Infrastructure Procurement

Gavin Newlands Excerpts

Monday 19th February 2024 Commons Chamber

[Alan Brown]

I wholeheartedly agree with my hon. Friend. It is almost like, when we look back historically, the oil and gas revenues paid for HS1 and the channel tunnel, but at the time we were assured that there would be a spur up the east coast and a spur up the west coast of high-speed rail. Now, all these decades later, we still do not have the promised spine, but as he rightly says London and Birmingham are getting better connectivity, even though there is some ambiguity about where the line will terminate in London.

We were told not to worry, and that the Birmingham upgrades would still mean much quicker journey times from Scotland to London. We were assured several times that trains will run from London to Scotland on day one of HS2 services, even though they will be going from Birmingham. Sure, trains to Edinburgh and Glasgow will run, but they are intended to run as one service stopping and decoupling at Carstairs. That is just deemed a minor inconvenience for those of us travelling to and from Scotland.

When HS2 looked at the purchase of rolling stock, the key decision was made that they had to be the quickest high-speed trains. That means that when that rolling stock accesses the existing tracks on the west coast main line, the trains will go slower than existing Avanti west coast services. Not only will we not get high-speed rail to Scotland, we will get a poorer service from the new high-speed rail once it is running on the west coast main line. How can that be a logical proposal for the most expensive infrastructure project ever undertaken by a UK Government?

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

My hon. Friend makes a point about the slow speeds. This is not news. A report that had a foreword by Philip Hammond, who was the Transport Secretary at the time—13 and a half years ago—suggested that the rolling stock could indeed decrease speeds, stating that

“journey times between North West England and Scotland could be potentially longer than at present”,

resulting in longer journey times between Scotland and London. Just a few weeks ago, we heard evidence in the Transport Committee that that is still the case, with times increasing by between five and 25 minutes. Does my hon. Friend not think that it is absolutely absurd that we have ended up with a gold-plated commuter line between Birmingham and London and slower journey times for the rest of us north of Manchester, and that that sums up Westminster’s attitude to transport infrastructure spending since time immemorial?

[Alan Brown]

I wholeheartedly agree. I go back to my opening remarks about HS2: the whole premise of it going to Scotland was to encourage people not to fly and to get the train. Now the competition is going the other way; they will be incentivised to fly because the journey times will be longer. It is absolutely crazy.

My hon. Friend the Member for Angus (Dave Doogan) touched on the fact that the costs of HS2 spiralled to over £100 billion. What happened then? The eastern leg was removed. Next to go was the Golborne link, removing the link to the west coast main line and trains running to Scotland. Then the northern spur to Manchester was removed. HS2 does not know whether to terminate at Old Oak Common or Euston, despite upgrades already commencing at Euston Station. Clearly, there is no overall strategic thinking other than a continual form of panicked cost control.

Unfortunately, HS2 is a monument to a poorly developed concept of not knowing what the key strategic objectives would be, unrealistic budgets, politicians meddling in route alignment and increasing the amount of tunnelling, politician panic as costs increase, continual stop-start reviews all costing money, over-specification, unrealistic risk allocation, and clearly not enough up-front design and site investigation work or proper planning with regard to project delivery and discussions with contractors. But hey, as we have heard, passengers from Birmingham might now be able to get to London 20 minutes quicker than they can at present, which is not a bad outcome overall for a £66 billion project that does nothing strategically outside the midlands. That leg was originally estimated to cost £20 billion, so there has been a £46 billion project overspend.

There is another major infrastructure project that is very similar in its overspend, delays and costs spiralling out of control: Hinkley Point C nuclear power station. It is a testament to political determination and aspirations over the reality of nuclear power. It was estimated to cost £18 billion, including contingency, in 2016, when the UK Government gave the go-ahead after a review. Just a couple weeks ago, however, EDF estimated that it would cost £46 billion in today’s prices. By last week, it had already increased to £48 billion. That is a mere £30 billion overspend on what was already the world’s most expensive power station. Instead of generating power in 2025, it will now be as late as 2031. As costs have continued to spiral, the Government’s attitude is, “It’s okay, the risk lies entirely with EDF,” which is completely head-in-the-sand stuff. China General Nuclear, one of the partners in the project, has already reached its cap on the amount of capital it will put into the project, so clearly EDF is having to fund a lot more borrowing. It beggars belief that the Government claim not to be speaking to EDF about this issue, especially when chief executive Luc Rémont stated last week:

“We’re confident we can find a pathway with British authorities on Hinkley Point C and Sizewell.”

