Highways (Financing) Bill (Second sitting)

Greg Smith Excerpts

Committee stage
Thursday 29th October 2026 Public Bill Committees

[The Chair]

We are now sitting in public and the proceedings are being broadcast. Before we start to hear from our witnesses, do any Members wish to make a declaration of interest in connection with the Bill?

We will now hear oral evidence from the Centre for Policy Studies and Britain Remade. We have until 2.35 pm for this panel. Would the witnesses please briefly introduce themselves for the record?

Ben Hopkinson: I am Ben Hopkinson, head of housing and infrastructure at the Centre for Policy Studies.

Sam Dumitriu: I am Sam Dumitriu, head of policy at the campaign group Britain Remade.

[Greg Smith (Mid Buckinghamshire) (Con)]

Q42 Good afternoon, gentlemen. Thank you for appearing before us.

Clearly, this is a Bill of two halves: there is the specific stuff on the lower Thames crossing, and then it is a pretty open-ended book for other projects going forward. Can I have your initial assessment of whether this is the right model to solve both the question of getting the lower Thames crossing built and issues relating to future trunk road projects that may be required or identified in the country? Will it actually deliver value for the motorist and haulage businesses using the scheme? Do we even know that it will deliver to certain metrics? No one can give us an answer yet on what the toll would be on the lower Thames crossing, for example.

Ben Hopkinson: We have quite serious concerns about the regulated asset base model. This will certainly be the first time it is been used for roads. The main issue is that there are quite limited incentives for cost control within a regulated asset base. If you are the private contractor, you have significant incentives to increase the capital expenditure on the regulated asset base to make it as large as possible, because that means you get as large a return on your investment as possible.

The organisation standing in the way of that is the Office of Rail and Road in this case, and it has never overseen a RAB before. It would not even be able to look at other organisations or regulators that have overseen a RAB for roads, because there are none internationally.

We have a better model through concessions. France has built more miles of motorway this century than the UK has in total. It has done that with the private sector working through concessions. Under a concession, there are strong incentives for private contractors to keep their costs as low as possible, because it directly impacts their bottom line, which is completely the opposite for a RAB model.

[Greg Smith]

Q Can you just expand on the example you have given from France? How could that be integrated into the Bill, or does the Bill just get it so badly wrong on that front that it will end up costing British motorists more?

Ben Hopkinson: The Bill is focused on delivering a RAB model. It is a completely different set-up to use a concession model. There is a second challenge with RAB in so far as the Department for Transport does not really bear any of the costs either. That is why you get it doing things like banning diesel construction vehicles for the lower Thames crossing. That is a policy goal it has otherwise that does not actually lead to a better overall road. It is an example of “everythingism”, where it has plenty of different goals, none of which is necessarily delivering the best road project for motorists at a very reasonable cost.

[Greg Smith]

Q I will bring in Sam in a second. How much more will banning diesel in the plant to construct the lower Thames crossing add to the construction cost, which will ultimately come out in the toll people are charged to use it? Are there any other things you have identified that will put the cost up?

Ben Hopkinson: I do not have a specific number for it, but it is a regulation that might lead to a different form of construction than they would have chosen were they going purely for value for money. Across the piece, the lower Thames crossing has been racked by planning delays, which I am sure we are all aware of. It was designated a national priority project in 2011 and it took 14 years, 360,000 pages and £300 million to get planning approval. That all adds cost. When the project started going through, it was projected to cost about £4 billion. Then international events got in the way and it is now projected to be over £10 billion. Moving quickly saves costs. Our slow planning system has been a real driver of added cost here.

Sam Dumitriu: Cost control is one of the most important issues here. If you look at road building generally, the big problem in the UK is that we have a very large construction cost premium. Britain Remade has looked at 345 infrastructure projects across the world, of which 121 were road projects. On average, the UK pays about 65% more to build a given mile of road or railway. It is a bit less for road on average, but when you look at more complicated projects like the lower Thames crossing, it tends to creep back up.

Many people often dismiss our problems around infrastructure as a problem of too little money going in, but over the past five years or so—a period that includes covid, but also years either side of it—we spent about £308 per head on Government public infrastructure investment. In France it is more like £271 and in Germany about £251. When you account for that cost premium, we end up getting about £180 of what the French or the Germans would get. For me, that is the No.1 problem.

