HC Deb 25 April 1996 vol 276 cc621-35

'.—(1) No Minister of the Crown shall transfer to a rail link undertaker ownership of any asset which is owned by the Crown which is a rail asset.

(2) In this section "rail asset" includes any railway asset or additional railway asset, any ancillary service, any premises (including any station), any locomotive, any network, any railway facility, any railway vehicle, any rolling stock or any track.

(3) In subsection (2) above, the terms used shall be construed in accordance with section 83 (Interpretation of Part I) of the Railways Act 1993.'.—[Mr. Allen.]

Brought up, and read the First time.

Mr. Allen

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this, it will be convenient to discuss amendment No. 11, in clause 30, page 16, line 32, at beginning insert 'Subject to the provisions of section (Rail assets not be transferred):

Mr. Allen

In years to come it will be judged that the channel tunnel rail link was a vital, exciting and very welcome scheme. Whatever unnecessary delays and sordid sweeteners have accompanied it, the Opposition will repeat the view that the high-speed link is essential and will considerably help economic regeneration throughout the United Kingdom and not just the south-east—especially when we have a Government who will seize the opportunities to which I referred in an earlier debate.

It is almost incredible that the present Government have somehow managed to contrive a losing position for the taxpayer out of such a magnificent concept—first, by delay, and secondly by the financing of the project. Delay has, of course, caused incalculable loss. I do not mean because of the increased expenditure required to complete the link; I mean, as my hon. Friend the Member for Cardiff, Central (Mr. Jones) said in Committee, because of the years of use that have been lost by the project not going ahead when it could have done in the late 1980s. In addition, there is the loss of what one might term prestige. We look like a backward nation in Europe that was unable to seize the opportunities of the channel tunnel once it was built, not least when compared with our friends and neighbours across the channel in France, who moved so quickly to seize the opportunities and advantages offered by it.

As for the financial aspects of the deal, never in the history of privatisations in the past few years under the Government has there been a sweetener as large as the one that we are about to nod through today. There is no question but that seven years ago Conservative dogma determined that it was unacceptable to use any public money to get the project off the ground. Yet we know that the project could have been ours for the ludicrously small sum of £1 billion just a few years ago in 1989.

Mr. Jacques Arnold

Is the hon. Gentleman saying that he would have accepted that bargain basement scheme, which would have cost the environment and people in Kent and east London dearly if it had been railroaded through with no consideration to the environmental interests of local residents?

Mr. Allen

There is no question but that the final scheme would have been very different from the one initially proposed by Trafalgar House and British Rail, and—one hopes—those considerations would have been taken into account.

Although the Conservative party may not admit it, I hope that the lesson that all important large-scale transport projects are massively subsidised has been learnt and that the pipe dream of a totally privately financed scheme of such magnitude has been dispelled once and for all by the channel tunnel rail link. I hope that we have matured enough to move on from the "private good, public bad" sloganising, and that serious discussion is now about the form of that subsidy and, consequently, the value for money achieved for the taxpayer, which will need to be in even greater detail as we approach a change of Government.

The Conservatives' chosen form of subsidy is a £1.4 billion hand-out, plus a free gift of taxpayers' assets of £3 billion and the writing off of a loan to Eurostar of £1.3 billion—a grand total of £5.7 billion for something that we could have had for £1 billion in 1989. Some people question those figures. It is impossible to tell whether they are accurate. Some people think that we are understating the subsidy. My hon. Friend the Member for Hampstead and Highgate (Ms Jackson) has followed the matter closely and will no doubt allude to it later. The cash subsidy is £1.4 billion at net present value. By the time we come to pay it in real money over the period involved, it could approach £2 billion. Equally, some people think that the profits to be made out of development lands, not least at King's Cross, will be far higher than the original estimates that were made when the deal was announced.

That is not a clever twist of creative accounting; the assets are as much real money as our income tax payments are real. Anyone who has ever bought a rail ticket or paid a penny in income tax has helped to build and buy the Eurostar trains that are being given away, the station properties at King's Cross and Waterloo and the plum development lands at King's Cross, Stratford and elsewhere. We are not discussing a tiny amount of money; £5.7 billion pounds is equivalent to almost 3p on the standard rate of income tax or asking every family to pay another £370 on its tax bill to fund this Conservative incompetence.

The £1.4 billion cash giveaway is roughly equivalent to the money that will be raised by the Government selling off virtually the whole of our rail network. We are getting nothing from privatising the rail network; we are giving the proceeds straight to London and Continental because the Government are desperate to carry out the PFI in this tack-handed way. To rub salt into the wounds, the Government's failure to clinch the deal in the late 1980s meant that the taxpayer had to build Waterloo international. That, too, has disappeared in the special "build one, get one free" offer to London and Continental.

