§ 7.3 p.m.
§ The Earl of Courtown rose to move, That the draft order laid before the House on 13th February be approved [10th Report front the Joint Committee].
§ The noble Earl said: My Lords, we are today considering a draft order which will enable the Secretary of State for Scotland to contract out certain of his statutory functions as roads authority for the trunk road and motorway network. Noble Lords may recall that similar provision has already been made for England and Wales under the terms of the Contracting Out (Highways Functions) Order 1995.
§ The powers are needed for two purposes. The first is our intention, under the private finance initiative, to procure a comprehensive construction and road management service to private contractors—commonly known as DBFO (Design, Build, Finance and Operate) contracts. Three such DBFO projects are in the current Scottish trunk road programme. The second is for the new arrangements for the management and maintenance of the trunk road network which replace the present agency agreements between the Secretary of State and local roads authorities and will come into effect in April this year.
§ Before I go into the detail of the order, it may be helpful if I say a few words about the underlying policy. Most of the design, major construction work and capital maintenance for the trunk road network is already done by private sector consultants and contractors. We wish to widen the scope for competition to ensure value for money in the more day-to-day management activities. I should stress that this is not deregulation or privatisation. The Secretary of State will remain as the roads authority.
§ DBFOs form a prominent part of the Government's private finance initiative and will play an increasingly important role in the financing of major road schemes. Essentially, companies, or consortia, formed for the purpose are being invited to compete for DBFO contracts which would deliver a major section of new road construction and then manage and maintain what they have built. The revenue the DBFO companies receive will he significantly influenced by the amount of traffic using the new or improved road. This will 676 provide a major incentive for the operator to build in quality and ensure that necessary repair work is carried out quickly and efficiently.
§ A principal feature of such contracts is that the company managing the road should have overall responsibility for keeping the road in service, under contract to the Secretary of State. Without this order it would be necessary for the Secretary of State to act for the DBFO company in a variety of circumstances where his formal functions are involved. That is not sensible given that the object is to unify responsibility with the DBFO operator under the commercial contract. Operators themselves will want to take as much control as possible to fulfil their obligations without reliance on third parties, including government.
§ DBFO companies want the freedom to have access to services such as winter and routine maintenance which they feel would be best procured from local roads authorities. Likewise, local roads authorities have indicated that they wish to have the opportunity to bid for sub-contracts let by DBFO companies. We believe that this is sensible and the order will enable this.
§ At present, trunk road management and maintenance is carried out by the regional councils under broadly based agency agreements on behalf of the Secretary of State. Local government reorganisation means that new arrangements will have to be in place for April this year. The opportunity was taken therefore to review the way in which these services are delivered.
§ The main thrust of the new arrangements which are set out in the consultation paper, Competing for Better Roads, is to introduce a formal contractual basis on which trunk roads should be managed and maintained, together with open competition for the provision of these services —the key objectives being to improve customer service, secure the best value for money and promote the use of the most effective management resources. The first round of term contracts have been tendered for and won by local authority consortia. The first of these contracts in the all-purpose network will be re-tendered in three years' time.
§ A related proposal set out in Competing for Better Roads is to establish a new traffic controller organisation. This is to act as agent for the Secretary of State to operate and manage the new traffic control and driver information systems that are currently being installed and developed on the motorway and trunk road network in the central belt. It is our intention that the appointment of a traffic controller should be subject to competitive tender. At present the powers to operate these systems are confined to the Secretary of State and local roads authorities. That severely limits our ability to test value by competition.
§ The draft order sets out a series of statutory functions from which the Secretary of State may select those to be contracted out. In short, the power is intended to be permissive and selective according to the particular circumstances of the case.
§ As I said earlier the underlying purpose is to widen the range of choice in contracting and management arrangements for the strategically important trunk road and motorway network. The Secretary of State remains 677 the responsible authority and nothing in the draft order reduces the range of those responsibilities. We recognise that a great deal of effort goes into the present management of the network. What we are now seeking is the ability to provide for a better service to the travelling public through the ability to choose from a wider selection of management arrangements. The draft order under consideration today would help this process forward, and I commend it to the House. I beg to move.
§ Moved, That the draft order laid before the House on 13th February be approved [10th Report from the Joint Committee]—(The Earl of Courtown.)
§ 7.10 p.m.
§ Lord Ewing of Kirkford
My Lords, before my noble friend Lord Carmichael replies for the Opposition, perhaps I can ask the Minister one or two questions.
