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Lord Davies of Oldham moved Amendments Nos. 90 and 91:

"(6A) The Secretary of State may by regulations make provision (corresponding to subsections (1) to (5)) requiring undertakers to make payments to a street authority where—
(a) the authority has given a re-surfacing notice to an undertaker,
(b) that undertaker has exercised a right, conferred by regulations under section 73D, of the sort mentioned in subsection (2)(d) of that section, and
(c) the authority has carried out any of the works specified in the notice.
(6B) Regulations under this section may make different provision for cases where an undertaker mentioned in subsection (1) or (6A) has made, or is liable to make, a payment under section 78."
Page 31, line 2, at end insert—
"(8) In subsection (5)(b) "insolvency"—
(a) in relation to a company, has the meaning given by section 247(1) of the Insolvency Act 1986;
(b) in relation to an individual, includes the approval of a voluntary arrangement under Part 8 of that Act."

On Question, amendments agreed to.

Lord Davies of Oldham moved Amendment No. 92:

(1) In section 72 of the 1991 Act (powers of street authority in relation to reinstatement) after subsection (2) there is inserted—
"(2A) The Secretary of State may prescribe a fee in respect of a prescribed description of inspection mentioned in subsection (2).
If he does so that subsection has effect, in relation to that description of inspection, as if for "he shall bear the cost of" there were substituted "he shall pay the prescribed fee in respect of".
(2B) The power to make different provision under subsection (2A) for different cases includes power—
(a) to make different provision for different descriptions of street authority or undertakers;
(b) to prescribe different fees by reference to the nature or extent of the inspection, the place where it is carried out and such other factors as appear to the Secretary of State to be relevant."
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(2) For section 75 of that Act (inspection fees) there is substituted—
(1) The Secretary of State may make provision by regulations requiring an undertaker to pay to the street authority the prescribed fee in respect of—
(a) all inspections carried out by the authority of his street works; or
(b) such inspections of those works as may be prescribed.
(2) The regulations may—
(a) require undertakers to make payments in respect of inspections anticipated to take place within a prescribed period; and
(b) make provision for the striking of an account between an undertaker and a street authority and the making of any necessary payment or repayment.
(3) The power to make different provision under this section for different cases includes power—
(a) to make different provision for different descriptions of street authority or different descriptions of undertakers (including descriptions framed by reference to their previous performance);
(b) to prescribe different fees by reference to the nature or extent of the excavation or other works, the place where they are executed and such other factors as appear to the Secretary of State to be relevant.
(4) The reference in subsection (3)(a) to the previous performance of an undertaker is to the performance of the undertaker, during such period as may be prescribed, as respects such description of his duties under this Part as may be prescribed.
(5) The regulations may require disputes of any prescribed description to be determined by arbitration.
(6) Nothing in this section applies to inspections in respect of which the undertaker is obliged to bear the cost, or pay the prescribed fee, under section 72(2) (inspections consequent on failure to comply with duties as to reinstatement).""

The noble Lord said: My Lords, Section 75 of the New Roads and Street Works Act 1991 provides that statutory undertakers shall pay a fee to the street authority for each inspection of their works that the street authority carries out. These inspections are to make sure that the works are carried out to the required standard. The Secretary of State prescribes the inspection regime in regulations. These currently allow a street authority to inspect up to 30 per cent of each undertaker's works in its area at the undertaker's expense, at a fee of £21 per inspection.

While the existing regime works as a general monitoring tool, it is not effective in improving the quality of work and reducing the amount of remedial work that causes unnecessary disruption. Amendment No. 92 replaces the existing Section 75, widening the remit of the regulations that the Secretary of State can make. In addition to the factors presently covered, the replacement Section 75 would allow the regulations to differentiate between different descriptions of street authority and undertaker. The latter case will include making stricter or less strict provisions depending upon an individual undertaker's performance in the past. This would allow increased inspections for the poorest performers, with the aim of driving up the standard of works. It is not expected that good performers should have more inspections than at present. Regulations can prescribe how and over what period an undertaker's performance would be
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assessed. The amendment also allows for regulations to prescribe how disputes relating to the charging of fees are to be settled by arbitration.

Section 72 of the 1991 Act covers circumstances where a street authority's inspection uncovers a failure to meet the prescribed performance standards. Where this occurs, the undertaker has to meet the cost of three inspections: a joint inspection with the authority, to see what action is needed to remedy the fault; an inspection during the "remedial" works; and another after their completion. Subsection (1) of Amendment No. 92 allows the Secretary of State to prescribe in regulations that the undertaker in question shall pay a fee to the authority for each of the three types of inspections and also what that fee should be. It allows for the fee to vary according to what type of inspection is needed, how extensive it is, where it is carried out, or any other factor that the regulations might provide for. For instance, a badly failed reinstatement might need a more extensive and therefore more costly inspection. In all of this, the intention of the Government is to target poor performance and improve the quality of street works, so that doing reinstatements properly first time becomes the norm. To monitor performance and changes in performance effectively, there would still be a minimum proportion of all utilities' work inspected.

The Government intend to ask a working group of utilities and authorities to consider what changes should be made to the inspection regulations in light of the changes introduced by the Bill. We will consult publicly before new regulations are made.

Amendment No. 93 is a simple drafting change to ensure the consistency of new Section 73F of the 1991 Act, inserted by Clause 56, with the existing provisions in the Act. I beg to move.

Lord Rotherwick: My Lords, the utilities industry welcomes the move towards the principle of rewarding good practice. However, it argues that this clause leaves matters too vague. The accompanying explanatory text in the letter the Minister was kind enough to send us before this stage of the Bill makes it clear that the Government are at least contemplating a regime where effort and resource are concentrated on those who have not demonstrated good records in street works. That much is to be welcomed.

The letter also makes it clear that while the Government envisage using a stick to punish those who do not improve, the industry questions why the department is not contemplating a corresponding carrot for those who make improvements, in the sense that those who improve will continue to pay for inspections at the current level. Those who do not will face increases. Can the Minister comment on whether he believes that there ought to be some incentive to make further improvements, such as better performance leading to a reduction in inspections and therefore fees? This would encourage better performance and would free up resources to deal with those who continue to perform below par.

Lord Davies of Oldham: My Lords, I am grateful to the noble Lord for welcoming certain aspects of the
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provisions, and I appreciate the fact that my letter has helped to clarify some of these matters. I am not entirely surprised to learn that he is content with our clear determination to improve performance by applying the stick to undertakers who do not improve their performance.

The noble Lord has asked the additional question of whether we can think of ways of providing a carrot for those who do well. Of course there is one obvious carrot; namely that the number of inspections could be reduced for undertakers with a track record of satisfactory performance. I am sure that the noble Lord will share with me the broad intent behind the provisions, which is to improve the quality of road works so that we do not have the most irritating of all circumstances, those where work has to be attended to time and again, causing the same section of road to be subject to disruption.

I hear what the noble Lord has said. We shall look at his point, but I think he will recognise that there is an incentive for good performance. Undertakers in the category of good performers could find themselves subject to reduced inspections. Surely that ought to provide some incentive.

On Question, amendment agreed to.

Clause 56 [Inspections]:

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