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House of Commons
Thursday 24 May 1990
The House met at half-past Nine o'clock
PRAYERS
[Mr. Speaker-- in the Chair ]
BILL PRESENTED
Planning
Mr. Keith Vaz presented a Bill to extend the rights of local authorities in respect of planning application appeals ; to extend the powers of local authorities in respect of breaches of planning conditions ; to make provision for additional planning controls upon the installation of satellite dish receivers ; and for connected purposes : And the same was read the First time ; and ordered to be read a Second time on Friday 22 June and to be printed. [Bill 152.] Housing Corporation
Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Goodlad.]
9.34 am
Mr. John Fraser (Norwood) : I am grateful that this subject has been selected for debate and for the timing of the debate. I must declare an interest because I am a partner in a firm that advises and works for housing associations. The purpose of the debate is to seek a solution or at least an easement of the cash crisis in which the Housing Corporation and housing associations now find themselves. That crisis is a consequence of the change in the way in which the Housing Corporation gives approval to spend money for housing associations whose target for starting and completing homes is 20,000 per year.
In 1989 the total production of public sector homes, which are largely to rent, was 27,000. That is disgracefully low. We are talking about virtually all public sector low-cost housing for rent since the Government massacred the local authority house building programme. The cause lies ultimately with the Government, who introduced the Housing Act 1988. The solution is also in the hands of the Government and they can provide it not by the announcement of any new unit or committee but by the announcement of a new commitment to see through the programme of 20,000 starts and 20,000 completions in the housing association sector.
It is not enough for Ministers simply to shuffle off responsibility for what has happened to the Housing Corporation or the private sector. Ministers are responsible for housing. They are not Ministers of excuses or alibis--they are here to provide houses, but they have provided only a small number. I do not want excuses--I want action. Housing associations now provide almost all the low-cost homes for rent in Great Britain. Those homes are almost all for those who are in need and on low incomes. The associations provide much of the new housing for the homeless and also for people with acute needs such as those who have had long periods of hospitalisation, people
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suffering from mental or physical illness, those who need sheltered accommodation and people who need accommodation that is coupled with counselling.There is almost no new help for such housing except that which comes from the housing associations. That is because the Government have savaged local authority programmes. Housing associations are non-profit-making bodies. Some are co-operatives and some are specialised, and all are governed by volunteers. Most of the vacancies which occur in their properties go on nomination to local authorities and the associations play a useful part in tackling the problem of homelessness.
I shall now deal with the cause of the present crisis. I shall have to simplify my explanation, but my description will certainly not be inaccurate. Obviously, I cannot spend a long time going through all the causes. Before 1989 housing associations received approval for loans and subsidies. The subsidy is called HAG, which means housing association grant. They received approvals for individual schemes and the money was then paid by the Housing Corporation to acquire land, to move on to site and sign building contracts, to complete legal obligations to builders and for the completion of the site, and to pay development costs.
The system that operated before 1989 made it relatively simple, although it was not entirely without problems, to keep the flow of money from the Housing Corporation to the housing associations with public expenditure limits. In the financial year 1989-90 the system was changed. Following the passage of the 1988 Act, housing associations were invited to be more commercial, to use private finances, to take more risks and, under the assured tenancy arrangements, to charge higher rents. The larger housing associations were given the freedom to plan ; it was called tariff expenditure. They relied heavily on the tariff arrangements, but unfortunately they have been torn up in the recent crisis.
Under the new system, associations could draw their allocations much more rapidly. They could then get on with the job of providing housing by accelerating the development process, which they did with great success. Indeed, it is precisely because they responded effectively to the new system that they are now being penalised and find themselves in crisis, which affects not only them but, ultimately and more importantly, their consumers. Housing associations did not overspend in 1989-90 ; they simply spent their money more quickly and did exactly what the Government had asked them to do--that is, to work with the private sector to achieve a rapid provision of housing. Of course, the numbers are still far too low, but within what they were allowed to do they responded with a rapid system for putting housing into use.
