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Baroness Hayman: My Lords, the noble Lord, Lord Ampthill, raises a number of extremely well informed points, as the House would expect given his chairmanship of the committee which considered the Channel Tunnel Bill. Both I and the whole House share his concern that the project has been delayed. However, there was no point in trying to proceed with a project that was basically unsound and did not have a strong, solid foundation to ensure completion. That was very much the consideration which we faced in January in deciding whether we could make the deal work--it took four months of very intense negotiation, and further negotiation will be required to get the details right--or we should run the risk of having to start from scratch, adding at least two years' further uncertainty and blight,

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with no guarantee as to the outcome, by re-tendering the whole project. We have taken another path that we believe has been successful.

The noble Lord has referred to the dead hand of the Treasury. I describe it as the imaginative and innovative support of the Government in financing a deal that makes this project work. I recognise the noble Lord's concern that there will be different completion dates for different phases, although given the nature of a project of this length it was always going to be built bit by bit. I point out to the noble Lord--it is one of the dangers of believing what is said on the radio and leaked in the papers--that the first phase to which Railtrack is committed in procuring the building and buying of the track at the end of it will not go as far as Ebbsfleet. It will go to Fawkham Junction and the spur into Waterloo. I understand that there will be concerns at both Ebbsfleet and further into London because of the very real additional benefits to which the noble Lord has referred: the regeneration possibilities at Stratford, at Ebbsfleet and in the whole Thames corridor. We shall have to wait a little longer for those benefits, but we have a robust framework in terms of both the management and financing of the project, which means that the complete link will be built.

4.37 p.m.

Lord Redesdale: My Lords, I welcome the completion of this project, but can the Minister inform the House what plans are now being made to increase the capacity of King's Cross Underground Station? Once the project is completed there will be a vast influx of people who wish to use the Underground network from King's Cross. At the moment King's Cross is almost running at capacity and without further major works to accommodate the extra passengers there is a possibility that it will become dangerously overloaded. Are there plans to undertake large-scale development at King's Cross? Further, can the Minister inform the House about any engineering studies that have been undertaken at St. Pancras? Those who sat on the Select Committee dealing with the King's Cross inquiry a few years ago were told quite categorically that it was very unlikely that St. Pancras would be able to accommodate an international terminal without major works. What studies have been undertaken of the financial problems that will arise from that?

Baroness Hayman: My Lords, the noble Lord is right to point out that the implications for both St. Pancras and King's Cross must be carefully evaluated in terms of the links with the Underground and other transport systems. That integration between forms of transport is also one of the reasons why the potential links around Heathrow are particularly attractive as they would provide a variety of interchanges available to travellers and a number of ways in which they could gain access to the high speed link.

Another issue is Thameslink 2000 and the possibilities that that offers for commuter traffic at King's Cross and St. Pancras. Construction of the Thameslink 2000 station is included in the second phase

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of construction. Both LCR and Railtrack will be discussing the full implications of that project with the department. I am sure that there will be further discussions with London Underground about the implications for Underground services at King's Cross.

Lord Biffen: My Lords, the Minister has very properly spoken of sacrifice in this major financial project. Will she confirm that part of the private sector contribution will be in terms of fixed finance? What is the assumed rate of inflation that will be absorbed in the arrangement?

Baroness Hayman: My Lords, in all honesty, I do not think that I can answer that at this moment. I undertake to write to the noble Lord and give him that information.

Lord Berkeley: My Lords, I congratulate my right honourable friend the Deputy Prime Minister on the creative and hard negotiations that he has been through. In my simple calculation, he started off with £700 million of possible cancellation charges, about which we did not know from the previous government until a few months ago when we raised the matter in the House. He has got that down to £140 million to keep it going. He deserves every congratulation. I have two questions for my noble friend. First I should declare that I am chairman of the Rail Freight Group. Obviously rail freight welcomes the link, not just for rail freight in particular but because more capacity will be opened up between London and the Channel Tunnel, and that is essential. I leave that to one side.

My main concern, like that of so many other noble Lords, is that the link should be completed to King's Cross. I hope that my noble friend will be able to assure the House that if it is possible to construct the link from the junction next to Ebbsfleet as far as Stratford that would not be bad. It is a stage and a half. Stratford is at least on the London Underground, the Docklands Light Railway, and so forth. It may take until 2007 to reach St. Pancras with all the opportunities for regional services that that will bring.

In many debates in this House we have raised the question of frontier controls on these trains. I hope that my noble friend will take the opportunity to look, with her colleagues in Customs and Immigration, to see whether there could be a more simplified procedure which does not involve segregated platforms at Stratford and St. Pancras for international and domestic trains. That is something that seems to be unnecessary in the rest of Europe. Finally, is my noble friend satisfied that there will not be undue market dominance on the London to Paris axis in the air, by coach and on the railway by BA and National Express? What action will she be taking to ensure that that does not occur?

Baroness Hayman: My Lords, I am grateful to my noble friend for his comments. On his last point, I believe I made it clear in the Statement that there are regulatory issues in this country and at a European level which will be subject to scrutiny. That is part of the detailed work that will have to go on during the next

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weeks and months. Although he did not raise rail freight as a major point, it is important to stress that the link and the services will have direct and indirect benefits for rail freight, which are important at an international level. He mentioned security for passengers and security checks. That has always been an issue so far as concerns regional services and interchanges. I shall bear in mind his comments in what I am sure will be ongoing discussions on that subject.

My noble friend talked about the extension of the project at least to Stratford. I should make it clear once again that the contract remains unchanged and as it was under the Act; that is, a through route into St. Pancras. Lastly, he was right to make the point about the cancellation costs, which were not well understood at the time of the original agreement. He and my noble friend Lord Bruce of Donington drew attention to them in this House recently. My noble friend Lord Berkeley said that we could have been left with a bill of £700 million with nothing to show for it and that we would then be back to stage one in the negotiations. The only thing that he was wrong about is that the bill could have been nearer to £1 billion.

The Earl of Carnarvon: My Lords, the Minister will be aware that today, as chairman of SERPLAN, I published the strategic plan for the south-east, affecting 18 million people. I was at the press conference this morning. I found that the acting chairman of LPAC, Councillor Kallar, was extremely worried about the possibility of delays in development in the East End corridor and the connection with Stratford. That affects not just the people of London and the unemployed people of London to whom the noble Earl, Lord Attlee, referred; it affects everyone in the south-east. I suppose that housing in the south-east is probably the hottest potato that the Government have to handle. It is important for everyone concerned that the Government give local authorities throughout the south-east, particularly in the East End of London, confidence that there will be a connection to Stratford. I accept of course the Minister's remarks today, but I feel that her department should ensure that, with all the publishing that will go on in relation to the sustainable strategy for the south-east, that that point be endorsed and underlined.

Baroness Hayman: My Lords, I am grateful to the noble Earl for his comments. I recognise his long-standing concern over planning in the south-east. I acknowledge that there will be disappointment at the extended length of time for completion of the links into Stratford and St. Pancras. However, I believe that it is in the interests of all those people in London and the south-east who are looking for the regeneration benefits that will come from the Channel Tunnel rail link that we have in place a robust and secure managerial and financing arrangement that will in time produce the whole link, rather than an agreement which on paper,

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would produce it sooner but which was, in fact, so unrobust that it was in danger of total collapse in January of this year.

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