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Report (3rd Day)

Part of Infrastructure Bill [HL] – in the House of Lords at 9:00 pm on 10th November 2014.

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Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative 9:00 pm, 10th November 2014

My Lords, I thank the two noble Lords who added their names to the amendment. We turn from the question of spending the proceeds of shale gas to the question of who is paying for the infrastructure investment on which the country has embarked and for which there is a great deal of support.

When my noble friend Lady Kramer wound up the debate on the new clause in Committee, she was kind enough to suggest that I might approach my noble friend Lord Deighton to discuss this matter as it was entirely a matter for the Treasury. It was therefore no surprise that a day or two later I received an invitation from my noble friend’s office to go to a meeting. It was a very helpful meeting and I will refer to it later. However, I was most grateful for his readiness to meet me on that occasion, and for his presence here this evening to respond to the debate. I recalled his splendid speech when he opened the second day’s debate on the Loyal Address last June. He demonstrated his deep commitment to the Government’s major programme of renewal and expansion of Britain’s infrastructure.

The new clause concerns one important aspect of that. I refer to the absence at present of any systematic system for calculating and publishing what part of the costs will fall on consumers and have to be paid for in their bills. I suggested in Grand Committee that it was time for the Treasury to “lift the veil”. But we are not the first. Last year the National Audit Office produced an interesting report. I will quote two passages from it. First, in paragraph 16, the NAO said:

“Government has made no assessment of the overall impact of infrastructure on future bills or whether those bills will be affordable. Therefore government and regulators are taking decisions on behalf of consumers in the absence of full information about the situation for consumers”.

Later on, on page 11 of the report , it recommended:

“The Treasury should ensure that there are mechanisms in place to assess the cumulative impact of infrastructure investment on consumer bills and the affordability implications, particularly for low-income households”.

I say straight away that I have accepted the arguments that to try to do this cumulatively right across the whole range of infrastructure is at this stage probably unrealistic. In the present new clause, we have removed any reference to the cumulative assessment that we had in the version of it in Committee.

The NAO report was taken up by the Public Accounts Committee, which made a number of recommendations. One of them was to pick up that point made by the National Audit Office. On the same day, the Government published their response to the PAC report. That was really quite an interesting document. They accepted most of the recommendations but rejected the PAC’s recommendation that the,

“Treasury should ensure that an assessment of the long-term affordability of bills across the sectors is produced and published”.

However, at the end of that response, the Government added:

“Nonetheless, the Government agrees that there is scope to improve understanding of affordability in this important area and will continue to work with the regulators on these issues, including through the UK Regulators Network which is considering affordability as a key element of its work-plan”.

I regarded that as a very important pointer to a possible way forward, in particular the reference to the UK Regulators Network. I was unaware of this body, so explored its origins with Ofgem and learnt that it is indeed a more formal and authoritative body than the previous informal association of regulators. Here I come to my meeting with my noble friend Lord Deighton. He told me that the Treasury was in full support of the UKRN. Indeed, its creation was on the initiative of the Treasury itself. I also gathered that that paragraph in the response had actually been approved by my noble friend. I was delighted to hear that. As I said, I have taken on board what I think was the most difficult aspect of the proposal—the question of aggregating consumer impacts across several different programmes. We are now looking at just assessing the impact on consumers of each individual industry.

My noble friend told me at our meeting that the Treasury regarded the regulators network as the right body to take this initiative forward and that the Treasury would take very seriously any recommendation which it might make. There is no doubt that the impact on consumers is an issue of not only great but growing importance. This has been repeatedly acknowledged by the coalition Government, not least in the recent Statement of my right honourable friend the Secretary of State for Energy and Climate Change.

The PAC report of last July has not yet been the subject of a debate in another place. In those circumstances, I would not think it the least bit appropriate to invite the House to vote on the new clause. Rather, I see this debate as providing my noble friend Lord Deighton with an opportunity to give the House his assessment of where we are in greater understanding of the impact of infrastructure investment on consumer bills and what his department may be able to do to advance that understanding. There is no doubt about the importance of the subject. Indeed, the presence of my noble friend to respond to the debate indicates that the Government share that view. I beg to move.