In 1989-90, the system took the strain of several forces. The first was the much bigger initial payments to housing associations to start schemes. That was the pattern of the new regime. The second was the speed with which housing associations started on site or bought in completed schemes. Because of the slump in house building programmes, there were more off-the- shelf schemes available. Therefore, the available money was used more quickly. The third was the encouragement to get on with new schemes because of the change in capital controls on local authorities which came into force on 1 April. Many authorities were anxious to dispose of money that they could spend only in the last financial year, or to dispose of land under the old system. The fourth--which I regard as
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the forgotten factor--was the remaining substantial cost of completing schemes in the pipeline from the earlier years of the old approval system.In financial terms, the fast train of 1989 ran into the back of the slow train of 1988 and earlier years. That resulted in financial disaster and many casualties among housing associations. That is my description of events. The Housing Corporation used less florid language, but it amounted to the same thing. It said that the costs flowing from its 1989-90 programmes already approved require "significantly more cash in 1990-91 than we had previously forecast, leaving much less cash for schemes to be approved during the year." The £815 million budget for the Housing Corporation for 1989-90 was grossly exceeded and all sorts of devices were introduced either to cure or to disguise the problem. Of course, it is not a real problem--it is first a public expenditure accountancy problem and could be easily solved. Money was transferred from the 1990-91 programme to last year's programme, leaving much less available for this year ; a 13- month year was invented ; new approvals were delayed ; and the tariff arrangements--which, in effect, were the long-term planning agreements for associations--were torn up and disowned. The current year still holds commitments from the old approval system as well as the balance of commitments that were accelerated in 1989-90. I understand that the consequences are so severe that only about £70 million will be available for new starts this year as against the £450 million needed to sustain 20,000 starts a year under the new system, when much greater amounts of money are paid to housing associations once they have undertaken schemes. Because of the telescoping of previous programmes, only £70 million will be available, of which half is committed to starts on the new homeless housing programme. On the worst scenario, those figures mean that in the current financial year the number of starts will fall from 20,000 to 3,000, a cut of 85 per cent. Even on a medium scenario, with a cut of 50 per cent. to 75 per cent., it would be an appalling tragedy for the provision of housing for rent, which is the greatest unmet need in today's housing market. I cannot believe that Ministers will allow that to happen.
I wish to cite some examples of the consequences of what some call the current crisis, but which is officially called a dislocaton. The Government forced Lambeth borough council to sell a site because they said, with a little justice, that Lambeth was too slow in developing it. I asked the Minister's predecessor to ensure that the site would be sold to a housing association for rapid development to provide much needed homes for rent. I am pleased to say that he agreed to that proposition. As a result, the land was sold to a housing association so that it could get on with the job quickly. The consequence of the present crisis is that the housing association cannot develop the site because money will not be available to start during the current financial year.
A second example is of land in Kent which was acquired in phases for sensible development by a housing co-operative. It completed phase 1 and has acquired the land for phase 2. It is ready to go out to tender for the building contract. That co-operative has now been told by the Housing Corporation that the site cannot be started. Interest charges are accruing on the money paid for the
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site. Building costs may well rise during the next year. If the accumulated costs exceed the maximum allowable total- -it is called indicative costs--the scheme may have to be abandoned. It is another example of a delay in starts this year leading eventually to a reduction in the number of completions in later years.The third example is the number of development themes run by housing associations which may have to be disbanded. Those people are specialists who have been working together for a number of years. They have had a reasonable flow of work and they depend on development allowances to keep their teams together. Their expertise may now be lost. Associations that rely on a steady flow of development allowances could find themselves in financial difficulty with the consequent need to shed staff. At the end of the day, fewer starts this year--possibly as low as 3,000 to 4,500--must mean fewer completions in later years.
I demand that the Government act to ameliorate, or even to cure, the crisis. There are massive capital receipts in the public sector which could well be used. It is well within the Government's capability to solve the problem. As the Minister knows, there are huge accumulated capital receipts among local authorities. If a scheme could be put together with the Treasury to release that money, housing association schemes could continue without dislocation. If the Minister acted like a Minister with responsibility for housing and used a bit of imagination, housing associations would be able to maintain a programme of 20,000 starts as well as 20,000 completions a year. That would assist the building industry, which faces a difficult time, to maintain a reasonable flow of work and would help the homeless and those in need. In addition, it would have no long-term cost implications.
If one examines the dislocation, the crisis, the delay in starts, one sees that it will have the effect in the long term of increasing rather than decreasing expenditure. The cost of keeping people in homeless accommodation is notoriously high and great savings could be made there.
What we have this morning is the chance for the Government to turn a crisis into an opportunity, to meet housing need and human need and to keep the contract that they made with housing associations. I hope that the Minister will give me a positive and constructive response this morning.
9.50 am
The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope) : I am grateful to the hon. Member for Norwood (Mr. Fraser) for initiating the debate and giving me the opportunity to explain the background to some adjustments that have recently become necessary to the Housing Corporation's capital programme, to correct some misapprehensions about the consequences of these adjustments, and to reaffirm our confidence both in the corporation and in the ability of the housing association movement to take the lead in the provision of low-cost homes for households in need. I think that it is implicit in what the hon. Gentleman was saying that he recognises that the answer to today's housing problems does not lie in yesterday's massive municipal house-building programmes. Of course, there were and are plenty of good and well-run council estates, but there are also many notorious failures. Local authorities have had a near-monopoly of low-cost rented provision in their areas, and that monopoly has bred
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inefficiency and indifference to the customer's wants and needs. Authorities that have provided decent housing and managed it well have done so despite that monopoly, not because of it.Housing associations have on the whole avoided the mistakes of local housing authorities. As relatively small-scale providers, they have not allowed bureaucracy or professional vested interests to get between them and their customers. On average, their tenants are better satisfied than those of local authorities. That is the main reason why over the past few years we have reversed the traditional roles and made associations, not local authorities, the lead providers of new low-cost housing. In doing so, however, we have found it necessary to recast the basis for funding their development.
