COMPETITION, ETC. (Hansard, 21 July 1987)

§ Mr. David Mitchell
I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker
With this it will be convenient to consider Lords amendents Nos. 69 to 72.

§ Mr. Mitchell
These amendments are essentially technical. They facilitate the application of competition legislation to the concessionaires and will ensure that the procedures to which they will be subject will be closely aligned with those applicable to their competitors.

§ Mr. David Shaw
I tried to catch your predecessor's eye, Mr. Deputy Speaker, but just failed to do so. I wanted to speak on the amendments to clause 2, but I think that I may represent my constituency well by speaking about some of the aspects which could be related to clause 2 on this clause, which deals with competition.
In as much as competition concerns consumers and taxpayers, it is of immense concern to my constituents that no public money should go into this project. They are concerned that not only this Government but successive Governments should continue to protect the taxpayers and consumers. There would be unfair competition between the tunnel and the ferries if the tunnel were bailed out by some form of subsidy or sold if it could not meet its financial obligations.
There are many financial weaknesses in the present project. They stem from high fixed costs and, as the hon. Member for Vauxhall (Mr. Holland) said, the unrealistic and unreliable passenger and revenue projections for this project. Referring to the original Channel tunnel project, Coopers and Lybrand Associates, in its 31 May 1973 report, forecast on page 21 that, without a tunnel, there would be some 29,778,000 passengers using airlines in 1980 to go to and from the United Kingdom and Europe. The actual number was closer to 20 million passengers. There was a massive over-forecast by the traffic consultants who supplied the figures to Coopers and Lybrand.
Coopers and Lybrand's original forecast suggested that 14 per cent. of airline passengers would transfer to a Channel tunnel if it were built. Because the airline passenger rate was not as high as it should have been, Eurotunnel was forced to put in its 1987 prospectus a figure of 18 per cent. transferring. One wonders whether it was necessary to tweak the financial projections to achieve the right result. I was informed only at the weekend that the latest freight revenue projections show that, far from increasing, there has been a small downturn this year of some 3 per cent. in the freight revenue from ferries. Rail passengers—

Mr. Deputy Speaker
Order. The fault may be mine, but I am finding it difficult to relate what the hon. Member is saying to the contents of the Lords amendments. He should relate his remarks more closely to them, or resume his seat.

§ Mr. Shaw
I shall try to relate my remarks more closely, as you suggest, Sir. My lack of experience of the House is to blame. I suggest that fair competition is essential. We need fair competition in terms not only of revenue, but, dare I suggest, money raised in the City of London and other such places. Without such fair competition between—

Mr. Deputy Speaker
Order. I have to say again to the hon. Member that I find little connection between his remarks and the Lords amendments.

§ Mr. Shaw
The Lords amendments mention the Consumer Protection Advisory Committee and the Monopolies and Mergers Commission. Having made many representations to the Monopolies and Mergers Commission during my former merchant banking career, I suggest that the MMC, when considering competition, looks to very wide and varied aspects of information. Eurotunnel's prospectus refers to a number of exemptions under various stock exchange requirements and others. This means that information on the shuttle's engineering feasibility and its practicability is not provided. If the Monopolies and Mergers Commission were considering the tunnel on lines equivalent to the ferries or ports, it would surely be extremely worried about that lack of information.
In 1974, in a report on the Channel tunnel, Accountancy Age said that, although the tunnel was expected to carry 14 million passengers by 1990, the big expansion in journeys to and from the continent would be in air traffic, increasing from 16 million in 1971 to 41 million by 1990. All the 1974 forecast figures about passengers were wrong. Even in 1987, the ferries were carrying only 14 million passengers. I am concerned that, if the tunnel gets into financial difficulties, it will not be able to compete on fair grounds with the ferries. There may be some adjustment to the normal competition rules, which the Monopolies and Mergers Commission would consider.
8.30 pm
I feel that I should conclude on a matter that you may feel stretches the imagination somewhat, Mr. Deputy Speaker, in terms of whether I am speaking to the amendment. The British Rail contract recently signed by "38A.—(1) It shall be the duty of the Railways Board to prepare a plan stating measures which the Board propose to take, and any proposals as to measures which the Board consider ought to be taken by any person in the United Kingdom or France, with the aim of securing—

(a) the provision or improvement of international through services serving various parts of the United Kingdom; and

(b) an increase in the proportion of the passengers and goods carried between places in the United Kingdom and places outside the United Kingdom that is carried by international through services.

(2) The measures referred to in subsection (1) above are—

(a) measures relating to the operation of international through services;

(b) measures relating to the carrying out of works or other developments connected with international through services (including collection and distribution centres for goods and inland clearance depots); and

(c) measures relating to the provision or improvement of facilities or other services connected with international through services.

(3) The Railways Board—

(a) shall prepare the plan under this section not later than 31st December 1989;

(b) shall keep the plan under review and from time to time revise it; and

(c) shall cause the plan and any revisions of it to be published in such manner as they think fit.

(4) In preparing the plan and any revisions of it the Railways Board shall have regard to the financial resources likely to be available to them and to any restrictions likely to be imposed on them with respect to the application of such resources.
(5) The duties imposed by this section shall not apply at any time when the original Concession, as defined by section 1(4) of this Act, has expired or terminated and no new Concession is in operation.
282 Eurotunnel should be examined closely by the public. Certainly, many people in my constituency of Dover will be extremely concerned to ensure that that contract is fair vis-a-vis the ferries, and vis-a-vis Eurotunnel and British Rail. We hope that that can be examined, and will be published very shortly, before the publication of the prospectus in October.
Thank you, Mr. Deputy Speaker, for your tolerance in enabling me to raise a number of matters of concern to the port and ferry people of Dover.

§ Mr. David Mitchell
I have noted my hon. Friend's points carefully. I can reassure him that no public money will go into the Eurotunnel project.
Eurotunnel traffic forecasts are a matter for Eurotunnel, which must justify its project to the investors in the financial markets of the world. They are not underwritten or audited in any way by the Government; they are a matter for Eurotunnel, as a private sector operator.
As for competition, there are certain intrinsic advantages in each method of transport. They will appeal to different groups of people. That is the free working of the market, and I do not believe that we should interfere with it.