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Viscount Chandos: My Lords, I am afraid that a number of noble Lords on this side of the House do not understand the Minister's explanation of how, if the Government will act as lender of last resort or guarantor of the obligations of the NHS trust, it leaves any risk with the counterparts who contract with those trusts. They have a government guarantee on those obligations.

Baroness Cumberlege: My Lords, the private sector cannot have it both ways. It is seeking some confirmation that the Government will not rat on their obligations and yet the noble Viscount suggests that there is not sufficient risk.

I turn to the question of the relationship between the PFI and the PSBR. PFI contracts are treated in the same way as other public spending. The impact on expenditure plans for the PSBR occurs as and when the public sector spends money. That is because PFI is about buying services. Until we buy those services, we spend no money.

The noble Viscount suggested also that the capital cost of PFI schemes should be scored as public expenditure up front. But that would be wrong since the capital spending is by the private sector. But we illustrate the scale of public sector capital spending under the PFI in Table 6.5 of the Red Book.

The noble Lord, Lord Carter, asked specific questions about the costs of borrowing. But that is only half the story. History shows that large tracts of the economy perform better in the private sector than in the public sector because the private sector is able to use resources more efficiently with the result that although capital costs are higher, total project costs are lower.

Lord Carter: My Lords, I understand the point which the Minister makes about relative efficiency. I asked a simple question. The noble Baroness said earlier that the Bill gives the ultimate lender that absolute guarantee. Two £25 million schemes were

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undertaken without the Bill. The Government have now obviously been able to negotiate a keener rate in the contracts as a result of that. What is that rate?

Baroness Cumberlege: My Lords, I suspect that it will alter according to the scheme. I need to look at the detail of that and I shall write to the noble Lord. However, as I said, I believe that that is only half the story. Our experience has been that when public companies, public concerns, are privatised, they flourish and do better because the private sector is able to use resources more efficiently.

The noble Lords, Lord Rea, Lord Winston and Lord Dean of Beswick, were concerned about the high limits on trust borrowing. I assure them that the Treasury has set out very strict delegated limits on approval for the business cases which, in usual Treasury form, are not over-generous. I shall not go through them this evening because time is pressing but I shall write to noble Lords.

This Bill is designed to ensure that in the event of general or local health service reorganisation where a trust is dissolved or a health authority or an FHSA is abolished no liabilities would simply be extinguished. It gives security to all those who contract with the NHS and paves the way for the continued development of the PFI in the NHS to the benefit of patients and taxpayers alike.

Lord Winston: My Lords, before the noble Baroness sits down--with the greatest personal respect that I have for her--I feel she has made what I think is a deeply defamatory remark. I hope that she will retract it. She implied that I was a detractor of the National Health Service. I have given 30 years of my professional life to the health service. My team has raised literally millions of pounds towards the health service and I remain totally committed to it, as do all the Members of the House on this side. What we are trying to do is to sort out the difficulties which have been created successively by this Government over 17 years. I find it incredible that having raised eight specific points the Minister has been unable to answer any of them.

Baroness Cumberlege: My Lords, it has never been my intention to cause offence to any Member of your Lordships' House. If I have done that I certainly apologise. I am just very concerned when people go on and on about the NHS, the low morale, the poor pay, the this, the that, and the other. For people in the NHS it is demoralising when they are told that they are poorly paid, that they have bad conditions, that the NHS is going to the dogs, and that the principle is being eroded. I visit the NHS. I go round the whole country. I am not just in one institution. I travel throughout the whole country. I have to say that morale differs. I did not say that it was not low; I said that it was not at an all-time low. I want to defend the NHS and to say that if people are detractors of it and if they talk about low morale, that affects not only those working in the NHS but also those who want to join it because no one wants to join a sinking ship.