Most remarkable of all, every one of the assets has been given away up front, before a single sleeper has been laid on the channel tunnel rail link. Only a Parliament doped by years of endemic privatisation sleaze would tolerate what the Government have done—and all because the Government could not admit that a public-private finance partnership was the way forward in the late 1980s, despite constant pressure from the Opposition and the hopes of many people not only from around the link, but from all the regions of England and from Scotland and Wales.

We blame the Conservative Government, not London and Continental. It is debatable whether the constituent parts of London and Continental—Halcrow, Virgin, National Express, Warburg, Bechtel and Systra—are happy with the "some in cash, some in kind" arrangement. They might well have preferred a straightforward private-public sector partnership and to have got on with the job in hand without the complications with the assets that come in its train.

All this gives the PFI a bad name in the same way that the design, build, finance and operate concept on our roads has begun to undermine the valuable concept of public-private initiative because of its complexity, lines of accountability, high borrowing costs, large mortgages for the taxpayer and high tendering overheads. Public-private initiatives are welcome, essential and indeed unavoidable as a way forward, not least for transport schemes, but they should be genuine partnerships assessed on their merits, and not clumsy devices to get assets off the public books or to produce income tax cuts today paid for by massive mortgages on future taxpayers.

After all that largesse, what guarantees are there that the job will be done? The Bill gives only outline permissive powers and the guarantee of completion rests on contractual obligations that may appear very different in four years' time. The Government have delayed the scheme so that there has been a massive spiralling of cost. The incompetence and profligacy with our money almost defies comprehension. As we celebrate the construction of the high-speed link and work to make it effective for all our regions, we must never forget its tremendous costs. We will never forget the incompetence of the Government who incurred them.

5.45 pm
Mr. Gordon Prentice

I support new clause 7. I welcome the rail link, which is long overdue. If people knew the extent of the subsidy involved, they would choke on it. Public assets are being given away. It amounts to grand larceny. If it were not being done by the Government, the person responsible would be behind bars in Pentonville. Public assets are being gifted.

The story is full of ironies. One of the four bidders is Lord Parkinson, in his latest metamorphosis as chairman of Eurorail. In 1990, he vetoed a proposal by British Rail to construct the rail link. As my hon. Friend the Member for Nottingham, North (Mr. Allen) said, it is a matter of public record that the subsidy required then was £1.9 billion: a low-interest loan of £1 billion, capital grant of £500 million and an additional £400 million investment required by Network SouthEast. Now the Government are shovelling public money into the pockets of London and Continental as if there were no tomorrow. It will not be the people of Britain who own this magnificent new railway but the shareholders in London and Continental.

Lord Parkinson said at the time that it was not the Government's policy to subsidise the rail link and came out with this fantasy on 11 June 1990, when he said that it was illegal for the Government to subsidise any fast tunnel link, on the ground that it would create unfair competition for ships, road freight and airlines."—[Official Report, 11 June 1990; Vol. 174, c. 4.] We have the same Government but a different situation. The most enormous subsidy is going to London and Continental. As my hon. Friend the Member for Nottingham, North said, the outrage that people should feel is not being felt because of the diet of privatisation outrages. The Guardian on 4 March 1996 said: It is only because we have been nurtured so long on the drip-feed of privatisation sleaze that people haven't been more outraged. How true that is.

I shall deal with the specific figures. The straight cash subsidy, the so-called financial contribution, for a 68-mile long line is £1.4 billion. Railtrack is currently being floated, and all the pundits and commentators who know about such things tell us that that will raise about £1.7 billion. It was originally valued at about £6 billion, then the figure went down to £3 billion; now we are told that it is worth £1.7 billion.

What assets are we, the British people, losing in exchange for that £1.7 billion? First we shall lose 10,000 route-miles of permanent way, compared with an important rail link 68 miles long. Then 2,500 stations will go, plus 90 light maintenance depots, 40,000 bridges, viaducts and tunnels and, Railtrack tells us, 9,000 level crossings, with other bits and pieces. All that is to raise £1.7 billion. Even then, as my hon. Friend the Member for Nottingham. North said, £1.4 billion of that will be transferred seamlessly to the private sector company, London and Continental, to build 68 miles of fast link.

The fast link should have been built years ago, in 1989–90. It is a national disgrace that it still has not been built. When I was on the Select Committee we went to France to see the TGV. It was a blur of light; we could not see the thing as it flashed across the plain in northern France. But over here in Kent there is a puffing Billy: it is a Eurostar train, but it wends its way to the channel portal at 40 or 50 mph. And that will continue until the fast link is built. It is a tragedy that the Government were so short-sighted—or rather, ideologically blinkered—that the line has not already been constructed.

