Thomas Cook

Baroness Kramer Excerpts

Wednesday 25th September 2019 Lords Chamber

[Baroness Vere of Norbiton]

I believe that that directive has been brought across and is in our law.

[Baroness Kramer (LD)]

My Lords, obviously our first concern is both for the staff of Thomas Cook and for the holidaymakers who found themselves in this impossible situation. Across the globe, however, there are hoteliers and others who have provided services for which they have not been paid. If the UK has a reputation for allowing this situation, I suspect that other travel firms will find in the future that they are asked for guarantees and other kinds of prepayments that will make holidays far more expensive for everybody else in this country. Does she have an idea of how the people who are owed money for services that they have provided under Thomas Cook arrangements are going to be repaid in these circumstances?

[Baroness Vere of Norbiton]

As the noble Baroness will know, these are, in pretty much all instances, private companies making private arrangements. The travel market is global, so if one is in a hotel in Italy, there will be people there from travel companies from all over the world. It is the case, therefore, that those private arrangements will continue, and as with all private arrangements between two private organisations, an assessment should be made on the long-term financial viability of the person to whom one is providing credit.

High Speed Rail (West Midlands–Crewe) Bill

Baroness Kramer Excerpts

2nd reading (Hansard): House of Lords
Monday 9th September 2019 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I am a strong supporter of HS2. I was before I had the privilege of becoming a Minister in the last 18 months of the coalition Government, when I became the Minister responsible for phase 2. Hours and days were spent on the ground seeing not only extraordinary challenges but huge opportunities to regenerate economies that had fallen behind and essentially to change the future direction for many people, particularly in the north. However, I do not want to use this speech to talk in a general way about HS2; I want to focus on a number of issues that genuinely concern me.

Others have said this, but I shall pick it up in a slightly different way. This is clearly an opportunity for the Department for Transport, as well as other parts of government, to look again at how large, complex projects are costed. Recognising that the estimates cost of phase 1 had risen from £27 billion to somewhere between £36 billion and £38 billion did not happen overnight. Those who would have seen and recognised that they needed to make those changes never did so in the public arena—there was no transparency.

Frankly, I find this completely ridiculous. We should never look at a cost estimate in the early stages of a large and complex project and treat it as anything more than tentative. There should be an ongoing process of constantly updating. Having to say that the number is higher should not be treated as betrayal or failure; it is merely recognising and understanding the detail. I say to many here that this really needs a change in attitude at the Treasury and, frankly, much braver politicians in order to recognise that this will frequently be the pattern in projects of this kind.

I want to put on the record my gratitude to the whistleblowers who alerted many on the outside to the cost issues with HS2. I ask the Minister: will HS2 and the Government step in to amend some of the retaliation and harm that those whistleblowers have suffered? It was terrible and inappropriate, and it really needs to be remedied. We need that kind of honesty and integrity in this project.

I also want to look at cost-benefit analysis. My noble friend Lord Bradshaw referred to it in the more technical terms of the WebTAG. Allan Cook highlighted in his stocktaking report the inadequacies of the Government’s cost-benefit tools in providing any kind of sensible answer for projects on the scale of HS2, particularly with its broad impact on regeneration.

I feel this harshly. I had such fights inside the department during my period as a Minister. I have a banking background: I understand net present values and how you look at calculating returns. It was absolutely clear that the methodology was very inappropriate. The Government’s method completely fails to recognise more than very limited aspects of regeneration and economic benefit. This leads to poor decision-making on projects because, in particular, it does not recognise the uplift in land values. That would give us a much better mechanism for making decisions about these projects, as well as providing us with mechanisms to find ways to fund parts of these projects. Where there is land value uplift, we ought to be taking some of that in to pay for the project in the first place.

The current methodology is particularly hopeless for a phased project. Under its methodology, it captures all the costs of all the various phases and only includes a small part of the revenues and benefits that come from the later phases, because of the time guillotine inherent in the process. That has to be completely changed. I really think that it will take some outside pressure to get that kind of sense. It is perfectly within the department’s scope to look at all of that again.

I have a question for the Minister. I am really concerned about what on earth we will do with passengers now that the opening date of phase 1 is estimated not to be 2026 but somewhere between 2028 and 2031. I went into a lot of those passenger forecast numbers closely when I was in the Government. Even then, I was terrified that we could not cope with the forecast growth in passengers on routes between London and the Midlands with a 2026 opening. I do not know how we will cope without HS2 open until 2028 or even 2031.

I know that the industry is trying to use things such as changes in the way it manages fares to redistribute passengers through the day. Frankly, it will only make changes at the edges. In a couple of speeches, I joked about strapping passengers to the roofs of trains. It is no longer looking like a joke. We really are looking at tremendous overcrowding and over-demand. I have no idea what is being put in place now that we know that the opening of HS2 phase 1 will be delayed. This really ought to be a very urgent project.

