Draft Local Authorities (Contracting out of Highway Functions) (England) Order 2001 and Draft Street Works (Charges for Occupation of the Highway) (England) Regulations 2001

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Mr. Malcolm Moss (North-East Cambridgeshire): It is a pleasure to serve under your chairmanship, Mr. Cran, for what I hope will not be the last time.

The instruments appear on the surface to be harmless, and the Minister suggested that they had been introduced to help the poor motorist by ensuring

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that not too many roads were dug up at the same time. On closer consideration, however, the proposals have some sinister undertones, which I would like to explore.

I have little to say about the first of the two orders, except to ask a few questions, but I have severe concerns about the draft regulations, which involve pilot schemes, and unless the Minister can reassure us in her response, we may be disposed to divide the Committee.

I have a few questions about the draft Local Authorities (Contracting Out of Highway Functions) (England) Order 2001. On the third of the functions outlined by the Minister, according to which the collection of fines and penalties in cases of overrun will be a transferred to local authorities, will local authorities be allowed to keep the money that they collect? When speaking about the second order, the Minister said that authorities would be allowed to keep the balance of the money collected to use specifically on transport issues. Does that relate also to the function conferred by regulations in paragraph 3 of the schedule, which will enable local authorities to collect penalty fines for overrun contracts? If local authorities cannot keep that money, where will it go? Am I right in thinking that that function was previously undertaken by the Highways Agency and, if so, where did the money go then? If local authorities cannot keep the money, can they defer the cost of collecting the money and implementing the fines by deducting that cost from the fines that they collect? If not, is there any provision, in the standard spending assessment, for example, to cover their extra costs?

As I said, I have some concerns about the draft Street Works (Charges for Occupation of the Highway) (England) Regulations 2001. Given that a pilot scheme is already in place in respect of penalty fines, on which a consultancy firm will pronounce in May 2002, why are the Government introducing these heavy-handed regulations to supplement—not replace—the collection of fines and charges that already exist? If, as the Minister said, the purpose of the second of the two orders is primarily to reduce disruption on our road and street network, why is it that the fines and charges are likely to fall on the consumer, not the undertaker?

I received information from the London Electricity group that the Ofgem price control regulations allow efficiently incurred costs, which they understand would include lane rental charges, to be recovered from customers. As a result, in their opinion, the incentive effect of such charges on electricity and gas suppliers undertaking the street works that they must do will be negligible; the costs of the scheme will be borne directly by the consumer.

The Minister alluded to the Government's expectation of some discussion between the utility undertakers and the regulatory bodies about where charges will fall, but it is obvious from what the London Electricity group has told me—it has taken counsel's opinion—that the charge can be directly loaded on to the consumer.

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The charges are not small. The order allows for up to £1,000 to be charged daily. Many of the works in question are connections for customers, paid for by them, such as an upgrade of supply to a retail outlet or business, so we are not talking about digging up whole streets. According to the London Electricity group, it takes on average seven days to install those connections. The first three days are free, for which we are eternally grateful to the Government, but that still leaves on average four days. Assuming the maximum charge, that adds £4,000 to the customer's bill.

That is regulation gone mad. The Government profess to look after the small business man and preach about always looking to cut regulation, yet here is a proposal for massive regulation—a burden that will go straight on to the bill of the consumer.

Glenda Jackson (Hampstead and Highgate): Is not the hon. Gentleman making a strong point for the basic unfairness of the utilities' argument? They speak of the consumer, but the gas pipes that are to be replaced in major work planned in London will last at least 50 years. Why should today's consumers pay for infrastructure for which the companies will receive profit for at least half a century?

Mr. Moss: The hon. Lady does not argue against my point about what often happens when connections are installed for individual consumers, who will pay a connection charge. The London Electricity group states that the charge can, under current rules set by the regulator, be passed directly to the consumer. That cannot be right.

It should not be thought that the London Electricity group is considering the matter solely in a way that serves its own ends. It has taken counsel's opinion and written to the Secretary of State. I wonder if the Minister knows about the letter, to which an answer has not yet been received—that is not unusual, given the time that the Government take to answer any correspondence. The London Electricity group wants assurance that the regulations under section 74A of the New Roads and Street Works Act 1991 will not be implemented until the one-year review with respect to the overrun penalties has run its course and the consultants' report has been received.

I am surprised that the letter has not been passed to the Minister. It also informs the Secretary of State that, should the pilots in Middlesborough and Camden go ahead on anything other than a zero-cost basis, the London Electricity group will have to ask Ofgem to disapply the price control formula specifically for the relevant area—Camden, in its own case.

The London Electricity group has also written to tell the Clerk and Chairman of the Standing Committee what advice it has received from counsel about the regulations under section 74A. The regulations may be open to judicial review on the grounds that the policy

    ''is unequal in its effects between the utility companies, has failed to take account of relevant factors concerning its application, and, through a fettering of the Secretary of State's discretion in relation to the regulations, may produce discriminatory effects between local authorities.''

