Business of the House
Will the Leader of the House give the House the forthcoming business?
Showing every spoken contribution, including 5,558 under 12 words. Hide short remarks
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Business of the House
I thank the Leader of the House very much for that update. As the House will be aware, this is a day of very mixed feelings as we mourn the deaths and injuries sustained in the Spanish high-speed rail disaster yesterday. In a far happier vein, it is impossible not to celebrate the triumphs of Harry Kane in the Ballon d’Or—the first British winner for 25 years—and of giant-killing Fleetwood Town in conquering Arsenal in the Carabao cup. Just in time for Halloween, we learn that the SNP Government in Scotland have assembled an army of nearly 800 ghost workers on the public payroll, costing taxpayers £27 million a year. The jobs have vanished, but the salaries remain. One of those people has been non-working in the NHS for 17 years. That is the SNP in a nutshell. Needless to say, the Scottish Government have no plans to change that state of affairs, and with hundreds of people being paid to pretend that they have jobs, it is the perfect metaphor for this Labour Government. So to the Chancellor of the Exchequer, who spoke after the usual orgy of pre-briefings to the media yesterday. To his credit, he avoided some of the more lunatic ideas of his colleagues. He tried his best, but frankly Harry Kane or Fleetwood Town—hell, Fleetwood Mac—would have done better with that Budget. It was a Budget for a May general election, not for the future of Britain. As Helen Miller from the Institute for Fiscal Studies put it, <span id="440" class="column-number" data-column-number="440"></span>there was “lots of fiddling”, but no “clear, coherent vision”. It means that disposable household incomes are falling, the tax burden is at a historic peacetime high, and growth forecasts are falling, with not even the whiff of a strategy for growth yesterday. Worse still, as noted economist Paul Johnson pointed out, the Budget implied back-end loaded spending cuts in “most areas of public service spending of 2.6% per year between 2028-29 and 2031-32.” His verdict was that this is “not honest politics, nor is it honest economics”. Those are his words, Mr Speaker, not mine, and I think it is well known that Mr Johnson is not a Conservative. There is something even more troubling here. Britain is walking a fiscal, monetary and security tightrope, but yet again, the Government’s response has been to postpone difficult decisions, spin the plates, ladle on the fudge and hope that nothing goes wrong. Now we have persistent speculation, despite attempted rebuttals, that the Prime Minister may call a general election—what an extraordinary abdication of responsibility that would be. The message would be this: yes, Britain faces profound economic and international uncertainty, so let us add a little extra disruption to that with an entirely unnecessary election, more than two years before one is required and, while we are at it, let us reopen the constitutional turmoil of another EU referendum to boot. The British people would surely say, “We gave you Labour people a majority of more than 170 to sort out the country’s issues. You have replaced your own Prime Minister and your Chancellor. You have failed to deliver the change you promised, and now you want another election because you are simply too frit to make the decisions required.” Britain needs growth, stability, financial strength and national security. Instead, it is getting short-term fixes, deferred decisions and political manoeuvring. This is not a strategy for governing Britain; it is an absolute failure of leadership. The Chancellor could not even meet his own test for defence spending, over which he supposedly resigned. The Prime Minister has talked endlessly of his desire to “rewire the state”, and the Chancellor said the same in terms yesterday. We have a huge debt burden, stretched public services, rising interest rates and growing defence commitments. There is the escalating threat of external shocks—Ukraine, Iran, inflation, AI, trade wars, extreme weather, another pandemic—so will the Leader of the House now explain, in his usual candid way, without prevaricating or blaming others, why those two men have demonstrated absolutely zero interest in actually taking any of the serious decisions required to address those issues?