About £300 million has been spent on the planning process for the lower Thames crossing. If you add together the world’s longest road tunnel, which was built in Norway, and a tunnel built 282 metres under the sea, you just about reach that. They are building much more complicated projects for much less. You can talk about how it is more difficult to build due to UK geographical or geological issues, but fundamentally, just those front-loaded costs make it very difficult to build anything cost-effectively. Because of that, there is a risk that this model is adopted as a way of taking some of those costs off the books without the right level of scrutiny.

[Greg Smith]

Q That is helpful. Clearly, the Bill is predicated on tolls being charged upon completion, for use to create that payback. You have clearly looked at France. Having driven to the Alps at Easter, I know from bitter personal experience just how much you pay at every toll booth there: they are beautiful roads, but it costs hundreds of euros to travel a single trip of that sort of distance. Where is the British tipping point? How many more toll roads—those could be built, but there is also concern that road charging could be expanded to other roads under the Bill, because of some of its wording—would the economy bear, without major changes to fuel duty, road fund licence rates, et cetera?

Sam Dumitriu: One thing is that a lot of major road projects have been cancelled recently. The first road investment strategy was much more ambitious than the ones that followed. That was partly due to covid, but now we are out the other end, we see reduced ambition on road building. Road maintenance has gone up a bit, which is positive, but at the same time, we are not building the projects.

It is important to look at which projects are appropriate for tolling; bridges and tunnels make perfect sense. In America, lots of additional lanes that have their own toll are built. Based on our geography and the amount of road infrastructure we have, you probably could not do that—when you are adding a super-fast lane on a seven-lane motorway, that works; it does not really work here—but clearly there are lots of bottlenecks and opportunities to finance things via tolls.

The question we have to ask is, as fuel duty revenue declines, because people are switching to electric vehicles, will there be the same impetus to put money into the roads? Currently, motorists do not get a very fair deal: they pay a lot in tax, but they do not see the same return in road building, as the money tends to go into the general pot. You might want to, say, hypothecate that revenue—that is one thing—but road user charging gets around the question of politicians attempting to use infrastructure money generally to put it towards your primary, day-to-day spending, whether that is on the NHS or £100 to deal with the cost of living, et cetera.

There needs to be some way of insulating long-term infrastructure funding from those, and that is the advantage of tolling. The problem is that motorists will only bear or accept it if they are confident that they are not being hit by all these other taxes and are getting something genuinely new in return. I do not see many motorists complaining about the Silvertown and Blackwall tunnels being tolled, because they have new infrastructure and congestion has fallen. It would be different if an existing road were tolled without a noticeable improvement.

Ben Hopkinson: There is nothing inherently wrong with road user charging. It is quite sensible that the people who use and get the benefits of an infrastructure asset pay towards its construction and maintenance. The challenge is that we already have quite high fuel duty, and it is more than solely the combination of carbon output and what we spend on roads and maintenance. If fuel duty were solely for mitigating the externalities of carbon emissions, combined with the upkeep, maintenance and addition of roads, it would be around 35p, rather than the about 52p it is now, so fuel duty is already higher than the economic impacts of roads and emissions.

If you kept fuel duty where it is, or cancelled out the 5p cut—the scrapping of which is perennially promised—and added road user charging on top, that would be quite a significant burden for motorists to bear. But ideally, new infrastructure would be funded through some form of road user charging. The people who drive get the benefits, so that is only fair.

[The Parliamentary Under-Secretary of State for Transport (Justin Madders)]

Q Good afternoon, gentlemen. Mr Hopkinson, you have expressed concerns about the limited incentives for cost control—presumably that is mainly in the construction part of the scheme; obviously, we are talking about the lower Thames crossing here. The Bill gives the ORR the ability to set licence conditions on economic allowances and expenditure controls, and provides for the investors to make a reasonable return. Those safeguards are set out. Do you not consider those sufficient and would you like to see something in addition?

Ben Hopkinson: I am well aware that there are safeguards and that the regulator is tasked with ensuring that there are not runaway costs. However, the ORR has never done this before. No regulator has ever done a RAB for a road before. There is a real risk that if it sets the return too high, motorists will pay significantly more, but if it sets the return too low, then no one will want to invest.

While in theory the model makes a lot of sense, I am a little worried about the practicalities of the ORR accidentally setting a rate too high or too low. In other sectors where rates are set by regulators, there are often risks, especially when there are macroeconomic shifts—higher interest rates, for example. Regulators are sometimes slow to update to that. There are concerns there. With a concession model, as used in France and around the world, there are much better incentives for contractors to keep costs down because they are the ones bearing them, not the potential motorists.

--- Later in debate ---

[The Chair]

We will now hear evidence from the British Vehicle Rental and Leasing Association. We have until 2.55 pm for this panel. Could the witness please introduce themselves for the record?

