My Lords, at Second Reading the Government failed to provide a convincing case for why the strategic highways company needed to be created to achieve the stated aims. As we indicated to the Minister at Second Reading, there is agreement pretty well across the House on the objective of a more coherent planning structure for the crucial part of the infrastructure represented by trunk roads and motorways. But the Minister indicated that because the Highways Agency would be turned into a Government-owned company, it would have,
“the stable, long-term funding needed to plan ahead effectively”,
and that the Government were,
“also introducing in the Bill the framework for a roads investment strategy”,
which, of course, we applaud. The Minister went on to say:
“The strategy will be agreed by the Government and the new company. It will set out the Government’s longer-term strategic vision for the strategic road network, investment plans and performance criteria, along with the necessary funding, just as happens for the railways. The new delivery model will allow the company to better prioritise its spending in terms of both maintenance requirements and capital demands. This is bound to lead to better asset management than we have now”.—[Official Report, 18/6/14; col. 838.]
Where is the beef in that statement? What is it about the new delivery model that is superior to what we could achieve with the Highways Agency? What in the structure of the Highways Agency makes it impossible for it to deliver longer-term planning? It may be that it has not done so because of the vicissitudes of funding, for which the Government must take responsibility, but the Minister surely recognises that nothing gets done without Treasury approval. What the present structure of the Highways Agency seems to need is more operational independence from the Treasury. The Treasury needs to be on board with the necessity for longer-term thinking about roads. But why we
need the creation of a Government-owned company to plan spending, I do not know. This is spending that is not in yearly cycles. It does not peak towards one part of the year rather than another. It is not clear that the Bill actually delivers what the Secretary of State has claimed to be among the key benefits. I cannot see why, with serious intent and commitment to long-term planning of infrastructure on the Government’s part, the existing structure cannot be made to work towards those objectives.
2.30 pm
The summary note released by the Minister says that,
“establishing the Agency as a legally-separate company, clearly independent from government, ensures that the relationship between central government and the operator is transparent”.
Will the Minister outline in more detail the extent to which the Secretary of State retains an ability to be involved in and direct the strategic highways company envisaged in the Bill in the course of its running? If the Secretary of State retains the ability to vary the funding and priorities, the benefits of setting up the new company might have been somewhat overstated.
Other ways in which the benefits of the new arrangements could have been overstated involve the tax arrangements of the new company. The Highways Agency is able to claim back over £400 million in tax every year. VAT is not included in the list of relevant taxes that the Treasury can vary with respect to this new company. If the company cannot claim that back, the £4 billion that it would have to pay would appear to somewhat overshadow the Government’s mooted £2.6 billion efficiency pay-off from the new structure. After all, it would not take many years at £400 million-plus a year before we were pretty close to this efficiency claim, which I guess is not meant to be realised the year after next but at some distant time in the future. The Minister must both explain how this new structure compensates for the loss of the VAT receipts and give us rather more detail about where this £2.6 billion figure comes from and the sums which add up to it.
Does the Minister envisage any further costs in the creation of the new company, such as rebranding? To what extent does the Minister envisage these eating into the efficiency gains of the new company? If the rebranding is going to go on, I am quite sure that the Government will not expect a Consignia situation to develop again, in which, after privatisation, a new brand was created for the part of the Post Office that the Royal Mail sold off. Nobody knew what Consignia meant. I am quite sure that neither the Government nor those responsible for the company will make the same mistake, but there is an issue over what the brand image of the new company will be. We remain in favour of a model that is able to deal with longer-term planning on roads. It would help the Government to avoid the kind of expensive uncertainty that we have all seen surrounding the A303 in times past and, more recently—although the A303 is recent enough—the A14, which is a source of great discontent.
The National Audit Office has said that funding certainty is not itself sufficient to guarantee delivery; we can all drink to that. However, the Minister has to tell us what gains can be readily identified from this
new company. Can she tell us whether the department has given any thought to the creation of a national infrastructure commission, which would involve not only roads but the whole basis of infrastructure in this country? After all, the strategic highways company is due, in the fullness of time, to establish relationships with the rail regulator. A national infrastructure commission to consider these issues as a whole would surely point to some more coherent solutions.
It is often said that that the United Kingdom does not shape up too well in international infrastructure league tables. The Australians have Infrastructure Australia and Singapore has its Urban Redevelopment Authority—radical reform along these lines is the best way to secure an end to stop-start funding. We do not need to recreate what we already have as an instrument for the roads, in the shape of the Highways Agency, and I am therefore still not convinced that the main proposition underpinning the Bill, as contained in this first clause, is necessary.