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I strongly agree. I think that I am right in saying that Stratford is the sixth largest interchange station in London, for exactly the reason that my hon. Friend suggests. I cited Canary Wharf, although I know that it is not in his constituency. Let us consider air travel, for example, the routes from London City airport to Brussels, Paris or elsewhere. The chances of getting people working in such places on business to go quickly by changing at Stratford are much better than
hoping that they will go back to St. Pancras, drive to Ebbsfleet or use some other route to get on the train. I hope that they will be able to make such a journey in a much more effective way.
The Bill is important because Government intervention is necessary to achieve these benefits. Reference has been made to the fact that in 2001 the then Deputy Prime Minister, my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), set down clear conditions for a high-quality interchange at Stratford, placing a planning obligation upon Union Railways, the company constructing the channel tunnel rail link. There is little doubt that Union Railways openly flouted the requirement, despite an explicit Government instruction. Union Railways claimed that it could not afford either the capital or the ongoing maintenance costs for this improvement, and eventually the Governments stipulation was, sadly, simply ignored. Representations were made by many people: those who were dealing with the London gateway; people from Newham council and a range of different other areas; and some rail companies that wanted the improvement to happen. I understand that when detailed legal advice was taken, those who supported carrying through the Governments commitment did not think that they would legally win the case to do that, so it got slid away.
It is important that we use the power in section 6(1) of the Railways Act 2005, which, as I understand it, this Bill confirms will apply directly to this railway system, to require the investment that is needed. The attitude exhibited by Union Railways was unacceptable, which is why the Bills requirements are necessary. The Secretary of State should use her powers in the ways that I have described.
The power can, and should, also be used to encourage good connections to the Eurostar from throughout the country. The Under-Secretary of State for Transport, my hon. Friend the Member for Glasgow, South (Mr. Harris), makes a powerful case in resisting HS2, HS3, HS4, HS5 and so on simply because of the amount of money involved. That is a serious factor. However, would it not be possible and better to invest relatively much smaller sums to use connections such as Stratford in a way that genuinely creates an integrated system?
sets out provisions which will facilitate the restructuring of LCR by clarifying the legislative and regulatory position of the HS1 railway, and goes on to say that without government intervention there is a risk of legal or regulatory uncertainty affecting the restructuring, which could jeopardise Governments ability to optimise value for the taxpayer.
That is a serious warning in the RIA, when we consider the situation in the round, and that is why the Bill is necessary. However, that is also why I urge the Secretary of State to ensure that the clarification includes the commitment to capital investment in a high-quality interchange at Stratford station.
The RIA makes it clear that the Government will receive capital receipts if assets are sold. I believe that a good use of such receipts would be to invest in the capital work at Stratford station that I have suggested. Such an investment would be worth while for the
country, so I hope that Parliament will pass the Bill and that the Secretary of State will act on it.
I would welcome the Ministers reflections on his response to an earlier intervention that the Bill would make no difference to Stratford station. I am aware that he was responding on the hoof, but I hope that he was wrong. I hope that the powers established by the Bill will give the Secretary of State the power to encourage the development of a high-quality interchange at Stratford, which would be important for my constituents and more widely, for the reasons that I have set out today.
Susan Kramer (Richmond Park) (LD): This is a short but highly technical Bill. I agree with the Conservative spokesman in appreciating the fact that we will get a briefing on the Bill next week, and I am also conscious that there will be work to be done in Committee. Although the Bills clauses seem narrow, the consequences have significant monetary value, whether for the taxpayer or the fare payer ultimately using the range of services. Like others, I was caught up in the excitement of the completion of the channel tunnel rail link and the glittering opening of St. Pancras station. It was a glorious evening, and there was a certain satisfaction in seeing a project such as High Speed 1 come to a successful conclusion and feeling that we, too, had a high-speed service, not just the continental Europeans.
I suggest to the Minister and the Conservative spokesman that it is wise to be cautious about using the phrase on time and on budget. When the right hon. Member for North-West Hampshire (Sir George Young), then Secretary of State for Transport, announced the award of the contract to London and Continental Railways in 1996, the total Government contribution was set at £1.7 billionwith no guarantees or loansand the completion date was 2003. It was only with the rescue packageI commend the Government on their willingness to push that forward in 1998that we actually got the project that people now describe as on time and on budget. Most people agree that there may have been some flaws in the procurement that made it a much easier target to achieve.
The Government now stand credit behind £3.7 billion in bonds issued by London and Continental Railways. There is still a potential for the Government to loan directly up to £400 million, and up-to-date figures on the likely figures would be welcome, although that seems to be a constantly moving target. The Government, for their pains, have in effect obtained the equivalent of an equity stake of approximately 35 per cent. in the company and, in 2006, LCR was reclassified as a public sector company.