Thomas McLennan: Hi, I am Thomas McLennan. I am the director of policy and public affairs for the British Vehicle Rental and Leasing Association.

[Greg Smith]

Q Good afternoon. I am grateful to you for being here this afternoon. I am impressed by what it says in your bio; your organisation is responsible for a significant number of vehicles on British roads at the moment. The obvious opener to that is: what is the reaction from your customer base to the change to a RAB model for the lower Thames crossing and potentially other projects in the future that might mean more toll roads on the British strategic road network?

Thomas McLennan: Thank you for the question. For wider context, we have more than 1,000 members, and between them there about 4.6 million vehicles, representing about one in 10 cars, one in six vans and one in six trucks on UK roads. Our members own those vehicles, but other people use them. Right at the core of the problem with almost any measure or change of this scale is the technical detail. Perhaps that is not as interesting as the macro questions around how things are funded and so on, but it is what really impacts us and everyday users.

We have seen in a number of major changes in how road funding and wider funding happens, such as the eVED scheme, that the technical detail has not been considered up front. That has led to huge stress for the sector and potentially administration bills in the hundreds of millions of pounds. We want to see, in any change of this scale, especially if it will encompass an expansion of barrierless charging to more current barriered toll operations, that technical detail is guardrailed in right from the start.

At the end of the day, what we want to see is good user experience, as well as good business experience for both our members and their customers. It is in no one’s interest to have a system that is bureaucratic, challenging and leads to abrasion, when you are reducing the barriers to reduce abrasion and exactly that kind of thing. If you are just moving it elsewhere, it does not really meet its purpose. We are keen to see that this is as technically guardrailed as possible to make sure that end customers have a good experience.

[Greg Smith]

Q I do not know if you heard some of this morning’s evidence, but we had a question this morning around whether there should be a national scheme with a single log-in, as opposed to every scheme having its own charging mechanism, if you are going to have barrierless tolling. In answering that question, can you give your thoughts on the impact that will have not just on schemes built under the RAB model proposed in the Bill but all the other road charging we already have?

For example, here in London, we have the congestion charge. It is dressed up as an environmental scheme, but we all know it is just road charging. Equally, other schemes are popping up. Arriving at my party’s conference in Birmingham, I remember saying to a passenger in the car, “Quick, panic—look up whether I have to pay a charge for this new clean air zone”—or whatever it might be. Is one of the things you are looking for in that answer something that simplifies the experience of the British motorist across schemes built under this model, as well as everything else?

Thomas McLennan: Short answer: yes. The long answer is that consistency is key. A lot of the burden in this model, and in any of these charging models, falls on the registered keeper. On your point, Greg, of needing a passenger to pay, not everyone has a passenger. There are lots of instances where people do not pay and there are inconsistent lengths of time that you have in which to make that payment—it might be 24 hours or six days. There might be an inconsistency in the ramping up of charges if you do not pay, or in how that charging is structured and the portals that you can use—it is all varied.

If you can create a national framework for individual specificity—I am not saying that everyone has to be exactly the same in what they are delivering, but you need to have the same guardrails and structure that enable someone to have consistency of experience. That would enable fleets to advise their customers, who might be someone running grocery stores across the country or a tourist who is arriving at an airport in the north or the south, and to train their staff to be able to give consistent advice and experience. Having every scheme with its own approach could be deeply challenging.

[Greg Smith]

Q I will ask my last question. Clearly, your organisation, sitting across your members who supply the vehicles, would be in trouble if the number of vehicles on the road started going down. Have you done any modelling on where the breaking point or tipping point—call it what you will—would be on top of existing fuel duties, the new 3p a mile for battery cars, road fund licences and so on in terms of the overall volume of additional toll roads that this Bill could enable?

Thomas McLennan: That is a very good question. I am afraid we have not done that modelling, but we can look into it. The more pernicious point for us is that the more points of friction you have in your usership, the less likely you are to be able to make the usership work for you. We have unfortunately seen that even in great measures, and in London the level of friction has meant that some car club companies had to fold. It is challenging to operate where you have a split, with every borough having its own rules—all of those interactions have been deeply challenging. With more consistency, we can have a strategic vision on how to deliver within that framework. That is a much stronger approach to enable the investment from ourselves and the customers to be able to keep mobility moving in this country.

[Justin Madders]

Q You said a little about how consistency across the country would be helpful for your members. I just want to take you one step back: is the principle of barrierless charging one that your organisation would support?

