Infrastructure Bill [HL]

Lord Davies of Oldham Excerpts

Tuesday 14th October 2014 Grand Committee

[Lord Davies of Oldham (Lab)]

My Lords, I will briefly intervene, not because I have the expertise of my noble friend Lord Berkeley; if he believes that he may be pushing at an open door as regards the Minister’s response, that is very good news indeed. My qualification for speaking about level crossings is that I live on the border of Hertfordshire and Essex, in one of the flattest parts of the country, the Lea Valley. The railway line there is plagued by the problem that it has a very large number of level crossings of all kinds, from the latest state-of-the-art crossings in some parts, to those where people open a little gate and run for it, dragging the dog behind—because they usually have a recalcitrant animal as well—and take risks getting across. Incidents on the line are constant.

I know that my dear friends at RoSPA—the Royal Society for the Prevention of Accidents—indicate that there are only nine deaths per year and that limited numbers of people are injured. We have 6,000 level crossings, and they are not all on the line that I know so well, but as my noble friend Lord Berkeley has emphasised, there is no doubt that because of the improved efficiency of the railway line—which is not just for local stations but is also the Stansted line, and which therefore supplies an important service to Stansted —very fast trains cause greater problems when you have some crossings which to all of us look exceedingly casual.

There was a tragic case only two weeks ago, when one of the most experienced local cyclists—someone who had travelled all over the world on his bike and raised lots of money for charities, who rode his bike all the time and was very advanced in years—decided that he could beat the train. Of course, this happened on one of our crossings, which is a bit posher than some, with an automatic gate that comes down on one side, and an automatic bar that comes down on the other side. However, if you are prepared to take the risk, you can wiggle between the two, and this poor fellow took the risk and got hit by a fast train.

We need to address this issue. We all know that with so many crossings, it is quite unrealistic to expect the problems to be resolved overnight. We are also aware at the present time that the whole responsibility falls on Network Rail. The costs and responsibility for safety all rest on Network Rail, while it is quite clear that other users create so many of the problems. That is why, at the very least, there should be some sharing out of the costs where it can be established that the local authority responsible for the road access may well not have played its part as fully as it ought to have done.

I am therefore looking forward to the largely positive reply from the Minister; it is an absolute delight to anticipate such a response. I emphasise that we were somewhat disappointed that there was nothing in the Queen’s Speech about a Bill, given that there was a small number of Bills—and rather pot pourri Bills as this one is to a certain extent—covering a range of issues. We were concerned that there was nothing about a level crossing, but I am very glad that my noble friend has raised the issue with this amendment, and I look forward to the Minister’s response.

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

My Lords, I am very grateful to the noble Lord, Lord Berkeley, for raising this issue. I know that he speaks also for the noble Lord, Lord Bradshaw, who has had to leave. I welcome the opportunity to discuss this matter. It is an area in which the Committee rightly takes a very keen interest.

As we all know, the UK has the best level crossing safety record in Europe. We want to ensure that it is maintained and, of course, to see that it is improved. We are absolutely not complacent about level crossing safety. The noble Lord, Lord Davies, rightly pointed out that, as we run more trains and operate many of our lines at full capacity, the issue becomes more acute. He mentioned that the relevant cost fell on Network Rail. I can understand why people say that other road users should pay for the provision we are discussing. I do not want to fight over who is going to pay. When it comes to taking a decision on a closure, we need to move forward in an accelerated fashion. Therefore, I will accept a little injustice in order to make sure that we are really efficient when we need to be. I do not think that is what is inhibiting the system although I take the point that the noble Lord makes.

This amendment is about the law surrounding level crossings. At present, the legislative framework surrounding the management and operation of level crossings is, frankly, antiquated and complex. I have been passed a note informing me that 10,000 Acts apply to level crossings. I did not even know that we had 10,000 Acts. That is the most extraordinary figure and it says it all. Indeed, that complexity is the reason why we, or, rather, the Government of the day, requested the Law Commission and the Scottish Law Commission to undertake a review in 2007. The review was initiated in 2008. I take this opportunity to place on record my thanks to the Law Commissions for the tremendous amount of hard work which has gone into developing their report, and recommendations which were published in September 2013. The examination of 10,000 Acts is demanding work.

The Committee will appreciate that this is a highly complex area which touches on a wide range of issues including railways, highways, health and safety, planning, land and criminal law. The Law Commissions’ 86 recommendations represent the culmination of five years of investigation. Following legal and policy analysis, the Department for Transport has published its response. I apologise that noble Lords have not had a little more time to read it. I suspect that the noble Lord, Lord Berkeley, was always going to be the most dedicated reader and I congratulate him on going through it. The response indicates which of those 86 recommendations we intend to accept, reject or implement in a modified format.

