Highways (Financing) Bill

Mike Reader Excerpts

2nd reading
Thursday 15th October 2026 Commons Chamber

[Mike Reader (Northampton South) (Lab)]

As many Members will know, I joined the industry 20 years ago as a civil engineer. Throughout my career, I have been very fortunate to work on a lot of major infrastructure projects, including the lower Thames crossing, the A303 and some of the big National Highways frameworks, such as the specialist professional and technical services framework and the regional delivery partnership—the delivery integration partner framework. I now chair the all-party parliamentary group on infrastructure, so I come at this Bill as someone who has priced and bid for major contracts and has seen what happens when the money just is not there.

However, I thought I would start my contribution to this debate with a safety moment. Members who have been around the sector will know that safety culture is absolutely critical to delivering our road network and doing so safely, and a safety moment that has always stuck with me is one from National Highways. It is about a lady who I am going to call Jane. Jane had had a busy day at National Highways; she jumped in her car, was driving home, and was involved in a very low-speed traffic collision. When she hit the car in front, her airbag went off and caused her lanyard to be forced through her chest, and she ended up in hospital. That is always a good reminder—when you leave today, if you are rushing to your car to drive home, remove your lanyard, not only for your security but for your safety.

Let me now turn to why this Bill matters to Northampton. Why is an MP for Northampton talking about a scheme in Essex and Kent? Well, Northampton sits at the heart of the logistics network: some 2,640 logistics businesses operate out of Northamptonshire, and 35,000 people in my county work in haulage and logistics. Every day, goods move between warehouses in my constituency and the channel ports, many of them crossing the Thames via Dartford, and when Dartford jams up, those costs are felt in my constituency and across the midlands. I support this Bill—I think it is the right thing to do to deal with that problem—but I agree with the Road Haulage Association and many hauliers that we must also consider the cost for freight operators. When the licensing agreements come forward, we must consider the considerable business and fuel costs that many businesses in my constituency are facing.

Planning has long been the biggest barrier to building roads. In particular, the development consent order process for the lower Thames crossing has been torturous—unfortunately, I know that at first hand. The second biggest barrier, though, has often been money. The Treasury can only fund so many projects at any one time, and every project competes for the same pot. This Bill brings in the private capital to build things that would otherwise sit in the queue. I have long argued that private finance works in this sector; when the Silvertown tunnel opened last year, it showed that modern public-private partnerships can deliver for taxpayers, and I still believe that.

However, having spoken to the Minister previously responsible and now to the current Minister, I want to be straight with this House. This is an ambitious thing that we are doing. I do not believe that the regulated asset base model is used elsewhere in the world for road infrastructure; traditionally, we see it delivered through concessions or availability-based public-private partnerships. I was initially concerned, so rather than shouting at the Department about where the money is coming from, I went out and spoke to industry. Through the Global Infrastructure Investor Association and some of the big advisers to the investment community, I spoke to investors about this project, and they said that this is actually quite an exciting opportunity, particularly because it should reduce the cost of capital. Creating a regulated return reviewed by an independent regulator should deliver cheaper finance and, importantly, more competition for that finance, so it is completely right that the Department cannot say who is funding this project yet, because we need to run the competition to get that funding in the first place. The more certainty we give to the market through a model such as this one, the better our chances of securing that finance at a much lower cost.

[Mr Francois]

The hon. Gentleman has obviously spent a lot of time looking into this matter, and I commend him for that. As a result of his discussions, could he estimate when we might know who the funders will be—is it another year or two? When will it be? As he has obviously spoken to the Road Haulage Association as well, what does he think the initial toll will be for a lorry going through the tunnel?

[Mike Reader]

I would not want to speculate on the Government’s timetable. What is important is that the Bill goes through, and then we will go through the licensing arrangements to find the right partner to deliver this project, as well as the finance, obviously. However, the delays that happened under the previous Government—the first failed development consent order, where they completely ignored the local community, and the second DCO ending up in the courts because of challenges brought forward by the environmental lobby, as my hon. Friend the Member for Dartford (Jim Dickson) said—were not dealt with, and I am really disappointed that the Opposition are playing that card now when they campaigned against the Planning and Infrastructure Act 2025, which brought forward many measures that would have solved the problems that the lower Thames crossing had.

