House of Commons Hansard Debates for 18 May 1990

Mr. Wolfson : My hon. Friend has made my point. Unfortunately, Trafalgar House appears to be taking the same view. That is both depressing and wrong.

Mr. Rowe : As I understand it, the reason is that it has gone along with the traditional railway freight allocation income of so many pence a mile. That puts the United Kingdom at a huge disadvantage. People who enter such contracts at the beginning of a project of this size should be sacked.

The cost to the infrastructure of the Bechtel-Manufacturers Hanover Trust line are much lower than the costs of the British Rail-Trafalgar House proposal and deserve serious consideration. For example the new Isle of Grain container port, the proposed MCA development at Rainham and the contribution that it will make to the lower Thames road crossing make it clear that the opportunity for getting input into the costs of building the line and the stations attached to it are greater than under the British Rail plan. When I tell the House that only eight houses in Kent will be affected by the Bechtel-Manufacturers Hanover Trust line, whereas 7,500 houses are affected by British Rail's proposals, it will understand that it would be irresponsible for a Kent Member of Parliament not to press for the line to be looked at.

My hon. Friend the Member for Sevenoaks (Mr. Wolfson) is right. The centre of London is moving east. In 15 years' time it will be nonsense for my right hon. Friend the Member for Selby (Mr. Alison) to pretend that King's Cross, that Victorian station, is in the centre of London. It will be on the periphery by then. Most international business travellers will want to come to docklands and to the City, so the eastern approach will be much better. For all these reasons, I urge my hon. Friend the Minister not to rush into accepting a proposal that will cost more than we are told that it will cost, will be less effective than we are led to believe, takes no account of the future European freight and is in many ways wholly wrong.

1.8 pm

Mr. Tony Lloyd (Stretford) : I agree with some of the comments made by the hon. Member for Mid-Kent (Mr. Rowe), but one narrow point will illustrate our difference in perspective. He said that London is moving eastward,

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either in the next 15 years or well into the next century. He should understand that one of the pressures that those in the north feel strongly is that much of the emphasis on the tunnel and developments from it means that we shall be at a considerable disadvantage in the early years. Pressures for economic and industrial development will be dictated by the physical and geographical realities of where the tunnel is and where adequate links to it have been established.

From the point of view of the north, decisions must be made quickly to implement proposals. We cannot afford to have our links built at some indefinite time in the future. I hope that that message is understood, because there is common agreement among hon. Members that planning by the Government and British Rail has been appalling. Solutions have been based on the minimum possible cost and effort--not strategically or to achieve the maximum possible benefit for the nation.

The hon. Member for Mid-Kent mentioned freight. The debate on King's Cross has nothing to do with freight, but I am unhappy and unclear about whether the solutions being advanced by British Rail take account of a region such as mine--a major trading region second only to the south-east in economic importance. We insist on adequate access to the channel tunnel for freight distribution. There are all manner of things that we feel British Rail has not provided, such as a decent high-speed link with the north-west, but I accept that those issues are not relevant to the debate.

Whether the terminal is at King's Cross or Stratford we are still unhappy about the lack of through trains. People travelling to the continent from Manchester, Liverpool or any of the northern cities will not want to stop in London. That is no disrespect to Londoners--we simply do not want to have to change in London to travel through the tunnel and we feel that British Rail is letting us down. There should be adequate links with the three railway lines to the north--the west coast, east coast and midlands lines. As my hon. Friend the Member for Nottingham, North (Mr. Allen) said, the Nottingham line is not electrified. That is ridiculous. It is equally ridiculous that, the line from Blackpool to Manchester is not electrified, allowing the north-west to become part of an adequate, modern railway system. Any link must connect the London interchange with those three rail lines. A good interchange system is a high priority.

I say to hon. Members who are arguing the case for Stratford that the problem in the north is that we know that at King's Cross there will be at least a semi-adequate system. It is incumbent on those hon. Members to guarantee that the interchange at Stratford will be just as good. That case has not been made to me or to others from the region.

Mr. Jeremy Corbyn (Islington, North) : I am grateful to my hon. Friend for giving way and I am sorry to interrupt his flow. As a London Member, I support Stratford because I believe that it will do less damage to the King's Cross area and because in terms of transport infrastructure it makes much sense. We do not see Stratford as a means of worsening rail services or through trains for people from the north. It would improve the throughput of rail

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freight and passengers and enable people such as my hon. Friend to travel directly from Manchester to the continent more simply than if the trains went from King's Cross.

Mr. Lloyd : My hon. Friend's remarks are central to the case being put forward by those who are arguing for Stratford.