Baroness Jay of Paddington: My Lords, before the noble Baroness sits down, I must speak on behalf of

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my noble friend and say that today the person who has discussed the state of the NHS, in the words that the Minister has just used, is the Minister herself. Everyone who has spoken from these Benches has referred to the need to improve the facilities in the NHS; to support the Private Finance Initiative where it is appropriate; and to hope that the NHS will be improved in this way. We are concerned that this Bill--as I think we have demonstrated in speech after speech with absolutely no support from the Minister's own side except the speech of the noble Lord, Lord Harris of Peckham--will not achieve any of those aims.

Baroness Cumberlege: My Lords, that is a view the noble Baroness can take. However, I have to say that it was not I who raised the issue of morale this afternoon; it was the noble Lord, Lord Winston.

On Question, Bill read a second time; Committee negatived;

Then, Standing Order No. 44 having been dispensed with (pursuant to Resolution of 13th May), Bill read a third time and passed.

Channel Tunnel Rail Link Bill

6.52 p.m.

Viscount Goschen: My Lords, I beg to move that the Bill be now read a second time.

The Channel Tunnel Rail Link Bill seeks powers to construct a new high speed railway from the Channel Tunnel to London, the first new mainline railway in this country for a century. It is a project of major national significance which will provide a high speed link with the rest of Europe. The competition for a private sector partner to build and operate the new railway was successfully completed in February this year with the selection of London and Continental Railways. The completion of the Bill will be the last major public step for this flagship project of the Government's private finance initiative. With timely Royal Assent, the rail link should open in the year 2003.

The Bill provides powers for the construction, operation and maintenance of the link between a new international terminus at St. Pancras and the Channel Tunnel. It also includes powers for associated works, including a connection to provide access to Waterloo international station, connections to other lines, provision in outline for a station at Ebbsfleet and the alteration to St. Pancras station, including advance works for the Thameslink 2000 project to enhance the capacity of that cross-London railway. The Bill contains powers for an open box shaped cutting at Stratford, of a size to accommodate a combined international and domestic station there, although the powers to turn this into a station will be sought separately. The Bill also provides powers to widen the A.2 at Cobham and the M.2 between junctions 1 and 4.

The main reason for embarking on the Channel Tunnel Rail Link project was the forecast need for extra capacity for international passenger trains in several

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years' time. The new railway will more than double the capacity for Eurostars, and it will achieve much more besides. It will cut journey times substantially; enable new express domestic services to be provided for north and east Kent, which is an area that currently has particularly slow services; increase overall capacity for freight trains through to the Channel Tunnel; boost regeneration in the Thames Gateway through new stations at Stratford and Ebbsfleet; and assist in spreading benefits to the Midlands, north and Scotland through excellent access, notably to the west coast main line.

Journey times for Eurostars from London St. Pancras will be cut by over half-an-hour compared with the current services from Waterloo. Paris will be two hours 20 minutes away and Brussels two hours for non-stop services. The time reductions for regional and Scottish services will be as much as an hour when these services start in the not too distant future. For example, the Birmingham to Paris service will be a little over four hours under the LCR's plans when the rail link opens. The reductions will increase the area of the country for which overall journey times will be competitive with air travel.

Up to eight high speed domestic services per hour will use the new line in the morning and evening peaks and the journey time reductions to London are remarkable: Gravesend would take 20 minutes rather than 50 minutes and Ashford 40 minutes rather than 75 minutes. Some 25,000 commuters from north and east Kent will benefit. The rail link is primarily a high speed passenger railway but it will have a freight capability. Two freight loops and a connection to the existing freight inspection facility at Dollands Moor have been provided in the Bill and an undertaking has been given that they will be built. The rail link will increase overall rail capacity to the Channel Tunnel, which will provide more room for future growth in demand. This is an important regional benefit, with so much of the demand for international freight through the Channel Tunnel arising beyond London.