The flaws in procurement raise several issues. It is clearly evident that the private sector managed to out-negotiate the Government into entering a contract in which the risks remained overwhelmingly with the public sector, with precious little remaining with the private sector. The GovernmentI suspect that the problem lies largely with the Treasurywere far too
naive in their analysis of passenger numbers. The original forecast that Eurostar would have 21 million passengers by 2004 was ludicrous. Even the revised and re-revised downside cases of 8 million passengers by 2006 have been missed. Passenger numbers are starting to move up a bit now, but I would be interested to hear from the Minister about the greater risk profile for passenger numbers now that the base has been moved to St. Pancras.
As many in the industry recognise, the business commuters based in south London are an important element of Eurostars passenger numbers. They have taken advantage of the Heathrow, Gatwick and Waterloo triangle, but they will now be lost. I shall be interested to know the potential impact of that loss on the project, and to what extent the money that the Government have put in may be put at risk.
Mr. Martlew: Does the hon. Lady accept that people going to Heathrow have to use Paddington anyhow, and that the ones going to the continent may as well use St. Pancras? I am afraid that I do not agree at all with this part of her argument.
Susan Kramer: One has to look at how people function in real life. The reality is that significant numbers of business customers in south-west London have been happy to make the easy journey by train to Waterloo, but that they simply jump in a cab to go to Gatwick or Heathrow. It is unfortunate, but their passenger business will largely be lost, as the journey to St. Pancras will be more than an hour longer than the current journey to Waterloo. In addition, it will be far more complex, with passengers having to change trains and manage their bags and so on. All those are significant matters and, if we are to understand the value of the Governments investment in the project, they cannot be ignored.
Mrs. Gwyneth Dunwoody (Crewe and Nantwich) (Lab): I had not intended to intervene, but the hon. Lady seems to be suggesting that all our business men and women live in south London, something that may come as a bit of a surprise to my hon. Friend the Member for Vauxhall (Kate Hoey) and one or two others. Moreover, she seems to ignore the fact that many people in the triangle that has been mentioned, as well as in the midlands and the north, will benefit from the transfer of the Eurostar service to what is a fantastic and sparkling new station. We should try not to be too parochial when we talk about the rail serviceexcept, of course, when we do so in relation to Crewe and Nantwich.
Susan Kramer: Obviously, I respect the hon. Ladys expertise and knowledge when it comes to transport, but the triangle offers three options for travel to continental Europe. The existence of that cluster of departure points has attracted a significant number of people to live in the area: they make the journey on a regular basis and are an important element of Eurostars passenger base. It is not that business people do not live all over London, and in the north and the midlands, but they are less likely to make regular rather than occasional journeys. That changes the profile of Eurostar use, as the company has recognised.
Kelvin Hopkins (Luton, North) (Lab): Does the hon. Lady accept that, in the fullness of time, there will be an upgrade of the Thameslink services between south London and the new St. Pancras International station? There will be an escalator straight up to the Eurostar platforms, so will that not make a difference?
Susan Kramer: I confess that I have sometimes used the phrase Thameslink 3000, but I accept that any additional access to St. Pancras will mitigate the problem that I have identified. The project has constantly failed to meet its forecast targets, especially in respect of passengers, and the cash flows involvedin the early stages in particularare significant. The problem that I have described is not major, but it should be noted and not ignored.
Mr. Harris: I am grateful to the hon. Lady for giving way, but I hope that she will clarify her position. Is she suggesting that it was wrong to choose St. Pancras over Waterloo International as the Eurostar terminal? Does she believe that Eurostar services should have continued to go from Waterloo instead of St. Pancras?
Susan Kramer: The original planin many ways framed as a promisewas that services would continue to leave from Waterloo as well as from St. Pancras. I had hoped that we could keep to that commitment, even though I accept that it would have been difficult to achieve in financial terms.
Mr. Harris: I am grateful to the hon. Lady for giving way to me a second time, and I shall try to make this the final intervention that I make on her. She has said that the option of using both stations was too challenging in financial terms, so which would she prefer as the single terminalWaterloo or St. Pancras?
Susan Kramer: I would have preferred not to spend the additional money on moving to St. Pancras, but I was relying on the idea that we could manage to use both stations. Finding a mechanism to do that would have been to the greatest advantage of both.
Stephen Hammond: My constituents are undoubtedly affected by the move of operations from Waterloo to St. Pancras, but none the less St. Pancras is a magnificent achievement. Does the hon. Lady agree that people from south-west London are more concerned about the fact that platforms at Waterloo that could have been used to ease overcrowding will not be used?