Associations are private bodies, owing their foundation to volunteer effort and enterprise, yet since 1974 they had looked entirely to the public sector for their development funding. Moreover, because rent controls left associations with no means of increasing their income, that funding had to take a form that left all the risks with Government and provided no incentive to efficiency in construction and management.
Fitting associations for their new role has involved a revolution in their financing, restoring to them the freedom to set their own rents provided that they keep them within the reach of their own clients, tapping private sources of loan finance, and giving them full financial responsibility for their successes and failures. We provided the framework for that funding revolution and the expansion of the movement in the Housing Act 1988. Most of the hard grind of devising the detail of the new grant arrangements and all the complex transitional machinery, putting the systems and people in place to run them and educating the movement about the implications and opportunities of the new regime, fell on the Housing Corporation. It had, too, to prepare itself and the housing association movement for a massive expansion in the capital programme. I pay tribute to its immense achievement in getting everything ready to roll in April 1989.
The strain on management, systems and staff throughout the organisation was enormous, and it would be altogether astonishing if everything had run with clockwork precision and smoothness from day one. If anything has gone wrong, it is that the housing association movement has mastered the new arrangements and responded to the challenges and opportunities that they offer even more quickly and impressively than we and the corporation had expected. I think that that is recognised by the hon. Gentleman. That has upset some of the key assumptions on which the corporation's plans for its capital programme in 1989-90 and 1990-91 were based.
Management of a capital programme within a strict and necessary discipline of annual cash limits--on which the Government put great emphasis--is always a complicated business. Individual schemes may take a number of years to plan, agree and execute. Decisions taken in one year will affect expenditure for several years ahead. Planning assumptions about what schemes will cost, or how long they will take to build, can be badly thrown out by events. Hitherto, in the face of all those difficulties, the corporation's record has been exemplary. The 1989-90 programme, however, posed an unprecedented problem
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--the introduction of a radically new grant system, the impact of which on development costs and times could only be guessed at. A related difficulty was that evidence of the effects of the new system accumulated only very slowly during the past financial year. Associations' submissions of new schemes for grant approval tend to be heavily concentrated towards the end of the financial year, and that effect was more marked than usual in 1989-90 as associations, naturally, took a little time to familiarise themselves with the new arrangements. Initially, the corporation feared that take up of the programme was inadequate and that a significant underspend was in prospect. That shows how quickly the situation has changed. The basis on which the corporation could have tested its planning assumptions and taken any corrective action was not available at critical times of the year, and the evidence on which the necessity of emergency action was eventually diagnosed was itself very incomplete and, as it turned out, unrepresentative.By November last year, it became clear that action would be needed to contain expenditure for the year, and that was taken. Only at the end of December, however, did the corporation have reason to think that spending could not be constrained within the cash limit for the year, and in January my right hon. Friend the Secretary of State announced a bringing forward of £120 million of expenditure, originally planned for 1990-91, into 1989 -90 in order to avert an overspend. The corporation's outturn expenditure for the year was within the revised cash limit.
In January, on the still very limited evidence available, the corporation believed that the high rate of spend was attributable mainly to the increasing use by housing associations of procurement methods such as design and build and off-the-shelf purchase of completed dwellings, under which grant expenditure flows through very rapidly once the scheme has been approved for grant. Allowance was made for that effect in the corporation's announcement, also in January, of its plans for the 1990-91 capital programme.
By March, it had become apparent that the new grant regime was having much more widespread effects on the phasing of expenditure. A marked speeding up was observable in all types of new scheme, including those using traditional procurement techniques. Projects that would have taken four to five years to complete under the old arrangements now seem set to be finished on average within two years. That is excellent news in itself. Homes are being completed and made available for letting much faster than before. Associations have got to grips with the new grant rules and responded to the new incentives to cut costs and development times with impressive speed, but it would have been better news still had the corporation known about it before announcing its plans for 1990-91.
The position now is that the unexpectedly rapid rate of expenditure on schemes approved before the start of the year will leave much less of a margin of uncommitted expenditure for new schemes to be started in the present year.
Mr. Fraser : The Minister is giving us an elegant and intricate description of a financial cock-up. Before he comes to the end of his speech, will he say that he intends to do something about it?
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Mr. Chope : The purpose of the debate is to explain the background and not only the inputs but the outputs. I shall be stressing later the importance that the Government attach to output figures and I shall deal with them in some detail.The corporation is reviewing the prospects in detail with each housing association and will then decide which new projects can be allowed to proceed during the year and which will have to be deferred until 1991-92.
What really matters is the number of new housing association homes being completed. It exceeded our plans for 1989-90 and seems set to do so again by a substantial margin in 1990-91, depending on imponderables such as the weather. The hon. Gentleman was, perhaps understandably, a little backward in paying tribute to the increased output beyond our forecast in both 1989- 90 and 1990-91. Although the number of planned scheme approvals will have to be cut back sharply this year, that will have little impact on completions. There are two reasons--the large remaining pipeline of schemes originally approved under the old grant arrangments but on which work has yet to start, and the much faster rate at which schemes approved under the new regime are now likely to be completed.