We accept the case for reform which the Law Commissions have presented and have accepted the majority of their recommendations. However, in some key areas—for example, closures and the application of the Health and Safety at Work etc. Act, as the noble Lord, Lord Berkeley, mentioned—the Department for Transport’s response indicates that we believe we need additional policy and legal consideration. This arises very much as a result of talking to the industry. The Committee will understand that some level crossings are site specific and that that creates additional complexity. However, we believe that we have to pursue these issues because in some cases there may be alternative proposals that work rather better.

On closures, the department needs to be convinced that the process recommended by the Law Commissions would shorten timescales and cut costs, which it is meant to do. We need convincing that that is what it would do. Stakeholders from both road and rail have voiced concerns about the possible implications and have pointed out to us areas where there is lack of clarity. We need to explore those further.

I very much understand that this is a probing amendment but I am told by those who understand procedure that it is a real oddity to put in a piece of legislation a clause which would legally commit a future Government to introduce a complete Bill. Although I know that is not the purpose of the amendment, technically there is an issue there. I should also draw the Committee’s attention to the fact that the Law Commissions’ recommendations contain significant devolution elements which we must and will discuss further and reach agreement on with the Scottish and Welsh Governments before implementation could proceed. As I said, we are also aware of stakeholder concerns about some of the recommendations. They must be addressed because this is highly practical, operational stuff and we have to get it right.

We want to move quickly, but we recognise that there is work to be done, and we are trying not to set ourselves an artificial deadline. However, I am very concerned that this does not get kicked into the long grass—as, I suspect, are all of your Lordships who have spoken.

We have said that we will come forward with an action plan. We will produce it by the end of 2014. It will be an outline of where we think further work is required and how it can be taken forward as a priority. I point out that that action plan will address some of the specific issues raised. The noble Lord, Lord Berkeley, asked whether most of this requires legislation. Unfortunately, it does, but we will look for those areas where we do not need legislation, because that will give us a little flexibility. There are also additional complications that flow from our need to get the Law Commission to consider whether it can simplify some of its recommendations. The action plan will cover that issue as well.

I hope that the noble Lord, Lord Berkeley can agree that this is the best way forward; I hope that he will feel comfortable to withdraw his amendment, because it seems to me that we are all pretty much on the same page on this important issue.

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[Lord Whitty]

My Lords, as a former consumer champion, I am fully in support of what the noble Lord, Lord Jenkin, is trying to do here and, in particular, I see the sense in putting it in the hands of the Treasury. The Treasury is the only government department, with the occasional exception of No. 10, which can ensure that individual departments do not go off at a tangent. The problem is not only the multiplicity of regulators but that each of them rests within a culture of a different department. The consumer function, insofar as it is reflected in Whitehall, is a very minor function of the business department’s responsibilities. It is only the Treasury that can insist that regulators and departments really look after the interests of consumers.

Whether the Government follow through the amendment of the noble Lord, Lord Jenkin, or the NAO’s report, this is something that needs doing, and therefore I hope that we get a positive response.

[Lord Davies of Oldham]

My Lords, I, too, congratulate the noble Lord, Lord Jenkin, on putting forward a very useful amendment. However, as he indicated, in terms of the level of expertise available among staff currently devoted to aspects of this kind of work in the Treasury and the fact that we would also need some legislation, the whole proposal will produce enormously beneficial results but not next year, nor probably after that. It would take some time before we had the full range of expertise indicated in the noble Lord’s amendment.

He is absolutely right on one thing: of course the country is not prepared to take time over these issues because the consumer is all too well aware that they are bearing the costs of a great deal of interest by the companies. What the companies reflect is what they classically reflect in the private sector—the massive increases in pay for their directors and chief executives since they became independent operators, a significant increase in profit and a whopping price rise for the consumer, who has very little capacity to avoid such price rises.

We know that consumers are meant to move around among the energy companies—we know how easy that is with regard to water, for example, and other areas where the natural monopolies obtain. The noble Lord, Lord Jenkin, has identified what we on this side of the House have emphasised for several years: that the operation of a great deal of these services to the public through such private companies, some of which are natural monopolies, has produced a most distressing situation for people who we all know are seeing nothing in the way of increase in their own resources, with low wage levels, and are meeting ever increasing costs. I therefore strongly support the amendment and congratulate the noble Lord, Lord Jenkin, on making this great effort to produce an outline of what is necessary. However, we will expect the next Government to move more directly even than this proposal.