I appreciated an earlier intervention about the disappointing amount of rail freight using the channel tunnel, so I am interested in the Bills implications for freight. There is a general perception that, rightly or wrongly, one of the difficulties in increasing the amount of rail freight using the tunnel has been the conflicting interests within the SNCF, as both owner and provider of rail services. As the Minister is aware, other freight operators, such as EWS, are extremely frustrated at their inability to get access to the channel tunnel for the services they want to run.
Given the restructuring of the projectthe separation into different packages of the track, operations and propertyit would be exceedingly interesting to know how possible conflicts of interest will be addressed, as it is perfectly possible that somebody could be an investor in more than one of the pieces. The ongoing frustration that we hoped was coming to an end could thus continue, so I shall be interested in the Ministers comments on the issue.
I am sure the Minister agrees that freight is an important concern for all of us, especially with climate change in mind, and that the need to shift freight from road to rail is extremely pressing and would have general benefit.
Kelvin Hopkins: I strongly agree with the hon. Lady about freight. Does she accept that the channel tunnel is one of the costs that must be borne by Eurostar services, and that the tunnel will be uneconomic unless and until we put much more traffic through it? As there are not enough passengers, that traffic will have to be freight, so does she agree that we need a delivery system for freight on our side of the channel to make full use of the tunnel to make it an economic proposition, which will benefit Eurostar indirectly, too?
Susan Kramer: I very much agree. There is huge demand for continental freight transport and I am concerned about the quantities of freight that are likely to arrive in the UKthe industry suggests another 2 million trucks-worth within 10 years. The only way it can be moved successfully through the country is to have more freight capacity on our rail lines overall. I am a fan of dedicated freight lines, which are not a subject of the Bill, but the idea feeds into its general structure, as the framework could be affected by the terms of the Bill.
The quality of procurement for the project is relevant, because the Bill would shape the sale of the underlying assetpossibly the next step. As the Minister is aware, in 2005 the National Audit Office took the view that the taxpayer was still likely to be called on to fund a shortfall in LCRs cash flow, and that the economic justification for the links remained marginal. Those issues will have to be addressed in the next step.
In 2006, the Public Accounts Committee came to similar conclusions and recommended that the Department for Transport should actively manage the size and timing of LCRs call on the access charge loan, to give LCR and Eurostar an incentive to maximise revenues.
After November 14, the restructuring
will be our No 1 priority.
the best way of protecting the taxpayers interests would be for there to be an open, competitive and transparent process before the sale of LCR.
The Minister has been kind enough to let us know that the likely structure will involve a division between track and train operations, and property. He has confirmed that it will be possible for Network Rail to be one of the bidders. I wonder whether he is able to go into some of the ways in which the Bill could help to make sure that the project remains an integrated part of our overall networkrather than standing alonegiven that the rest of the track in the country is owned directly by Network Rail. There is also the issue that I raised before: ensuring that we do not, through the creation of complicated consortiums that own different pieces, find ourselves once again facing an anti-competitive conflict of interestwhich seems to have expressed itself in resistance to allowing other freight operators to use the tunnel.
I am rather unclear about the impact of the sale. Will the Government receive an equity return that involves getting their 35 per cent. stake back? What will happen to the debt? Will that be repaid through the financing? Given that the construction risk was one of the primary arguments for the Governments agreeing to stand behind £3.7 billion of debt, and that construction risk is now over, will we have some assurance that guarantees on that figure will be removed?
Can the Government try to give us some confidence that the public will genuinely get value for their support for, and investment in, this project? I just give some warning in relation to the recent example of Northern Rock. That reminds us that the private sector tends to think that it can play fairly fast and loose with public money and with the Government in these kinds of circumstances. The Minister will be conscious of the pain and anguish that has followed the collapse of Metronets public-private partnership. That demonstrated that such negotiations will be exceedingly complex, if they are to be successful.
I want to ask the Minister about the use of the proceeds from the sale that the Bill structures. Others, including the Conservative Front-Bench spokesman, have mentioned that the Environment, Transport and Regional Affairs Committee reminded the Government in 1999 that, when the Channel Tunnel Act first got parliamentary approval in 1987, the regions were promised a benefit. It was to be for them as much as for the people in London. The ETRA Committee report that looked at the final project said:
The regions have been cheated.
The Government could begin to fulfil that promise to the regions by directing all or part of the proceeds from the sale into expanding the high-speed rail network. That would not pay for the network from beginning to end, but it could begin to provide part of the Government proportion and begin to pay for the planning and feasibility studies. We could begin to look at the kind of structures that have been used for the Crossrail project, for examplethe kind of structures that could bring development and business money in, to enable a high-speed network to be developed. My party is going to look at a lot of that over the next year.
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