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Topical Questions
<Question HRSContentId="{7AAAE1AE-D109-4DF0-9805-8D424F26E507}">T2. <QuestionText HRSContentId="{B0829464-45D7-4B47-B3A2-D5017828F7D7}"></QuestionText>Unlike my constituents, Mr Speaker, you are lucky enough not to have to suffer the weekly misery of South Western Railway. I surveyed my constituents recently and asked them what they wanted from the first nationalised rail service, now that we are paying for it. Their priorities were clear: they want more services from Liphook, more carriages at Haslemere, faster journeys from Farnham and any access at all from Whitehill and Bordon. Will the Minister commit to meeting me to get those four rather simple things done soon?</Question>
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Highways (Financing) Bill (First sitting)
<strong>Q</strong><strong><QNum HRSContentId="{916422EC-6EE9-4808-9561-BA7D13EA9492}"> </QNum></strong> It is a pleasure to serve under your chairmanship, Ms Lewell. Good morning, gentlemen. On one level the Bill, particularly on Second Reading and in other narratives that have come out since it was first published, seems to be presented as answering the question: how do you solve a problem like the lower Thames crossing? But it equally has a lot of other provisions—perhaps it is due to badly drafted clauses or perhaps it is deliberate—that seem to allow tolling and road pricing to extend further than the lower Thames crossing. Is that something your organisations are concerned about, and do you feel enough focus has been given to parts of Bill related to everything other than the lower Thames crossing—to the general motorists in this country? <em><strong>Edmund King:</strong></em> Obviously if you look at the need for the lower Thames crossing—the congestion and the environmental issues currently at Dartford—it is easy to see that some alternative solution is needed. But, as you rightly say, this Bill is not just about the lower Thames <span id="5" class="column-number" data-column-number="5"></span>crossing; it could allow that finance model with other schemes. It might have been easier if it was concentrated on the lower Thames crossing because then you could have brought in more restrictions and safeguards on tolls for motorists. As the Bill stands, on the one hand you have the Office of Rail and Road as the regulator for it, and then you have drivers who are the consumers, whether they are individual motorists or heavy goods vehicle drivers. To some extent, there might be a conflict between those two. The ORR has to ensure that the licensee makes money from it so it can be viable, but at the same time, it regulates tolls for the drivers. You could argue that there might be a conflict in that at times. When we looked at similar schemes before—I did a paper on road miles with an economist, which looked at the broader issue of road pricing—one thing we called for was an independent body to oversee tolling and ensure it is fair. I certainly think that the responsibility of the ORR when it comes to tolls could be strengthened and given more independence within the Bill. <em><strong>Steve Gooding:</strong></em> Clearly, the Committee will want to look very closely at clause 3, which I think is the key thing here. Yes, we looked at it and wondered whether this was a way of creating a framework that could then be applied to the existing road network and the existing motorway network. Clearly, the provisions relate to the trunk roads—the National Highways roads. I think the way clause 3 is drafted tightens that down to where capacity is being added, but we want the Committee to look at how much capacity is being added in order to make that a valid use of the powers in the Bill. Is it simply, for example, playing tunes with the speed limits or maybe adding a lane? What is it? In those circumstances, would we really be contemplating transferring sections of the existing national road network over to a private company? I do not think that is the intention, but the intention is not always the actuality.
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Highways (Financing) Bill (First sitting)
<strong>Q</strong><strong><QNum HRSContentId="{E5C7CB7B-C985-4181-868A-379FA3EE0308}"> </QNum></strong> That is very helpful. I want to dig a bit deeper on that because I think the part of clause 3 that you are referring to is where it says: “A licence may also provide for the holder of the licence to secure the maintenance, operation or improvement of any other highway”. Is it the view of your organisation and members that people would expect that to be about an entirely new road or perhaps a dualled road where there is currently a single carriageway, rather than making what many might consider a relatively minor improvement, such as—I do not know whether this is an improvement—adding smart motorway cameras? <em><strong>Steve Gooding:</strong></em> Our understanding of it, and this is why I think the Committee will want to make sure this is clear, is that the subsections of clause 3 relate back to each other. It is not relatively minor maintenance of itself that would enable the licence to be awarded. In our reading of it, it has to be linked back to enhancement and capacity—but perhaps the Minister will want to make that clearer.
