way to get a receipt. It also provides the ability to drive through what we call our breeze lanes, on which the gates will open automatically if your account is in good status.

[Douglas Lumsden]

Q Mr Garratt, you mentioned that you would like ministerial assurance that the Bill will not be used more widely across the rest of the country. Is ministerial assurance enough, or would you like to see something in the Bill to ensure that it is not a Trojan horse, as the Minister says it will not be?

Ben Garratt: Our sense is that the way in which the Bill is drafted is relatively strong. That is why we are seeking assurances on the record, rather than amendments. We do not want it to be used as a Trojan horse to spread this across the country, but there is a particular case for it on this particular route. Given the wording at the moment, to have assurances would be proportionate.

[Douglas Lumsden]

Q We have heard that moving to a smart motorway and using the hard shoulder could increase capacity, meaning that tolls could be charged.

Ben Garratt: Again, it would be good to get an assurance that that will not be the case, but that is not our reading of the Bill at the moment. That does not mean that others could not interpret it differently at some point, when looking at it in the future. That is why we are seeking a strong assurance that this is about adding actual new trunk road capacity and not doing things like what you just said.

[Douglas Lumsden]

Q Mr Pang, do you have any concerns?

Declan Pang: We are concerned about how the Bill could be applied to introduce tolls. We want greater reassurances from the Department about that. Clause 81 in particular gives the Secretary of State the power to direct any road to be made a trunk road, so we are concerned about what could be brought into scope. We want greater reassurances.

[The Chair]

That brings us to the end of the time allotted. On behalf of the Committee, I thank our witnesses for their evidence.

Examination of Witness

Ralph Smyth gave evidence.

Highways (Financing) Bill (Second sitting)

Douglas Lumsden Excerpts

Committee stage
Thursday 29th October 2026 Public Bill Committees

[Douglas Lumsden (Aberdeen South) (Con)]

Q We heard from an earlier panel that the operator has limited incentives for cost control and that there is a risk of taking “costs off the book without any level of scrutiny.” Do you understand what they are talking about in that?

Will Godfrey: I think “without any level of scrutiny” is something I would take issue with, certainly as I would see the arrangements working. We have had good discussions with old colleagues of mine at Ofwat about the arrangements they had, for example, for the Thames tideway tunnel. There, both the rhythm—by which I mean the frequency of reporting, monitoring and scrutiny of costs during construction—and the importance of having a dependable, expert, independent technical assurer on the costs are really important for making sure you have that right level of visibility and scrutiny. I would question the nature of unchecked costs. I am not denying that cost pressures would arise, but that is the whole point of having arrangements like an independent technical assessor.

[Douglas Lumsden]

Q Is it true that there are limited incentives for cost control? What is the incentive for the operator to keep the costs down?

Will Godfrey: I will go to both costs and schedule. There are instruments that you can bring in through a licence—such as cost-sharing rates. The point I was trying to make earlier is that you do not necessarily design a price control—at the moment, if there is a cost shock, it just goes through to end-user prices, so cost-sharing arrangements are one example. You can also bring in thresholds to make sure that the company is incentivised to remain on schedule as well.

[Douglas Lumsden]

Q If an operator in future was not making any money and was going under, who would step in? Would it be you?

Will Godfrey: Before we get to that point, it is worth bearing in mind whether there are other potential investors willing to buy out the company that is struggling. There may be particular reasons why—maybe it was not well managed or well financed. There is the potential in principle for someone to come in through normal mergers or acquisitions and take responsibility. In the event that the company is really struggling against a particular settlement, that is a challenge for a regulator to manage. There are certain provisions on the limit, where things ultimately are pushed to the point of non-recoverability, which are envisaged within the Bill.

One of the jobs of the regulator is, first, getting that first price control settlement right. As I say, at the moment that is being set by the Department, but getting that projection on the allowed cost is key—get it right at the start. Then, that rhythm of regular monitoring is really important to make sure that you anticipate that point. What you do not want to be doing, particularly with a construction project like this, is to get to that point with some element of surprise. What you need to do is keep that regular rhythm of monitoring and scrutiny, so that you can act before you get to that point that the company has nowhere to go.

[Douglas Lumsden]

Q I guess you could step in and increase the costs and have them earning more to try to keep them on a sustainable footing.

Will Godfrey: At certain points it is possible that a regulator could introduce things like cost limits, beyond which there was then a redetermination of a price allowance, but not necessarily one that was a simple “costs have overrun by CX, therefore tolls increase by the same amount.” It would not be an automatic pass-through; it would be subject to that efficiency and economy test.

[Jim Dickson (Dartford) (Lab)]

Q One of the things that has come through from other witnesses today is the need for pace on this project—the status quo is appalling for my residents but every bad for the economy and for various sectors. Matt, would you say that the need for us to pass some legislation, then have an equity competition and then appoint the funders is slowing down your work to make sure that the project continues and completes on time—and hopefully on budget and on spec as well?