Now for the great railway sell-off. The Opposition have calculated a total of £5.7 billion, and I think that that figure is right, but for the purposes of argument I shall concentrate on what the Government say the assets are worth. There is a big difference. All the commentators and journalists and economists without exception, including the Financial Times and all the business broadsheets, say that although the Opposition may have pitched the figure a bit high at £5.7 billion, no one believes the Government's subsidy figure, which I shall deal with in a moment, because it is too low.

Apart from the £1.4 billion, there are the King's Cross railway lands, with an existing use value of £5.8 million. When I asked the Minister a question, he said that the development value of those lands was £10.6 million. I am not a surveyor, but the King's Cross railway lands are within spitting distance of central London.

The Minister told me that the existing use value for the Stratford rail lands—they were valued as railway marshalling yards, although they would not really be worth anything for their existing use—was £15.2 million. He then told me that the development value of the Lands excluding those parts required for the CTRL"—[Official Report, 14 March 1996; Vol. 273, c. 721.] was £12.5 million. Pull the other leg.

Mr. Watts

Like the hon. Gentleman, I am not a surveyor, but the estimates of the development value of the land were made for British Rail for the purposes of its accounts. They are not my estimates, but professional valuations.

Mr. Prentice

Yes, those may have been the valuations prior to development, but it takes nothing more than common sense to see what will happen. There will be a new international station at Stratford, all the traffic coming in from East Anglia and the rest of eastern England will funnel into Stratford, and the adjacent railway lands are ripe for development. The British Rail surveyors should be out of a job if they value them at £12.5 million. We are not talking about one or two acres, but 240 acres, with the King's Cross and Stratford lands combined.

There are more depots too—for instance, Manchester Longsight. I do not know it personally. I have not visited it, as I have visited Stratford and King's Cross, but I have been told that the historic cost valuation was £5.9 million. No other valuation was given, just a historic cost valuation. So we do not know what that might be worth.

Then there is the Eurostar maintenance depot at North Pole in north London. The Government say that that is worth £77.5 million. Again, that is a historic cost value. I do not know when British Rail acquired that depot. It may have been a long time ago, or relatively recently. No other valuation was given. Again, the Government relied on a historic cost valuation.

My hon. Friend the Member for Nottingham, North mentioned the Eurostar fleet of trains. The loss of that is something that people should gag on. The fleet of 11 trains, each one weighing about 800 tonnes—a marvellous triumph of engineering—is being gifted to London and Continental. The Government say that it is worth £380 million. Yet the debt write-off alone for Eurostar trains was £1.3 billion.

Mr. Jacques Arnold

The hon. Gentleman is presenting a politician's judgment on the value of development land, as against the judgment of highly professional experts. He is also telling us that a politician's judgment of the value of carriages should be based not on their value but on the money spent on them. No business man would do that. The hon. Gentleman is making the fatal mistake that Labour politicians always make, especially when they are in government: they believe that politicians can carry out business better than business men. There is a very good example that he could look up—the Labour Government's attempt to set up the groundnut scheme.

Mr. Prentice

I should not have given way and allowed the hon. Gentleman to make that nonsensical intervention. We are talking about the valuation of public assets. As I told the Minister, every commentator who—unlike the hon. Member for Gravesham (Mr. Arnold)—knows anything about the subject, says that those public assets are being given away at a bargain basement price. [Interruption.] If the hon. Gentleman could contain himself for a second, I want to mention a few more public assets and tell the House the Government's valuation of them.

The new Waterloo international station has just been built. It is a marvellous beautiful station—the gateway to London. Apparently its value is £136 million. Then there is Ashford international station. All the work that has been done in Ashford in preparation for the new link—

Mr. Stevenson

That was all public money.

Mr. Prentice

Of course it was all public money; £41 million was spent.

Back in London, the Government tell us that the valuation of St. Pancras station, on existing use, is £3.7 million. Then there are some little dribs and drabs with which I shall not weary the House—the land at Kensington Olympia, the marshalling yards and the 650 properties along the line, all of which will be given to London and Continental.

If we add all those together, using the Government's own figures, the valuation amounts to £621 million-worth of assets, which are all to be gifted to London and Continental. If we add the £1.4 billion contribution, that makes more than £2 billion. Yet all those years ago, the entire line could have been constructed and kept in public ownership for less.

The whole affair has been an absolute disgrace. The Government say that it is a triumph, but people out there are not so stupid. They realise that valuable public assets such as Railtrack and the assets associated with the channel tunnel rail link are being handed over. If any other organisation were doing that, its managers would be behind bars, not sitting on the Front Bench. The sooner the Government are out of office, the better.

Mr. Chidgey

I listened to the hon. Member for Pendle (Mr. Prentice) with great interest. There is considerable public concern about the details of this transaction, and to some extent I share that concern. I refer hon. Members back to the amendment and to the implications that it might have for the contractual arrangements that the Government may or may not have entered into for the channel tunnel rail link. I hope to get some clarification on this from the Minister.