Thomas McLennan: We have had very mixed experiences with barrierless charging, so I do not think we can give a pure vision on that right now. We have had some use cases where currently there is not even the ability to transfer liability to someone who has hired a vehicle—the operator does not allow it. Then there are other instances where you can do bulk uploads, the system works really well and it is effectively smooth sailing.

What we always see is that the removal of barriers means a lot more penalty charge notices. That obviously makes sense, because previously you had to pay to get across, and then the barrier is removed and lots of people do not pay, so there is a sharp increase in penalty charge notices. All of our members have reported that to us.

The question is what happens after that. The inconsistencies mean that you can then have a duplicative effect of enormous administrative burdens on everyone involved, which have to be paid to make that work. We would say that if we are going towards barrierless charging from the get-go, which we understand has congestion benefits and so on, it needs to be done so that you do not shift the burden of someone paying at the barrier downstream to someone then having to figure out how to transfer liability or chase up on that, removing people’s ability to challenge the fines because they have just been paid, and so on. We need to look at all those things in the Bill from the start and structure them there.

--- Later in debate ---

[The Chair]

We will now hear oral evidence from the Office of Rail and Road and National Highways. We have until 3.35 pm for this panel. Will the witnesses please introduce themselves briefly for the record?

Will Godfrey: Good afternoon. My name is Will Godfrey, and I am director of economics, finance and markets at the Office of Rail and Road. I am leading our preparations for the licensing arrangements and the regulatory framework that you have under consideration today.

Matt Palmer: Good afternoon. I am Matt Palmer, and I am the National Highways chief exec for the lower Thames crossing.

[Greg Smith]

Q Good afternoon, gentlemen. I appreciate your giving your time today.

Given the significant new responsibility that the Bill will give to the Office of Road and Rail in particular, is the organisation suitably equipped to take on a new licensing regime? Does it have a skills base that has looked at other parts of the world or other sectors that have adopted a RAB model? Does it have the necessary interactivity with road users to ensure that early projects do not end up with more teething problems than anybody would have wanted? I am not saying that anybody would want teething difficulties, but we know that that happens when big change comes about.

Will Godfrey: We do not underestimate the significance of this work. It is important work, and it builds very significantly on the experience that we have from both rail and road. Our interactions on the rail side cover publicly and commercially funded infrastructure, and managers and operators. I could refer to a number of examples, including the work that we do on price controls on the high-speed link down to the Channel tunnel, and interactions with international passenger operators looking to expand operations there.

On the road side, we obviously have experience as the monitor and the organisation responsible for holding National Highways to account. We are certainly looking to build on the engineering, economics and finance operations. We also have consumer policy experience across both road and rail.

I started out in economic regulation just over 25 years ago. I have worked in the water sector, and I worked in telecommunications for a number of years, including overseeing the arrangements that led to the roll-out of superfast broadband, among other things. A number of colleagues have worked in other sectors, spanning aviation, water and others.

Your question about the risk of teething problems is well placed. I am confident that we have the lead time to build in the necessary arrangements and resourcing to get ourselves ready for the new arrangements. One of the important things to bear in mind is that the regulator’s role takes place once a licence has been awarded. A licence for the lower Thames crossing—the first scheme that will be enabled by the Bill—is some way off yet. The process for awarding that licence currently sits with the Government, but we are in discussion with the Department about our future resourcing to deliver this work.

[Greg Smith]

Q I am grateful for that answer. This is not a criticism of anyone in the ORR right now, but as we see with so many projects, under whatever model they are built, unexpected things happen; things do not go according to plan. Often, hindsight is that wonderful thing: “Oh, I wish we had just…” What preparation work is the ORR doing, or what additional resource does it need from the Department for Transport, to ensure the lower Thames crossing, as the guinea pig for this new model, does not end with those “Oh, I wish we had…” questions being asked? That might be very significant for Mr Dickson’s constituents, who might suffer from unintended consequences, as much as they clearly want the lower Thames crossing—that is not a point of political difference—and could end up impacted if the regulation and the licensing regime do not work as Ministers, in good faith, expect.

Will Godfrey: There are two parts to that question. One is where we are at with, for example, the lower Thames crossing. There is a lot of debate about the risk of cost overruns and so forth, but this is not a new project; it is already significantly advanced. There has been significant work, and perhaps Matt will talk to it in a moment, on preparation—literally the groundwork—to get this project ready, so it is not a completely new project. That comes with the advantage of some teething issues already happening.