[Baroness Kramer]

My Lords, I am afraid that I wear a number of hats with this Bill. While much of the advice has come from the Treasury, I also speak at other times for Defra. I therefore speak as a government Minister across the breadth of a number of issues. I can assure the noble Lord that my noble friend Lord Deighton will be happy to meet him. I hope that he will take advantage of that opportunity, because it is important to share the thoughts that he has expressed eloquently today.

The noble Lord, Lord Whitty, said that departments pay little attention to the consumer and that it is a small part of what they do. That may have been true of the departments that he was part of in his time in government, but if he came today to the Department for Transport, he would hear almost nothing but the words “passenger”, “traveller” and “consumer”. They are key in the way that we have been shaping policy, and I think that one can see it in the response of a lot of the transport industry, which is now beginning to put passengers at the heart of what it does. Historically, that might well have been absent and one might have accused much of the industry of being engineering-biased, but I assure the noble Lord that it is certainly not the case in today’s world.

The Government fully recognise the importance of ensuring that infrastructure investment is delivered in a way which protects consumer interests and is affordable to current and future customers. I think that we can say that a lot of the pressures today are caused by the fact that investment in infrastructure essentially disappeared off the radar screen for virtually a generation. We want to be sure that we do not do that to future generations. It is central to government policy and to the work of economic regulators, such as Ofwat and Ofgem, operating in each sector.

However, the Government disagree with this amendment and have some serious reservations about trying to aggregate across sectors for infrastructure costs. Bang our heads as we might, we cannot think of a way in which one could do this that could be robust or meaningful.

Let me try to be practical about this. Different consumers in different parts of the country consume different amounts of travel by rail or air—I am now talking about transport, because it is my area—and different amounts of water and energy, all differently priced. Consumers also use very different amounts of these services depending on their needs and preferences, which makes any attempt to aggregate across sectors, to depict a typical household or clusters or types of household, pretty much impossible. Once one starts trying even to estimate an average, it becomes meaningless.

It is the sector-by-sector assessment of their customer base which regulators do in detail that we think is the effective way to assess consumer impacts and affordability. I am thinking of new transport infrastructure, which would obviously be included in this package. It might give the Committee some understanding of how it is near enough impossible to do this in an aggregate way. Transport investment affects personal affordability in many ways and affects different social groups in different ways. For example, if we bring in a smart motorway scheme, it leads to reduced congestion and you could argue that it leads to reduced fuel bills. On the other hand, because there is reduced congestion, more people may well use the road, so because they are travelling their fuel bills go up. However, it may be that they are making that journey because they now have access to a job or to additional business. You surely ought to net out that benefit in order to come to a conclusion on the additional cost caused by that additional piece of motorway. Getting this sorted out is virtually impossible.

HS2 is probably the biggest piece of infrastructure seen across Europe. We have said that there will not be premium fares, so what number do you put in for the burden on the consumer? Is it the standard fare? You were not including it when that standard fare was being used on the existing line. Is it the additional revenue? Then again you are netting out benefits. To try to unravel this into something that would let you have a formula that would make any real sense is near impossible. It is not really a sensible way in which to try to look at this. When we think about capturing cumulative effects in a way that has some meaning, it seems impossible to work your way through the human behaviours and their responses to infrastructure to get you to something that you want.

Back in the department, when we are trying to decide whether to fund a scheme, we try to look at this complex picture. How does the scheme impact on the individual, the environment, the economy or personal health? What happens, in terms of safety, to accident levels and to various other societal benefits? It is based on in-depth, long-standing scientific evidence about how people and businesses value different things. It is just a much more complex picture when we try to put this together into a scheme business case.

The fact that I am saying that cross-sector aggregate measures look at something too complex to come up with a meaningful answer does not mean that the Government fail to take affordability extremely seriously. The Government are taking targeted action on some of the costs that have been discussed today. We have introduced a range of measures to help hard-working families with the cost of living, which is surely what we are all trying to get at. For example, increasing the tax-free personal allowance has a big impact on the cost of living for individuals. Freezing fuel duty has a big impact on the cost of living, as does helping local authorities to freeze council taxes. Those are mechanisms for trying to deal with this set of issues and link in no way to the kind of cumulative cost assessment that is being discussed in this amendment.

Targeted action on bills includes action at the last Autumn Statement, in which the Government announced a series of steps saving the average household around £50 on its energy bills. We recently announced an extension of the freeze on rail fares. Last year, that saved season ticket holders around £70 over 2014 and 2015. It is completely separate from trying to calculate the specifics of a specific infrastructure investment. It has been possible because the Government have a long-term, credible economic plan.