The amendment may block the progress of the channel tunnel rail link. If the Government have entered into a contract with London and Continental, and if progress is blocked, where would we stand? If the amendment is passed and the Government abandon the contract, will London and Continental—having negotiated or won a contract for the channel tunnel rail link against significant competition and having struck a deal—be able to make a claim? Would we find ourselves faced with yet another huge bill to be met by the public purse?

6 pm

The key question is: under the terms of the contract that has been struck with London and Continental, what assurance do the public have that there is no escape clause allowing the contractor to abandon the project before its completion? I am most concerned to ensure that there is no opportunity in the contract for London and Continental to decide that the project is no longer a valid financial proposition or that it cannot possibly complete the project without further access to, or drain on, public funds.

I am anxious to see the project go ahead. It is many years late, as been most eloquently stated by many hon. Members. One could argue long and hard about the money that has been lost because of the delays. I want to see the project completed because it is most important to the transport strategy of this country. I also want an assurance that there is no way, having struck this deal, that the contractor can walk away from the project and leave the public holding the purse strings and shelling out more cash to make it viable and complete.

Ms Glenda Jackson

My hon. Friend the Member for Pendle (Mr. Prentice) gave an almost depressingly graphic elucidation of just what the Government have stolen from the people of this country in handing over the building of the channel tunnel rail link to the designated undertaker. All hon. Members will welcome the fact that, at long last, a designated undertaker has been selected, and that there is a possibility that a high-speed rail link will be entered into.

Over the past few years, we have watched the travesty of the Government changing their mind on which route the link should take and how it should be financed. That vacillation impacted disastrously on all those who live on the previously proposed routes—in Kent, in east London and in north-west London.

As my hon. Friend the Member for Nottingham, North (Mr. Allen) said, this vital link for the nation could have been the nation's property years ago for a fraction of what it will cost us now, in both cash and kind. I will not repeat just how much the Government have stolen from the public purse. I wish to refer to the enormous amount of national assets—in both cash and kind—that are being handed over to the designated undertaker, and, as far as I know, we still have no absolute guarantee that the line will be built.

We welcome the line—we have argued for it for long time. The nation is in desperate need of such a line. During the debate on the previous two amendments, we heard of the requirement that the designated undertaker must acknowledge that the channel tunnel rail link is not for the exclusive benefit of London and the south-east—it is of vital importance to the nation. The Minister, in his response to my hon. Friends in relation to those amendments, made no mention of the fact that profits—if they are made by the designated undertaker over the running of the channel tunnel rail link—should be invested in improving the lines that are north of what will be the channel tunnel rail link.

The Minister mentioned the station at Gobowen—a station that I know well from my childhood—as having something to do with the creation of a rail network fit for the 21st century, which the channel tunnel rail link surely must be. That would have been almost laughable—if it had not been so sad.

The ease with which we are supposed to accept the possibility that mere marketing techniques and improvement in selling tickets could open up the rest of the country, its people, its products, its business and its facilities to the channel tunnel rail link is patently absurd. The only thing that will open up the rest of the country to the facilities of the channel tunnel rail link is modernising the west coast main line—and there should be a requirement on London and Continental to assist in the vital investment to improve that line so that the country can be opened up.

In Committee, we said that it was almost impossible to define the cost—not only financially, but emotionally—of the delays, the vacillations and the changes of mind that have sat over this project year after year. My hon. Friend the Member for Nottingham, North referred to this on the previous amendment.

Hon. Members have referred to the King's Cross lands. A previous scheme for the building of the channel tunnel rail link said that the London terminus should he at King's Cross. While that project was still in that curious limbo that Conservative Governments call planning, there was a scheme between the London borough of Camden, British Rail and other owners of the lands at the time to enter into a scheme to regenerate the area—it is in desperate need of regeneration.

The work that had been engaged in by British Rail, by Camden and by other local authorities in the area for the regeneration of the King's Cross land was thrown out of the window overnight. Links that had been made with interested businesses, with financial houses and with architects as to how the land could be regenerated were scrapped and dustbinned. It would be possible to work out how much that waste of a scheme cost—and it became meaningless overnight.

There is still a great need for regeneration in that area of London—regrettably, there is a great need for regeneration over the whole United Kingdom after 17 years of Conservative misrule. National treasures such as St. Pancras station and St. Pancras chambers—which was recently refurbished at a public cost of, I believe, £8 million; it now glows like a glorious rose on Euston road—could have played a vital and intrinsic role in the regeneration of this part of London, where it is desperately needed. They should not be handed over to London and Continental.

Unemployment in certain wards in that part of London is between 35 and 85 per cent. There is a vast preponderance of children under the age of five. Illness is infinitely higher in certain wards in that part of north-west London than in others.