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The Minister must answer those points to our satisfaction, otherwise we shall be obliged to divide the Committee.

One wonders why the Government are rushing forward with the proposal. An adequate pilot scheme, which would have led to penalties on overrun, was already in force. The greatest pressure on undertakers should be to do their work within the time scale agreed with local authorities and highway authorities. Undertakers should be penalised if they overrun the time scale through inefficiency, which is eminently sensible because it would put pressure on the undertaker to finish the work, creating a direct relationship between the fine and the overrun.

The regulations are simply a form of tax. If a utility digs up a road, it will be charged up to £1,000 a day, but in most instances it is digging up the road to connect somebody or to renew a length of cable or pipe, which benefits consumers in general and society as a whole. Why should a utility pay tax on the duration of its work? The Minister's opening remarks did not persuade me, or I suspect most Opposition Members, that there is any point to the regulations. Because of the regulations' cost, there is not a direct relationship between them and a reduction in disruption. She tells us that the Government are prepared to return to the regulator and twist its arm while saying, ''You must change this situation so that these costs cannot be passed on to consumers.'' It will be either a tax on the consumer or a tax on the utilities, and she did not clarify that point to my satisfaction. There are many questions at which she can have a go, and we shall judge whether to divide the Committee by her responses.

Glenda Jackson: I warmly welcome the regulations, as will my constituents. My hon. Friend the Minister will have to answer the questions put to her by the hon. Member for North-East Cambridgeshire (Mr. Moss), but during the time that I have been Member of Parliament for Hampstead and Highgate the utilities and others have had a total lack of regard for both residents in residential streets and businesses in business streets when it comes to taking over the roads. In doing so, they often make it impossible for pedestrians, car drivers and business deliveries because roads have been annexed by whoever is supposedly doing the work, but there is no sign of any work taking place.

I hope that the orders will encourage the utilities and others to work in unison so that one does not see, as has happened many times, a utility doing a great deal of work involving digging up the road and a couple of days later another utility digging up the same stretch of road. That has happened on three occasions in one stretch of road. I know that one of my constituents, an elderly gentleman who cares for his disabled wife, will be particularly delighted by the orders. A few years ago he left his house to go shopping and returned to find that a utility company had dug up not only the road but the pavement. He was unable to access his home until somebody came along and was kind enough to place two planks across the huge hole where, half an hour earlier, there had been a pavement.

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I am delighted that the borough of Camden is to be one of the two pilots, because my constituency forms one half of its two parliamentary seats. Businesses in my constituency have raised serious concerns about what they perceive to be the extraordinary costs of a company or utility, which can make it impossible for customers to enter their shops or for deliveries to be delivered on time. Arguments put forward by some utilities, which the hon. Member for North-East Cambridgeshire eloquently endorsed, do not take into sufficient consideration how frequently the work of utilities—necessary though it may be—has a major economic impact on other businesses. I strongly urge the Minister to ignore the cries, which will be undoubtedly emitted from utilities, that costs incurred should be borne by consumers and not by them. I reiterate the point that I made earlier: who precisely are the consumers whom they would like to carry the burden?

The utilities will be investing, as they have a duty to do, in modernising their equipment. I gave the example of gas deliverers, who will be engaged in a major repiping exercise throughout London. They told me that they expect that infrastructure to last for at least 50 years. Is it right and proper that present-day consumers should pay for a facility that will be part and parcel of a company's ability to gain more business in future and to ensure that its shareholders receive profits? I do not agree with the argument that an individual who wants a facility to be put into his or her property should pay more than the cost of it. That facility, whether it be electricity, gas or cable, will be useable for a considerable period. The relevant regulatory officers may have to address such issues and I sincerely hope that they find in favour not of the utilities, but of the consumer.

It is not clear from the statutory instrument, or from the Minister's contributions to the Committee—the points that she did touch on were eminently clear—whether there will be any requirement for the utilities to co-ordinate their activities. It is hoped that they would want to do so of their own accord if there is a threat that they will be fined for overrunning on the time that they rent a lane from the local authority.

New fines may also mean that utilities will attempt to cut corners to avoid having to pay them. On more than one occasion, constituents have raised the issue of a road that was supposedly restored to its former state by a utility—or whomsoever—and holes appeared in the road less than a month after the work was finished. Clearly, the monitoring of such work needs to be examined, but I do not accept that what, in the past, has been less than first-rate work will be further impaired because of the possibility of a fine being introduced. Such realities may mean that, in future, utilities and others who need to rent lanes from local authorities will bring the professionalism and expertise that they undoubtedly show their consumers if they are ever late in paying bills.

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Prepared 10 December 2001