The route for the Channel Tunnel Rail Link was chosen especially to foster regeneration in the Thames Gateway area. We expect to see considerable regeneration benefits as a result of the decision to locate international and domestic stations at Ebbsfleet, Stratford and St. Pancras. Investment will be attracted to the areas served by the stations, bringing jobs to areas where they are particularly needed. It has been estimated that the regeneration benefits created will be worth at least £½ billion, with development being attracted to some 1,300 acres of derelict or underused land. These benefits cannot, of course, be gained without some environmental impact. It would be astonishing if a 68-mile railway running through Kent, Essex and London could avoid generating significant impacts. But the time taken to develop the CTRL project has been well used to produce the optimum route, always taking careful account of environmental impact.

In 1991 the Government selected a broad corridor to approach London from the east after considering the results of a lengthy comparative study of the four main options. This broad route was chosen as it had less

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environmental impact and created more opportunities for regeneration, even though it was more costly, than the originally proposed southerly approach route. The easterly route was then refined by comparing and sifting all the possible local route variations, taking account of environmental appraisals and soundings with the local authorities. Union Railways presented the major options to the Government and in March 1993 a route for public consultation was published. In January 1994 the route was confirmed, with some enhancements. Further work was commissioned on two sections of the route that caused acute local concerns. Following this work the route for consultation was changed further to produce the route that was incorporated in the Bill on introduction in November 1994.

The process of route selection was very thorough, with proper public consultation, and with comparative environmental appraisals produced at every stage. For every mile of route selected, nine miles were rejected.

A full environmental statement was produced by expert consultants to accompany the Bill at introduction. That statement identifies significant impacts and the options for mitigation. It is a remarkable document in terms of its scope and quality for a project of this size.

The route was then considered by the Select Committee in another place and important changes were made. Supplements to the environmental statement have been produced for each change. Taking those route changes into account, around 25 per cent. of the route is now in tunnel and 85 per cent. is either in tunnel or follows existing transport corridors. I think that it can be fairly claimed that the route before your Lordships' House has been painstakingly produced and has developed into maturity. It is unlikely that there is any reasonably achievable option for a section of the route which has not at some stage been studied and rejected and had the reasons for this explained.

As I have said, the Select Committee in another place made certain locally significant changes to the route for the protection of petitioners. By significant changes I means changes outside the Bill limits which required additional provisions entailing fresh plans and environmental assessments and a further round of petitions. The most important changes were extending the long tunnel in London for a further two-and-a-half miles from Barking to Dagenham; lowering and moving the railway where it runs close to the Mardyke Park housing estate in Thurrock; and changes to reduce the impact of the approach to St. Pancras. The Government accepted all of these changes--seeking only to optimise them--at an additional cost of more than £100 million. That is a substantial sum even for a project of this size. The committee also considered and rejected other changes in the route, notably a long tunnel at Boxley near Maidstone.

It will be for the Select Committee of this House, under the proposed chairmanship of the noble Lord, Lord Ampthill, to decide whether it wishes to propose further route changes requiring additional provisions. The Government's clear advice is that the committee should not seek additional provisions. This is for two main reasons. First, the route is already of a high

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environmental standard in terms of alignment and mitigation, with extensive use of tunnels that have added considerably to the cost of the project. Secondly, promoting additional provisions would cause significant delay and difficulty to the Bill. It would take a number of months to prepare designs, draw plans, undertake environmental assessment and then reopen petitioning. However, it will be for the committee to decide.

It may be for the convenience of the House if I now briefly describe the Channel Tunnel Rail Link and A.2/M.2 widening projects and the content of the Bill. The 68-mile long rail link starts at St. Pancras, which will be refurbished and the deck extended to accommodate the long Eurostars and the new domestic trains as well as existing trains that use St. Pancras. Underneath this deck a new station for Thameslink would be provided as an advance work for the Thameslink 2000 project that has recently been given the go ahead by the Government. The rail link route then crosses the railway lands before entering a long tunnel. Outside the Bill, London and Continental Railways propose to seek the powers for a twin track connection to the North London line that will enable more trains to run through to the west coast main line bypassing St. Pancras.

