Infrastructure Bill [HL]

Lord Hunt of Chesterton Excerpts

Wednesday 18th June 2014 Lords Chamber

[Lord Hunt of Chesterton (Lab)]

My Lords, like others on this side, I give a half-hearted welcome to the Bill. The opening by the noble Lord, Lord Adonis, put it in the right context. I am surprised that nobody else has mentioned the less than flattering view of Britain’s infrastructure by China’s Prime Minister when he was visiting here and gave us a rather low score. Perhaps, being an outsider, his view was rather more objective than the rose-tinted view from certain Benches here in the House of Lords.

All, I think, agree—road enthusiasts or otherwise—that strategic highways play an enormous role in the economic development of the country. I personally saw the extraordinary development in north Devon once the highway was produced under a previous Tory Government. It was remarkable how that led to economic development. There is no question but that road building is of vital importance. In our crowded island, however, other factors also are extremely important, particularly air pollution. Air pollution, as we now know, is much worse in big cities where a lot of traffic is present. It is particularly bad where motorways intersect. Therefore the planning and design of motorways should be of considerable concern in terms of air pollution.

Most importantly, the UK has benefited from the fact that we do not have massive motorways through the middle of our towns; in particular, not through the middle of London. Some noble Lords will recall going to protest meetings in the 1960s when there was a real possibility that we would have enormous highways right through London; fortunately, we did not. However, there is a threat for this in other big cities. I believe that that is one of the strategic areas.

The other point, made by the noble Baroness, Lady Miller of Chilthorne Domer, is on the question of carbon emissions, which is important in the case of major motorways and part of our impact on the climate. The other effect of motorways is that they can help or hinder water movement. In Malaysia, the motorway that goes into the centre of Kuala Lumpur is generally a road but can also be an enormous drain when there is enormous rainfall. Similarly, we could have road tunnels and cuttings to use our roadways as part of our water infrastructure.

The other point to emphasise, when you go to Germany, is that you should moderate your speed because of the noise. The Germans do not generally moderate their speed, but they do when suburbs tell them about the noise. We have extremely noisy roads, such as the North Circular Road, and those are aspects.

I want to come back to that in a moment, and the role of the private sector. I am surprised about the confidence in this Bill about the private company solution. Who will own the company? Will it be owned by five different banks all around the world? There was an article in one of the Sunday newspapers recently. Thames Water has been owned by many banks, finally ending up with the Macquarie bank in Australia. English people are being told all sorts of undesirable things on water to maintain the very high profit levels of this multiple bank ownership. How are we going to be sure to avoid this kind of thing?

Well run companies, such as we see in France with their motorways, not only run the motorways well but also give extremely good advice to road users. They tell them not to go too fast because it is dangerous and it is adding to carbon emissions. Here, under our Department for Transport control of the motorways, road users are told to go faster—they say, “In 70 minutes you will reach Bristol going at 70 miles an hour”. That is not the right message. The private sector with proper guidance could help, but the transparency that we need of private sector involvement needs to be a great improvement on what we have seen with the massive water companies.

The other feature of roads and road strategy is the question of whether they will continue to be the same. Are we going to have automatically controlled cars and cars and vehicles that are electrically driven? The big question is whether the investment and financial case being put forward for roads is based on current technology. I look forward to hearing the Minister’s view on that, and on who will be responsible for making the strategic technological decisions.

It is very important that there should be an overall strategic view on highways as regards the transport, economic and environmental aspects. That issue was of course reviewed in the Armitt infrastructure report, which put all those things together—things which we are not seeing at all in the Bill as drafted. In his report, which he produced with a number of important advisers, including my noble friend Lord Adonis, it was suggested that roads need to be considered in a broad context, obtaining maximum value. That requires an integrated approach by government. I have mentioned some features, but other important ones include other aspects of transport, such as rail. Surely, many railway journeys to the south-west tip of Cornwall would be much more comfortable for everybody if the car was put on a train and the train went to Penzance—the sort of thing that used to happen and which still happens in France. Everybody charging down these roads to that tiny peninsula at the end of Britain is a very strange thing to do.