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Highways (Financing) Bill (First sitting)
<strong>Q</strong><strong><QNum HRSContentId="{CFC51A3E-52B8-4083-B342-FE3B143A2929}"> </QNum></strong> Lastly, where a new scheme is being proposed under the provisions of this Bill, is enough thought being given to other nearby existing roads and to those who rely those nearby roads—businesses, <span id="6" class="column-number" data-column-number="6"></span>homeowners, people who live there, schools, hospitals and so on—and are they being properly consulted on this? Too often in this world, the new, shiny thing gets all the attention without due regard to existing infrastructure. Do you feel that that has been adequately explored? <em><strong>Edmund King:</strong></em> You can say that in relation to the lower Thames crossing, because in that part you know the two elements—one is the current Dartford crossing; one is the new crossing—and you can look in that area. But if you look at the Bill more generally, it is very difficult to say because we do not know where it will be applied. Clause 3(1)(a) does say “construction of a highway specified in the licence”, but we obviously do not know where that highway is or what the competing interests are with housing, the economy, routes and so on. In terms of this Bill, it is difficult to say unless a concrete scheme is being considered. <em><strong>Steve Gooding:</strong></em> It is within the duties that are being placed on the Secretary of State to consider where these powers will be used: there are duties in relation to having regard to users of the network, for example. It could be made more explicit. After all, we are talking about a national asset here, and if faced with a toll and an alternative, people might well choose the alternative, with negative traffic impacts in the round. That would have to be taken into account.
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Highways (Financing) Bill (First sitting)
<strong>Q</strong><strong><QNum HRSContentId="{62574D40-EF52-4C01-B2AB-FE069F84BB70}"> </QNum></strong> Good afternoon, gentlemen. Can I start with Ben and Declan from the logistics and haulage sectors? There were a lot of questions during the last panel about the overall cost of the lower Thames crossing and any other schemes that might get a licence through the provisions of this Bill. I know from my role as a shadow Minister doing roundtables with Logistics UK and visiting haulage firms in my own constituency that margins are very tight in the sector right now. Equally I get that the juxtaposition of margins is even worse if you are stuck in traffic and cannot get across the Thames or to wherever it is you want to go. Can you comment on where the breaking point is for the sector? If a toll for an HGV, for example, came out too high, there would be a perverse incentive for haulage operators to use existing other routes to avoid that. Is there a risk that we end up building these things too expensive, the toll is too high, and the haulage sector finds itself in a worse position? <em><strong>Ben Garratt:</strong></em> It is a tricky question. What we know is that the current situation and reliance on the Dartford crossing costs the logistics sector, as well as other users of the crossing, a lot in terms of the congestion that comes from that. The cost of sitting in traffic is estimated at £200 million a year. That is based on the time sitting doing nothing, but does not take into account the wider cost to the logistics sector and supply chains of goods not arriving on time. It is just based on the wasted time of the driver. We also know that reliability, or lack of it, is a cost borne by the sector that is then passed on. When we speak to our members, they tell us that what they want is a reliable transport system so they can factor in how much a job is going to take—how much <span id="13" class="column-number" data-column-number="13"></span>time, how many drivers and what they should charge for it—and unreliability means it is much harder to do that. As a sector we potentially have more assets than we need to cover the same amount of ground, which is why it is really important for the sector that capacity increases and why we support, therefore, the delivery of the lower Thames crossing. In terms of a breaking point it is quite tricky because the reason that the sector has a low margin—between 1% and 3%—is because it is a highly competitive sector. It is a feature of the sector rather than something we would say we complain about. It is because there are lots of logistics businesses all competing with each other to deliver the best price. When there are cost pressures on the sector over the medium to long term, it generally keeps that margin where it is, but it results in the overall cost being passed on to the public. Unless it is priced ludicrously, the risk is more about the overall cost being passed on to the public rather than it breaking the operators, as it were.