The other problem with the Stratford development is the possibility of delays being built into the system, which would put the north at a further disadvantage. It must be demonstrated that any movement away from King's Cross would not disadvantage the north. Whatever is on offer, we must have an assurance that it will not disadvantage the north. We cannot afford delays in an operational system for the northern regions.

If there is to be any reconsideration of the proposal, it is paramount that we are guaranteed that the funding will not sabotage achieving what we need. Central to the case of hon. Members so far has been cost minimisation rather than quality of service maximisation. We know the position with the King's Cross development--we understand the advantages and the disadvantages. If that proposal is to be changed, it is incumbent upon the Minister to guarantee that the system will come into operation quickly and that it will be properly funded so that it is a genuine national system, not just a system to serve the interests of one region.

1.16 pm

Mr. David Shaw (Dover) : I congratulate my hon. Friend the Member for Dulwich (Mr. Bowden) on obtaining such an important debate at such an opportune time. I also congratulate my hon. Friend the Minister on his appointment. In view of the importance of the issue that we are discussing, he will be kept busy for many months and years ahead.

It might be helpful to consider the background to the debate--not only the rail link, but the channel tunnel itself, without which we would not be having this debate. The channel tunnel has become an extremely expensive project, not only in money but, as we sadly heard the other day, in loss of life. The House is concerned about the considerable loss of life during construction work to date. The main aspect of concern today is the immense financial cost of the project, which has now risen to an estimated £8 billion. The only people who have been right about the finances of the channel tunnel are its critics. Those who have advocated the project have consistently got their figures wrong. The changes in figures have all been negative when proven. The only positive changes to the figures are the hypothetical estimates of the revenue to be earned from passengers and freight. Those figures are pure guesswork because no one knows to what extent freight lorries or passengers and their cars will transfer from the ferries to the channel tunnel. Therefore, it is true to say that the jury is still out. Indeed, the bankers are potentially out of pocket with the channel tunnel finances. The £6 billion debt for the channel tunnel project means an annual interest bill, at current rates, of £900 million. Administration costs will add another £200 million, producing total annual running costs of £1, 100 million annually. The revenue earned from the existing ferries operation is estimated at £500 million, so even if the whole of that trade transfers to the tunnel, there would remain a

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deficit of £600 million and a loss- making channel tunnel for ever and a day. Against that background, we are asked to contemplate an immensely expensive rail link.

The passenger volumes on which the channel tunnel revenue forecast was based were made at a time when it was thought that the tunnel trains would travel faster than is likely as a result of the technological requirements of the latest designs. That and other factors mean that passengers will probably have to pay more to use the tunnel, as will those who use it to transport freight. Therefore, the traffic volumes predicted in previous revenue forecasts are even more suspect.

The new ferries being introduced on cross-channel routes are larger, safer and more comfortable than ever before--they even include club class. They present a competitive advantage by comparison with the tunnel. The ferries will offer much more comfort than cramped railway carriages or the shuttles that will force passengers to remain in their cars as they travel through the tunnel. Those advantages, combined with new technology such as hovercraft catamarans on some of the long-haul channel routes, will mean that pasengers will enjoy more comfort if they continue to use sea crossings rather than the tunnel.

With so many doubts about the tunnel's financial viability, one must question also whether the proposed rail link makes sense or whether alternatives should be examined. Several of my hon. Friends have effectively advocated the viability, in terms both of financial considerations, passenger comfort and commonsense, of alternative rail links. The use of Stratford would seem to make sense and be more cost- effective, and it could benefit many more people. British Rail's plan seems ill thought out, and it has brought complaints from right hon. and hon. Members in all parts of the House and from their constituents.

The motives of the supporters of, and participants in, the proposed link were questioned by my hon. Friend the Member for Dulwich. My hon. Friends and I would not question motivations of profit, because they are laudable in any business man--but we do question the profit motive when it is at the expense of a taxpayers' subsidy, and it is being suggested that the rail link cannot work, in terms of a terminal at King's Cross, unless such a subsidy is provided. That would be ludicrous, and we must not be left with a developer-led scheme that results in a taxpayers' subsidy.

If there is any spare money around from property developers, it should be used to realise the potential that exists at, for example, Stratford. The hon. Member for Newham, North-West (Mr. Banks) was right to appeal for Stratford to be developed, reminding the House that his constituency is not the most beautiful area in London. It is incumbent upon us to promote a project that might improve his constituency.

The alternatives are not adequately examined in the current proposals. Perhaps if we consider the alternatives in detail we may find that they could benefit many more constituencies and many more people.

In Dover, we are interested in a good rail link. The present link is a disgrace. Last Friday night when my wife came down to the constituency, she missed an urgent appointment that she was supposed to attend with me, because the train journey ended up taking three hours instead of one and a half. It should not even be one and a

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half hours. If we had a decent rail service, we could get the time down to an hour and it would then be equivalent to services in the rest of the country.