The question of risk is another important one. A RAB model moves construction risk on to the people who are financing, building and delivering the scheme, but the treatment of risk in the delivery of a major infrastructure project can make the difference between success and failure. The question is: who holds that risk? The Competition and Markets Authority’s review of the civil engineering sector rightly identified that the transfer of risk from tier 1s, from financers, and into the supply chain can make a big difference to a project’s solvency and how it is delivered, particularly for major projects. We have to make sure that the licensing arrangements established by this Bill make provision for Government to require equitable risk management and risk treatment within the delivery of projects, as well as prompt payment through the supply chain, so that when billions of pounds of investment are involved, that money flows through quickly into the supply chain and does not get stuck at tier 1 level.

I have a couple of questions for the Minister to round off my speech—I am very grateful for his and his predecessor’s engagement on this Bill. The Secretary of State told the Transport Committee that the process for setting tolls in the first settlement period, which would answer the question asked by the right hon. Member for Rayleigh and Wickford (Mr Francois), would be set out as the Bill progresses. Will the Minister confirm that that is still the case? The standard licence conditions will be set by the Secretary of State without parliamentary procedure, so will the Government commit to publishing the core principles for investor returns and price reviews before any licence is granted?

The Bill puts new requirements on the Office for Rail and Road. I have had relatively good experiences with that organisation, but this is a new skill and capability that it needs to have, so what are the Government going to do to strengthen the ORR’s capability to manage these contracts effectively?

Turning to existing roads, to address the point made by the shadow Secretary of State, the Government have already confirmed in a written answer that they have no plans to use these powers to toll roads that are currently free. I welcome that, but since there is confusion, could the Minister put that question beyond doubt in his closing remarks from the Dispatch Box?

Some will say that this is a pay-per-journey model that will change Britain’s roads, but I do not believe it is. It is a way of getting the biggest schemes—the schemes that get stalled for years, if not generations—off the drawing pad and into delivery. I fully support the Bill.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

Highways (Financing) Bill (Second sitting)

Mike Reader Excerpts

Committee stage
Thursday 29th October 2026 Public Bill Committees

[Shivani Raja]

No, that is fine. Do you have anything to add, Mr Palmer?

Matt Palmer: I think it is beyond my scope—National Highways is here as an operator and a constructor. I think Will has probably answered the question properly.

[Mike Reader (Northampton South) (Lab)]

Q Matt, I think you have already answered my first couple of questions: the legal requirement on climate was set in 2022 in the original direct consent order, and the requirement to use alternative fuels to diesel is not a significant cost driver in a scheme of this scale. However, reflecting on a conversation that you and I have had previously, I was wondering about the cost impact, and the impact on the project generally, of delays caused by uncertainty of finance. Would a Bill like this enable future schemes to have certainty of financing arrangements, and therefore get on site and be delivered more quickly? Is that a fair assumption?

Matt Palmer: I think all of us recognise that annualised costs on major projects, especially mega-projects, are very difficult to deal with. They drive perverse cost behaviours, where you are trying to fit into a 12-month window, and the Government are currently moving, with the mega-projects piece, towards more of an envelope-type conversation. This is just another extension of that. You end up with a cost envelope that you are working within, with a driven timeframe that you have to deliver to, which then allows the flexibility to execute at the right time—depending on the weather and so on. It is that flex that you need in order to execute efficiently. If you are constraining yourself on cost to a budget every year, which is common, it does drive cost. This model gives you the flex that allows you to drive an efficient construction project.

[Mike Reader]

Q For those who are concerned that the capital cost of this scheme continues to rise, and it has risen since I was first involved in it many years ago, what mechanisms have you put in place specifically with your contractors to drive down cost in delivery?

