My Lords, let me deal with a couple of issues. I will be talking about fines under the next grouping, so if the noble Lord, Lord Davies of Oldham, will indulge me, I will leave that conversation until that point, so as not to be repetitive. He asked a question about paying VAT. The SHC will not be required to pay VAT, which is exactly the same as for the HA now. That should clear up that issue. To pick up on discussions in the Committee’s previous sitting, he asked about funding certainty and whether that impacts on future flexibility. It must impact on future flexibility, but we have been very clear that we have been making sure that we strike a balance between providing long-term certainty of funding and recognising the democratic right of any new Government to come to different decisions. As the noble Lord will remember, we are making the process highly transparent and consultative, so that any change in the RIS will have to be through a very clear process, which means that it is explicit and all can see what is taking place. I think the noble Lord understands how that balance is being struck.
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If we all accept that certainty of funding is important—I certainly believe that it is—and that lack of certainty and stop-start has really undermined our ability to deliver infrastructure, including road infrastructure, historically, setting up an arm’s-length company is all part of that process. It is to create that element not of separating the SHC from the Government but of creating that distance from the department, with a contractual relationship between the two, which is key to the improvements that we seek. The longer-term certainty enables management to look differently over a longer period and to consider asset management in a different way. We have given examples of where other countries, achieving that one way or another, have
seen a significant improvement in efficiency and the ability to deliver infrastructure. This is our attempt to achieve all that.
The noble Lord, Lord Whitty, raised the issue of staff. We have said before that there is a great deal of detailed discussion going on with staff so that they know what is taking place and are fully engaged in it. It will be on TUPE-equivalent basis. That is because we know it is important that staff remained committed to the process.
To come to the heart of the amendment, I want to make it clear that Clause 4 gives the Secretary of State a general power to issue directions and guidance to a strategic highways company. That power already includes the ability to cover the matters addressed in the amendment, such as remuneration, should the Secretary of State choose to do so.
The strategic highways company will be a limited company under the Companies Act 2006, with the Secretary of State as sole shareholder. In the Government’s view, it is more appropriate to this structure and to the objectives of the reforms that matters such as those in the amendment are dealt with in the constitution of the company and the framework document between the company and the Secretary of State. As my noble friend Lord Jenkin of Roding described, the articles of association will play a significant role in all that. Your Lordships have seen an outline of the framework document between the company and the Secretary of State, with more details expected later this year, although I cannot put a date on when it will be available.
We published the outline framework document and the other related documents about expected governance arrangements on 23 June. It is clear that detailed arrangements for the company are still under consideration, but I can reassure your Lordships that we intend to set suitable governance arrangements to ensure the appropriate use of public funds. For example, the strategic highways company will set up a remuneration committee which will be consistent with guidance from DfT, HMT and the Cabinet Office in relation to staff pay. Remuneration packages will comply with a public sector rule that requires pay above the Prime Minister’s salary—currently, £142,500—to be approved by the Chief Secretary to the Treasury.
It is therefore clear that the Government will, in a sense, be on the hook for decisions on remuneration that will cause a variance against the Prime Minister’s salary. I think that we would agree that that means that the democratic process is at work, including in terms of accountability. In the Government’s view this amendment is not needed, and I ask the noble Lord to consider withdrawing it.