In terms of the ORR’s capability, we are working closely with the Department to look at the arrangements that might apply to, for example, licensing. This is an important point I want to stress: the Bill gives us the duties and powers that we want to see, but the really important thing for making a lot of these schemes work is that the licensing arrangements are the right ones, and that you have the licence conditions in place to hold the company to account properly and scrutinise its delivery not just on construction but on operation, its approach to tolling and so forth.

In terms of having the resource in place to do that, I am currently working with a small team. We are looking at the suite of skills and capability that we anticipate needing across, for example, corporate finance, supporting the stakeholder group—that is an important part of the Bill—and the engineering and operations capability. I am confident that we have the lead time to get in place the team that we need. We are in discussion with the Department about the resourcing necessary to secure that.

[Greg Smith]

Q Will, you mentioned construction in your answer—this is a question to both of you. When organisations are considering regulation, licensing or any factor around the construction of anything at all, but we will take the lower Thames crossing as the example today, do you need much greater freedom within that to license something along what many would call common sense principles, certainly when it comes to cost control? For example, I think it is pretty obvious that the banning of diesel in construction plant is going to make the project more expensive. Where do you sit, both from experience of other projects and looking forward, on factors like that? You might find yourself in a difficult place between what Government want and what the ultimate licensee wants, and having to find a happy medium on that.

Matt Palmer: I am an historic mega-project constructor. I have done many big projects across the world and in the UK. Let’s talk about diesel and its cost. It is part of lower Thames crossing’s requirements, which were set in 2022, for us to construct to carbon neutral, and actually, it ends up with us being in line with the sixth carbon budget. That has been a requirement in our project. We have executed it. It is in part of our development consent order. It is required now by law and by statute through the development consent order. The vast majority of our diesel is being replaced by HVO, for which we are currently paying £1.70 per litre.

[Greg Smith]

Q Just to confirm, for people watching out there who think diesel is £2 a litre, is that plus VAT?

Matt Palmer: We pay £1.70; our contractors do not pay VAT on it. It is marginally over a current diesel cost, but we ran a competitive process and it was competitively bid.

[Greg Smith]

Q But it is more expensive than diesel.

Matt Palmer: It is comparable to diesel. Actually, the total operating cost of some of our equipment that we are starting to bring out is cheaper. The electric kit is actually cheaper per total operating cost, which is what you would experience in your EV and so on.

[Greg Smith]

Q Does the equipment exist out there to build the lower Thames crossing purely on battery electric?

Matt Palmer: No, it does not. That is why we are using HVO and electric.

[Greg Smith]

Q Do you have any comments, Mr Godfrey?

Will Godfrey: Matt has covered the construction side of things. Was there a part of your question about licensing arrangements?

[Greg Smith]

Yes.

Will Godfrey: In terms of the construction of this particular project, as I say, the way you hold the company to account relates to what is in the licence, and it is important to draw a distinction between what is in the development consent order and what is in the licence. The regulator’s role is not to hold the company to account on the DCO—that remains subject to the separate process for the scrutiny and delivery of that.

What the ORR would be doing under these arrangements is holding the company to account on the licence itself. The first price control settlement, if you like, would be set by the Department as part of a competition toward the first licence. Those would set the commercial terms—the expectation around allowed revenue and so forth—and then the ORR would come in as the regulator at the start of the price control and hold the company to account against that, by monitoring and scrutinising the delivery against the relevant milestones on the construction.

[Justin Madders]

Q Good afternoon. You probably heard witnesses earlier express a little scepticism about your ability to deal with the potential cost inflation or exaggeration—whatever word you want to use. You have obviously both been involved in this project from its inception, particularly in terms of construction, and you are running the existing crossing, so you know what the running costs and maintenance costs are. Would you say that, because of that, the scope for being blinded by PowerPoint, for want of a better description, is probably more limited than it could be?

Matt Palmer: The lower Thames crossing has been developed in detail over the last six years. Our development consent order fixes that scope very tightly; we cannot build any more or any less, so the scope is very well known. We are now running at 90% designed, so we literally are fully designed, and it has been competitively bid for. It is operating—we are currently on site with 3,300 people—and operating well against that very defined scope.

It is, I am afraid, just a simple road. My colleagues back at base will kick me for that, but as a project it is a simple thing to build. We are not building a complex signalling system or a control system for a nuclear power station; we are just building a simple dumb asset. As for our ability to control that, control on road construction is historically very good. If you take a similar project, which would be something like Thames Tideway, a similar RAB-based model, it is another simple dumb asset—that is no disrespect to my colleagues who built that. These are simple projects to build. They are large, but they are simple, and we know how to build them in the UK. The cost control on it is predominantly driven by the fact that we know what we are building and what it costs.