If—as we are told—public money must be attracted, why should an investor be attracted to this project, to help in the regeneration of those parts of the King's Cross lands, when the Government have set the model that all one has to do is to wait? The Government have created the expectation that, because they cannot decide on a continuous plan, they will in effect decide to wash their hands of something that has become inordinately difficult—like a properly integrated public transport system and the construction of a channel tunnel rail link—and will declare, "Take it away from us. We can't handle this problem any more. Take all this money, take all these assets and tell us that you will, possibly, probably, hopefully, build us a line."

When the Secretary of State announced to the House that a designated undertaker had at last been selected, I asked him what guarantees there were that the British taxpayer was getting a good deal, and he replied—I paraphrase his response—that there would be an explanatory memorandum of the contracts with London and Continental. I understand that no one in the House is privileged to see the contracts in any detail or to discuss them, on grounds of commercial confidentiality. It is a curious commercial enterprise that is clouded in mystery in one direction.

It has been accepted, has it not, that the sharing of risk is essential in projects of so large a scale and so extraordinary a nature. We should surely look to a Government to protect the taxpayer from risk, so that—as has been said—should London and Continental not succeed in attracting the funds it claims it can to make the line a reality, not a dream, we do not suddenly find that the public purse is expected to fill up any possible hole.

There is an interesting definition of sharing of risks in the explanatory memorandum of the contract with London and Continental Railways. Paragraph 13 says: The possible events to which the sharing of responsibility is to apply include the following: changes in law or taxation which discriminate … against London and Continental Railways". It is an interesting possibility, is it not, that London and Continental would appear, by that sentence, to be given fiscal powers. I should have thought that changes in law or taxation were the responsibility of Government—indeed, of the House—but apparently there is a sharing of responsibility.

Other possible events to which the sharing of responsibility is to apply are "war, rebellion and revolution". It is unlikely that London and Continental would be responsible for war, rebellion and revolution; regrettably, those are far too often the responsibility of Governments. As we know, the female former leader of the Conservative party was responsible for taking this country to war twice. I would hardly have called that a genuine shared responsibility.

We are asked to believe that the vast amounts of public assets being handed to London and Continental are necessary to get the line built, which may be the case—I do not know how well or how toughly London and Continental argued its case—but that the handing over of those assets will guarantee for us, as a nation, that the line will be built.

We all agree that the line needs to be built. It is a scandal and a disgrace that there was such a long period between the time when it was first considered possible to build the line and its construction. It is doubly disgraceful that what we could have had a few years ago for £1.8 billion may have cost, on completion, more than £8 billion, and that none of the profits will be returned to the public sector.

Unquestionably, the line needs to be built, but there is doubt that it ever will be built. Let us hope that those doubts prove unfounded. Indisputably, the country, given the exchange of assets and cash, is not getting the best of all possible deals.

Mr. Peter Brooke (City of London and Westminster, South)

I should declare what I believe to be an interest, as chairman of the Conference on Training in Architectural Conservation, which has a professional interest in St. Pancras chambers, allowed by the appropriate authorities. I heard the hon. Member for Hampstead and Highgate (Ms Jackson) describe it as "shining like a … rose". I am conscious that a considerable amount has been spent on making it appropriately watertight, but she would be exaggerating if she suggested that it had been returned to its former glory, for which considerable subsequent investment is still needed. The hazard of language such as she used is, I fear, that it devalues the effectiveness of some of the other things she said.

6.15 pm
Mr. Watts

My right hon. Friend the Member for City of London and Westminster, South (Mr. Brooke) is right. Although money has been spent on restoring the exterior of the St. Pancras buildings to a very attractive condition, anyone who has visited the interior knows that a great deal more money needs to be spent to bring that into any—

Ms Glenda Jackson

The point that I was making was clearly about the exterior of the building. Despite the right hon. Member for City of London and Westminster, South (Mr. Brooke), when I make comparison now between the exterior colour of that building and the colour that I knew it to be only a few years ago, I stand firm in my belief that it now glows like a rose in Euston road.

Mr. Watts

The hon. Lady has made her own point.

I congratulate the hon. Member for Eastleigh (Mr. Chidgey) on getting to the nub of the problem with the new clause. The new clause goes to the heart of the channel tunnel rail link competition. It would prevent the transfer of European Passenger Services Ltd. and other assets to London and Continental Railways, and in so doing would wreck the basis on which the project is proceeding.

The transfer of those assets was assumed in the promoters' bid for Government support, and the removal of that part of the equation would lead to a corresponding and massive increase in the taxpayer's contribution. It would seriously damage the viability of the project, and we would return to the position that we were in in 1993, before the competition was launched.

Opposition Members appear to have overlooked the fact that the majority of the assets being transferred are an integral part of what will be the high-speed link, and are necessary to its proper operation.