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Highways (Financing) Bill (First sitting)
<strong>Q</strong><strong><QNum HRSContentId="{10DAD023-6368-46FE-8260-9509BD9D5F6A}"> </QNum></strong> On the inflationary impact of that example, I think on Second Reading there was largely cross-party consensus on the need for the lower Thames crossing. That is not a point on which there is a political divide. Where the Bill opens up wider questions is on the “what else” bit—how many more schemes under this model could come to pass in future? Without wholesale change to other things, such as fuel duty, road fund licence and so on, there will be an inflationary impact if we suddenly end up with lots of schemes used by general motorists as well as the haulage sector. There will be a tipping point, where the inflationary impact—with the pass-on of tolls to customers—becomes high. Do you have any modelling on that? <em><strong>Ben Garratt:</strong></em> No, we do not. We would say that the inflationary impact is a balance between the direct input costs—paying a toll, fuel duty and taxes—and the indirect costs of congestion. As a sector, we want to keep those two things in balance, but one of the things that we do want is more investment in the transport network—road, rail and beyond—because some real hotspots are causing congestion and therefore passing the cost on. This is one of them, but it is not the only one. We need to make sure that is in balance. We are not disputing building this particular crossing, but not building things in general has a cost in itself. It is about making sure that this is fair, and therefore about considering the different ways of paying for it. Traditionally, such things have been done under general taxation, which we all pay for, but given the fiscal situation, we as a sector are not against a toll approach, a private finance approach, for this particular crossing. This crossing is one heavily used by the logistics sector. For us, it is a key part of the trading route between Scotland, the midlands and the north, and Europe; it is not simply an issue for the east of London, Essex and Kent. We want to see it happen and, as a sector, we are prepared to help pay for it. We just want to make sure that the toll takes into account the different vehicles, and that the different toll rates for different vehicles take the sector into account. The toll should not be based just on the weight of vehicle, and wear and tear; we need to take into account the economic value that the logistics sector provides to the rest of the country. Ultimately, we all pay for that in a way that is slightly different from other road users.
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Highways (Financing) Bill (First sitting)
<strong>Q</strong><strong><QNum HRSContentId="{6184434A-6A5F-46F9-8C59-0947DDA58B5C}"> </QNum></strong> That is a point I fully understand. Declan, will you add your thoughts and your organisation’s perspective? I will add one rider to the question I asked Ben: the previous Government removing tolls from the Severn bridge was pretty well received by general motorists and the haulage sector. That is where I am coming from—to get an understanding of where the tipping point is. <em><strong>Declan Pang:</strong></em> The cost and affordability of toll rates is a significant concern for us. As you all know, the majority of those in the haulage sector are small and medium-sized enterprises. Small businesses, many of them microbusinesses, are the major users of the trunk road network, so their interests need to be front and centre of how toll rates are set. At the moment, we also have quite a fragile situation in the haulage sector—a particular rate of mergers and acquisitions, as well as a high rate of insolvencies—and that difficult climate has certainly been exacerbated by higher input costs and fuel costs. That should certainly be considered when the Bill is looked at. In the Bill itself, we are particularly concerned about the affordability of tolls and the transparency of how those tolls will be set, as well as the wider impact of the financing model. We would very much like MPs to think about and look at how tolls will be calculated, how they might increase over time, and how the ORR, as the regulator, will assess the affordability of tolls, because we do not feel that that is clearly set out, as the Bill stands. Lots of concern is about whether the Government have plans to use the Bill powers to introduce tolls on roads that are currently free. We certainly seek additional assurances on that point from the Minister.