--- Later in debate ---

[The Chair]

We will now hear evidence from Wates Construction and John Laing. We have until 4.10 pm for this panel. Could the witnesses please briefly introduce themselves for the record?

Andrew Truscott: I am Andrew Truscott. I am the chief executive officer of John Laing, which is a global investor in infrastructure projects. We are a 178-year-old UK business. Our specialism is investing in greenfield projects, by which I mean projects that go through the construction cycle. We have delivered about 180 greenfield construction projects across the world over the last 25 years.

Roger Forsdyke: My name is Roger Forsdyke. I am UK operations director for Wates Construction. Wates is a business privately owned and incorporated in 1897, and has been working in infrastructure and house building since then.

[Greg Smith]

Q Gentlemen, good afternoon. Bearing in mind that the Government have been clear that they need to leverage private investment to get the project built, how attractive to you, as private sector entities in the construction world, are the provisions of the Bill introducing the RAB model for the production of the lower Thames crossing and potentially others?

Andrew Truscott: We applaud the use of RAB in this regard. Why? This is a complicated project. Listening to the previous panel, the feature of RAB that feels very relevant to LTC is the ability to have intra-cycle changes, subject to the way that, in particular, traffic operates in the future.

I am speaking purely from an investor perspective, so please excuse me; I look at Tideway as a really well delivered project, from an investor perspective, and a similar model was used there. The model used at Heathrow has also been relatively successful. Being totally transparent, when we first started talking to Government about this project, I felt that a more traditional concession model might be more appropriate, but the way in which the project is now being procured, and in particular the addition of the bridge, means that the RAB model looks really very interesting and, I would probably argue, more attractive from an investing perspective.

[Greg Smith]

Q Is there anything in this Bill that is a red flag for you—a provision that you look at and think, “If that was different, it would be a more attractive prospect from an investing perspective.”?

Andrew Truscott: Yes: uncapped construction cost risk being transferred on to an investor. I am being overly simplistic, so please excuse me, but that is something that we would not do, and I would argue that we are a relatively good proxy for investors of our type. Some work and some thought need to go into how to manage that cost overrun risk.

Echoing the comments from the previous panel, this is a well thought through project. We applaud the way it has been developed. Hopefully it can be delivered on time and on budget, but of the 180 projects that we have delivered, I can probably count on the fingers of one hand how many actually have been. As a contractor, an investor or a Government, all stakeholders have to be prepared for the expectation of cost overrun. Asking an investor to take uncapped cost overrun into its accounts does not necessarily mean that it is a terrible outcome; it just means that I cannot price equity.

[Greg Smith]

Q I understand the answer. Clearly, you and your company have a lot of experience in big construction and these big projects. What are the biggest lessons to be learned that we might be able to write into this Bill when it comes to cost control?

Andrew Truscott: Plan for the worst, and really plan for the worst around cost inflation. It was interesting listening to the Chancellor yesterday. Every element of the supply chain and the cost is increasing globally for all these sorts of projects. Plan for the worst and plan for an expectation that, unfortunately, even though it is not the intention, you will end up with a project that costs more than you expected it to on day one.

[Greg Smith]

Q I understand that. Clearly there are factors that no Government, company or entity can predict—global conflicts and so on—that will impact all that. However, what I really want from you, to improve this Bill as it goes through its parliamentary stages, are the things that you actually can control. In your experience of all those projects that the company has been involved with over the years, what are the things that can be controlled or you can put sensible steps in place to mitigate, that could improve this model too?

Andrew Truscott: Again, I will focus on cost for a minute, and then I would love Roger’s view because he is at the coalface; I am just a simple investor in my ivory tower.

What is important is that there are mechanics in the construction process or the construction phase that incentivise contractors to stick to budget as much as they can. Again, credit to the way in which the Bill is written and the way LTC is being procured—this idea of cost sharing and certain elements of cost being shared between contractor and Government and rolled into RAB. Having those sorts of features that really—no disrespect to Roger—hold the contractor’s feet to the fire in terms of cost control are very sensible. These projects can be delivered on time and on budget. We have just finished the North East Link project in Melbourne where we tunnelled under the Yarra, which is quite a complicated river. We did it on time and on budget.

[Greg Smith]

Q Mr Forsdyke, that is your cue. I am really looking for those practical things, from the years and decades of experience that you and your company have, that can improve the Bill.