Finally, there is shipping, which is a very important aspect of transportation around the coast of the UK. This was discussed in considerable detail when we had our coastal Bill in 2009-10, and should again be considered in a strategic way.

On other aspects of the Bill, I welcome the speeding up and clarification on land assets and conveyancing. Purchasing and conveyancing in the UK is nothing like as fast as it is in some other countries, and I hope that the efficiencies there will bring benefits. We should take on board the comments made about the possibility of fraud, when you have a highly computerised system. With people not understanding the process, there are dangers.

In Part 4 there is the discussion of indigenous oil and gas, as the Minister rightly emphasised. Will this be a possible source of energy for the UK via fracking? It is important to consider all the environmental costs. It is unknown by many in Britain, as we have been told here by visiting American politicians, that in the energy Bill proposed by President Bush he explicitly said that the costs of water and water clean-up would not be ascribed to the energy. It is therefore really important that all the environmental costs should be ascribed to the energy benefits or costs of fracking. It would be useful to have that point clearly made. The assumption in all the discussions is that you put a pipe down in the ground and oil or gas will come up out of the pipe. But the point about the experience of America is that, once you start really forcing the structure of the ground well below, you can get a release of gas coming up through other cracks, and some of these—as you can see when you look at the photographs from North Dakota—are very serious indeed. You can see flames popping up in between the nodding donkey gas extractors. There are still significant features of the chemistry of shale that need to be understood, when the shale is there in the presence of water. I visited a chemistry lab at the University of Leicester where they are studying this, and they pointed out that there were still important research questions to be assessed.

Another feature of Part 4 is the encouragement to build more energy-saving houses, as the Minister explained, with technology solutions that should of course include not only new sorts of emission but also ventilation and insulation, which are serious problems. Noble Lords might be interested to know that there is a nice book in the Library, which I edited, called London’s Environment, published in 2005, in which we described in great detail the excitement of the House of Lords committees at that time about what was happening in some of the new housing developments, in BedZED and Woking, some of which were looked at by many other countries. The Minister was right to imply that much of this technology is known, but the question is now to push this out and to ensure that it is available to social houses. I am afraid to say that some social housing is particularly bad with regard to insulation and ventilation, and this causes ill health, so housing for the whole community must be at an appropriate level.

Clause 26 in Part 4 has this very important development, which has been quite widespread in other European countries, in involving community investment in renewable energy. In Denmark, it had a great impact on involving people in their local wind farm installations. As the Bill describes it at the moment, it is a question of the community investing in the generation; there is no discussion that I have seen about generating local electrical networks. Woking was a borough run with no overall control, and some people say that that is why the Woking experiment or development worked so well—but that is a political point. It was at any rate extremely innovative, and Mayor Livingstone said that he wanted to make London look like Woking. That did not quite happen, but it was an ambition. One important point that was made was that the people in Woking could use a local electrical network and then the price of electricity that they paid for was much reduced. I suspect that the scheme being envisaged here is that community people might benefit to some extent from the income to the generators, but will they get cheap electricity out of their electrical plug to their kettle? I am not so sure about that. It is very important to have this done in an integrated way.

Finally, it is very important that if communities are to be involved in fracking, as has been suggested—I think that the Minister suggested that—they must also contribute to the costs. As others have emphasised, these costs include roadways and destruction of the local bio-environment, as well as the costs of the water supply and clean-up and recycling. So it is not just a free lunch. There will be quite considerable investment in all of that—but I believe that if the community is involved the right answer might be obtained.

[Lord Purvis of Tweed (LD)]

My Lords, the briefing notes accompanying the Bill say that its purpose is to:

“Bolster investment in infrastructure by allowing stable long-term funding, deliver better value for money and relieve unnecessary administrative pressures. The Bill would increase transparency of information provision and improve planning processes, allowing us to get Britain building for our future and compete in the global race”.