Overall, we are still on course for a massive expansion of associations' output. Public expenditure provision for the corporation is set to rise from £938 million last year to £1,736 million by 1992-93, and growing use of private loan finance will further add to the programme.
That said, the adjustments now needed to the corporation's programme of approvals in 1990-91 are, of course, extremely disappointing and frustrating not only for associations but those who work with them. Many associations have geared themselves up and taken on staff to take full advantage of the opportunities opened up by the new regime, and now face delays in getting planned schemes off the ground. The hon. Gentleman referred to some of them. All the more reason for paying tribute to the calm and constructive manner in which the National Federation of Housing Associations responded to the situation, despite all the inconvenience and disappointment that its members have faced.
It rightly concluded that the best way forward is not to indulge in recriminations but rather to work closely with the corporation on the development of new programme control arrangements, which will avert any future threat to the corporation's cash limit and give associations a firm forward planning framework--while making due allowance for all the many inevitable uncertainties which lie outside the corporation's, or anybody's, control. Thanks to tremendous efforts on both sides, those new arrangements are now being put in place for the current year.
The hon. Gentleman acknowledges that the corporation has had an immense burden to carry over the last two years, and has had an immense amount of change to digest. The introduction of the new grant arrangements has involved a difficult learning process for the corporation as well as for the movement. It is easy enough now to point to one or two things that could have been done, or said, differently during that process, or to suggest that some of today's difficulties should have been predicted and action taken to pre-empt them. But it is remarkable that today's critics were so silent at a time when suggestions could have been put to good use.
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Nor can the corporation be accused of any failure to consult or to take the views of outside bodies. The NFHA was closely involved in setting up the new grant regime, and management consultants were asked to undertake a review of the corporation's systems last autumn. Their report made a number of helpful recommendations on points of detail, but it did not identify a risk of cash control problems of the kind that emerged soon afterwards.The corporation is, I know, as anxious as anyone to restore full confidence in the programme control and planning process. As I said, new cash control arrangements are already being put in place. A full financial management and policy review of the corporation was in any event due to be carried out this year, and will provide a further opportunity to establish that the programme arrangements are as soundly based as possible. More generally, I know that Sir Christopher Benson, the corporation's new chairman, and his board are giving the supervision of that area of activity a high priority. I am sure, therefore, that those temporary difficulties will soon be behind us, and that the housing association movement can look forward to many years of expansion and prosperity.
The hon. Member for Norwood asked why the Government will not do anything about local authorities' accumulated capital receipts, but he knows that it has always been necessary to control the overall amount of borrowing. Local authorities as a whole have debts of around £45 billion. We believe that if local authorities sell assets, part of the proceeds should be used to repay some of the outstanding debt. That is how the long-term, prudent financing of local authorities will be improved, rather than be undermined by substantially increased debt burdens.
What is important is the number of units being produced. Completions are expected to be largely unaffected by the problems that I described, and the corporation expects the number for 1990-91 to exceed earlier forecasts by 12 per cent. Over the next two years, it is expected that more than 50,000 new homes will be completed for occupation by people in housing need. About 41,000 units are currently in development, between approval and completion- -so there is plenty of work for associations to be getting on with.
Mr. Fraser : I acknowledge that the number of completions has increased, and said myself that it had accelerated. However, does not the Minister recognise that, if the number of starts falls in the next two years, that will eventually be reflected in the number of completions? Does he regard 20,000 to 30,000 new homes to rent per year as adequate, when one indicator of demand reveals a figure of more than 100,000 families in need of homes each year?
Mr. Chope : I have already dealt with the number of completions forecast and why the reduction in the number of starts this year will not necessarily lead to a fall in the number of completions in subsequent years. I explained that aspect in some detail. As to the general issue of people in housing need, the hon. Gentleman will know that the Government are placing great emphasis on encouraging local authorities to make more efficient use of housing resources. The borough which contains the hon. Gentleman's constituency leaves much to be desired in that respect. About a year ago, it had
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about 1,000 properties squatted and another 2,000 empty. Last autumn, the Government announced a £250 million initiative to encourage better use of housing stock, which is alongside the increased amount being made available to the Housing Corporation and the housing associations.The Government are committed to ensuring that there is increased housing output. One way of ensuring that is to attract more private finance into housing. I am sure that the hon. Gentleman will recognise that an innovation once regarded with much scepticism by Opposition Members has proved to be effective in practice. We are now getting more for our money because we are attracting private sector investment.
I look forward to the future with nothing other than great confidence. I conclude by again paying tribute to the housing association movement for taking on the major responsibilities that the Government have given it.