What is British Rail going to do about improving the Dover service? It does not have to wait for the channel tunnel rail link. Something could, and should, be done now.

Dover is a part of east Kent and we are therefore anxious that, if the rail link is constructed, Ashford international should be promoted as a major through-change. That would bring prosperity to east Kent and it would reduce the level of unemployment, which has gone down considerably due to recent Government proposals and the changes that have taken place in this country in the past few years, but it could still be reduced further. A development at Ashford would be beneficial to that.

In Dover our other interest is to ensure the survival of the ferry industry. Ferries now offer a better, safer and more comfortable service than they did. That is why I am particularly disturbed to hear Labour spokesmen talking about the repeal of section 42 of the Channel Tunnel Act 1987. The Government put that section into the Act to support the ferries of Dover. It was a sensible section, which ensured that the ferry companies and their employees could be confident that the industry could compete fairly with the tunnel, which would not have a competitive advantage over ferries from Dover. Section 42 ensures that the Government do not put money into the tunnel to do down the ferries in Dover. Therefore it is wrong for the Labour spokesmen to seek to do down the ferry industry. We must ensure that Labour's proposal to repeal section 42 does not succeed and that it is not supported by the House.

Should there be any public subsidy or support for British Rail? I question whether that would be sensible. I cannot see why British Rail or the proposed Eurorail company should have a subsidy. It would enable a thoroughly unpopular route--one which would not exist if it were not for the subsidy--to be viable. It is a route that does not seem to have any significant benefits. Some environmental benefits have been promised for some constituencies, but they would make the situation worse in other constituencies, such as Dulwich and Mid-Kent. I do not see why £300 million to £400 million of public money should be put in to do down those constituencies for the benefit of a few areas on the route.

The speed of travel is a marginal reason for a public sector subsidy. It is debatable whether the tunnel, when it is completed, will reduce considerably the time taken to get to Paris. The tunnel will not improve travel speed as much as was originally thought because the rolling stock will have to go at a slower speed, and consequently it will not have such a time advantage. To promote the project with public money to achieve a marginal time benefit seems ludicrous.

What would happen if the project exceeded its budget? Once the first £400 million or, as my hon. Friend the Member for Mid-Kent (Mr. Rowe) said, £1 billion, has been committed, what will happen if the project goes wrong? Will the Government be committed to financing a share of the overrun, or most or all of it? That would be a major mistake. What would happen if the channel tunnel rail link project went into receivership or liquidation? If the Government had committed money to it, would they have to bail out the project, either in its entirety or in part?

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The Government must consider the alternative uses to which £100 million, £200 million or even £1 billion of public money could be put. Airports in other parts of the country or road links would be immensely beneficial and would be of far greater benefit than the narrow use of £1 billion on the channel tunnel rail link. I am critical of the fact that no figures relating to the cost of the proposal have been published. Only rumours and leaks abound about them. There has been no public debate about the cost of the channel tunnel rail link. There have been suggestions in the press today of a £400 million subsidy, but it could amount to £1 billion or more. There is not even a back-of-an-envelope calculation to support the proposal.

I see no reason to worry about what the French may or may not be doing. Two out of three people who cross the channel go to France. The French are the net beneficiaries, since only one out of three people who cross the channel from Europe are French. We should not therefore subsidise a project that would benefit French holidaymakers and the French rail link.

The project is imperfect. The proposal has been neither properly considered nor properly debated. Its finances are uncertain and the taxpayer would have to pick up a considerable part of the bill. We should keep the taxpayer out of it. I congratulate my hon. Friend the Member for Dulwich on his motion. I shall vote for it.

1.32 pm

Ms. Joan Ruddock (Lewisham, Deptford) : I join other hon. Members in welcoming the Minister for Public Transport to his new post. We look forward to his contribution to the debate.

It is extraordinary that we should be debating what is arguably the most significant engineering project of our time, with potentially the most profound impact on our nation's economy, on a private Member's motion in a half-empty House. Why has that happened? It is because the Government have adopted an entirely cavalier approach. They have chosen to ignore the nation's economic needs and the railway revolution across the channel. They have chosen to stand aloof while alarm and despondency have spread through public and private institutions alike.

It is extraordinary that the Government have not once raised the subject for debate in this Parliament--extraordinary, yes, but surprising, no. The Government's doctrinaire approach to planning, the economy and transport prohibits strategic planning and proper consideration of the public interest. The hon. Member for Dulwich (Mr. Bowden) is to be congratulated on bringing this subject before the House, although I guess that it will become obvious that he does not have the backing of his Government.