Roger Forsdyke: It is about responsibility for outcomes, and Andrew is right: put it where the responsibility lies. As a contractor, we are in control of only some of the process. I often think the contractor is being presented with all the risk, when the design, the planning and the procurement are in some other court.

For me, the most important thing is to get the planning done, so that you do not start before you are ready. A lot of projects start under pressure, without the outcome and the scope having been fully detailed and the risk apportioned correctly. You have to look at the stages that we need to go through so that, when we put a shovel in the ground, the scale and scope have been determined. In the majority of cases, cost overruns come from uncertainty, which is often there before we start work; things have not been properly nailed down with the appropriate parties. Yes, hold the contractor’s feet to the fire, but there are other parties and elements: the designers, the ecology—all the other things that go into a proper, well-delivered project. There needs to be some measure of accountability there also. Often, at the other end of the contract, we find that being transferred—not necessarily fully realised—into the contractor’s risk. That is where you get problems.

[Greg Smith]

Q An example of that came up in the previous discussion. Something not any contractor’s hands is the ruling about no use of diesel in construction plant for this. It may well be that the construction sector, for perfectly noble environmental reasons, wants to use HVO or other sustainable fuels in its operation, but in your experience as a contractor, and Mr Truscott’s as an investor, is it true to say that if the project was allowed to use diesel rather than HVO in construction plant, fuel costs would be cheaper to the tune of something like 20p to 25p per litre?

Roger Forsdyke: Potentially. It is a question of appropriateness. If it is blanket HVO—well, there is some plant, some stuff, you need to use diesel for, so it is a question of appropriateness for me. There is an uplift in use of that type of fuel—HVO. If that is a key stakeholder requirement and the public purse can afford it, it is something that should be done, but those are decisions outside a contractor’s position.

[Greg Smith]

I appreciate that that is outside the contractor’s position. That is why I came with the question.

Roger Forsdyke: That is not a variable cost to me; it is just an additional cost. The risk comes from variable costs that I cannot control.

[Greg Smith]

Q But my point is that this is not a concession model. The model that we are talking about has to have a payback from the tolls that are ultimately paid by motorists, haulage companies, small business people running their vans, or whatever it might be. Therefore, it is not a question of whether the public purse, the taxpayer, can bear it, direct from Treasury; it is a question of where the payback comes in terms of the tolling. If it is cheaper to build in the first place by not using a more expensive fuel, surely that is where that question comes.

Roger Forsdyke: I think you have answered your own question.

[Greg Smith]

Fair enough.

Andrew Truscott: There is only one thing I would add, and this is a bit naughty, so apologies. You are building a road; people have diesel cars that drive on the road. One of the things that we at John Laing do is this. We own toll roads; we own availability roads all around the world, and we couch our stage 1 and stage 2 emissions on each of our roads with a path to net zero in 2050. The one thing we cannot control is the vehicles that run on the roads that we build. We can control the operations and we can have input into the way they are built, but ultimately these are polluting events, because people drive diesel and petrol cars on them.

[The Chair]

Minister?

--- Later in debate ---

[The Chair]

We will now hear oral evidence from the Minister. We have until 4.30 pm for this panel. Will the Minister please briefly introduce himself for the record?

Justin Madders: Good afternoon. I am Justin Madders, the Parliamentary Under-Secretary of State in the Department for Transport.

[Greg Smith]

Q Minister, we had this discussion on Second Reading, but I want to ask you again after you have had a few days to reflect on it. You said clearly at the Dispatch Box that you do not want to bring in road pricing and tolling on other roads, but the Bill still leaves a little bit of a lawyers’ paradise where it could be argued that that power would exist, either for you, for the current Secretary of State or for any future Secretary of State. Will you amend the Bill to properly rule out, in statutory form as opposed to a commitment at the Dispatch Box, it being used to extend tolling and road pricing to other roads?

Justin Madders: We are pretty clear that it is not a backdoor to road pricing. The hon. Member may have an amendment that he thinks will deal with that, but I can assure him that we have gone through extensive discussions with the Office of the Parliamentary Counsel on this. I refer him to Logistics UK’s evidence this morning. They said that they thought the Bill was relatively strongly drafted in terms of closing the loopholes.

It is probably worth saying that, as the hon. Gentleman will know, the Bill’s intent is also important. My statements on the record on Second Reading, probably a number of times in Committee, I imagine, and today will all be relevant should, at some point in the future, a future Secretary of State want to do something that is clearly outside the scope and intention of the Bill. I will say, again, for the record, that this Bill does not provide a backdoor for widespread tolling.