Matt Palmer: We are moving at pace. The Chancellor at the last autumn Budget—not this one—announced funding to get us to private finance, and we are well into that. We are moving at pace. There is a misunderstanding that we have not started. We have very definitely started: 2,000 people are on site, we have 14 sq km of land and there is a lot of mud at the moment, I am afraid. We are moving well and at pace. Our target is to get a tunnel boring machine, which will be the largest in the world at the time, in the ground in 2028, which will line up roughly with when we go to private finance. All of that is contingent on the fact that we need the legislation through to allow us to get the equity to move on thereafter.

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[Jim Dickson]

That is very helpful.

[Douglas Lumsden]

Q Andrew, I think you said earlier that one of the issues was uncapped cost overruns for the contractor. What is the consequence of that? Does it scare some contractors away?

Andrew Truscott: Not for the contractor; for the investor. Sorry—if I said “contractor”, I meant “investor”. Apologies. I do not care about the contractors. [Laughter.]

It is not because we do not understand and price risk; that is what we do for a living. It is just that I cannot go to my investment committee and, when asked, “Okay, Andrew, what is the maximum amount of equity you are going to put into this project and therefore what is the return you are expecting to get on it?”, give the answer, “I don’t know.” That is not a conversation—well, it could be a conversation, but it would be the last conversation I have with my investment committee.

[Douglas Lumsden]

Q What do we need to do to change that?

Andrew Truscott: Again, I am getting well over my skis, so apologies, but it is about being smart. I am not just suggesting that this all lands on the country balance sheet, whether it is the National Wealth Fund taking excess risk above a certain threshold and therefore becoming an equity investor as a consequence, but it would be sensible to be smart and think innovatively about how to cap the number, so that I can then go to my investment committee and say, “This is the amount of capital we’ll commit, with any excess being provided by somebody else in exchange for an economic interest.” Rather than trying to give answers, I would say that being thoughtful and innovative about how that cap can be constructed is definitely worth putting on the agenda.

[Douglas Lumsden]

Q But it does not drive away investors as it is just now, does it?

Andrew Truscott: I think it will.

[Douglas Lumsden]

Q Okay—so it is something we need to look at urgently.

Andrew Truscott: I cannot speak for the entire investment community, but I can repeat what I said earlier. I think we are fairly typical—I mean, we are brilliant, but we are fairly typical—and an uncapped equity commitment is almost impossible for us to write.

[The Chair]

If there are no further questions from Members, I thank the witnesses for their evidence. We will move on to the next panel.

Examination of Witness

Justin Madders MP gave evidence.

--- Later in debate ---

[Tristan Osborne]

Q I have a question on the ORR. My line of questioning is about whether the regulator is ready. Obviously we had the independent report last month. I challenged on one particular finding of that. Is the ORR ready for this challenge? Is the regulatory landscape in a firm place where we can solicit investor interest next year?

Again, speaking to the investor spokesperson today, they said that regulatory certainty was absolutely critical for them. I want to understand the operational capabilities, the engagement between the DFT and the ORR, and whether or not we will have that structure and that robust regulatory regime in place, and how confident you are about that.

Justin Madders: I am confident about that, because that is what the Bill intends to do. It sets it out very clearly. We have heard from the investors that that certainty will be a very attractive opportunity for the long-term investment we are seeking to deliver. There will be a need for some additional capability and capacity in the ORR, but I was very impressed with the evidence we heard today. It is very much on top of this, but there is much more to be done, and the Bill will enable it to do that.

[Douglas Lumsden]

Q Minister, we heard from the last person who gave evidence, the investor, that he would not be able to invest because of the uncapped cost overrun risks. You heard that as well. Would you look at it again to make changes to ensure investors are not so scared away by that risk?

Justin Madders: I am not too familiar with the factors he takes into account when investing, but my advice from officials is that the soft market testing that has been taking place has shown a lot of interest in this. He also said in his response that there would be quite a lot of people who would be looking to invest in this. That conversation is ongoing.

Having the legislation on the statute book will actually help give more certainty to investors. Clearly one of the reasons why the project has already started is to de-risk it to some extent. All the indicators I am getting are that we are putting this in a strong position to attract investment.

[Douglas Lumsden]

Q Will you not make any changes after hearing the comments today?

Justin Madders: I do not think that this is covered by the Bill anyway, but I will certainly take it away to see if there is anything to reflect on. I assure you that this would not be proceeding if there were no interest in investment.

[Mike Reader]

Q Minister, we have heard evidence that there is not a massive amount of competition for major schemes in Europe, yet competition is important to drive down the cost of capital. Do you think that the RAB model will help us to secure the best possible deal on the capital for building the lower Thames crossing?

Justin Madders: I think it will. Obviously the Treasury decision on how this is going to be funded is driving us in a direction where we have to secure private investment. I think the model gives us the opportunity to give the investor certainty over a long period. Clearly, guardrails in there will protect users as well, but as I say, the indications I have had so far are that the long-term nature of the project and the way in which it has been de-risked make it an attractive proposition.