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Channel Tunnel
10.7 am
Sir Fergus Montgomery (Altrincham and Sale) : I am grateful for the opportunity to initiate this Adjournment debate. I suppose that it involves what might be called the northern factor. I was born in north-east England and I represent a north-west constituency. Therefore, the problems of the north are important to me and to my constituents.
I welcome my hon. Friend the Minister of State, who has not long been at his new Department, but who, as Under-Secretary of State for Health, was a kind and courteous Minister. Whenever I took problems to him, he listened sympathetically and always seemed to do something to help. I hope that he will be just as helpful in his new office as he was previously at the Department of Health.
The purpose of the debate is to emphasise the importance to the north-west and to the whole of the north of the channel tunnel. Time is critical. The United Kingdom is already far behind Europe in the realignment of both road and rail links to the channel tunnel. Further delay will be harmful not only to the United Kingdom but the north-west. I hope that the Government will resist all appeals to delay matters and instead will permit Eurorail to go ahead with preparing the private Bill under which Britain's high- speed rail link can be built.
The north-west of England is the second highest regional contributor to gross domestic product. It is a great industrial area and heavily dependent on the old basic industries, and so suffered greatly during the recession. I am delighted that the north-west is recovering extremely well. Some 70 per cent. of our overseas trade is with mainland Europe, which is why the channel tunnel is of such importance to us. With the single market coming into effect in 1992, and the channel tunnel due to open in 1993, we understand its enormous importance to the economic well-being of the north- west. Last Friday, my hon. Friend the Member for Dulwich (Mr. Bowden) initiated a debate--he is always very diligent in putting forward the views of his constituents--to urge British Rail to consider Stratford as the terminal for the channel tunnel rail link. That was supported by several hon. Members with constituencies in south London, and I understand their reasons. They believe that such a development at Stratford would be of enormous economic advantage to south London. A number of my hon. Friends representing constituencies in Kent also supported my hon. Friend the Member for Dulwich because they are worried about the effects that the rail link will have on the environment, and I understand their worries. When my hon. Friend the Minister replied to the debate last week he said that, whether King's Cross or Stratford is used, the link will still have to go through Kent. It is important that as little environmental damage as possible is done--hon. Members representing northern constituencies are only too aware of such damage, because the scars from the industrial revolution remained for a long time in the north--and I am sure that that will be borne in mind by British Rail and the Government. In the north, especially the north-west, we want to grasp opportunities offered by the tunnel. Therefore, improvements to the transport infrastructure are needed.
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The north-west is the largest single market area for international rail freight and passenger services outside the south-east of England. We stand to gain increased export and tourist opportunities.You may be interested to know, Madam Deputy Speaker, that a couple of weeks ago it was warmer and sunnier in Blackpool than on Spain's Costa del Sol. We must also remember that, although the north-west is a great industrial area, it also contains some of the most beautiful areas in the United Kingdom. Transferring more freight from road to rail would have tremendous benefits for the environment and would boost the attractiveness of the region and competitiveness in Europe for existing firms and for inward investment. Taken together, those things offer an enormous plus for the north-west, but people in the region are worried about the delay in reaching decisions on siting tracks to and from the tunnel and about the location of the new rail terminal in London.
I make no bones about it : I believe that King's Cross is the ideal choice, for a number of reasons. First, it would provide direct links to the east coast and midlands main lines and would ensure connections with the west coast main lines. Secondly, King's Cross would provide a good quality interchange for passengers, especially those from the north. Thirdly, it already has a relatively fast link--the Thameslink--to the tunnel. That will be essential until the high-speed passenger link is completed, which is not expected to happen until 1998-99. King's Cross could provide services with or without the high speed passenger link. Fourthly, the King's Cross Railways Bill was deposited by British Rail in November 1989, and any further delay should be avoided.
On the other hand, Stratford has no direct link with the three main lines to the north, it has poor interchange facilities, and no direct link to the tunnel. Therefore, it is a non-starter. King's Cross should be chosen. I understand that it has been suggested that there should be three London terminals--Victoria, King's Cross and Stratford--and that borders on the ridiculous. King's Cross, with its central position and its close proximity to Euston and St. Pancras, is the ideal location. Nowhere else in London can one find three important rail terminals in such a small area as that bounded by King's Cross, St. Pancras and Euston. Also, 66 per cent. of London underground stations on five underground lines are connected directly with King's Cross. The proposed travolator to link King's Cross with Euston will make it the hub of transport in the metropolis. A further advantage for King's Cross is that it could use the existing route through west Hampstead and so could easily be linked to the west coast main lines. I am firmly of the opinion that British Rail's plan to use King's Cross as the London international terminal is right, and that we should proceed with it as soon as possible. We should consider the national interest in the House today. No one disputes that the south-east is overcrowded and frustrated and that decentralisation of activities should be encouraged. No one disputes that the motorway system is already under intense pressure. If my hon. Friend the Minister cares to drive from Westminster to the north- west one Friday afternoon, he will discover how terrible the situation is as he drives up the M1 and on to the M6. It would take him a great deal of time, not because
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of accidents or road works, but because of the number of vehicles on the road. It is extremely frustrating for drivers and must be costly to the nation.It makes good economic sense to move more traffic from road to rail. We are constantly being told to think about the environment and environmental issues. I understand that the Prime Minister will make a great speech on environmental issues tomorrow. The use of the railway system to haul freight whenever it is practicable has considerable advantages compared with the available alternatives. I want the economy of the north-west to benefit as much as possible from investment in the channel tunnel. Therefore, investment in infrastructure is essential. At the moment, there is an enormous amount of investment in the Lille region in France because, rightly or wrongly, and not by accident but by design, Lille will be the junction for the London-Paris and London-Brussels rail links. Lille will be important and the French are pouring enormous amounts of money into the area. The rewards for the future growth of the economy in the Lille area are encouraging.