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Highways (Financing) Bill (First sitting)
<strong>Q</strong><strong><QNum HRSContentId="{B0784823-70F8-4D3B-A607-4C8173B84EF1}"> </QNum></strong> That is incredibly helpful. Given that the affordability of tolls is so critical to your members, do you believe that there should be a presumption or something even stronger locked into the Bill that, within the bounds of safety and meeting the correct standards, there should be due regard to ensuring that schemes are built as cheaply as possible? For example, the lower Thames crossing is already being made more expensive by banning the use of diesel plant to build it. Should there be a presumption that things should be built, within safety and other due standards, as cheaply as possible? <em><strong>Declan Pang:</strong></em> Absolutely. The costs of constructing these schemes are essential in terms of reducing the level of tolls. We particularly think that the Bill as drafted is quite open ended in terms of the phrases it uses. As a previous witness said, affordability should be part of it, rather than just “fair and transparent”. We would like to see that included. We are very supportive of Jim Dickson’s amendment on the rates as well. We would like to see more consideration given to affordability for businesses. <em><strong>Ben Garratt:</strong></em> I agree with everything Declan said. In the assurances space, clause 1 talks about the ORR having regard to economy. That also comes up in other clauses of the Bill. We would like assurances that that includes an understanding that freight and supply chains are a part of “economy”. It is quite a broad term otherwise.
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Highways (Financing) Bill (First sitting)
<strong>Q</strong><strong><QNum HRSContentId="{DB6B53E8-1B62-4ABE-89C1-5212D4E3E996}"> </QNum></strong> That is incredibly helpful. Mr Whelan, you have a niche interest around the M6 toll elements. Do you feel that the Bill delivers for an existing toll road <span id="15" class="column-number" data-column-number="15"></span>operation? Is there anything you feel is missing from the Bill? <em><strong>Michael Whelan:</strong></em> Our specific interest in the Bill is part 7, which will enable us to introduce free-flow tolling. At the moment, on the M6 toll, we have barriers where you need to slow down, stop and pay. Part 7 of the Bill is the first step for us to enable free-flow tolling, which will help my freight and logistics friends sitting to either side of me—they will not have to slow down and stop. That has many benefits, including time savings. The M6 toll is a very reliable route compared with the alternatives, so it further increases that reliability through increased time savings. It will also mean reduced carbon dioxide emissions because of less stopping and starting.
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Highways (Financing) Bill (First sitting)
<strong>Q</strong><strong><QNum HRSContentId="{77A4BC7E-CC8E-4F06-8DB2-661164376FC1}"> </QNum></strong> Good afternoon. As you look at the totality of the Bill, including the elements around the lower Thames crossing, do you think the Government are joined up enough in looking at where new schemes, be that the lower Thames crossing or anything else that might come to pass, are delivered in respect of the existing infrastructure, local roads and intersections, and, as we just heard from the haulage sector, things like roadside driver welfare facilities? Does the Bill risk bringing nice new shiny things to the strategic road network without the necessary back-up to the existing intersections and roads that the new schemes will rely on? <em><strong>Ralph </strong></em><em><strong>Smyth</strong></em><em></em><em><strong>:</strong></em> It is a very good question. I point first to the second national infrastructure assessment, which was published three years ago. That said that by the end of 2026—so where we are now—the Government should publish an integrated strategy for road and rail. If you can see how you are going to improve the rail links and the road links, that would join up better and give confidence about where there should or should not be, for example, a change to the roads. The other dimension is the local angle. We have heard recently in the media about how mayors might be given more of a say on water, for example, but the Bill goes in the opposite direction. It actually weakens or removes the mayoral input on transport. Transport has been the totemic issue of devolution and, oddly, the Bill removes that. A special new category of highway is created that is not subject to something called the network management duty, which is about joining things up in long-term planning and in short-term operations, such as where there is disruption. My concern is that for some of the schemes talked about, like the lower Thames crossing, it is going to be difficult to attract the private sector to invest without making it easier—for example, without reducing the risk of mayors getting in the way or trying to promote a railway line that would actually abstract some of the traffic.
