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Mr. David Curry (Skipton and Ripon): Following the Deputy Prime Minister's reply to the hon. Member for Barking (Ms Hodge), am I right in concluding that he can give no absolute guarantee that the second phase of the project will be built, but that he is building incentives into the financing in the hope that the company wishes to build it, and that if it does not, he hopes that somebody else will replace it to do so?

Mr. Prescott: The contract is not with the constructors. It is with the company that entered into the contract with me--the same company that the previous Government were prepared to accept--LCR. We have strengthened the contract and the company has given a commitment. The company will complete what it is contracted to do, to St. Pancras. The company was acceptable for the previous Government to negotiate with. We have strengthened the deal and changed the financial arrangements. We have every reason to believe that, with a proper balance of incentives, we can complete that work. I believe that the company has entered into the contract in good faith, and that it will be able to complete it.

Mr. John Gunnell (Morley and Rothwell): Bearing in mind the news two months ago that Eurostar was

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cancelling its orders for trains which would have enabled the company to have direct links to the north of England, will my right hon. Friend--when he reports back to the House on regional services--ensure that he has raised with those responsible the question of the direct link to the north of England, so that we can be assured that such a link will be in place in due course, using the completed route to St. Pancras?

Mr. Prescott: I have made it clear that I want to see a feasibility report from the company on regional services. I can do no more than that. As soon as I have that report--I have said that it should be ready by the end of the year--I shall report back to the House.

Mr. Eric Pickles (Brentwood and Ongar): Further to the point raised by the hon. Member for Barking (Ms Hodge), I am very surprised that the right hon. Gentleman is suggesting that we will be able to find other contractors to build phase 2 if Railtrack cannot do it, as phase 2 is the most difficult part of the project. Moreover, for the economy, it is the crucial part. Although I understand the need for incentives, does the £140 million relate specifically to phase 1 or to phase 2? Furthermore, did the right hon. Gentleman say that building the Heathrow link was an option for Railtrack and not part of the contract?

Mr. Prescott: Railtrack is not under an obligation to build a link to Heathrow. The consortium would like services to be increased, but current links allow connection from Heathrow to the railway system. Although there will be subsequent reports on the link, it is not part of Railtrack's agreement with LCR.

The £140 million is for the whole contract and is not payable until 2010--assuming that there is not an even greater surplus, in which case the consortium will be paying us, rather than the other way round.

On Eurostar services--I am sorry; I have lost the point of the other question.

Madam Speaker: It would be good if hon. Members asked only one question.

Mr. Eric Martlew (Carlisle): I congratulate the Deputy Prime Minister on today's statement to the House--after the shambles that we were left with in January--and find hon. Members' carping on it very objectionable. After many years, the west coast main line will be upgraded. I am also pleased to hear that we will have a link to St. Pancras. We are talking about regeneration not only of parts of Kent and London but of the west coast of Britain--which includes England, Wales, Scotland and, to some extent, Northern Ireland.

Mr. Prescott: I very much agree with my hon. Friend's comments, which have re-emphasised the fact that regeneration comes from moving not only passengers but freight. Moving freight and moving passengers is equally important. We are doing all we can--we have renegotiated a number of contracts--to improve passage of freight through the tunnel. Although the rail link has a special regeneration value for the east London area, it will bring regeneration also to the rest of the United Kingdom. Transport infrastructure brings regeneration, which is why the Government think that it is so important.

Mrs. Jacqui Lait (Beckenham): Will the right hon. Gentleman tell us what are the other elements in

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Railtrack's options, as well as access charges? On the related issue of the Thameslink project, will he say when he expects the work at Blackfriars station to commence?

Mr. Prescott: I am not sure of the answer to the hon. Lady's second question, but I will write to her on it.

The difficulty is that, although Railtrack is a private company, it is bound by laws passed by the House, and the regulator will review its track access charges in the next two years. The review is an essential part of the agreement, which makes it difficult to obtain from Railtrack a longer-term commitment on phase 2. However, there are so many incentives in the project--about three quarters of the cost is available--that I do not accept for a moment that LCR cannot find another contractor to complete phase 2. Nevertheless, I believe that Railtrack not only wants to build it, but can build it. However, at this stage, properly, it must take account of the regulator's judgments, which will not be made for some time yet.

Mr. Tam Dalyell (Linlithgow): In response to my hon. Friend the Member for Nottingham, East (Mr. Heppell) and the right hon. Member for North-West Cambridgeshire (Sir B. Mawhinney), the Deputy Prime Minister referred to a report on the regions. Forgive us a little impatience, but are we really going to say to people in Glasgow or Nottingham, "We will tell you next year when you may expect a rail link"? Why do we have to wait until December, after all that has gone under the bridges? What can we sensibly say to people who are becoming pretty impatient about business decisions?

Mr. Prescott: I thank my hon. Friend for that helpful remark. Like him, I want regional railway services to be connected to international railway services. However, I have had to turn my attention to saving the one currently available deal that is essential for regional services--essentially to complete the link to St. Pancras. I have now completed the deal, which is good news for Scotland, Wales and every other part of the United Kingdom that will use the new international route into the Community.

However, I should say that advertised experimental services from Glasgow took about 10 or 11 hours. There is some doubt whether one can fill trains of whatever length at whatever time if people want to fly to Paris or Brussels instead of taking a 10-hour train journey. Those are legitimate concerns, which must be given proper consideration without committing a great deal of money.

I have asked--I think that it is the best way--whether, if there are spare sets there now, we can do something about starting some useful services right away. It is possible to get on to the network coming from the north--we do not have to wait for the completion of St. Pancras--and that is why I have asked them to look the possibility of getting a quicker start without waiting for the completion of St. Pancras. That is what I hope to report to the House in December.

Mr. Alan Clark: The Deputy Prime Minister did not give an intelligible answer to the question asked by my hon. Friend the Member for Faversham and Mid-Kent (Mr. Rowe). One of the provisions in his statement was that LCR should seek to raise additional equity in the financial markets; but what happens if it cannot do so?

Mr. Prescott: We have made a judgment about the guarantees involved in raising money, and that is what

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the market will look at in the circumstances. Those guarantees, we have been assured, are sufficient to guarantee the borrowing requirements and the stability and credibility of this company. It is a unique financial deal, and when the right hon. Gentleman looks at the memorandum, he will see that using bonds and having them supported by Government is probably the strongest credibility possible in these matters.

I am bound to say that it is a lot cheaper than the way in which it was done under the previous Administration. What the company was telling us when I reported back to the House was that, in order to be able to raise the equity on the market to which it was committed--about £1 billion--it wanted another £1.2 billion sweetener as to attract the market to put in equity. I am not doing that, because it is too expensive. I have found a better way, which is better for the taxpayer.

Mr. Hugh Bayley (City of York): I congratulate my right hon. Friend on looking at the regional dimension of the link. Is it not important that that committee looks at regional services before the new line is completed? On Friday last week, I received a letter from the managing director of Eurostar, which told me that, although the track infrastructure safety case for the east coast main line has now been completed, they have not even started to do the safety case for the rolling stock, and the problems with electrical interference are being studied only on the west coast main line. Will my right hon. Friend make sure that equal weight and urgency is given to developing the case for the east coast main line?

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