The hon. Gentleman's motion seeks to place the responsibility on British Rail for assessing the alternative rail links to the channel tunnel. We cannot support him. There is a clear need to examine the alternatives. My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has consistently called for a full public inquiry into the project, though we recognise that the time for such an inquiry has probably passed. We recognise also that British Rail cannot be expected to be objective. We

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propose instead that the Secretary of State, by means of the good offices of his hon. Friend the Minister for Public Transport, should establish a committee of experts to examine all the available alternative rail link options. We believe that the committee could report within three months and should have a brief to examine the economic and environmental effects, the costs and the safety aspects of all the proposed routes. We suggest that can be done because so much work has already been done outside Government circles. The experts should hear the representations of the many groups of ordinary people who have real concerns and sensible questions and have proposals to make on this subject.

A wide consensus exists on the criteria that should determine the preferred route for the channel tunnel link. That consensus reaches across the political spectrum and encompasses the Confederation of British Industry and the Trades Union Congress. Last month's public opinion panel survey of Members of Parliament gives further testimony to that consensus. It found that the order of priority to specify considerations for determining the route was as follows : first, the need for through links to United Kingdom regions ; secondly, the need for fast links to London ; thirdly, the environmental impact of the route ; fourthly, the cost of the route ; and, last, the scheme's ability to be financed completely from private capital. Clearly, the Government are out of step with the views of hon. Members. The survey found also that two thirds of the Members questioned were not satisfied that the regions would be adequately served by links through the tunnel to Europe. Significantly, the survey recorded strong support for greater investment in the railway network to maximise the economic benefits of the channel tunnel.

This debate, because of the motion, has understandably focused on the merits and, to some extent, demerits of Stratford as a second international terminal. Undoubtedly, there are significant planning issues and property interests associated with all potential terminal locations, but we believe that achieving the priority objectives of the link should determine terminal location and not the other way around.

There is a clear consensus about objectives but little confidence that the Government are ensuring that British Rail and Eurotunnel meet them. Instead, a financial straitjacket has been applied by a Government determined to maintain the farce that this massive project can be built without any public money. The outcome is likely to be another botched job and a further public outcry when the latest BR-preferred route sees the light of day. The Secretary of State, we understand, has been studying the plans for six weeks. Perhaps the Minister will tell us today when the right hon. Gentleman is likely to make an announcement, or is it possible that he is having second thoughts?

British Rail's briefing for today gives some sign of the impossible hoops through which it has to jump. It is clear that the financial regime of the Secretary of State cannot be made to work. The preferred route, we are told, will include a proposed new commuter service from Kent to King's Cross in an attempt to attract public subsidy. What a ludicrous way to devise a national infrastructure plan for the 21st century. Having thought up this addition to the route, British Rail then uses it in its critique of alternative routes, saying that the latter do not offer the potential for

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a Kent commuter service. I do not think that we will find that many Members actively support a preferred route on the grounds of an enhanced commuter service for Kent.

There are certain fundamental questions. How can we provide a high-speed rail link, a service which links the whole of the United Kingdom to the tunnel and offers a first-rate service for passengers and freight alike? We believe that ideally we should look for a dedicated track built to European standards. Anything less will create a differential between the British service and the continental service, such that in parts of Britain trains could be running at half the speed that they run in France. Will the Minister tell us today whether his Department really finds that acceptable? We believe that the needs of the north of England and of Scottish passenger services--

Mr. Jacques Arnold rose--

Ms. Ruddock : Just a moment.

Those needs require major interchange facilities at King's Cross. That is the official Labour party view. However, we believe equally that the case is well made on environmental and strategic grounds in London and Kent for an alternative route linked to Stratford. The case for the Arup group proposal has been rehearsed today. There are those who believe that those two requirements can be combined with a relatively fast link from Stratford to King's Cross at a cost of about £500 million.

The House needs to know whether that can be done. Is it a solution to what could otherwise be presented as conflicting interests? Does the Minister agree with the costing? Has he or his right hon. Friend the Secretary of State studied the proposal? Are they still prepared to consider it, and if not, why not?

Mr. Jacques Arnold rose --

Ms. Ruddock : I am sorry, I shall not give way ; I have been asked to be brief.

Will the Minister confirm that such a combination of terminals present no disadvantage to the running of through services to the north?

As an hon. Member representing a south London constituency, I am acutely aware of the need to avoid a route that goes through such a densely populated area as my constituency. However, as a shadow Minister, I am also aware of the strong feelings of those in the midlands, the north of England and Scotland that they could be sold short if the concerns of only Kent and London were to be taken into account. Opposition Members are extremely anxious to find a consensus and solution that is right for Britain as a whole.