Mr. Allen

Will the Minister give way?

Mr. Watts

I would rather make a little more progress.

Mr. Allen

On that point?

Mr. Watts

I give way.

Mr. Allen

The Minister rightly said that there may well be a stronger argument about assets that are integral to the project, but many of the 240 acres of King's Cross lands surely cannot be put in that arena. My hon. Friend the Member for Pendle (Mr. Prentice) was chided from the Conservative Benches for saying that the £126 million valuation—

Mr. Gordon Prentice

No—£12.6 million.

Mr. Allen

I thank my hon. Friend. He was chided for saying that a valuation of £12.6 million was rather modest. A scheme was proposed in the 1980s to take over those lands and develop them, and even in those days it was a £5 billion scheme. Now the Government are giving away those assets for £12 million.

Mr. Watts

In fact, the hon. Member for Pendle (Mr. Prentice) mentioned several operational assets. He mentioned North Pole depot, the Longsight depot at Manchester, and Waterloo international station. Those could have substantial development values only if they were not used for the purposes of a railway.

The hon. Gentleman sounded like the most rampant of property speculators. All these matters were debated in considerable detail in Standing Committee. I gathered then—and it has been confirmed today—that Labour Members are not entirely at one with our proposal for funding the project. Nonetheless, our approach to the competition produced high-calibre bidders, and we reached an extremely good deal with London and Continental Railways that minimises the taxpayer's contribution and maximises the benefits of the channel tunnel rail link to the nation.

I shall deal first with the cash contribution of £1.4 billion from the public sector. A substantial part of that sum is a charge for the domestic capacity that we have secured in order to run domestic commuter services. The money will be paid over a long period, and it may result in corresponding revenue to the Government from train operators that operate services on the link. It is not an up-front contribution: it will be spread over a number of years when the link is in operation.

I can answer in part the question from the hon. Member for Eastleigh, who asked how we will guarantee that the line will be built and that the promoter will not walk away from the project. Not a single penny of the lump sum capital contribution will be paid until the promoter has incurred 68 per cent. of the project's outturn cost. If the promoter must put up so much of his own money before receiving a single penny of taxpayers' money, he will need to have very good reasons for not seeing it through.

Mr. Stevenson

The Minister has said that the £1.4 billion will be paid over a long period. Will he say whether that is an absolute figure? In other words, is there a ceiling on the figure, so that it cannot be increased over time?

Mr. Watts

The hon. Member for Hampstead and Highgate (Ms Jackson) referred to the summary of the terms of the development agreement and certain events that would trigger a sharing of costs, or allow costs to fall on the Government. Clearly, that could lead to an increase over and above the £1.4 billion.

For example, if a Government—for some perverse reason, as the hon. Lady mentioned—introduced tax provisions that discriminated against the company, it would give rise to a further payment by way of compensation. With that one proviso, I can confirm that the amounts in the development agreement are the sums that will be paid over a considerable period.

Mr. Allen

I thank the Minister for giving way again. Unfortunately, my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) is not allowed to look at the contracts and examine the real details. After applying pressure in Committee, we were permitted to see the explanatory memorandum; but we have no insight into what appears in the contracts. The explanatory memorandum says that there could be changes in the amounts payable if there are changes to the project ordered by the Government or if there are variations in the draft agreement. Virtually any changes would trigger increased payments.

I refer the Minister also to the fact that the £1.4 billion payment is calculated at net present value. When it comes to be paid, the real amount will be nearer to £2 billion. Ministers are bandying about £600 million as if it were nothing.

Mr. Watts

There is nothing unusual in expressing contributions to a capital project—particularly a long-running project—in net present value. We have evaluated the benefits of the project in the same terms.

I must correct the hon. Gentleman on another point. The explanatory memorandum was produced not because of pressure applied in the Standing Committee. In announcing his decision, my right hon. Friend the Secretary of State said that he would place in the Library the explanatory memorandum summarising the main terms of the agreement.

Some very odd figures have been bandied about this afternoon. We heard the old chestnut about delivering an alternative scheme for either £1 billion or £1.9 billion—Opposition Members have advanced two different figures. That is a very different scheme, which would have pursued a highly unpopular route into London through the south, and involved much more tunnelling.

Hon. Members have argued persistently and effectively for the construction of a station at Stratford. Stratford would not have been part of the project unless it took a very odd route through the south of London, around to the east and then back to the terminal. Therefore, all the regeneration benefits that have been rightly applauded would not have been part of the scheme.

As to the value attributed to the assets to be transferred, the hon. Member for Pendle quoted correctly from the information that I have supplied to him through answers to parliamentary questions. The assets transferred amount to £600 million in accounts values, or a little more if one substitutes for existing use value the development value of the two areas of railway land.