First, when the noble Earl introduced the draft order he was careful to point out that it was required in order to facilitate the design, finance, build and operate policy of the Scottish Office. Where, therefore, does the Skye Bridge fit into that?
We already have a design, build, finance and operate road in Scotland. The approach roads and bridge to the River Skye were built under such a provision. The company that built the Skye Bridge also assumed to itself the powers to impose and collect tolls. I am the first to accept that that matter has been decided in recent days by the Scottish courts; but does the order mean that any company that is granted the right to design, finance, build and operate a road—for example, a bypass or, even more pertinent, the proposal to construct a new bridge over the River Forth at Kincardine—will automatically be given the right to levy tolls? Since the Kincardine Bridge was built and opened in 1936, no tolls have ever been charged on that crossing of the River Forth.
It must be of deep concern to the travelling public, particularly commercial operators in Scotland, if one of the implications of the order is that those companies, those consortia, that are given the right to design, finance, build and operate roads in Scotland are ipso facto given the right to charge tolls as well. It is a serious issue that was not addressed in the noble Earl's comments and for the record we must get that clear.
Perhaps I can delay my noble friend for a few seconds more. I cannot for the life of me see how, if the Secretary of State contracts out the operation of traffic signalling and the various information systems that are being constructed throughout central Scotland, that can be cheaper than if the Scottish Office does it. As I was driving this morning from my home in Fife to the airport at Edinburgh those systems were in operation. All they were saying was: "Watch your speed"; "Please drive carefully". For goodness' sake, how will any private operator be able to provide that kind of information or advice cheaper than the Scottish Office? We need much more information than we have been given on what is behind the order. I have to say, in a critical fashion, that I was somewhat disappointed by the inadequate debate 678 in another place on the order. In my view this order is much more serious than a number of people seem to have grasped.
§ 7.13 p.m.
§ Lord Carmichael of Kelvingrove
My Lords, I am glad that my noble friend spoke in this debate. Scotland is buzzing and the people are not happy about what happened in relation to the Skye Bridge. In Scotland generally people feel that they have been cheated on the whole question of that bridge. If the Kincardine Bridge is replaced—I have travelled on it frequently—and if that is tolled, the tolls will be extremely heavy, which will be a great detriment to the industrial and social life of east-central Scotland.
The whole question of the need to set up the bodies about which the noble Earl spoke seems to me to be an afterthought to the reorganisation of Scottish local government. The local authorities, particularly the regional authorities, were already responsible for the roads, the lighting and all the other matters required to keep them in good condition. Now we hear that a rather complicated system is to be established by the Scottish Office.
I have no great worries. I know that local authorities cannot themselves build roads. They can do minor work, but they cannot build roads. As was said in another place and the Minister repeated tonight, most of the design work is handed out to private consultants and contractors are then asked to tender. That is a point that was not properly handled by the Minster of State in the other place.
The Member for Dumbarton, my honourable friend Mr. John McFall, spoke of the burden that would be placed on contractors who bid for those long lengths of road. It was estimated that for a big project the burden could be extremely heavy and there would be no compensation if contractors were unsuccessful. I agree that that is part of the risk of contracting, but the cost to the nation generally, however it is done, must be summed up in total.
When the Minister replied in the other House he hinted—he did not actually say—that there would probably be a cutting down of the numbers of contractors asked to tender for each job. Although competitive tendering for a large project is acceptable, it is extremely expensive. If there is a selection of tenderers for the various large jobs, how will we ensure that one comfy little group do not do it all the time? How will other contractors be able to break in and make known their desire to tender? Also, as was raised by another Member in the other place, how far will they go? The example given was whether or not a contractor from Milan would be acceptable. I know the Italian roads and they are beautiful. The Italians are skilled road engineers. I do not know whether or not they inherited that skill from the Romans, but the roads are exceptional.
Those are questions that have not yet been answered and the Minister should be willing to answer them, if not tonight, then at least to write to us. I worry about the fact that if we are too chummy with those we ask to 679 take on certain jobs, the contracting list could become static. That would be detrimental and unfair to other contractors.
A number of important points arise with which members of the public will be concerned. The schedule to the order is most illuminating when one looks at the powers that people will be expected to handle. For instance, at one time, when anything went wrong with a road—for example, the lighting—the public knew, regardless of which part of the road they were on (whether it was Fife, Lanarkshire or in a Highland area) who to telephone to have it put right. If the road is a design, finance, build and operate scheme, how will the public know who to contact'? There may be a skip in the road which is allowed for in the schedule to the Bill; the powers of the roads authority with respect to doors and so forth opening outwards; in relation to all those minor points at one time the public knew who to contact. If the contractor is doing the managing and all the other operations that were previously done by the local authority, who does the member of the public contact now? That is an important point and something with which people are concerned.