For example, Ofgem undertakes detailed and regular assessment of energy market customers, the affordability of bills and consumers’ ability to pay. Ofgem has published a strategy on consumer vulnerability which set out to understand and identify the causes of vulnerable situations in the energy market and to reduce the likelihood and impact of such situations. It regularly monitors and publishes data on energy disconnections for debt and other issues related to supplier dealings with domestic customers. Suppliers are required by their licences to avoid disconnecting consumers who are of pensionable age, disabled or chronically sick in the winter months—the “winter moratorium”. Ofgem also requires the big six energy companies not to disconnect vulnerable consumers at any time of year, and to reconnect a customer as a matter of priority and usually within 24 hours, if they are later found to be vulnerable. Regulators take these assessments and monitoring of consumers very seriously indeed and see it as an absolutely core part of their role.

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We have a lot to learn. If we go down this road, we need to look very carefully at how they did it in Norway, what is applicable to us and what we can learn from that. It was incredibly impressive, particularly —I am repeating myself—the fact that during the recession their fund hardly dropped at all. They managed to keep it up.

[Lord Davies of Oldham]

My Lords, I will be very brief. First, I congratulate the noble Lord, Lord Hodgson, on his excellent exposition of a very important concept. We see much merit in it. The one thing that we cannot replicate as far as the Norwegians are concerned is that they launched their fund at a time of great and increasing prosperity. Any Government in power at present or for the foreseeable future in the United Kingdom are not faced with that same position.

Secondly, there is a community dimension to the issue of shale gas. We are all too well aware of the price that local communities might pay in terms of disruption while the shale gas is mined. Thirdly, I emphasise that while we may underestimate how much is there, of course we may overestimate it too. It is much easier to identify how much is there than to actually extract it. Therefore, we must be able to follow the greater balance of optimism that exists in some places. None the less, the Committee ought to be enormously grateful to the noble Lord, Lord Hodgson, for raising this issue. I hope that the Minister will give him a positive response.

[Baroness Verma]

My Lords, first, I thank my noble friend Lord Hodgson for his amendment and for the most eloquent way in which he explained the merits for the Norwegian people of having a sovereign fund. Of course, shale represents a huge economic opportunity for the UK. It could potentially create thousands of jobs, generate significant business investment and provide substantial revenue for the Exchequer in future.

However, unlike the offshore industry in Norway, the shale industry in the UK is still very much in its early stages. The Norwegian Government’s petroleum fund was established in 1990, as my noble friend said, but that was nearly 20 years after oil first started being produced and when the levels of revenue were well known. In the UK, shale gas is still in the exploration phase. My noble friend said that it was a potential but as yet an unknown. The Government will not be able to forecast the scale or timing of shale revenues until more work is done to determine the extent of gas that can be technically and commercially recovered. It would therefore be inappropriate to indicate now how potential future revenue would be used. As a result, the Government have no current plans to assess the possibility of creating a sovereign wealth fund from this revenue.

I recognise the arguments behind this amendment. Diverting future revenues from government finances to a specific shale fund, or one created by revenue from other natural resources, would come at a cost. Shale revenues may also be needed to make up for shortfalls elsewhere. The UK continental shelf is a mature basin and oil and gas revenues from the North Sea are declining; the Government would likely need to either raise additional tax revenue elsewhere or cut spending to maintain the fiscal balance. The Government consider that, in general, hypothecation, or earmarking revenues for a particular spending purpose, is not always an efficient way in which to manage the public finances. Like all government receipts, revenues are remitted to the consolidated fund to support general expenditure. My noble friend Lord Teverson recognised that fact. Once it goes to the Treasury, it becomes slightly difficult to extract it—but that is because of the methods that we have used, whichever Government have been in power. It allows the Government to allocate resources most efficiently across the economy.

I thank all noble Lords for contributing. It has been a very informative debate, which has raised some very important points. The noble Lord, Lord Davies, said in his concluding sentence that I should be sympathetic to this proposal. Is it something that the Labour Party will put in its manifesto for the next general election? It would be interesting to know how that debate would follow.

[Lord Davies of Oldham]

Could I ask the Minister whether she thinks she will put it in her manifesto?

[Baroness Verma]

I have laid out very clearly our position in government. Generally, hypothecation of revenue is not something that we support.

I conclude by recognising that the noble Lord has made some incredibly important points, but I feel that I cannot accept his amendment and hope that he withdraws it.