The tunnel emerges at Stratford in a long, box shaped cutting and powers will be sought separately to turn this into a new international and domestic station. LCR envisages that trains running through to the west coast main line will call at Stratford as the stop in London. Returning to tunnel, the route does not surface until Dagenham, where it runs by the existing Tilbury Loop railway and passes under the QEII bridge before entering a tunnel under the Thames. The route then runs through the Ebbsfleet Valley where there will be an international and domestic station and a connection from the north Kent line. At Gravesend a disused line will be reinstated to provide a connection to existing lines for Eurostars serving Waterloo. The route then follows the A.2/M.2 corridor, crossing the Medway on a high viaduct before entering tunnel under the North Downs. The route emerges to run through the Boxley valley so that it can then take up the M.20 corridor. Approaching Ashford, the route departs from the M.20 so that it can run into the town and serve the recently opened international passenger station. The route then regains the alignment of the M.20 and the existing railway all the way to the Channel Tunnel terminal at Cheriton.

The Bill also includes a widening scheme for the A.2/M.2 between Cobham and Junction 4. For majority of its length, this road improvement will be adjacent to the Channel Tunnel Rail Link. The Government agreed to the request of the local Member of Parliament, supported by the local authorities, to include the road improvement in the Bill because this will facilitate simultaneous construction and enable the combined impacts of the two projects to be considered. An environmental statement for the widening scheme accompanied the Bill at introduction and it, too, is a thoroughly professional assessment produced by independent consultants. There is also an assessment of the combined effects of the road and rail schemes.

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Part I of the Bill deals with the rail link. It grants compulsory acquisition powers to the Secretary of State, with the powers to construct, maintain and operate the authorised works vested in a nominated undertaker. After Royal Assent, the intention would be to appoint London and Continental Railways as the nominated undertaker for the rail link works. There is a special planning regime and local authorities can opt for greater powers to deal with detailed matters where they adopt a planning memorandum that is being prepared with the benefit of two years' consultation with them. While there are some things that cannot be directly controlled within the Bill limits, such as the alignment of the railway, the extra powers available to qualifying authorities are unusually wide. There are also special heritage arrangements, again with agreements associated with the Bill. Part I also establishes a regulatory regime for the rail link and makes provision in respect of competition and finance.

Part II of the Bill provides for the widening of the A.2/M.2 as I have outlined. Part III has various miscellaneous provisions.

There are four particular matters on which it may assist the House if I say something more: heritage; property purchase and compensation; the competition and public financial support; and the relationship of the CTRL competition with the Bill.

First, as regards heritage, the rail link will undoubtedly have a substantial heritage impact in the St. Pancras area. I do not say this defensively, because I think that the nation's heritage will be greatly enhanced by the creation at St. Pancras of a 21st century railway use for such a fine 19th century, Grade I listed railway building. The train shed will be refurbished and the presence of an international station will create the conditions under which the Chambers--that is the Victorian hotel frontage to the station--can benefit from being brought back into some productive use. Some Grade II listed gasholders in the vicinity have to make way for the deck extension to the station to be built, but even so this loss is more than compensated for by the gain to the Grade I station. At this stage I shall not go into the requirements which the Government have imposed on London and Continental Railways, nor the controls over details that have been provided, but if petitioners raise concerns, these are matters that the Select Committee might examine.

The second matter is property purchase and compensation. The rail link will in fact require a very small number of homes to be taken and these properties qualify for voluntary purchase now. There is also a discretionary purchase scheme for properties that are not taken but are seriously affected and where hardship arises. The contentious issue is in relation to properties that do not qualify for purchase but for which there is a perception--not necessarily rationally based--that they will be seriously affected by the rail link. The Select Committee in another place viewed this as a wider issue and the Government agreed in the light of the committee's concerns to review the scope, cause and effect of blight arising during the various stages of major infrastructure projects and to consider whether

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any practical changes can be made to the existing arrangements for property purchase and compensation. Furthermore, the Minister for Railways and Roads in another place has given an undertaking that any changes introduced to the compensation code as a result of the review will be given effect in respect of blight arising from the rail link.