I do not think that any noble Lords who have taken part in this debate could disagree with those motives. Indeed, we have had an interesting debate on whether or not the Bill will deliver what this country desperately needs—a modern, efficient infrastructure to allow the economy to continue to grow.

When I served in the Scottish Parliament, my constituency had the unenviable record of being the largest area in Europe not served by a railway line. That is being corrected as the Borders Railway is finally being restored following its closure in 1969. I was intimately involved in that process during my time in the Scottish Parliament. I had the unenviable record of serving on the Scottish parliamentary committee that approved the Edinburgh tram scheme, which I confess I did not readily admit to Edinburgh taxi drivers when I was a passenger in their cabs. Therefore, I am fully aware of the complexity involved in bringing to fruition the infrastructure that we need.

The Borders Railway was a difficult project which the Scottish Government had wanted to fund—I think erroneously—through what they claimed was an innovative funding route, but which I was concerned was an untested and unsure funding route. However, the Government ultimately changed their position on that and are now using the regulated asset base for United Kingdom funding. I am pleased to note that the Scottish National Party is using United Kingdom infrastructure funding support to deliver a Scottish infrastructure project. The tram scheme, which the Scottish Parliament approved but was not subsequently built in full, is costing £125 million a mile. Some people refer to gold-plated infrastructure projects, but, as regards that scheme, the track itself could be said to be gold-plated. Our national objective is to ensure that the private and public sectors have the necessary professional capacity in this regard as well as proper planning and legislative frameworks. One thing that has not emerged in the debate so far is the factor which can make an infrastructure project—whether it involves transport, housing or energy—successful or a source of difficulty, as with the trams, and that is the professional capacity of the teams that put these projects together. If this Bill is to be successful, the projects which it seeks to deliver in a more efficient way will be delivered only if there is that professional capacity.

I wish to devote the rest of my remarks to an issue that was referred to in the gracious Speech and in the Minister’s introduction to this debate—offshore oil and gas. However, that issue is not included in the Bill. I will not draw the conclusion drawn by the noble Lord, Lord Adonis—namely, that we will have to legislate for that aspect on the hoof. The Wood review reported to my right honourable friend Edward Davey on 24 February this year. That review is a substantive piece of work with significant consequences for the whole of the United Kingdom oil and gas sector. Given the timeframe within which the Wood review reported to the Government, it is understandable that amendments to the Bill on that issue will have to be tabled during its passage through Parliament. Agreement will have to be reached with the industry to ensure that the legislation is as robust as possible. The clear commitment that was given by the Government in accepting Sir Ian Wood’s conclusions and recommendations in full has been welcomed by the industry. Similarly, the statement in the gracious Speech that this year’s legislative programme will contain measures to allow for “maximising North Sea resources” is also welcome.

[Lord Hunt of Chesterton]

The noble Lord seems to be proposing a new constitutional principle, whereby the Government say that they have an idea but they are not sure what it is, so they say, “Here is a Bill. When we have done some more thinking on it, we will introduce it”. This could be applied across the board. That is not how Parliament works. Is this a new procedure being advocated by the noble Lord’s Benches, in which case could he give us his own little background constitutional paper as to how Parliament should work on this basis?

[Lord Purvis of Tweed]

The noble Lord obviously has more experience in this House than I have. I am a mere new Member. However, as a mere new Member, I have been an observer of parliamentary procedure for long enough to realise that it is perfectly common for a Government to table amendments, which on occasion have been substantive. Indeed, over many years the party opposite has tabled amendments on substantive points. My point, which the noble Lord unfortunately did not take on board but which I hope others will and will be more charitable in understanding it, is that when legislation is being brought forward which will make a significant contribution to the success of the British economy, it is best done after proper and due participation and consultation with the sector which it will legislate. That is why the Government have indicated that they will bring forward measures before Committee, as the Minister said in her opening speech, to which the noble Lord no doubt listened.

