Highways (Financing) Bill (Second sitting)

Debate between Jim Dickson and Alison Griffiths

Committee stage
Thursday 29th October 2026 Public Bill Committees

[Jim Dickson]

Q Is this largely the result of having had considerable allocation of Treasury funding already, in order to be able to make a start and, essentially, mobilise and begin the project in the way described?

Matt Palmer: The logic is that the economic benefit of the scheme is great. Not only does it solve the problem in the local area; it is a national-level project, so we move at pace, we start the construction and we take a lot of the difficult, time-consuming activities like land assembly—putting plots of land together—and that is what we are doing at the moment. All of that enables a much more stable platform for investors to come in.

[Alison Griffiths]

Q I want to come back to the question of hydrotreated vegetable oil. Mr Palmer, you suggested that there was parity/comparability in costs between white diesel and HVO. I have spent a little time in the last few minutes looking at Google, Claude and ChatGPT, and not one of those sources suggests that is the case unless you count HVO being 10% to 30% more expensive as comparable. So I want to push back and ask you to be more precise on the additional cost base of using HVO in construction across the course of this project, both to date and in your estimates going forward.

Matt Palmer: In construction in the UK, about two thirds of our constructors use HVO as standard. For a project, you will find that a number of constructors bid with HVO—it is just in the costs. That is the case with lower Thames crossing. Two thirds of our contractors bid with HVO.

--- Later in debate ---

[Alison Griffiths]

Q Can anything in how the relationships are built with the procurement teams be changed to shift that?

Roger Forsdyke: I think so. If you have gateways where you build the price through detailed submissions, you can then control it. You do not want uncontrollable cost and excellent quality, but you need to create some gateways through the process so that you can control the quality as you go through. That is my experience. Those sorts of two-stage processes create the best outcomes.

You then have to make sure there is no undefined scope. As you cross the line to secured and the responsibility moves to the contractor, you do not want any change. That is sometimes very hard to achieve, but it is a really important step. It is often, “Oh, we just need to get started,” and the pressure of starting often means that the project will start prematurely, before the scope is defined. That is where the optimism bias goes in—the provisional sum might be light or whatever—and then you end up with escalation, notwithstanding the delays to resolving the issues themselves.

Andrew Truscott: I do not have a huge amount to add, because Roger has put it beautifully. I will just say one thing, and he can kick me under the table: contracting is a hard business. They do billions of pounds-worth of revenue for 2%, 3% or 4% margins—it is hard—and there is therefore little scope in their business models for mistakes. They will always enter into these sorts of projects with an expectation that mistakes do not land at their desk, because otherwise they go bust, and they have done globally.

Again, credit to the way LTC is being procured. I think separating church and state a little bit—separating equity and financing from contracting, rather than having one single proposal—is arguably a way of getting more certainty around deliverability than amalgamating all those elements into one. Where we have seen material cost overruns, it tends to be in the big projects where one single solution is given to a customer. We have been looking at a lot of US projects recently in the road space where single projects— equity, traffic and revenue, as well as construction—are lumped into one big unit and presented to a customer, who then tries to aggregate and always aggregates to lowest cost, and that is not always the right solution.

I am giving my previous panellists an awful lot of credit today, which is wonderful. I think disaggregating elements could be a way of managing that risk and that cost and delay overrun quite well.

[Jim Dickson]

Q I agree with your earlier point that it is really important that the tolls are kept affordable in every way, not only for the haulage industry but for motorists and other vehicles. Presumably one aspect of that will be this being an attractive project for which lots of interest is generated in the market, and therefore we get lots of potential bidders—

Andrew Truscott: Hopefully not.

Highways (Financing) Bill (First sitting)

Debate between Jim Dickson and Alison Griffiths

Thursday 29th October 2026 Public Bill Committees

[Alison Griffiths]

Q This is predominantly for Mr Whelan, but Ben and Declan, if you wish to weigh in, please do. For the M6, have the economic and operational outcomes that have been delivered over the last 20 years been what was envisaged? On the role of the ORR, does the regulation outlined in the Bill provide sufficient certainty for private investors?

Michael Whelan: In terms of economic benefits, the best way to look at the M6 toll is to consider the fact that 50,000 vehicles use it every day. If it was not there, the M6 and surrounding network would be quite a mess. As a result of the M6 toll, we have seen significant investment into the region. Numerous businesses have invested in logistics sites up and down that corridor—for example, there is a massive Amazon site near us. That also creates jobs for the region. I will not go through it all; please refer to the pre-reading that I know you all have.

In terms of part 7 of the Bill, which we are specifically interested in, as we see it, as it is an existing road, the ORR regulations do not apply. If they were to apply, that would have a significant impact on our concession agreement, on investors and, in particular, on lenders, who have all invested into the roads. Having this conversation is important, but for us it is a separate issue.

Declan Pang: On the RAB model in particular, we are supportive of any measures that will be brought forward to increase road building and capacity, and efforts in that regard. We think that RAB gives some certainty to the market around providing investment opportunities.

In addition to my comments around the stakeholder group, the ORR has been heavily weighted towards rail regulation and currently has a much smaller role in highways monitoring. As a proportion of what it does as an organisation, its role from a roads perspective is smaller than the rail element, and that is probably reflected in its level of engagement with the sector as it stands. The Bill would reflect quite a significant change in its level of responsibility, and we would want to be sure about the capability and capacity for it to take on that responsibility.

Ben Garratt: I want to expand on something Michael said about the wider benefits. Understandably, the logistics sector invests where there is transport capacity and junctions, from where it can then access the rest of the country. Particular parts of the road and rail network have a lot of logistics clustered around them. It is also about having good journey times between large conurbations.

We can definitely see, in other parts of the country, what we would say is artificially less logistics investment than there should have been, because of transport constraints in parts of the network. It particularly affects the north-west, where it is more of a rail issue. A lack of capacity on the west coast main line leads to more modern logistics being clustered further south than maybe it otherwise would be. There is a real economic benefit for the country in getting the capacity right.

[Jim Dickson]

Q Ben and Declan, you have set out very clearly the effect on your sector of the Dartford crossing being hugely over capacity. I have talked about how it affects hugely my residents’ quality of life and air quality. It has been suggested by some that we do not need the project and should look at modal shift instead of, rather than alongside, the solution of the lower Thames crossing. What do you think would happen if the lower Thames crossing was not built—what is your scenario over the next decade?

Ben Garratt: I think it would inhibit economic growth. Thinking about the modal shift piece, using the right modes for the right kind of journeys in our logistics system is really important, but it is not simply about getting more off congested roads and more on to rail. Rail can play a particularly strong role, as you would understand, where there are railway tracks that connect to ports and are bringing in containers. As this area gets congested, I do not think that would automatically lead to the logistics sector switching to rail, because of the lack of rail connectivity.

It could, over time, lead to less use of the short straits and more use of container shipping but, really, those dynamics are shaped by where the goods are coming from in the world. It would largely just be a bottleneck. It would increase the costs, over time, of exporters connecting to new markets. The current situation will invariably be inhibiting businesses from thinking about going to export, because it has an effect on the costs. We want to see that resolved. In short, it would be bad for the economy if it did not happen.

Declan Pang: We are very much behind it and we are grateful for your efforts in campaigning for it. We are pleased to see that the development consent order was approved. It is already having a significant impact on the economy, given the level of congestion. It is vital that we get it delivered.