The third matter is the relationship of the competition and public financial support. In February, London and Continental Railways won the competition for the private sector partner to design, build and operate the £3 billion CTRL project. The contractual details are contained in a development agreement; copies of an explanatory memorandum on the development agreement have been placed in the Library. The Government's financial contribution has a present value of £1.4 billion, which will be paid in instalments towards the end of the construction period after LCR has met at least 68 per cent. of the construction costs itself. Certain assets will be transferred that sensibly form part of the CTRL, notably European Passenger Services. This company runs the Eurostar international passenger services which are currently loss making but to which LCR can apply its expertise to bring into profit. The proportion of the capacity of the rail link reserved for domestic services will be purchased from LCR for some £340 million and these services will be franchised in due course. Land for redevelopment at St. Pancras and Stratford will also be transferred. LCR will also inherit the expertise of Union Railways, which has acted as the Government's agent and will continue to do so for the duration of this Bill. I would like to pay tribute to Union Railways for the way in which it has brought the project from its difficult early stages to the mature undertaking that we are considering today.

This leads me to the fourth matter: the relationship between the Government's selected private sector partner, London and Continental Railways, and the CTRL Bill. A huge amount of design work has been undertaken to produce the Bill design which is assessed in the environmental statement, but the final level of design, the construction design, has not been produced as yet. This will be for LCR to undertake, mostly after Royal Assent, working within the limits of the powers contained in the Bill. The consequence of this is that it is not possible to be specific at this stage about construction design details.

Instead, arrangements have been established to enable details to be dealt with later. Most importantly, in carrying out construction design work LCR is required not to worsen materially the assessed environmental impact. In addition, there are several hundred specific undertakings and assurances which LCR is bound to discharge and qualifying authorities will have detailed controls provided by the planning clause and various associated agreements. This regime compensates for the lack of detailed construction design today, which is an occasional but unavoidable source of concern for petitioners. It is to these specifically designed arrangements for dealing with detailed matters that petitioners can look for their protection.

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The Bill and the 293 petitions that were deposited by the closing date of last Friday will now be considered by a Select Committee. This is an onerous burden and the House will share my gratitude to the seven noble Lords who have offered to serve. I am particularly grateful that the noble Lord, Lord Ampthill, has indicated his willingness to accept nomination as chairman. The House will know that he has already been a distinguished chairman of two hybrid Bill committees, including the Channel Tunnel Bill in 1987. His unrivalled experience and expertise will be invaluable to the committee.

In closing, perhaps I may observe that the Channel Tunnel Rail Link is one of the largest and most significant projects undertaken in this country for many years. Indeed, I feel privileged to be opening the debate today. I believe that there is a general feeling that the rail link should now proceed with all reasonable speed.

Moved, That the Bill be now read a second time.--(Viscount Goschen.)

7.14 p.m.

Lord Clinton-Davis: My Lords, at the outset I thank the Minister for explaining the Bill in general terms and some of its most important elements. I echo his words in giving our support to our Select Committee in this place, led by the noble Lord, Lord Ampthill. We wish him and his colleagues well. I also wish to put on record our appreciation of the assiduous work undertaken by the Select Committee in another place and of the successes that it was able to achieve. I wish to say how much we appreciate the work of Union Railways and to express our good wishes to London and Continental Railways for coping with the challenging work that lies ahead. Theirs is a daunting but, I hope, rewarding task.

We welcome the Bill and will do nothing to impede its progress through the House. The Channel Tunnel is a stupendous British engineering feat with the French playing an important role as our partners. One can only hope that the rail link will achieve similar distinction. As the Minister described, the potential of the link is that it can and should provide immense advantages for international rail transport between Britain and the mainland of Europe. It is extremely important that it should represent a vital link with the trans-European networks and the development of the single market which is critically tied up with the whole project. The cuts in journey time between London and Brussels and London and Paris will be remarkable. I am sure that some of the first users of the fast link will be my noble friend Lord Bruce of Donington and the noble Lord, Lord Pearson of Rannoch.


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