In the north-west, we have an efficient group called the North West Channel Tunnel Group, comprising the North West Local Authority Rail Forum, Greater Manchester Economic Development Ltd., the development corporations of Central Manchester, Merseyside and Trafford Park, Inward, English Estates (North West), all the chambers of commerce in the north-west, and the north -west Confederation of British Industry. That is a formidable team. The group has produced a booklet which I am sure the Minister has seen, called "Capitalising on the Channel Tunnel : Action for North West England". In its foreword it says : "The North West of England is a region of great economic importance to the UK economy as a whole, and to secure future growth it must be able to compete effectively in the European Community when the Single European Market is completed by 1993.
Transport infrastructure is a key to the North West being able to achieve this, and the Channel Tunnel promises to make international rail freight and passenger services a major element of transport in the Europe of the 1990s. The North West is the region of the UK with potentially the most to gain and the most to lose from the Channel Tunnel, as the largest single market area for freight and passenger services outside the South East.
It is essential that the North West has effective international rail freight and passenger services, so that the region can take full advantage of the Single Market and the transport benefits offered by the Channel Tunnel. It is important to establish business plans from the outset which will promote economic opportunities as fully as possible.
The North West Channel Tunnel Group has considered both road and rail options for gaining access to the Channel Tunnel from the North West. In spite of road improvements planned in the Government Report Trunk Roads- England : Into the 1990s', road congestion is unlikely to be substantially eased. The Group's view is that the focus needs to be on rail to provide fast and reliable movement of passengers and freight to and from mainland Europe, because of advantages in cost, time and convenience.
For this reason, the North West Channel Tunnel Group has been formed from a wide range of business, economic and public sector interests in the region. Our aim is to co-ordinate North West efforts to secure fast and reliable rail access to mainland Europe, and promote the economic opportunities this will bring.
British Rail has recently published its Plan for international rail services and facilities for UK regions, but the proposals for the North West fall far short of what the region needs.
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Time is a critical factor. There are less than three years to go before the Single Market is fully enacted in 1992, and only just over three years before the Channel Tunnel is planned to open in 1993. There is little time available to achieve even the most basic improvements to international rail infrastructure for the North West. The North West Channel Tunnel Group is determined to ensure that the region's transport infrastructure aspirations for 1993 and beyond are understood and achieved as soon as possible."In not too many words, those are the basic aims that I am trying to put forward.
The Government have injected more money into the north-west than any other Government. Enormous sums have been poured into the three development corporations at Trafford Park, Manchester Central and Merseyside, to say nothing of the enormous amount of money that has gone into inner-city funding. Those initiatives are paying off. Anybody can see the benefits that have accrued in the north-west since the Government took office. It would be extremely sad if those advantages were allowed to wither away because of our failure to attend to the transport infrastructure.
10.20 am
Mr. Michael Jack (Fylde) : Thank you for allowing me to contribute to this debate, Madam Deputy Speaker. I endorse the powerful remarks of my hon. Friend the Member for Altrincham and Sale (Sir F. Montgomery). I underline my concern about our friends and colleagues in Kent. It would be churlish and selfish of us in the north-west to continue to endorse the benefits of the channel tunnel rail link without remembering the problems that they and their constituents face.
Clearly, much of our discussion about the benefits of the channel tunnel in the north-west would be academic without a high-quality rail link between London and the channel. I understand the pressures that my colleagues are under and I hope that, even at this late stage, the Government will recognise the environmental impact of the line in Kent and perhaps find some mechanism to resolve the problem. Without the symbol of commitment-- the link between London and Kent--much of the excitement of and possibilities for the channel tunnel will be lost.
My hon. Friend the Member for Wyre (Mr. Mans) and I recently attended a meeting with local authorities in the Fylde coast area and we discussed inward investment. That meeting was held with the assistance of an organisation called Inward, which has had much success in recent years in bringing Japanese and American investment to the north-west. A powerful message came from the discussions. Representatives at the meeting said, "In your discussions on the channel tunnel, don't let the impression be created that the north-west of England is cut off from that vital transport link to Europe." They pointed out that companies in Japan, America and elsewhere invest in this country because of our attitude to 1992 and the creation of the single market.
