Further supplementary memorandum submitted
by the Department for Transport
I wrote to you on 8 December 2005 with information
on a number of points following my appearance on 9 November at
the Committee's inquiry into Olympic transport. I understand that
the Committee has subsequently asked for further information about
the public contribution towards the Channel Tunnel Rail Link.
In the Transport Select Committee's evidence
session on 19 October 2005 the Committee asked Mr Rob Holden about
the National Audit Office Report of 21 July 2005 which suggested
that, as already noted in 1998 and dependent on growth of passenger
numbers, London and Continental Railways (LCR) may require a public
contribution of £260 million towards the running of the CTRL
until 2051.
The Committee also asked about the arrangements
for commercial development of the route of the CTRL, and in particular
about the lands at Stratford. These are, by and large, unrelated
issues.
The National Audit Office report Progress
on the Channel Tunnel Rail Link published on 21 July 2005
stated that, since the opening of Section 1 of the CTRL, demand
for Eurostar has grown rapidly, but passenger revenues remain
below the original forecasts. The report notes that as a result
of the shortfall in passenger revenue the Department for Transport
expects to lend LCR about £260 million to cover the shortfall
between cash requirements and income through to 2051. Despite
the worse than expected revenue forecasts, the expected loan is
still around the amount estimated in 1998 because LCR successfully
secured savings by reducing the cost of interest on its debt.
As part of the agreement for construction of
CTRL LCR have a lease on the track itself and the commercial opportunities
created along the route. These include developments which are
now underway at King's Cross, Stratford and Ebbsfleet. One of
the major benefits from the CTRL is that it is stimulating regeneration
along its route, particularly in key growth areas.
In the Stratford area the agreement for construction
of CTRL included the transfer of the freehold of former rail land
presently owned by the Secretary of State for Transport to LCR.
This transfer will take place no later than two years after the
railway becomes operational. This land has been used for construction
purposes during the building of the CTRL and Stratford International
Station.
It is also the site of the planned Stratford
City Development and adjacent to the site of the Olympic Park.
LCR and a consortium of developers (the Stratford City Development
Partnership) intend to develop this land into a mixed retail,
residential and business development, and outline planning permission
was granted by LB Newham in February 2005.
The Olympic plans require that parts of the
Olympic park are located on the Stratford City site, including
the Olympic Village. A heads of terms agreement was signed by
LCR and the London Development Agency (LDA) in May 2004 before
the London Olympic Bid was submitted to the IOC in November 2004.
Under the terms of the agreement to construct
the railway, any proceeds arising from the development of this
land will be shared with the Department for Transport. The proceeds
arising from the development will be used to offset the cost of
building the railway.
As the Committee is aware, negotiations were
recently concluded between LCR, the Stratford City Development
Partnership and the London Development Agency. The aim of these
talks was to unify and integrate the Stratford City Development
and the Olympic Park to obtain the maximum benefit for the Stratford
area from both. Amongst other things the agreement resolves the
questions over the use of Compulsory Purchase Powers over the
land and protects the public interest in the completion of CTRL
and subsequent development of the railway lands.
16 January 2006
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