As I said, I wanted to bring up one or two issues. Perhaps the Minister could help me with one last issue. HS2 is a project that demands sophisticated rail. I know that the whole industry has been reliant on British steel as the source of that rail. We know that the future of British Steel is in question. I hope she can explain to the House how we should respond or how she would see this set of issues. If somebody came to me and asked what major risks could further delay the project and put up costs in a way that we had not anticipated, that one would be somewhere near the top of my list.

--- Later in debate ---

[Baroness Vere of Norbiton]

I suspect that I may already have that list, but I would be delighted to receive it again.

My noble friend Lord Framlingham made what I think noble Lords will agree was an expected contribution, mentioning costs and value for money; indeed, that is what the Oakervee review will consider. He spoke about whistleblowers, as of course did the noble Baroness, Lady Kramer. We are clear that any whistleblowers are covered in the UK by the whistleblowing legislation, and absolutely nothing should stop them coming forward. The Oakervee review will of course look at all available evidence when assessing the scheme.

[Baroness Kramer]

Would the Minister be willing to meet on one occasion to take up that issue of whistleblowers?

[Baroness Vere of Norbiton]

I would be delighted to meet the noble Baroness when diaries allow.

My noble friend Lord Framlingham mentioned fraud. I would like to be clear that neither the Serious Fraud Office nor the police has contacted HS2 regarding any investigation, nor made any request for information in that regard.

The noble Lord, Lord Greaves, asked whether HS2 was competent. The Oakervee review will of course look at how we have arrived at the place we have, and at whether HS2 as it stands is able to deliver the project. We would not want to prejudge that outcome, but we have been working closely with the new chairman to ensure that HS2 has the right skills at this important stage to take the project forward.

The noble Baroness, Lady Randerson, mentioned salaries, expressing surprise at the number of people who are paid quite high salaries within HS2. I do not know that I agree with her on this one. These are very technical positions, which need quite a lot of skill and experience, and I have not yet been able to see any benchmarks which would mean that they are not reasonable salaries to pay to these highly skilled technicians and engineers.

The noble Lord, Lord Tunnicliffe, raised the important issue of connectivity. I said in my opening remarks that HS2 will be able to connect the major cities of the UK, but also described how the hub-and-spoke system then goes out to more than 100 cities and towns, which will be able to benefit. It is probably slightly early days now to think about those towns, because we need to get closer to the date of completion and services. However, I agree with him that whoever is in government at that time—I very much hope that it will be the Conservatives—will work with local authorities to make sure that we have an integrated transport system so that the buses connect with the trains, and all those things happen that we all would like to see.

The issue of Old Oak Common was raised a couple of times. We published a response to the Economic Affairs Committee report in July 2019, which mentioned stopping at Old Oak Common. There are few benefits, because stopping there means that you cannot transfer on to other transport systems, but the Oakervee review will of course look at that issue.

Heathrow Airport

Baroness Kramer Excerpts

Thursday 7th June 2018 Lords Chamber

[Baroness Sugg]

My Lords, the statement of principles was a snapshot in time. It was published publicly in October 2016 and is not legally binding. As I said, the document will expire if the scheme proceeds and the NPS is designated. The Government will of course define their relationship with Heathrow in a new agreement if the scheme proceeds. On surface access, Heathrow Airport Ltd has pledged to meet the costs of any surface access proposals that are essential to deliver airport expansion. Many of the schemes which the noble Lord mentioned—HS2, Crossrail and the extension to the Piccadilly line—are already committed. For any other scheme currently under consideration, such as western and southern rail access, there will be an appropriate contribution from the developer.

[Baroness Kramer (LD)]

My Lords, when the PPP companies Metronet and Tube Lines collapsed, the Government found themselves having to step up with millions to make up the damage to London Transport because it was essential. It will be exactly the same with Heathrow if there is any failure in the successful completion of this project, and the Government should be honest about that. From doing years of infrastructure funding, I can say that there is no way that any responsible shareholder or lender would put money into a project with so many potential liabilities—for transport, environment, community impact and damage to other airports—without some form of implied government backstop. Will the Government please come clean and provide their estimate of the liabilities that the taxpayer will be exposed to before the vote in the Commons?

[Baroness Sugg]

My Lords, there is of course a risk that in certain circumstances Heathrow Airport Ltd could pause or cease the development of the scheme. However, the regulator will hold Heathrow to account on the delivery of the scheme through its regulatory licence. I say again that the Government are clear that airport expansion should be financed solely by the private sector and that Heathrow Airport Ltd has no claim to damages or liabilities.

--- Later in debate ---

[Baroness Sugg]

My Lords, I am happy to confirm to my noble friend that we absolutely continue to support regional airports. With an expanded Heathrow, we will still see regional airports growing and benefiting from long-haul flights, such as the recent introduction of the flight from Manchester to China, which has been so successful.