Our economic future depends on the rail links to the tunnel. With desperately overcrowded roads in London and the south-east and the dilapidated state of public transport, we shall have a disaster on our hands if millions of people and tonnes of freight are simply dumped outside the tunnel or in the heart of this capital city. We must plan for the needs of the nation as a whole with economic efficiency and environmental sensitivity at the top of the agenda. We are aware that European money is available for European projects. Why should not Britain be the beneficiary? If the French can produce a nationwide network of super-fast trains, why cannot Britain? If the French railways can carry 42 per cent. of all long- distance freight, why cannot British Rail do the same? Why should

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British Rail be forced, through financial restraints, to behave as though it was still running a 19th century railway instead of planning for the 21st century?

The Secretary of State cannot be allowed to stand aside any longer. He must consider repealing section 42 of the Channel Tunnel Act 1987. I heard what the hon. Member for Dover (Mr. Shaw) said. Of course, we supported that section to protect the ferry services running from our coasts--and rightly so, but it is our contention that those services are competitive and that they remain so without that special protection. It is in the nationwide interest that they do so. However, we should also bear in mind the nationwide interest of being able to provide an adequate railway link to the channel tunnel.

The Secretary of State must relax the financial regime imposed on the rail project. Although we believe that money is required, we are completely opposed to using taxpayers' money to prop up private sector projects. The Minister must be aware that rumours abound. It is high time that his right hon. Friend came to the House and admitted what is going on. Will the Minister tell us today whether we can expect a statement on the financing of the rail link before the spring recess? Before he does so, perhaps the Secretary of State should also consult his officials about the likely impact of the proposed European directive on establishing a Community railway policy, because the harmonisation required to build a Community network is directly at odds with the expected British Rail-Eurorail proposals for the British channel tunnel rail link. The report on that proposed directive states :

"From a technical point of view it is obviously possible, to a certain extent, to live with different systems and different specifications. However, this approach, which up to now has been the basis of co-operation between the different networks, will result in high costs and less reliable equipment. The European railways should rather adopt universal' specifications compatible with the particular set of international routes they plan to serve, which is their only chance of success."

We must note what the directive says about developments on the continent. The Secretary of State would be ill-advised to ignore them.

If the Government continue with their present stance, Britain will again be relegated to the dark ages while continental Europe reaps the greatest economic benefits of the single market and the opening of the tunnel. We are in danger of paying the highest environmental cost for the least economic return. We in the Labour party are clear where the blame for this fiasco lies. We share all the anxieties that people have about the behaviour of British Rail, but responsibility for the fiasco lies with the Government, and it is the Government who must act now. Money can and must be found to make an adequate link. A review by a committee of experts will not delay the proceedings. We know that it is crucial if we are to achieve the high-quality, high-speed rail links for the whole of Britain, to which the Labour party is committed.

1.47 pm

The Minister for Public Transport (Mr. Roger Freeman) : This has been an interesting debate and it is certainly not yet over. It has been particularly valuable to me as a new Minister at the Department to listen to this timely and useful discussion. I congratulate my hon. Friend the Member for Dulwich (Mr. Bowden) on his courtesy to me prior to the debate and on the clear and even-handed way in which he presented his case. I also

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thank him and the hon. Member for Lewisham, Deptford (Ms. Ruddock) for their kind remarks in welcoming me to my new position. The hon. Member for Newham, North-West (Mr. Banks) described the debate as being, in effect, a five-hour tutorial for a new Minister, and he is right in so far as 15 hon. Members have spoken, excluding my hon. Friend the Member for Dulwich, and the debate has certainly been helpful to me. I hope that I bring a fresh and inquiring mind to the issue. It will also be helpful to British Rail and to officials at my Department, and I will ensure that the record is fully studied. To the extent that I cannot answer the questions raised in the time available to me, I will write to hon. Members who have contributed to the debate. I find these half-day debates helpful--for a Minister, one's desk is cleared and one rightly has to listen to the arguments and so far as possible reach decisions. The proceedings which follow such debates are also most helpful.

My hon. Friend the Member for Dulwich will be glad to know that no one, least of all British Rail, disagrees with the terms of his motion. British Rail has examined the alternative routes, including those to Stratford, and will continue to examine them. It has been in contact with both promoters of the alternative routes to Stratford or to the east of London to discuss the details of the schemes. I understand that the new Chairman of British Rail, Mr. Bob Reid, plans to see the two groups himself--the Ove Arup group and the Manufacturers Hanover Trust and Bechtel group. I hope that my hon. Friend the Member for Dulwich will be reassured by that.

