My Lords, I have slipped an amendment into this group as well. In a sense, it deals with the same problem—the ability of the new company to raise money on the markets—from the other end.
The reality is that the Treasury will never provide quite enough money out of general taxation to build roads. My noble friend Lord Hanworth and the noble Lord, Lord Bradshaw, have focused on road charging as one way of getting that income. Who would be accountable for that? The Government have said that they do not currently intend for there to be any road charging. Strategically, in the long-term, they may have to revisit that. It is therefore quite important that if, down the line, they do so, the Secretary of State would be able to limit or control the charges which could be raised on those roads; I believe that was the primary purpose of my noble friend Lord Hanworth’s amendment. The French example, with which I am familiar, shows the dangers of not doing so.
That could be done by a Government-owned company as much as it could be done by the private sector, although the temptation may be a bit different. Either way, if the company cannot raise money through charging and it cannot raise money by going to the market to borrow, the pressure on allocation for the strategic investment programme and the Treasury will be acute down the line.
As I have said before, when this proposition was made I thought that one of its advantages might be that the company could raise its own money against future income of one sort or another—capital gains and so forth. Apparently, that is not to be the case. That is a severe limitation on the flexibility of the company and the degree to which it is genuinely independent. Clearly, its access may ultimately be controlled by the Secretary of State. The amendment recognises that, in that it is about the Secretary of State setting the terms on which the company could go to the market. That could include going for public loans or literally going to the market—issuing bonds and getting a return on them, which is, of course, how we built the railways. If you do not have that flexibility, the arguments down the line about how much this year and next year is in the Treasury’s gift and the question of what alternatives need to be considered will always be there, however firmly you might have set the strategy and the expenditure
attached to that strategy at the beginning. This would give some flexibility, with a bit of control by the Secretary of State.
6 pm
I know that there is a Treasury doctrine about this all being set against the public sector borrowing requirement or the central government requirement, or whatever. It is the same problem that we have with local authorities not having the ability to raise money for housing. It is also a definition used in relation to local authorities in this country, which is much tighter than the definition used by most comparable companies, whereby local authorities can raise money against their assets, or future assets, free of it being charged against the central government borrowing requirement. It is a complete obsession of the Treasury that that is not the situation here; in other respects it adopts it, as most other OECD countries do, but not in this respect. That applies to local government.
In some ways, the highways company will be treated as if it were local government, because it is a traffic authority as well as a highways authority, just as local government is. Therefore, the issue of how we control local government raising capital applies equally to the new highways company. It may be resolvable only in that wider context. I see no sign, I have to admit, that the Treasury team of the current Opposition is likely to change those long-standing laws, despite my remonstrations with them over the years. But at some point, the logic of having powerful local authorities and powerful independent state-owned companies that are able to raise their own money will dawn even in Great George Street.