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Highways (Financing) Bill (First sitting)
<strong>Q</strong><strong><QNum HRSContentId="{0D85CB98-0C26-4941-A0B7-8E0AEC2E635A}"> </QNum></strong> Are you suggesting that those areas of the country that currently have a mayor should be locked into the Bill as key consultees, in planning speak, before anything can go ahead? <em><strong>Ralph </strong></em><em><strong>Smyth</strong></em><em></em><em><strong>:</strong></em> I would not want to leave out the rural areas where there are perhaps not mayors.
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Highways (Financing) Bill (First sitting)
Absolutely right—do not leave the rural areas out. <em><strong>Ralph </strong></em><em><strong>Smyth</strong></em><em></em><em><strong>:</strong></em> Quite. The problem is the bigger context and the discussion about rewiring the state. That is talking about removing consultation, so simply a duty to consult to give your views might not be worth much.<span id="22" class="column-number" data-column-number="22"></span> The problem is that it needs to make economic sense for the investors. The M6 toll did not make a profit for 20 years. You are going to have to tilt this, particularly for very big schemes like the LTC, to make it attractive for investors, and that could mean making things less affordable for drivers and there being less involvement for mayors, despite transport being one of their big issues.
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Highways (Financing) Bill (First sitting)
<strong>Q</strong><strong><QNum HRSContentId="{D32803B9-5C01-4AC1-B2FB-90DD6DDE603D}"> </QNum></strong> Looking at the whole national scene, if you take it as read that there is no change to road fund licences, fuel duty and so on as the core funding for the road network, where is the tipping point in terms of the number of additional toll roads across the network that will just make driving unaffordable—for a haulage sector that is using longer routes every day of the week, and for the average motorist that maybe does not travel that far every day but needs to make those journeys to see relatives, go on holiday and so on across the strategic road network? <em><strong>Ralph Smyth:</strong></em> The tipping point depends on the sector and the type of journey. For discretionary journeys, like seeing a relative, a sudden increase in toll might have an impact quite quickly. If you are commuting and doing the same journey every day or if a haulage firm is doing the same routes, it might take longer for a response to happen. As we are talking about tipping points, I will also talk about climate change, because some figures from the Environment Agency have shown that by 2050—not long after some of these roads might be built—about half the UK transport network will flood regularly. That obviously means a lot of disruption and a lot of increased costs for the operator or owner of the assets. Those things will also affect, given where we are going, our use of roads, railways and everything else.
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Highways (Financing) Bill (First sitting)
I am mindful that this is a shorter session, so I will stop there.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{7578D5F3-4B44-4112-AD8E-E86F49DB3CF7}">42</QNum></strong> 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. <em><strong>Ben Hopkinson:</strong></em> We have quite serious concerns about the regulated asset base model. This will certainly be<strong> </strong>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 <span id="28" class="column-number" data-column-number="28"></span>their costs as low as possible, because it directly impacts their bottom line, which is completely the opposite for a RAB model.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{5A4541C5-7CF6-43BF-8B01-FF3486409EA6}"> </QNum></strong> 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? <em><strong>Ben Hopkinson:</strong></em> 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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{FCF144AB-C860-4D20-9287-2F09768FB4A6}"> </QNum></strong> 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? <em><strong>Ben Hopkinson:</strong></em> 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. <em><strong>Sam Dumitriu:</strong></em> 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 <span id="29" class="column-number" data-column-number="29"></span>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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{071F0066-DC49-4CD3-BB6E-47BBA1F5C028}"> </QNum></strong> 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? <em><strong>Sam Dumitriu:</strong></em> 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. <em><strong>Ben Hopkinson:</strong></em> 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. <span id="30" class="column-number" data-column-number="30"></span>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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{086A3A55-680B-4384-91BA-CBC0482D2C0D}"> </QNum></strong> 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? <em><strong>Thomas McLennan:</strong></em> 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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{E7022A3B-0638-4591-BB8A-AD9B7372939A}"> </QNum></strong> 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 <span id="36" class="column-number" data-column-number="36"></span>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? <em><strong>Thomas