In other words, there will be another taxpayer bailout.

One lesson that the UK Government appear to have learned is that a contracts for difference model is not the best way to deliver a nuclear project, but they are now diving head first into the regulated asset base model, which transfers risk from the contractor to the billpayer. That is what the Government want to do for Sizewell C, despite the evidence of failure of the RAB model for a project in South Carolina, in the United States, where ratepayers continue to pay higher rates for a nuclear power station that was actually abandoned during construction. How will the UK Government make sure that this does not happen at Sizewell?

--- Later in debate ---

[Gavin Newlands]

I thank my hon. Friend for giving way one last time. When it comes to transport infrastructure, he will be aware from his previous role as the SNP transport spokesperson that Scotland has an overarching transport strategy. In fact, we are on to transport strategy 2, and we have the strategic transport projects review 2, which supports the delivery of that strategy. In England, there is no such overarching transport infrastructure strategy whatsoever. We have heard evidence in the Transport Committee recently that the Government should put that in place, because that avoids all the problems we are now seeing within this procurement. It is just a complete muddle and a mess, because there is no overarching strategy at all.

[Alan Brown]

Absolutely. An overarching strategy again goes back to linking needs and outcomes, and to identifying budgets. It also sends a clear signal to investors and contractors of what is in the pipeline of work, and people can actually gear up and plan ahead accordingly. One other thing about Scotland is having, through all this work, a strategic transport development plan, and then the Tories calling for the UK Government in Westminster to bypass that for a pet project, which again completely undermines our strategic thinking.

All these projects I have spoken about show that risk needs to be correctly allocated. The lessons learned means that sufficient up-front design work needs to be undertaken. We need early contractor involvement and a clear pipeline of projects. These are all matters that the construction industry has actually been calling for for years. We also need politicians to take responsibility, where required, and for politicians to understand that undue interference and the chopping and changing of projects mean an increase in costs and programme delays.

Somehow in today’s political world, we do need to have cross-party working as much as possible. One thing is for sure: we cannot continue to have flagship projects that are handled as badly as HS2, Hinkley and the rest. It is quite clear that some politicians down here really do need to look in before they look out when it comes to infrastructure delivery and talking about that.

--- Later in debate ---

[Alex Burghart]

I am still answering the previous intervention so the hon. Gentleman will have to wait. [Interruption.] I have got all night; I have had my supper and I can talk about this. The hon. Member for Kilmarnock and Loudoun would like us to rehearse everything we went through in the Procurement Act; if he wants to go back and look at it, he will discover that the Act makes it possible for—[Interruption.] The Act makes it possible for—

[Gavin Newlands]

You have already said that.

[Alex Burghart]

That is because I have been interrupted many times, but I am happy to repeat the first clause of my sentence over and over again until the good gentlemen are ready to put a sock in it, but if they are not, I am not hungry and I am not tired and I am happy to fill up column inch after column inch of Hansard with this rubbish.

If the hon. Member for Kilmarnock and Loudoun wants to go back and look at the debates that we had in Committee and on Report he will understand that it is possible for both contracting authorities and suppliers to work through pipelines and framework arrangements that make it easier for suppliers to see what business is coming forward and make it easier for them to prepare, with the result that the conversations that he alluded to between contracting authorities and suppliers happen earlier and contracts are more appropriate and less likely to break down. That is one reason why the legislation we brought through the House was so widely welcomed by businesses and by contracting authorities.

I am very pleased to say that we are making great progress towards introducing this new regime in October. We have a huge plan of learning and development that will be going on across the country. We have a new digital online platform for procurement which is being built and which is eagerly anticipated. We are also constructing the new national security unit for procurement, which will make sure that it is much harder for hostile actors to enter sensitive parts of our supply chain. It is a really great achievement.

In addition to this fantastic new legislation that was brought in following wide-ranging public consultation and stakeholder engagement, we have brought forward legislative proposals to establish the new regime. These measures and the training we will roll out to support them will deliver greater value for the public purse not just in infrastructure, with huge road and rail construction projects, but across public procurement from IT software by the NHS to services by local councils.