I can assure the Minister that my next point is not a small one. I had a number of problems in another place over the question of cattle on roads. Presumably the trunk roads will be going through difficult terrain where there may be cattle on either side. I should like to know whether there will be continuous fencing or what will happen when a fence breaks down. There have been many cases in which much damage has been done and claimed for because cattle stray onto a road. Again, at one time the local authority could be notified very quickly, but now it may take a long time before an outside contractor can be contacted.
My other point concerns reinstatement. The Minister said—I can see that there is a certain validity in the point—that if someone has built the road and is responsible for maintaining it, he will make sure that the road is kept in good fettle. However, sometimes these things do not work out quite like that. Who will be liable if there is damage to vehicles or injuries to people because of a badly maintained road? At present the local authority or the regional authority is able to be contacted and if necessary—it happens frequently—sued; whereas if it is a contractor a good deal of time may be taken and wasted and a good deal of court time may be involved in trying to deal with these matters. The order has some good points but there are a great many questions which need to be answered.
§ 7.20 p.m.
§ The Earl of Mar and Kellie
My Lords, this order deals with the possible transfer to private contractors of the lesser functions which the Secretary of State for Scotland holds with regard to the trunk roads—the so called all-purpose roads. I must draw your Lordships' attention to the risks, as I see them, implicit in this order. The first is the likely loss of uniformity in the appearance of roads in such matters as road signing, layout and design and indeed the colour of the road materials. The second risk concerns safety standards, in particular regarding the treatment of snow and ice, 680 lighting, footpaths and the removal of unplanned or unapproved obstructions, including skips. When dealing with winter conditions, the Minister does not need to be told that only completely uniform standards of gritting and salting on a 24-hour basis can lead to public confidence in the use of a trunk road—or indeed any road—in the extremes of winter.
I want to draw out this question. If the trunk roads are to he maintained by private contractors—my question has been asked before—how will the motoring public know whom to contact about a problem with the road? Will there be adequate signposting of this information? Currently the motoring public are aware that roads are maintained by the nine regional road authorities, with the premier and trunk roads being looked after by the local authorities on an agency basis. If I want to report a fault, I can visit my community information point in Clackmannan or I can phone the central regional council. I acknowledge that some citizens of Scotland have been confused over the past 19 years by the functions of the district and regional councils. That confusion with regard to roads could have ended on 1st April this year when the new unitary authorities take over. But, no, the trunk roads will be maintained by an even wider group of undertakings—the local authority, a consortium of local authorities, local authorities bidding for this work from afar, or private contractors. That will not promote clarity in responsibility for the trunk roads. I think I can safely say that in Scotland we broadly resent the loss of local democratic control of roads in any form. I would say that compulsory competitive tendering has already had its effect in sharpening up local authority management costs.
Before concluding, I have some questions about bridges which carry trunk roads over water. I have given prior notice of these questions. I understand that the Forth Road bridge on the A.90 has now paid off its costs and is running at a profit at the tolls. At Kyle of Lochalsh, on the A.87 the Skye bridge is most unpopular for its high tolls, and in consequence Dingwall Sheriff Court is choked with not guilty pleas. I also understand that a part of the new A.74(M) is owned by its builder, who is in receipt of shadow tolls, paid on a usage basis by the Scottish Office. There is also, as has been mentioned, an active consultation out at the present moment about a new bridge at Kincardine-on-Forth on the A.876. Indeed, that was the bridge I crossed this morning in order to get to your Lordships' House.
Will the noble Earl consider transferring surplus cash from the Forth Bridge to the Skye Bridge, or imposing a shadow toll, or arranging payment from the National Lottery for the Skye Bridge? With regard to the new bridge at Kincardine-on-Forth, can the noble Earl please tell me how the bridge will be financed? Will it be a cash toll bridge, or what? That will be of considerable interest to both myself and my neighbours in Fife and Clackmannanshire.
§ 7.25 p.m.
The Earl of Courtown
My Lords, I have listened with interest to what noble Lords have had to say about the draft order. Its purpose is straightforward. It is to allow us to continue to bring efficiencies to bear on the provision, management and maintenance of trunk roads. A number 681 of points have been made by noble Lords. Some have been duplicated but I shall do my best to answer them now. If I cannot, I shall write to the noble Lords involved.