McLennan:</strong></em> 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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{255377F1-771C-4280-B3A7-D791307B1628}"> </QNum></strong> 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? <em><strong>Thomas McLennan:</strong></em> 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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{0C29E9E1-CFF1-4BFA-8EF4-64F38CB3DC49}"> </QNum></strong> 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 <span id="38" class="column-number" data-column-number="38"></span>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. <em><strong>Will Godfrey:</strong></em> 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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{4C750F78-663E-4F2D-A113-A40C77FF41AD}"> </QNum></strong> 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. <em><strong>Will Godfrey:</strong></em> 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 <span id="39" class="column-number" data-column-number="39"></span>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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{3753FB2C-89B1-4173-BBC7-88A772A29152}"> </QNum></strong> 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. <em><strong>Matt Palmer:</strong></em> 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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{23AB75E3-83F1-4059-85AA-B60863D75214}"> </QNum></strong> Just to confirm, for people watching out there who think diesel is £2 a litre, is that plus VAT? <em><strong>Matt Palmer:</strong></em> 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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{298EC9C9-E56A-460E-96B9-6D04CA256D16}"> </QNum></strong> But it is more expensive than diesel. <em><strong>Matt Palmer:</strong></em> It is comparable to diesel. Actually, the total operating cost of some of our equipment that we <span id="40" class="column-number" data-column-number="40"></span>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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{0EC1DC82-7736-48CC-B739-91016F1FC329}"> </QNum></strong> Does the equipment exist out there to build the lower Thames crossing purely on battery electric? <em><strong>Matt Palmer:</strong></em> No, it does not. That is why we are using HVO and electric.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{2970938D-E25F-46D3-8D9D-0C9FEC2938C4}"> </QNum></strong> Do you have any comments, Mr Godfrey? <em><strong>Will Godfrey:</strong></em> Matt has covered the construction side of things. Was there a part of your question about licensing arrangements?
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Highways (Financing) Bill (Second sitting)
Yes. <em><strong>Will Godfrey:</strong></em> 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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{A4E58940-64B1-4787-B801-26BA386A7B3D}"> </QNum></strong> 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? <em><strong>Andrew Truscott:</strong></em> 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 <span id="48" class="column-number" data-column-number="48"></span>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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{4805B22F-E819-421A-893C-FE02B1BAC6E8}"> </QNum></strong> 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.”? <em><strong>Andrew Truscott:</strong></em> 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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{74792699-06BB-4FE1-8755-ED63888C9648}"> </QNum></strong> 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? <em><strong>Andrew Truscott:</strong></em> 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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{ECD66A0E-50BA-4E57-9ABC-3D85CD5692D9}"> </QNum></strong> 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?<span id="49" class="column-number" data-column-number="49"></span> <em><strong>Andrew Truscott:</strong></em> 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.
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Highways (Financing) Bill (Second sitting)
<strong>Q</strong><strong><QNum HRSContentId="{F28D7988-88E1-4A96-8907-AE41FF2608C0}"> </QNum></strong> 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. <em><strong>Roger Forsdyke:</strong></em> 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.
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<strong>Q</strong><strong><QNum HRSContentId="{9FF5B569-7633-47FF-AB9D-EA4AAD903328}"> </QNum></strong> 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? <em><strong>Roger Forsdyke:</strong></em> 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.
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I appreciate that that is outside the contractor’s position. That is why I came with the question. <em><strong>Roger Forsdyke:</strong></em> That is not a variable cost to me; it is just an additional cost. The risk comes from variable costs that I cannot control.
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<strong>Q</strong><strong><QNum HRSContentId="{378DE0FA-8B0F-4CD2-A1A9-3DE246E32011}"> </QNum></strong> 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. <em><strong>Roger Forsdyke:</strong></em> I think you have answered your own question.
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Highways (Financing) Bill (Second sitting)
Fair enough. <em><strong>Andrew Truscott:</strong></em> 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.