In the debate on the gracious Speech in another place, the Prime Minister gave a strong indication to my honourable friend Sir Robert Smith, the Member for West Aberdeenshire and Kincardine, in relation to the oil and gas industry:

“My hon. Friend speaks very powerfully for his constituency and for that absolutely vital industry which, as he says, is vital not just for Scotland, but for the whole of the United Kingdom. We are going to make sure that the recommendations of the Wood review are included in our infrastructure Bill, which is a key Bill at the heart of this Queen’s Speech”.—[Official Report, Commons, 4/6/14; col. 27.]

The Prime Minister was right: this is a vital sector. Therefore, I hope that during the passage of this Bill we will give due consideration to the impact which that sector makes to the whole United Kingdom economy. It is 50 years since the first licences were issued. Some 42 billion barrels of oil have already been produced and up to 20 billion more could still be produced. The United Kingdom continental shelf production meets 60% of UK oil demand and 50% of UK gas demand and directly and indirectly supports 450,000 jobs across the UK. It paid 9% of all UK corporate taxes in the last financial year, which is 2% of all United Kingdom tax receipts. Decommissioning relief introduced by this Government represents around 1% of our GDP.

The Government intend to include measures in the Bill to take forward the recommendations of the Wood review. The Bill provides us with an excellent opportunity to ensure that the UK continental shelf is able to face the very complex and difficult challenges which lie ahead. Although more than £14 billion was invested in the continental shelf in 2013—a record amount—production has fallen by 37% between 2010 and 2013, and production efficiency has fallen from 80% in 2004 to 60% in 2012. Rising exploration costs and falling success rates have led to fewer wells being drilled. This was the background to Sir Ian Wood being asked by my right honourable friend Edward Davey to carry out a review into how the UK continental shelf can maximise economic recovery for the whole of the United Kingdom.

Sir Ian Wood’s four recommendations are significant. Two of them in particular require legislative change in this Parliament; and both will, I hope, be the source of proper scrutiny when the Bill passes through Parliament. One is to create a new arm’s-length regulatory body to ensure that there is collaboration in exploration, development and production across the industry. Although it will be arm’s-length from the Government, they will be a partner. My right honourable friend Danny Alexander, the Chief Secretary, only last week indicated at the Oil and Gas UK conference that the Government accept this recommendation in full. He also announced that the authority should be called the “Oil and Gas Authority” and be based in Aberdeen. As regards the other recommendation of Sir Ian Wood, my honourable friend said that it will ensure that protocols and processes will be in place for dispute resolution and for ensuring that there is better co-ordination and collaboration among the industry, and that the licensing regime will be rationalised. All these measures will require proper and full scrutiny by Parliament. That is why the signal in the Queen’s Speech and the Minister’s announcement are significant.

Another area that has been touched on is taxation and revenue. The Government have stated that the new oil and gas authority will carry out a wholesale review of the ring-fenced tax regime for the oil and gas industry. This has the potential to be a hugely significant piece of work, which will have repercussions not only for the Scottish economy, where the oil and gas sector represents nearly one-third of the entire GDP, but for the United Kingdom as a whole.

Finally, I seek further clarification from the Minister. It was welcome that she indicated that it is the Government’s intention to bring forward amendments before Committee, but is it the Government’s intention that those amendments will cover all the recommendations of the Wood review on the relationship with industry, how clear they will be on the funding of the authority, and how that authority will take forward its work on the fiscal review? Sir Ian Wood gave a clear steer that he wanted the new authority and regulator, and his recommendations, to be taken on board so that the industry can look forward with confidence to a strong and clear regulatory regime and licensing for the future of the sector. It is the Government’s intention; I hope that it is Parliament’s will and that no further constitutional theory needs to be put forward to ensure that the future of the oil and gas sector is as strong as it can be, so that we can rely on it well into the future.