The more fanciful evaluations that Opposition Members have tried to place upon the development value of the land depend upon one other important factor: that someone has completed the new high-speed link and that it is operating successfully. Unless that occurs, the value cannot be enhanced further. Even if one were to try to estimate that value, figures of £3 billion, £5 billion and so on are completely fanciful.

Mr. Gordon Prentice

rose—

Mr. Watts

No, I shall not give way, as I have done so a number of times. We have had a fairly lengthy debate, and I wish to reply to it as speedily as possible.

As I explained in reply to expressions of concern about the development of services to the north of London, a critical part of the strategy is that the promoter should take control of Eurostar services at the earliest possible date and promote them. The hon. Member for Hampstead and Highgate sneered at the idea that better marketing could increase passenger numbers. I think that she will find that marketing is crucial.

Ms Glenda Jackson

rose—

Mr. Watts

No, I shall not give way again; I have given way to the hon. Lady twice already. She should not be insulted by my quoting her words back at her. The hon. Lady must wait and see whether marketing improves the performance of the service.

Hon. Members must understand that, if the new clause were added to the Bill, it would wreck the whole project. It would involve either a massive additional sum by way of taxpayer subsidy or the total abandonment of the project as a joint public sector-private sector scheme. The alternative is probably one that Opposition Members would favour—a scheme funded entirely out of the taxpayers' pockets.

We know that one hon. Lady would be very happy to pay more taxes in order to fund that scheme or any others, but I suspect that her view is not universally shared by her colleagues. The new clause must be recognised as a wrecking attempt and nothing else. I invite right hon. and hon. Members to treat it accordingly, and to vote it down.

Question put, That the clause be read a Second time:—

The House divided: Ayes 76, Noes 175.