The Bill is creating an additional financing option for major strategic road infrastructure, specifically for trunk roads in England. It is deliberately a framework because, rather than legislate for one individual project, it is possible that there may be more suitable projects in the future, but that does not mean—I want to be clear—that this will become the default model for road investment. Any future use would need to meet the requirements of the Bill and be considered on its own merits. As Steve Gooding from the RAC said this morning, I am happy to confirm that, at the moment, there are not any other schemes that are being considered for use under this Bill.

It is important to say that the Bill narrowly defines when a licence can be granted: for a new road, a capacity-enhancing improvement or the continued operation of a road that has been previously licensed under this regime. This is about major strategic infrastructure; it is not about, as in the example the hon. Member gave, putting in tolls when a new camera or something is introduced. That clearly is not the case. Some of the evidence earlier also suggested that our geographical constraints would make that very difficult anyway, even if that was what we wanted to do, which, I will state again for the record, is not the case.

[Greg Smith]

Q Thank you, Minister; I appreciate your clarity. You are right that we will explore that further during line-by-line scrutiny, because I have genuine concerns that some of the drafting leaves that backdoor open. I want to ask another question that we did not get any clarity on in the Second Reading debate. I appreciate that this is a decision for future licensing authorities or the ORR to come to, but what would be an acceptable window for the toll on the lower Thames crossing?

Justin Madders: I am afraid I am going to disappoint you. We are not going to give figures for tolls for a nine-year window in advance, because that will be part of the ongoing analysis and development of the project and part of the discussions with potential investors. We are clear that the Bill will set out the framework for how that will work. It is about the economic and efficient costs of provision. It is very clear that we believe tolls must remain affordable and they must represent good value for road users. Future projects would be undertaken on the same basis, so although I cannot give any figures in pounds and pence, I can give assurances that there will be sufficient restraints in place to ensure that this is not an unlimited blank cheque for increased tolls for evermore.

[Greg Smith]

Q In terms of unlimited blank cheques, can I come to this point about cost control on any project, starting with the lower Thames crossing? We have heard evidence of other projects that have gone over budget. We have heard clear evidence that it is quite rare for a project to come in on budget. I think we can all understand the reasons for that, but within what can be controlled, are you willing to look again at the ban on diesel, which means an additional cost of between 20p and 25p per litre in using HVO, ultimately having a bearing on the construction cost of the whole project?

Justin Madders: I thought the evidence from National Highways was very clear on that. It is saying that there is not an increased cost as a result of that. It also said very clearly that this was a requirement set in the development consent order in 2022, when your party was in government. I am not entirely sure where you are going with this.

[Greg Smith]

Q We paid our price in 2024 for the mistakes we made. This Government have been in power for two and a half years, and the evidence I put to the representatives from Wates and John Laing confirmed that there is a differential in price. From looking it up, my estimate is a between 20p and 25p per litre difference between white diesel and hydrotreated vegetable oil. Given that we are now operating two and a half years into this Government, and we are looking at significant costs that will ultimately be borne by those who pay a toll to go on the lower Thames crossing, I gently and respectfully ask if you will look at this again to try to get the cost of this project—which the Opposition do want to see built—to come down.

Justin Madders: I would gently push back and say that, rather than evidence from people who are not working on the project, or from ChatGPT or whatever the source—

[Greg Smith]

The market, Minister.

Justin Madders: We had very clear evidence from National Highways that this is not having an overall impact on costs. I am happy to provide further information. I will ask it to put something in writing about the detail of that. You will be aware that this Bill is scheme agnostic, so it is not appropriate for such restrictions to be placed in the Bill, but I am happy to facilitate a further conversation, because I understand you are concerned about that.

[Greg Smith]

I am grateful.

[Jim Dickson]

Q I am a very strong supporter of the Bill, because it enables major projects such as the lower Thames crossing to be funded, but the tolling issue is important. We cannot talk about individual toll levels, but we can talk about mechanisms by which reasonable—hopefully affordable—tolls will be set for both industry and individual motorists. Could the Minister enlarge a bit on how the ORR, with the legislation designed and passed by Parliament, will ensure that tolls fit the definition of “affordable” as far as possible?

Justin Madders: I understand why you ask that question. The Bill sets the framework for the RAB model, and that will establish the independent regulator. Its remit is clear, and it is there in the first few clauses of the Bill: to take account of the interests of road users. There will be fair pricing, transparency and long-term sustainability as a result of that. You will also be aware that there will be a stakeholder group in which users will have the opportunity to feed in. We have a pretty robust set of reassurances that I hope will satisfy you and your constituents.