This country has much to offer, but the key to taking advantage of it is a good transport link with Europe. The tunnel is an important feature of that. Another key to taking advantage of the channel tunnel is our rail links with centres such as Manchester. There may be a debate about the correctness of the capacity of freight and passenger transport. That is something that the market
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will have to prove, but, in this age of the railway, we need to do all we can to encourage people to use rail as an alternative mode of transport.I emphasise the strength of feeling in our part of Lancashire about the electrification of the line from Blackpool to Manchester. It took some time for me to prise from British Rail the actual costs involved in the project- -about £30 million--but it said that, as part of its infill electrification programme, the Blackpool to Manchester line is viable and at the top of the list. The advent of direct links with the channel tunnel means that that infill project is another attractive way of persuading people to use railways to journey to Europe. I urge my hon. Friend the Minister, when considering the development of the domestic rail network, to look at that perspective.
Also on passenger services, I emphasise the need for my hon. Friend, in his discussions with British Rail, to try to get it to think even more about the commercial opportunities that the channel tunnel rail link will have. British Rail seems reluctant to recognise that passengers boarding trains in the north-west will want the same baggage facilities as are provided by airlines. It is reassuring to know that if, one is flying from Manchester to London and then to Strasbourg, one's luggage will end up at the final destination. British Rail seems reluctant to move into that new era.
My hon. Friend the Member for Altrincham and Sale talked about the advantages of King's Cross--I endorse what he said--and he underlined the importance of a travolator link. A travolator would cater for the passenger and be a powerful inducement. As one can walk to terminals 1, 2 or 3 at London airport, so would one be able to go from Euston to King's Cross and then travel to the channel tunnel. The thought of having to carry their bags could put people off. Such a facility would make all the difference to exploiting the enormous benefits of travelling by rail to continental Europe.
There appears to be indecision about where the various freightyards and co- ordinating points will be. It is important that British Rail does whatever it can to remove that indecision. I must sound a political note to my hon. Friend the Minister. There is little use in bodies such as Lancashire county council continually writing to Members of Parliament berating them on this subject. When I write to them and ask, "Where is your strategy and plan? Where would you like the freightyards?" they reply, "We are concerned about it, but we do not have any specific ideas."
There is a great danger that bodies such as Lancashire county council are trying to exploit difficult decisions simply for narrow political gain, and I object to that. Conservative Members have shown their dedication and commitment to the channel link and will fight hard for it. As my hon. Friend the Member for Altrincham and Sale has pointed out, no Opposition Member from the north-west is present. It is important that British Rail does all that it can to induce a railway culture for those who, until now, have transported freight by road. There is a generation of freight managers who might say, "Yes, we will use the channel tunnel rail link," but, at the moment, their thoughts are road-bound. Fully to exploit the potential, industry must demonstrate its positive commitment to using the rail link. That would encourage British Rail to take an even more positive attitude to this important development.
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10.27 amMr. Keith Mans (Wyre) : I am grateful for the opportunity to say a few words. I thoroughly endorse the comments by my hon. Friends the Members for Altrincham and Sale (Sir F. Montgomery) and for Fylde (Mr. Jack) on this important topic. I congratulate my hon. Friend the Minister on his new role, and I urge him to persuade British Rail--I know that it has made considerable progress over the past decade--to make a new effort to improve its passenger and freight facilities to the level that we now regard as the norm in air transport. I should like the great improvements that have been made in consumer comfort and the operating procedures of air transport networks--more specifically through the privatisation of British Airways-- to be applied to our ground transportation system, and to British Rail in particular, so that the customer is put at the head of the queue and is provided with the best possible transport service. That is vital for people in the north-west and for others in this country. Great Britain is on the edge of Europe. The channel tunnel will make certain that, in terms of travel time, this country is much closer to many continental centres not only in western Europe but increasingly in eastern Europe as that part of the continent, under the light of free enterprise, moves towards a much more sophisticated and prosperous economy in the years ahead. That is even more true of the north-west. Great Britain is on the edge of Europe ; clearly, we in the north-west feel that we are even further from the centres of Europe than the south-east is. In many ways, the channel tunnel is even more important to the north than it is to the south-east. Let us consider the distances and times it takes to reach places in Europe, and the distance and time it takes to reach London. It takes the same time to travel from Newcastle to London as it does from Preston to London, although the distance from Newcastle to London is considerably greater. In terms of travel to London, let alone to the continent, the north-west is the poor relation of the north-east. For one reason or another, our rail link has been neglected in the past. It is important that it is improved, especially with the completion of the channel tunnel only two or three years away.
There are two areas for which it is important that action is taken quickly on the rail link. First, the port of Liverpool could benefit tremendously from the channel tunnel as an entrepot to Europe and as a one-stop facility for cargo coming across the Atlantic or from elsewhere. Cargo could come to Liverpool rather than to Rotterdam and containers could be taken through the channel tunnel. Liverpool can be revived provided that there is a decent rail link between that great city and the continent. It is important that British Rail appreciates that fact.