Matt Palmer: The base cost of the scheme—the cost without inflation—has been fixed since 2020. The great thing about a development consent order is that the scope is fixed. We are still building 52 bridges, 22 km of road and 4.3 km of tunnel. The cost difference between now and previously is essentially driven by inflation. You have got great cost control sat there inside the direct consent order. Our contracts with our contractors then drive to that same scope and control, and there is a pain/gain share: they get into pain if they exceed and they get incentivised to deliver below, which is normal with any project of this scale.

[Mike Reader]

Q Will, I do not know whether you heard the earlier evidence and the thoughts about how the ORR needs to scale up and strengthen to deliver this. Do you have any reflections and what have you fed back to the Government about what the ORR needs to be able to do its role effectively on this project?

Will Godfrey: I hope my earlier answers go to some of that. If your question is specifically about the scope of what you were just asking Matt, it is important for us that the arrangements around what will be LTC Co. and its relationship with its contractors, and in turn what it is allowed to charge to end customers, is not a simple pass-through-type arrangement. That is really important.

You need to make sure that there are the right liability caps in relation to the pain/gain sharing. Are those at the right level? Has LTC Co. or any company licensed under these arrangements—let us concentrate on the LTC example—got the right incentives to be able to control the relationship with the contractors? Through the licence and the price control arrangements we need to create arrangements in which there remains that discipline to control those costs, so it is not a set of arrangements in which, beyond a certain threshold, end users are ultimately on the hook for cost pass-through.

The importance that the Bill places on efficiency in the economy and that being at the heart of our duties is something that we would take really seriously and very much welcome. It gives us the authority to be able to act on getting to those kind of price control licence arrangements. Of course, as I said earlier, the first price control arrangement would be set by the Department through that first competition for the first licence. In terms of how we operate on it thereafter, we would look to make sure there is not just a simple mechanistic pass-through in the event that costs overrun, whether for inflation or other cost shocks.

--- Later in debate ---

[Douglas Lumsden]

Q Will you not make any changes after hearing the comments today?

Justin Madders: I do not think that this is covered by the Bill anyway, but I will certainly take it away to see if there is anything to reflect on. I assure you that this would not be proceeding if there were no interest in investment.

[Mike Reader]

Q Minister, we have heard evidence that there is not a massive amount of competition for major schemes in Europe, yet competition is important to drive down the cost of capital. Do you think that the RAB model will help us to secure the best possible deal on the capital for building the lower Thames crossing?

Justin Madders: I think it will. Obviously the Treasury decision on how this is going to be funded is driving us in a direction where we have to secure private investment. I think the model gives us the opportunity to give the investor certainty over a long period. Clearly, guardrails in there will protect users as well, but as I say, the indications I have had so far are that the long-term nature of the project and the way in which it has been de-risked make it an attractive proposition.

[Mike Reader]

Q In the passage of the Bill, do we have to be careful to separate what it is about—a financing regime and addressing some of the legacy challenges of tolling in the UK—and the construction decisions made by National Highways on the type of fuel it might use, which is probably the equivalent of less than 1% of the overall construction cost?

Justin Madders: As I probably made clear, the Bill is scheme agnostic, so an amendment to require a certain type of fuel would not really help us at all. Look, we have had quite a lot of evidence and, as a Committee, we should take confidence in the measures that are in place to ensure that the costs are kept under control.

[Mike Reader]

Q We heard some evidence about 343 projects, which I think Sam from Britain Remade referred to, which included a whole range of projects delivered around the world. I did a very similar study in 2020, with a similar number of projects—I need to look at whether a bit of plagiarism is going on there in that work! We are actually very good at delivering major road projects in the UK—the A14, the Silvertown tunnel and various others. We are very good at delivering major infrastructure projects on time in the highways space in the UK. I think people need to have a bit more optimism about the delivery of this project.

Justin Madders: I suppose, to pick up from one of the witnesses, I will reference the fact that the road investment strategy—which was started by the previous Government —has set us up with a very sustainable model to develop these large projects over a longer term, giving confidence to the supply chain to keep control of costs and to deliver on time and within scope. I think that National Highways is now very well skilled at doing that, which should give us all confidence.