Both British Rail and the Government are quite clear that before adopting any final proposals, and before submitting them to Parliament, British Rail will need to be as satisfied as it possibly can be that it has made the right route decision. Parliament will expect to be satisfied, and to have it demonstrated, that the alternatives have been properly and fully examined and that there are good and convincing reasons for the final proposal. There is no monopoly of wisdom in these matters and all ideas must be looked at on their merits.

I agree with my hon. Friend the Member for Mid-Kent (Mr. Rowe), who sought to put this debate in the context of the channel tunnel opening in three years' time and a rail link being a decade away, even with the fastest possible agreement on the route, and its design and structure. The opening of the channel tunnel and the rail link are governed by two different time scales.

I can give not only my hon. Friend the Member for Dulwich, but other hon. Members, the assurance that British Rail takes the alternatives seriously-- it has to. I shall return to the suggestion of the hon. Member for Deptford for a committee of experts. British Rail has to convince not only itself but the Department of Transport and Parliament because the private Bill procedure, which operates for extensions or alterations to the railway network, provides a careful examination of such proposals.

The issue of the channel tunnel rail link must be seen in the context of the Government's policy that the maximum benefits and efficiencies from transport systems, as in other walks of life, are achieved where there is fair and equal opportunity for as many competitors as possible to

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compete in the market. As for inter-city rail and international services, we believe that the railways can and should compete on an equal basis with other transport modes including sea, air or road. I chose my words carefully when I spoke of "inter-city rail" and "international services".

Operators and users of other services are not subsidised and in terms of economics and fairness there is no reason why international rail services should be subsidised. The essentially commercial nature of international rail services is also enshrined in section 42 of the Channel Tunnel Act 1987. The hon. Member for Newham, South (Mr. Spearing) referred to the channel tunnel. If he believes that the Government are going to bail out or subsidise the channel tunnel, I can disabuse him of that fact. He may have been confusing the channel tunnel and rail link. I assure him that there is no question of the Government bailing out the construction of the tunnel, which needs additional finance. We shall see whether the company is successful--it has a good story to tell and I hope that it will soon be successful. Section 42 of the Channel Tunnel Act was widely supported at the time, not least by the Opposition, who now seem to be calling for its repeal. Indeed, the hon. Member for Deptford called for it to be repealed. At the time, there was widespread recognition that it was right to guarantee fair play to the ferries and ports, and to those working in those organisations who were concerned that subsidised international rail services would inevitably, in effect, subsidise the channel tunnel. I can tell my hon. Friend the Member for Dover (Mr. Shaw) that we have no intention of repealing section 42 of the Channel Tunnel Act, which relates to the international travel aspects. There are other aspects of the financing of any rail link which section 42 does not directly affect.

British Rail has had a clear remit, both from the Government and from Parliament, to look at the channel tunnel rail link as a commercial project, and one that will have to be acceptable to Parliament.

Earlier, the hon. Member for Newham, South implied that the Government and British Rail were on a hook because of prejudice, that they did not intend to provide finance for the channel tunnel rail link and had a preference-- almost a craving--for private sector capital involvement. The hon. Gentleman was wrong on both counts. He knows that the massive sums involved in providing finance for any channel tunnel rail link--albeit sums which are presently under consideration by a joint venture--require the Goverment's approval and agreement because they are taxpayers' funds. It is not true that the Government are not involved in providing finance for capital investment in a nationalised industry. I assume that the hon. Gentleman was referring to the degree of Government subsidy and the hon. Member for Deptford, is now suggesting that we should ditch section 42 of the Channel Tunnel Act, but I have said that the Goverment are not contemplating that.

There is no blind prejudice in favour of private capital. If private capital has a role to play, that is fine, but the hon. Gentleman recognises, as I do, that private capital has a much higher implicit cost in terms of the return that it has to earn. That means that the involvement of private capital tends to make a project even more difficult to justify. The private sector can contribute to property development, which nationalised industries are not particularly good at,

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nor is it their job, and to the management of particular projects. There is certainly no prejudice on my part or on the part of the Government.

Mr. Spearing : Surely the Minister is saying that by virtue of the need for a public organisation to achieve a return of 8 per cent. or for private capital to have an even higher return there is a hurdle that the Government have to jump or a hook on which they have to impale themselves? Will he confirm that if he applied the criteria which applied to the Victoria line when it was built under the authority of Ernest Marples, those considerations would not apply?

Mr. Freeman : The hon. Gentleman is right in his analysis. I have no idea what rates of return private sector capital requires in this or other projects. We set an 8 per cent. real rate of return for commercial projects for nationalised industries. I recognise that the involvement of private sector capital can make the attainment of that more difficult in some cases. As I have said, however, private sector capital can make other contributions. The 8 per cent. real rate of return changes with current financial circumstances and the advice and views of the Treasury. I do not know what rate applied when the Victoria line was built.

