§ Queen's Recommendation having been signified—
Motion made, and Question proposed,
That, for the purposes of any Act resulting from the Channel Tunnel Bill, it is expedient to authorise—
(1) the payment out of money provided by Parliament of any sums required to meet expenditure incurred by the Secretary of State—
(2) the payment out of money provided by Parliament of any increase attributable to that Act—
(3) The payment of any sums into the Consolidated Fund; and in this Resolution expressions to which a meaning is given for the purposes of any Act resulting from the Channel Tunnel Bill have the same meaning as in that Act.—[Mr. Peter Lloyd.]
§ 9 am
§ Mr. Michael Brown (Brigg and Cleethorpes)
I am sorry to detain the House and I shall try not to be too long, especially in view of the horoscope which appears in today's Daily Mail for my birthday sign, which I shall read briefly without, I hope, incurring your wrath, Mr. Speaker. It states:It is difficult to know where to place your energy today. If you meet unexpected hazards then prepare for delays. Do not try to have an early night.I shall try to follow precisely the last part of that advice.
There is one slightly worrying aspect of the money resolution to which I should like to draw the attention of my hon. Friend the Minister of State. Subsection (1)(c) states;by virtue of provisions of that Act authorising the Secretary of State, in certain circumstances, to maintain the tunnel system if construction stops before it is completed, or (as the case may be) to manage, operate and maintain the tunnel system or such part of it as is practicable to operate up to the end of the period of three months beginning with the date of the expiry or termination of the Concession;My worry, bearing in mind the assurances that we have received on many occasions from my right hon. and hon. Friends to the effect that the tunnel is to be constructed out of private funds — something which is much to be welcomed — lies with paragraph (c), where it is suggested that, in the event of the private companies being 1329 unable to complete the tunnel, the Government would be given powers under the money resolution to pick up the tab. It has been stressed to us throughout the debate, both inside and outside the House, that the financing of the Channel tunnel will come from private funds.
Those who want to see the Bill enacted, which the Government do, and the tunnel constructed and brought to fruition want to ensure that the companies have sufficient resources to enable them to complete the project without having recourse to public funds. There is an intimation in paragraph (c), however, that the companies may not have the financial resources to do that and may find themselves faced with the prospect of having to stop constructing the tunnel if they are unable to raise sufficient funds over the construction period. In those circumstances, public moneys would have to be directed to the project. I hope that my hon. Friend will take up these issues when he replies.
§ Mr. Greg Knight (Derby, North)
One way round the problem would be for the companies concerned to be obliged to enter into an insurance bond so that if any difficulties arose, moneys—not public moneys—would be available to maintain the tunnel.
§ Mr. Brown
I feel sure that the companies will try to do precisely that. I should like to know whether the Government have considered the possibility that, notwithstanding any insurance bonds that the companies might take out, there could be the possibility under paragraph (c) of a failuere and the Government having the power to pick up the tab.
§ The Secretary of State for Transport (Mr. John Moore)
I hesitate to intervene, but in so far as my hon. Friend is addressing himself to the money resolution and my hon. Friend the Minister of State is about to respond, he might care to agree with me—I am sure that most hon. Members will — that we have had most extraordinary and outstanding contributions of exceptional courtesy from my hon. Friend the Minister of State throughout this long series of debates and a display of great stamina.
§ Mr. Brown
I agree with that absolutely. My hon. Friend the Minister of State has responded fairly and with great patience to all of our legitimate concerns. Whatever view we may take on these issues, we are all most grateful to him. This has been an important series of debates, and we end on an important debate. I am delighted to associate myself with the comments of my right hon. Friend the Secretary of State. I should be grateful if my hon. Friend the Minister would direct his thoughts to the points that I have raised.
§ Mr. Kenneth Hind (Lancashire, West)
With regard to the financing of the Channel tunnel project, it is important to emphasise that it will be built with private money and with no contributions from the state. Our deliberations on the money resolution are limited to the essentials of any Government Department overseeing this type of scheme, the purchase of land and the financing of the safety authority. My hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) mentioned financing the tunnel to ensure that it is managed, operated and maintained for a period should construction come to a halt.
My hon. Friend also raised the possibility of some form of bond. If because of heavy costs or unforeseen 1330 engineering difficulties the whole of the burden of the programme was thrust upon the taxpayer, the one thing which the invitation of funding from the private sector sought to avoid would occur. I am sure that my right hon. Friend the Secretary of State and the Minister of State are considering that matter and will ensure that the public interest is properly protected.
On behalf of my colleagues, I echo the Secretary of State's comments and I thank the Minister for his unfailing courtesy in his dealings with us throughout the night.
§ 9.7 am
I can well understand that my hon. Friends are in a state of perplexity about the money resolution, because, after all, we had spent many long hours here saying that there would be no public expenditure involved in the construction of the tunnel. It is understandable if hon. Members wonder why the money resolution is required.