[Baroness Kramer]

My Lords, can I suggest that the Minister may have missed the point? In order to pay back its financing and its shareholders, Heathrow will need to fill those runways as rapidly as possible. The obvious way to do that—I am sure this is deeply embedded in Heathrow’s plans—is to suck in traffic from other airports across the UK, not just in London and the south-east but elsewhere. Will she confirm that that is indeed part of the business plan and give assurances otherwise to the various regional airports, because it will require government action to make sure that that does not happen?

[Baroness Sugg]

My Lords, there is a huge amount of pent-up demand at Heathrow and I imagine that those flights will be some of the first coming in when the new runway is built, which Heathrow expects to be in around 2026. I have spent much time in many regional airports and they have all been welcoming of the expansion of Heathrow, particularly on the domestic connectivity point where we expect to see up to 15% of slots reserved for domestic flights.

--- Later in debate ---

[Baroness Sugg]

I could not agree more with the noble Lord. We are in desperate need of expanded capacity in this country if we are to continue to succeed as a nation. I would very much like it if we could proceed.

[Baroness Kramer]

My Lords, could I just push the Minister on the funding of surface transport?

[Noble Lords]

No!

[Baroness Kramer]

There are still two minutes to go— unless someone else would like to ask a question. As the Minister will know, the Heathrow Southern Railway scheme requires the diversion of trains, typically going to Windsor, to the airport. The plans actually consume capacity that has been designed to meet not only the needs of the current Heathrow Airport but the growing demands of the local community. While the local community is going to be displaced, who is going to provide that replacement transport? There are both capacity issues and huge cost issues associated with that, but the airport could very easily claim that they are not directly related to bringing passengers to the airport.

[Baroness Sugg]

My Lords, Heathrow Airport Ltd has pledged to meet the costs of any surface access proposals that are essential to deliver airport expansion. Any work that will benefit the wider transport system, not just the airport, may require some taxpayer contribution, but proposals will need to represent value for money. As those proposals develop, those agreements will be made.

Airports National Policy Statement

Baroness Kramer Excerpts

Wednesday 6th June 2018 Lords Chamber

[Baroness Sugg]

I thank the noble Lord for his supportive comments. This expansion will absolutely deliver jobs for the local area: I think that the latest figure is 114,000 and 5,000 apprenticeships, which will obviously be welcome for young people. We have not underestimated the potential impact of this decision on local communities, or the importance of listening to them and doing it in the right way. I personally met some of the local groups which have been campaigning hard on this issue and saw at first-hand their strength of feeling. The NPS commits up to £2.6 billion towards compensation, noise insulation and improvements to public communities but, as the noble Lord said, expansion has support from local communities as well as opposition.

[Baroness Kramer (LD)]

My Lords, I declare an interest, in that I live under the flight path and belong to many of the community organisations that the Minister will have met. I am appalled by this proposal, as will be the majority of the community where I live and the surrounding communities. Will the Minister confirm that it is clear in the report that daytime respite periods will be shorter under this plan? It says in parenthesis that they will be cut. Perhaps she will confirm that. That matters because there may be money for insulation, but that is not very useful for children who want to play outside or for people who want to walk outside or sit in a garden. Perhaps she will tell us the number of hours of peace that we are about to lose every day.

To answer the question of the noble Lord, Lord Brabazon, airlines will be permitted to run a full service from 5.30 in the morning under the new plan. The night-time ban is six and a half hours: 11 pm to 5.30 in the morning. Currently, they cannot run a full service until 6 am. That is done because Asian Governments are concerned that their residents are being disturbed by departures, so instead our local residents are to be disturbed by arrivals.

Will the Minister confirm what is clear to me from the report: that the required noise level that the airport has to achieve is that in existence in 2013, giving up five years of improvement? All the surface transport mitigations listed are those under way or in place to deal with current congestion, current overcrowding, the air quality problems of the current airport, and the forecast growth in demand in the local community. There is no additionality to deal with 41 million people, a doubling of freight and no indication of who will pay.

On air quality, there are just vague aspirations without any guarantees, clarity or targets. Will the Minister confirm that?

[Baroness Sugg]

My Lords, on the respite periods, the final flight paths obviously have not been confirmed yet, and I understand why there is frustration about that. The proposals to change airspace design have to follow the new airspace change process, which will be done in the coming years, in close consultation with the community.

On the 6.5 hour ban, it has not been decided between periods of 11 pm and 5.30 am exactly where that will go. As I say, that will also be done in consultation with local communities. We think that there could be more respite than that, and predictable respite too. Obviously, with a third runway, there will be more aircraft movements in the sky, so I acknowledge that there will be more noise. We have set out a comprehensive package of compensation, which includes noise insulation and improvements to public amenities.

On the surface access point, there is lots of investment to come on that. I would mention Crossrail, HS2 and Southern Rail and western rail access. There are clear commitments to 50% of public transport use by 2030 and 55% by 2040. Where that is directly to deal with expansion, it will be paid for by the developer.