The hon. Member for Peckham (Ms. Harman) asked the Government, and me specifically, to be the guardian of the national interest. I cannot shuffle off that responsibility because the Department of Transport's job is to approve investment proposals put to us by British Rail. Any channel tunnel rail link is likely to involve substantial sums of public sector capital and must therefore involve our careful consideration of the alternatives and our being persuaded that the chosen route is the right one.

My hon. Friend the Member for Gravesham (Mr. Arnold) rightly drew attention to the importance of the environmental impact of any route--the King's Cross route or the Stratford route to east London. British Rail and Eurorail are undertaking a full environmental impact assessment for the rail link along the lines of the European directive. Any proposal which comes to us for final consideration will have to go through that process.

The Government cannot accept the view that major infrastructure projects do not go hand in hand with a sensible commercial approach. After all, the channel tunnel is a commercial project and is much the better for it. The project has captured public interest in a powerful way, and in concept and scale is the leading transport project for the United Kingdom and France, if not the world. Even so, it needs to be kept in perspective. It will not be the only link with the continent. For years we have had ferries, hovercraft, hydrofoils and aircraft linking and integrating Britain with Europe, and those alternatives will certainly continue. The tunnel will be a substantial and important addition to the existing links. Above all, it will be a tremendous competitive spur.

With regard to freight, the House should bear in mind that the capacity of the tunnel will be sufficient to handle only 6 per cent. by volume of total United Kingdom trade in 1993, including oil. In 1988, Liverpool handled 7 per cent. by volume of total United Kingdom trade, Southampton 11 per cent. and Tees and Hartlepool 13 per cent. I am aware that Eurotunnel would like us to look at an analysis of dry bulk unitised trade between the United

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Kingdom and Europe. The tunnel's share of that United Kingdom trade would be between 14 and 20 per cent. I hope that that puts the tunnel into perspective in relation to some of our other great ports. If the tunnel were opened today it would rank as the 12th or 13th largest port in the United Kingdom in terms of volume of freight handled. Probably the most important aspect of the tunnel is its role in joining the United Kingdom's rail network to the mainland of Europe. That will enable British Rail for the first time to compete with the airlines on price, speed and comfort. No one doubts that international rail travel has a bright commercial future. British Rail is already in the process of investing on a commercial basis more than £1 billion to provide comprehensive passenger and freight services on the day the Channel tunnel opens in 1993. I am grateful to my hon. Friend the Member for Mid-Kent for reminding us that we should not lose sight of plans which are already in place and those that we hope to see in place to ensure that we have the rail network to service the tunnel when it opens.

By any standards, this is a massive investment programme and it is fully geared to maximising for the railways the tremendous opportunities offered by the tunnel. Last December, with the approval of the Government, British Rail signed a contract worth some £350 million with SNCF for the purchase of 18 high-speed trains. The trains will be operated by British Rail and will run between London and Paris and London and Brussels.

Today I can announce that the Government have approved British Rail plans to build an international passenger terminal at Waterloo station and a maintenance depot in west London. The hon. Member for Vauxhall (Miss Hoey) cannot be present in the Chamber. I hope that Lambeth council will adopt an objective and fair approach to the planning applications for Waterloo station because that service has to be open and running in three years when the tunnel opens. If the hon. Member for Vauxhall were here I do not think that she would be able to defend further the argument that we should close down our plans for Waterloo and move to Stratford. The time scales for the two projects are wholly different.

The investments on the passenger side are worth about £175 million. I can also announce that we have just approved investment of about £80 million on electric freight locomotives and on electrification of the line between Tonbridge and Redhill. That forms part of British Rail's core investments of a further £175 million in channel tunnel freight. The Government have now approved the great majority of British Rail's investment plans for 1993.

Mr. Prescott : The new investment that the Minister has announced will be welcomed by the House, especially the investment in freight trains. Europe wants to see the harmonisation of our high-speed rail system so that trains can leave the tunnel and travel on the French and Belgian systems. Will the new freight trains be able to do that?

Mr. Freeman : I am sorry that I cannot answer the hon. Gentleman's question because I have not briefed myself on the matter. I will write to the hon. Gentleman. I understand the significance of his question.

My hon. Friend the Member for Sevenoaks (Mr. Wolfson) asked us to take a longer term-view--what he called freight vision. While I am sure that he will welcome the announcements that I have made today about improving the existing freight system through new

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equipment and electrification, he rightly asks us to look 20 or 30 years ahead. No large business undertaking can react short-term to pressures in the next two or three years. British Rail has to take a serious, studied, careful look at the development of freight traffic, and I hope that it will take an optimistic and forward-looking view about the share of such traffic that it can gain. I should not support a limited vision on that. In any proposals which come before me, I shall want to look carefully at whether British Rail has looked forward a decade or two, and I hope that it will rise to the challenges.