The noble Lord, Lord Ewing, mentioned the Skye Bridge, as did the noble Lord, Lord Carmichael, and the noble Earl, Lord Mar and Kellie. This order has nothing to do with toll bridges such as the Skye Bridge. This is promoted under the New Roads and Street Works Act 1991, which gives the Secretary of State the necessary powers to assign his right to charge and collect tolls. The noble Earl, Lord Mar and Kellie, said that the Skye Bridge tolls are excessive. I believe that they are at just the same level as are charged for those going across on the ferry.
The Earl of Courtown
My Lords, that is the information I have. The noble Lord, Lord Ewing, made a point concerning traffic controllers. This system is still being installed. When it becomes fully operational later this year, many more messages to assist drivers will be able to be displayed. If local authorities can operate this system cheaper than the private sector they will win their tenders for that operation.
The Kincardine Bridge was mentioned by the noble Lord, Lord Ewing, and the noble Earl, Lord Mar and Kellie. No decision has yet been made on how a possible new bridge at Kincardine might be financed or how the position will be progressed. A decision will be taken in due course.
§ Lord Ewing of Kirkford
My Lords, before the noble Earl leaves that point, may I have on the record an absolute guarantee that, no tolls ever having been charged over the past 60 years that the present Kincardine bridge has been in operation, on any new bridge there will also be no tolls charged? May I have a guarantee that it will be a toll-free crossing?
The Earl of Courtown
My Lords, I cannot give the noble Lord that guarantee. I am sorry that I cannot be any more helpful.
The noble Lord, Lord Carmichael of Kelvingrove, mentioned the problem of cattle straying on to trunk roads. The terms of the DBFO contracts will include provisions for such occurrences.
A number of other matters were raised. Thenoble Lord, Lord Carmichael, and the noble Earl, Lord Mar and Kellie, referred to a complicated system in terms of the premium areas and the all-purpose network. I believe that the new system will be a great deal simpler than the present one. The existing system is managed under 32 different authorities but for the trunk road network we shall now have three premium networks and five all-purpose networks.
The noble Lord, Lord Carmichael, referred to the cost of tendering. We are not talking about peanuts. The extension of the A.74 from Carlisle to Glasgow, which will eventually he designated the M.6, is a £200 million 682 contract. Therefore the businesses that tender for these operations realise that there is expense involved in such work.
§ Lord Carmichael of Kelvingrove
My Lords, how wide will be the tendering list? It is quite important. Will there be selected lists which were half-promised by the Minister of State in another place? He said that there would be a selection because too many contractors estimated or put in a bid for the particular roads. Somehow or other the contractors need to be repaid in the next contract. Therefore the total cost to the country will be considerably higher. We are talking about millions of pounds for an estimate on a contract.
The Earl of Courtown
My Lords, we realise that costs are involved. Initially, when we come to the new system and the DBFOs, the actual tendering process might be more complicated and expensive. After the first successful DBFO contract there will not be the repetition of costs incurred by some contractors in the first instance. The tendering lists are being restricted to three or four, which keeps the total costs down. I believe that I have covered all the questions which have been raised. If I have not, I shall write to noble Lords.
The delegation of functions to the private sector which would become possible under this order is important, as otherwise it would not be possible for the private sector to show properly what it can do. The private sector would have to revert to government to carry out a range of maintenance improvement functions. Our local authority agents are not constrained in this way as existing statutes provide for delegation to them. This draft order will allow a level playing field, in that the private sector will have the same degree of control over its operations. It will be more efficient for private sector operators. I expect these efficiencies to be reflected in pricing.
In future, private sector bidders for DBFO and management and maintenance contracts will be able to submit their proposals in the knowledge that they will have as much control over their operations as is practical. Delegation to them of functions which otherwise would be for government will provide reassurance that they will not be subject to delay and unnecessary administration over matters of importance to them in the management of the roads.
We are continually working to ensure that we are able to meet ever-increasing demands on the trunk road network in ways that will provide value for money and are efficient for the road user. This order will allow us to extend the range of options which we have for managing the network. It will allow us, from a broad spread of functions, to select which functions are suitable to delegate in the particular circumstances. With traffic volumes continuing to increase, we need to be flexible to best meet the challenges which lie ahead and he responsive to changing circumstances. I believe that this order will play a vital role in helping us to achieve this.
On Question, Motion agreed to.