[Mike Reader]

Q The Secretary of State told the Transport Committee that you would set out the process for setting tolls, which may address some of the concerns about what toll levels might be. Is that still the case? When will we see that during the passage of the Bill?

Justin Madders: The tolls will ultimately be part of part of the licence, which is covered by the Bill—

[Mike Reader]

Q But the process for setting the tolls—will we see how they are to be set, with the key principles and how that is to be done, as the Bill progresses?

Justin Madders: That will be part of the licence conditions, and probably a little too specific for the Bill. Obviously, there are safeguards in the Bill about the things that will need to be considered by the operator.

[Mike Reader]

Q As the licensing conditions are not subject to parliamentary scrutiny, will you set out the core principles of what those licensing principles will be as the Bill progresses through Parliament?

Justin Madders: Yes, we are happy to do that.

[The Chair]

As there are no further questions from Members, I thank the Minister for his evidence. That brings us to the end of the sitting. The Committee will meet again at 9.25 am on Tuesday 3 November to begin line-by-line consideration of the Bill.

Ordered, That further consideration of the Bill be now adjourned.—(Michael Wheeler.)

Highways (Financing) Bill (Third sitting)

Mike Reader Excerpts

Committee stage
Tuesday 3rd November 2026 Public Bill Committees

[Greg Smith]

My hon. Friend is absolutely right. It struck me that in his answer, that witness did not necessarily say that there is no differential in cost, but that his duty was simply to get a quote for HVO, so he would not take a quote on any other fuel source. That goes contrary to my view of the world, and my belief that we would all be better served if we as Members of Parliament, and politicians at large, did not just accept what we were told, and instead properly challenged and looked at the consequences of everything. There is a failure to challenge and say, “Hang on—isn’t white diesel 20p or 25p a litre cheaper?” If I were in the Minister’s place, I would push back on National Highways over that to ensure value for the toll payers of the future.

[Mike Reader (Northampton South) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Dowd. Does the hon. Member understand how construction procurement works? National Highways would not have specified a particular fuel type; it would have specified an outcome, and the contractors appointed would have chosen how to meet that. That outcome was set out in the development consent order signed under his Government. Is he suggesting that the Government should interfere in the activities of contractors working on the lower Thames crossing? Given that fuel cost is less than 1% of the Bill cost, does he really think this is an issue we should be focusing on?

[Greg Smith]

I know the hon. Gentleman has a background in this field, and I respect his point of view. I accept that fuel is a small part of the Bill cost, but small parts, if allowed to persist unchallenged, eventually become large costs for the toll payers.

On the point the hon. Gentleman made about the DCO, as I put my hands up to in the Committee’s oral evidence sessions, the previous Government got things wrong. We Conservatives paid a heavy price for that in July 2024, just as the Labour party paid a price for getting things wrong in government in previous general elections. Under our new leadership, we are putting our hands up to some of those mistakes and challenging some of those parts of the past that we think should be put right. The DCO that he referred to was signed under the last Conservative Government, but I would put it to any incoming Government—the Government in which the hon. Gentleman serves as a Back Bencher in particular—not just to accept that and say to the contractors, “Just follow everything that went before. Don’t question it. Don’t look at it again”, but to ask questions and say, “Will this deliver ultimate value for future toll payers on the lower Thames crossing?”. That is not interfering with contractors; it is actually setting contractors free to be able to come to market without the restrictions that clause 1 places on them in this instance and that the DCO placed on them in other instances. It would enable them to offer better value to future toll payers in this scheme and to the taxpayers of this country in other schemes.

[Mike Reader]

Is the hon. Member suggesting that we should go back and change the DCO to remove the climate targets? I decided after the evidence session to speak to some planning lawyers, and they told me that that would add at least five years to the delivery of this programme. Is he advocating for stalling the lower Thames crossing for another five years?