Beyond 1993, traffic will undoubtely grow. No one seriously argues with British Rail's view that, sooner or later, extra capacity will be needed between London and the tunnel. There also seems to be general agreement that a new line is the best means of providing that capacity. Against this background, British Rail published its preferred route in March 1989. As the House knows, the cost of environmental improvements to British Rail's proposed new line--in particular, the cost of tunnelling under London-- affected the viability of the new rail link proposal.

Latterly, British Rail has been pursuing with Eurorail--the Trafalgar-House -BICC consortium--the possibility of establishing a joint venture company whereby the private sector would play a major role in both the financing and the commercial operation of British Rail's international rail services, including the construction and operation of a new channel rail link. British Rail and Eurorail have now submitted to the Government certain proposals for carrying forward the joint venture and the Government will be responding to a complicated package of suggested amendments as soon as we are able. The hon. Member for Deptford asked me whether we would make a statement before Whitsun. I cannot commit my right hon. Friend the Secretary of State for Transport or the Government, but I can tell her that this debate is both helpful and timely. We shall try to reach a decision as quickly as possible because I am aware, as my hon. Friend the Member for Dulwich and the hon. Member for Peckham pointed out, that there is concern about blight on the routes proposed. We know British Rail's preferred route, but the need to remove uncertainty as quickly as possible is very much at the forefront of my mind.

Mr. Prescott : I am extremely grateful to the Minister for giving way to me again because I know that he is pressed for time. In whatever option is put to them is the Government's preference still for the tunnelling rather than the surface option?

Mr. Freeman : I cannot comment on that because we have to evaluate the revised proposals put to us. We have not reached a conclusion and I shall not speculate as to what combination of tunnelling and above-ground track we are likely to favour. The Government are aware of the Eurorail and the Ove Arup outline proposals and the support that some hon. Members, including my hon. Friend the Member for Dulwich, have lent to these alternative approaches. The Stratford routes have attracted support for a number of reasons. Some wish to see an international station at Stratford because of the local advantages that this would bring. Others have outlined what they see as the national advantages of such

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a scheme, including car parking and the onward movement of traffic, both freight and passenger, to the north and the west. I have listened to those arguments with great care.

A Stratford terminal was on the British Rail shortlist as a possible site and has therefore been carefully evaluated by British Rail. Had British Rail chosen Stratford as its preferred location for the second terminal in London, it would still have approached it from the south, the route from Kent, and not from the east through Essex as envisaged by the promoters of the alternative schemes. The reason for that is to ensure that any benefits of constructing a new line are shared with Waterloo and that it is linked with the increased capacity that would come with the construction of such a line. That would not necessarily happen if at a relatively early stage the line went north and across south-east Essex.

Mr. Rowe : This is of considerable importance because that was the original point that BR made to us many times. It later changed its mind and explicitly said that it did not envisage that being an essential part of the criticism of the other routes into London. Several Conservative Members were present at the meeting when that was said.

Mr. Freeman : I have approached the debate with some caution as I am new to the job and do not want to put my foot in it. I hope that I am not making dogmatic statements. I shall study exactly what was said. I apologise if I have confused or confounded my hon. Friend. I say to hon. Members who represent constituencies to the north of London, particularly my right hon. Friend the Member for Blackpool, south (Sir P. Blaker), the right hon. Member for Halton (Mr. Oakes), my right hon. Friend the Member for Selby (Mr. Alison) and others, that of course we understand the significance of a rail link for the regions to the north and west of London. It is most important that we take a national view of any proposals put to us. Although it is fair to say that the bulk of passengers who will use the rail link will live in the home counties, greater London and the south-east, I accept the argument that one must consider carefully the implications for the north-west and north-east. I have listened carefully to the case for what are seen as the short-term advantages of using King's Cross, but I do not propose to dwell on the relative advantages and disadvantages of the various routes.

As I have made clear, the Goverment and BR accept entirely that it is BR's responsibility to convince the country that it has examined all the alternatives and reached the right decision. However, there are certain aspects of the alternative proposals to which I should perhaps refer as it may help to clarify the issue for those concerned about it. The first point relates to comparative costs. Everyone must exercise much caution when making comparisons. Those who believe that the costs of the alternatives are higher then the costs of BR's route say, with some logic, that the alternative routes involve building a four-track railway to handle passengers and freight, whereas BR's route is for a two-track passenger railway only.

I will reply in writing to hon. Members whom I have not answered specifically. The hon. Member for Deptford asked for a committee of experts. British Rail is

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