Division No. 111] [18.28 pm
AYES
Allen, Graham Jones, Jon Owen (Cardiff C)
Anderson, Ms Janet (Ros'dale) Jones, Lynne (B'ham S O)
Banks, Tony (Newham NW) Kaufman, Rt Hon Gerald
Barnes, Harry Keen, Alan
Barron, Kevin Khabra, Piara S
Battle, John Kilfoyle, Peter
Bayley, Hugh Livingstone, Ken
Benn, Rt Hon Tony Lloyd, Tony (Stretford)
Bermingham, Gerald McCartney, Ian
Berry, Roger McKelvey, William
Brown, N (N'c'tle upon Tyne E) McWilliam, John
Byers, Stephen Martlew, Eric
Cann, Jamie Michael, Alun
Clapham, Michael Miller, Andrew
Clwyd, Mrs Ann Morgan, Rhodri
Cook, Frank (Stockton N) Morris, Rt Hon John (Aberavon)
Corbett, Robin Mullin, Chris
Corston, Jean Pike, Peter L
Dewar, Donald Powell, Ray (Ogmore)
Dowd, Jim Prentice, Gordon (Pendle)
Fatchett, Derek Robinson, Geoffrey (Co'try NW)
Flynn, Paul Roche, Mrs Barbara
Galbraith, Sam Ruddock, Joan
Galloway, George Sedgemore, Brian
Gapes, Mike Short, Clare
George, Bruce Skinner, Dennis
Godman, Dr Norman A Smith, Chris (Isl'ton S & F'sbury)
Godsiff, Roger Soley, Clive
Griffiths, Win (Bridgend) Spearing, Nigel
Hanson, David Spellar, John
Heppell, John Stevenson, George
Hill, Keith (Streatham) Taylor, Mrs Ann (Dewsbury)
Hodge, Margaret Timms, Stephen
Hogg, Norman (Cumbernauld) Wicks, Malcolm
Hoyle, Doug Wise, Audrey
Hughes, Kevin (Doncaster N) Young, David (Bolton SE)
Hughes, Robert (Aberdeen N)
Ingram, Adam Tellers for the Ayes:
Jackson, Glenda (H'stead) Mrs. Bridget Prentice and
Jenkins, Brian (S. E Staff) Mr. Robert Ainsworth.
NOES
Ainsworth, Peter (East Surrey) Cash, William
Aitken, Rt Hon Jonathan Chapman, Sir Sydney
Amess, David Churchill, Mr
Ancram, Rt Hon Michael Clappison, James
Arbuthnot, James Clarke, Rt Hon Kenneth (Ru'clif)
Arnold, Jacques (Gravesham) Coe, Sebastian
Ashby, David Colvin, Michael
Atkinson, Peter (Hexham) Congdon, David
Baker, Rt Hon Kenneth (Mole V) Conway, Derek
Banks, Robert (Harrogate) Coombs, Anthony (Wyre For'st)
Bates, Michael Coombs, Simon (Swindon)
Bellingham, Henry Cormack, Sir Patrick
Beresford, Sir Paul Currie, Mrs Edwina (S D'by'ire)
Bonsor, Sir Nicholas Deva, Nirj Joseph
Booth, Hartley Dicks, Terry
Bowden, Sir Andrew Douglas-Hamilton, Lord James
Bowis, John Dover, Den
Boyson, Rt Hon Sir Rhodes Duncan, Alan
Brandreth, Gyles Duncan Smith, Iain
Brazier, Julian Dunn, Bob
Bright, Sir Graham Evans, David (Welwyn Hatfield)
Brooke, Rt Hon Peter Evans, Jonathan (Brecon)
Brown, M (Brigg & Cl'thorpes) Evans, Nigel (Ribble Valley)
Bruce, Ian (South Dorset) Evans, Roger (Monmouth)
Burt, Alistair Evennett, David
Butterfill, John Faber, David
Carlisle, John (Luton North) Fabricant, Michael
Carrington, Matthew Forman, Nigel
Carttiss, Michael Forth, Eric
Fox, Dr Liam (Woodspring) Mitchell, Andrew (Gedling)
Fox, Rt Hon Sir Marcus (Shipley) Mitchell, Sir David (NW Hants)
Freeman, Rt Hon Roger Moate, Sir Roger
French, Douglas Monro, Rt Hon Sir Hector
Fry, Sir Peter Needham, Rt Hon Richard
Gale, Roger Neubert, Sir Michael
Gardiner, Sir George Newton, Rt Hon Tony
Garnier, Edward Nicholls, Patrick
Gill, Christopher Nicholson, David (Taunton)
Gillan, Cheryl Norris, Steve
Goodlad, Rt Hon Alastair Oppenheim, Phillip
Goodson-Wickes, Dr Charles Ottaway, Richard
Gorman, Mrs Teresa Page, Richard
Greenway, Harry (Ealing N) Paice, James
Greenway, John (Ryedale) Peacock, Mrs Elizabeth
Griffiths, Peter (Portsmouth, N) Porter, Barry (Wirral S)
Hamilton, Neil (Tatton) Porter, David (Waveney)
Hampson, Dr Keith Portillo, Rt Hon Michael
Hanley, Rt Hon Jeremy Robathan, Andrew
Hannam, Sir John Rowe, Andrew (Mid Kent)
Hargreaves, Andrew Sackville, Tom
Harris, David Sainsbury, Rt Hon Sir Timothy
Hawkins, Nick Scott, Rt Hon Sir Nicholas
Hawksley, Warren Shaw, Sir Giles (Pudsey)
Heald, Oliver Smith, Tim (Beaconsfield)
Heathcoat-Amory, Rt Hon David Spicer, Sir Michael (S Worcs)
Hendry, Charles Spink, Dr Robert
Higgins, Rt Hon Sir Terence Squire, Robin (Hornchurch)
Hill, James (Southampton Test) Stanley, Rt Hon Sir John
Horam, John Steen, Anthony
Hordem, Rt Hon Sir Peter Stem, Michael
Hughes, Robert G (Harrow W) Streeter, Gary
Hunter, Andrew Sumberg, David
Jenkin, Bernard Sweeney, Walter
Jessel, Toby Sykes, John
Johnson Smith, Sir Geoffrey Taylor, Ian (Esher)
Jones, Gwilym (Cardiff N) Taylor, John M (Solihull)
King, Rt Hon Tom Temple-Morris, Peter
Knapman, Roger Thompson, Patrick (Norwich N)
Knight, Rt Hon Greg (Derby N) Townsend, Cyril D (Bexl'yh'th)
Knight, Dame Jill (Bir'm E'st'n) Twinn, Dr Ian
Lait, Mrs Jacqui Vaughan, Sir Gerard
Lamont, Rt Hon Norman Viggers, Peter
Lawrence, Sir Ivan Walker, Bill (N Tayside)
Legg, Barry Waller, Gary
Leigh, Edward Ward, John
Lester, Sir James (Broxtowe) Waterson, Nigel
Lidington, David Watts, John
Lloyd, Rt Hon Sir Peter (Fareham) Whittingdale, John
Luff, Peter Widdecombe, Ann
MacKay, Andrew Wiggin, Sir Jerry
Maclean, Rt Hon David Winterton, Mrs Ann (Congleton)
Madel, Sir David Winterton, Nicholas (Macc'fld)
Maitland, Lady Olga Wood, Timothy
Malone, Gerald Yeo, Tim
Mans, Keith Young, Rt Hon Sir George
Marshall, John (Hendon S)
Marshall, Sir Michael (Arundel) Tellers for the Noes:
Mates, Michael Mr. Patrick McLoughlin
Mayhew, Rt Hon Sir Patrick and
Merchant, Piers Mr. Simon Burns.

Question accordingly negatived.

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