My Lords, in Committee my noble friend Lord Bradshaw raised the question of the power to fine the new company. As originally proposed, this power would have belonged to the Secretary of State. Under our proposed removal of Clause 5 and its replacement following Clause 9—I draw the attention of the noble Lord, Lord Whitty, to that, because I know there can be confusion—which will be covered by Amendment 41, this power will be transferred to the independent monitor.
We have consistently stressed the importance of independent accountability to the strength of the new model for managing highways. The creation of the watchdog and monitor creates a powerful team that can scrutinise performance of the company and can represent the interests both of its users and of wider taxpayers. I am not aware of any country in the world which operates an equivalent model of accountability. This will give England’s road users a powerful voice.
On reflection, however, I can also see the value of going further. We have designed a system that ensures that the Secretary of State is well advised when planning the future of the network and judging the quality of its current management. By introducing this amendment, we will also give the roads monitor the power to directly influence the behaviour of the company, in the manner of a true regulator. The monitor will be given two statutory powers under this system. It will have the power to issue an improvement notice, which will require the company to take specific action to correct a failure in its performance. It will also have the power to issue fines, should matters become particularly serious. This matches the regime in rail, and will make the new highways company accountable in the same way as Network Rail is at present.
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It will not be a blunt tool. The ORR has assured me that such powers are used sensitively, not to mechanically punish bad performance but to drive more effective action by encouraging change. A range of non-statutory incentives and measures will exist short of formal improvement notices and fines, and these formal instructions will be available once the softer measures are exhausted. However, it will mean that the company will not be able to ignore the recommendations of the monitor and will never be able to let poor performance or inefficiency become ingrained. In issuing fines, it is important that any fines levied are proportionate and do not represent a risk to the delivery of the road investment strategy. Guidance from the Secretary of State and the Treasury, set out in Amendment 48, will ensure this.
As part of this new arrangement, it is necessary for the Secretary of State to be able to issue wider guidance on how the monitor carries out its responsibilities. The Secretary of State and the Treasury, acting jointly, will
also be required to issue guidance to the monitor on the application of powers to fine. In the short term, this will help the new regulator to bed in and adapt to its unique remit. Over time, it will allow the Government to clarify how policy is developing and to ensure that key elements are properly represented. However, I stress that this is not a power for the Secretary of State to overrule the monitor, just as it is not in other sectors, and it cannot be used in such a way. These measures will allow the monitor to act in the manner of an independent regulator, will result in clearer, stronger accountability, and will lead to better outcomes across the network.