The principal reason for the resolution is that we have included in the project the building of the extension of the M20/A20 from Folkestone halfway to Dover. My right hon. and learned Friend the Member for Dover (Mr. Rees), who has participated so much in our debates on the matter, is familiar with the importance of the road. It is the bypass for Capel-le-Feme and is of crucial importance in view of the amount of traffic which is likely to be generated during construction. Apart from that, as I have mentioned to my hon. Friend the Member for Thanet, South (Mr. Aitken) on many occasions, ferry traffic will continue to increase between now and 1993 when the tunnel opens. For that reason, it is important that the extensions be carried out to enable traffic to get to Dover using the M20 and to Folkestone and its ferry services.
§ Mr. Hind
Will my hon. Friend consider the question of safeguarding the public interest should the Eurotunnel consortium find itslf in financial difficulties or should the public be faced with an enormous bill for completing and maintaining the tunnel? Will he consider ways of safeguarding the public interest, perhaps through a bond or insurance policy? What does he have in mind?
I will help my hon. Friend, who has asked about two precise circumstances: what happens if the company fails before construction is complete, or after it is complete. If the project fails during construction—clause 25 deals with this—the Government will be able to maintain the works. That is not as extraordinary as it sounds because that is exactly what we have done with the old 1973 workings.
§ Mr. Bill Walker
Will my hon. Friend advise the House whether, if the company developing the tunnel is unable to complete the work and the Government must intervene with public money, the Government are in effect nationalising and taking over the tunnel?
I can reassure my hon. Friend on that score, and it is perfectly understandable that he should take that view. If the project fails and the lenders do not find another concessionaire to complete, it will be mothballed. The equity interest put in by the participating shareholders will be lost. In that case, a receiver would undoubtedly be appointed on behalf of the lenders, and he would seek to find an alternative concessionaire to complete the tunnel.
1331 The premise on which the Government have supported the project is that we are satisfied that the financial requirements laid on the concessionaire will ensure that completion can take place without any risk that it cannot.
The event of the project failing after it is complete is covered by clause 26. The Government will be able to operate it for three months, the concessionaires will not benefit from that, and the Government will take the revenues from road and rail traffic. Moreover—this is important to the point about nationalisation—this power is conditional on clause 27, in that it can be used only if the Secretary of State is satisfied that there is a reasonable prospect of a new concession being negotiated in the near future. If he is not so satisfied, there will be no attempt to continue the operation.
§ Mr. Albert McQuarrie (Banff and Buchan)
It cannot be overstressed that the Government have investigated the financial provisions for the tunnel so thoroughly that there is almost no possibility that the venture will fail. Therefore, any comments on the possibility of failure are purely hypothetical and extremely unlikely.
My hon. Friend is putting into my mouth somewhat more than I said. It is for the promoters to satisfy the investors that the project is viable and that the investors should put their money into it. The investors include Japanese and other foreign sources, pension funds, City institutions and the like. The Government do not give an imprimatur which gives a Government guarantee, Government audit, or Government certification that the project is viable.
It is for the promoters to persuade the investors, just as any promoter in any other private project would have to persuade investors before the money could be raised for the project to go ahead. We would not have reached this point if we thought that the promoters were unable to persuade the investors of that. The promoters still have to do that and the matter should not be taken for granted.
§ Mr. David Harris (St. Ives)
My hon. Friend has allayed our fears about nationalisation on this side of the 1332 Channel, but has he considered the possibility, remote as it might be, that, in the event of failure after completion, the French Government will step in and nationalise the whole enterprise from their end? Has it crossed the mind of my hon. Friend what his reaction would be in that hypothetical situation?
The company structure and the agreements between us and the French could not allow that situation to arise. The administrative costs of the two Governments would be covered by a single annual payment of 3 million ECUs—about £2 million—shared equally between the United Kingdom and France. In practice, the cost of the inter-Government commission and the safety authority would be variable from year to year. If the project fails and the sites have to be restored, the cost will fall on the Government, but the Government will have a claim on the material of the tunnel system to set against that cost. I hope that that reassures my hon. Friends.
§ Mr. William Cash (Stafford)
Does my hon. Friend agree that this important debate has been conducted on a serious note and that the Opposition have not been here? The press should note that we have been debating this seriously throughout the night and the Opposition have been asleep the whole time.
Before the debate started last night, there was some talk of a waffle debate to take up time. What has become increasingly apparent throughout the debate is the serious way in which the House has addressed itself to the important and detailed matters of the Channel tunnel project and the arrangements for the Select Committee. The House will feel that, with the passing of the money resolution, which I now recommend to hon. Members, a good night's work has been done for the benefit of the country as a whole.
§ Question put and agreed to.