Secondly, and a little closer to home, in the Fylde we have our own little silicon valley which is rapidly building up. Its core is British Aerospace and around it are the high-tech facilities that such a core activity tends to draw together. If we are to develop that area, it is vital that the communications are there so that people who want to work and live in the Fylde area, but who need to correspond, to travel and to meet people on the continent who are involved in similar activities are given the facilities to do so. That would draw the area closer to the centre of Europe. The channel tunnel link and a faster rail link to the north-west would help to achieve that.
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Nineteen ninety-two will be with us in a few years. We must take advantage of that common market and we can do so with the construction of the channel tunnel. However, in the north-west, it is increasingly being seen that the direct rail link with the tunnel will be vital for the port of Liverpool and for the area around British Aerospace, and for the whole economy of the north-west to take the best advantage of the opportunities provided by the unitary market in the coming decade.10.32 am
Mr. Kenneth Hind (Lancashire, West) : I want to begin my remarks at the point where my hon. Friend the Member for Wyre (Mr. Mans) finished his. Clearly, the major danger for the north-west is that we shall be on the periphery of the main activity in the economy unless we have connections to the main artery of the future and to the biggest British trade market, which is Europe. It is essential that, when the tunnel is in full operation, the north-west is not left out.
At present, the estimate for future north-west freight to Europe is 2 million tonnes a year. That means that, along with north Wales, the north- west is the biggest freight region in the country. It is bigger than the Home Counties or the south-east, so it is a market that should be considered. As my hon. Friends have said, we cannot underestimate the importance of the channel tunnel to the export markets for north-west companies. The proximity to the tunnel will determine the location of new factories and jobs, and inward investment. If we do not have those connections, we are likely to be left out.
As my hon. Friends have said, we need two essential factors in our favour. First, we must have good freight links to the tunnel ; secondly, we must have good passenger links. At present, there are no final decisions on the main terminal and the fast link from London to the tunnel. The only option available to us in the north-west is King's Cross and the fast link through Kent.
The other option, of Ove Arup and Stratford, is irrelevant to us, as Stratford is too remote from the north-west main line and will slow down the passage of freight from the north-west to the tunnel. The Ove Arup proposal has not been properly costed, especially in relation to tunnelling under the Thames. Ove Arup proposes a Berne gauge from Europe which will reach us in the north-west in 2003, which is far too long to wait. The whole north-west economy could have been destroyed by the time it arrived.
There is a need for an imminent decision by British Rail about the freight terminals so that planning can go ahead. There are only three options. The first is to develop a sea port for Merseyside, at Garston or Seaforth, which is container-based ; secondly, there could be a similar one at Trafford Park, which my hon. Friend the Member for Altrincham and Sale (Sir F. Montgomery) has already mentioned ; thirdly, there could probably be one in the centre of Lancashire at Haydock, joining up at Crewe for onward passage to the tunnel. It is important to note that freight is viable when the distance travelled is more than 200 miles, so it is a viable option for us to send freight through the tunnel from the north-west to the European markets.
British Rail's estimates for passengers are far too conservative. It proposes to order 18 trains for passenger use, of which only seven will be capable of going north of
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London because they will need to be divided. British Rail envisages only one train a day going beyond London, compared with the 15 trains it envisages will come from Paris and stop at London. That is not adequate. We believe that we shall be able to develop the necessary traffic that will go on to the north-west. If one is keen on skiing, for example, it would be possible to go all the way to Moutiers. We shall be able to pack those trains with north-west skiing enthusiasts through the winter months.British Rail must start making decisions. We are three years from the opening of the channel tunnel and two years from the implementation of the single market. Not a yard of track has been laid, and final decisions have not been made on essential structural matters which are important to the north-west. If it is not to be left behind in industrial development, decisions must be made soon. I know from experience that my hon. Friend the Minister is a man of action. I look to him to speed up the process and to see that the north-west is properly catered for.
10.37 am
The Minister for Public Transport (Mr. Roger Freeman) : I thank my hon. Friend the Member for Altrincham and Sale (Sir F. Montgomery) for his kind remarks at the beginning of this brief debate. I note with interest that there is strong Conservative representation from the north-west. The debate was initiated by my hon. Friend the Member for Altrincham and Sale and we have had excellent contributions from my hon. Friends the Members for Fylde (Mr. Jack), for Wyre (Mr. Mans) and for Lancashire, West (Mr. Hind). I notice also here my hon. Friends the Members for Warrington, South (Mr. Butler), for Bolton, North-East (Mr. Thurnham), and for Bolton, West (Mr. Sackville) and, not least, my hon. Friend the Member for Eddisbury (Mr. Goodlad). That is a truly magnificent sign that Conservative Members strongly support the best interests of business and industry in the north- west and that they want to ensure that, when the channel tunnel opens, the north-west makes immediate, active and thorough use of the enormous opportunities that it will present.
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