CHANNEL TUNNEL (INITIAL FINANCE) BILL

HL Deb 13 November 1973 vol 346 cc593-634

4.13 p.m.

Second Reading debate resumed.

VISCOUNT SIMON

My Lords, I have to return your Lordships to the problems of the Channel Tunnel, and after the recent exchanges I do so with an even heavier heart than when I first came into this Chamber. When we last debated this matter, on a Motion for Papers by the noble Lord, Lord Orr-Ewing, I think it was generally agreed that we had not got sufficient information at that time in May, or sufficient estimates, to form a proper judgment as to whether or not this was a sound project. During that debate, the noble Lord, Lord Sandford, who was speaking for the Government, promised us that further opportunities for debate would be provided before any commitments were made. "Further opportunities", my Lords—in the plural. I suppose this is it, but this debate arises on the Second Reading of a Money Bill and there will be no means for your Lordships to express your views on this issue. So for the second time we shall discuss the matter, but there will be no certainty as to what the views of your Lordships' House are about this project. If I were a malevolent person (if I may borrow the word) I might wonder whether the Government think that if they were to have a vote in this House they would be outvoted. I do not know whether that is so, but at any rate the fact is that we shall have no opportunity of recording our decision.

The noble Baroness, Lady Young, when she winds up the debate, may say that there will be a further debate on the great hybrid Bill when it comes forward and that in strict fact no commitments have been entered into. That may be technically correct, even though we learn that an agreement is to be signed with the French Government this week. But I think it is clear that the Government have decided to go ahead—indeed the noble Baroness said as much in her introduction—and if one studies the terms so far outlined it is fairly clear that by 1975, when Phase 2 comes to an end, the cost of withdrawal will be very heavy indeed and I can see the arguments that will be put forward by the proponents of the tunnel, that really at this stage we cannot go back. So I feel that we have not really been given the opportunities that we were promised for further debate before the Government virtually committed themselves to go forward.

I still feel, as was said several times in the debate in May, that this decision is being rushed. The noble Lord, Lord Greenwood of Rossendale, pointed out that we have not even seen the Bill as it came out of another place. I did not myself realise that Amendments were tabled, and we do not know officially whether those Amendments were adopted or not. In fact I do not know quite how we managed to give the Bill a First Reading, but I suppose somebody had seen it. Why is this decision being rushed? When it was discussed in May, a suggestion was made that if a decision was put off any longer the whole of the present financial structure would collapse. I know that it took a long time to build up this structure, but I feel that it must indeed be fragile if the position is that a delay of six months, or even a year, would cause it to collapse. Great industrial corporations study capital investments of this magnitude for a long time and if they have any doubts at all about the desirability of going ahead they do not think twice about postponing them. It would be ironic if the Government having insisted on a decision now, when the Promoters go to the market they find that it is almost impossible to raise the money with rates of interest where they are to-day.

I suggest that the real reason—and it is quite an honourable reason—why the Government are pressing is that they made an agreement with the French Government some time ago in regard to a timetable. I believe that both Governments estimated that the necessary studies could be completed by, perhaps, early this year, so that there would be time to examine and digest them, and, as often happens when elaborate studies are undertaken, they simply took longer than was expected. If only Her Majesty's Government, as soon as that became apparent, had gone to the French Government and said, "We are not going to have enough information to decide by July; probably we shall not have enough to decide by November—why don't we put the whole thing off for six months or 12 months?", I cannot believe that the French Government would not at least have been prepared to consider that suggestion.

My Lords, if I may turn to the Bill, I recognise that as it is a Money Bill we have no right to amend it, but I believe we are entitled to a proper explanation of what is involved. I hope so. I would ask the noble Baroness whether, when she comes to reply, she will explain the figures again because they have puzzled me, quite frankly; and what she said this afternoon has not removed my puzzlement. In May it was estimated that the cost of Phase II would be £27 million. We are now told that it will be £30 million. That is a fairly substantial increase over a period of five months, but we know, unfortunately, the sort of climate in which we are living. We must accept that.

It was also said that, of that £27 million, the equity shareholders would provide 30 per cent. That was actually the £8 million the noble Baroness said they are now going to raise. Thus, although the cost has gone up, the share of the equity shareholders has gone down from 30 per cent. to some rather lower percentage. But in the Bill, the Government have included a contingent liability of £5 million. I can quite understand that the Government, in seeking a Bill, want to cover all probabilities, but such experience as I have had of large capital contracts leads me to believe that putting in large contingencies is a very dangerous thing to do. It is surprising how often, if one puts in a contingency margin (in this case of £5 million on top of £30 million), one finds that the contingency gets spent. I see that possibly there may be some difficulties of Government accounting in keeping to a much tighter estimate and having to come, if necessary, in sackcloth and ashes later on to say, "It has cost a little more". Even with these facts, I still do not understand why the Bill authorises the Minister to advance £30 million. I know that in fact half of whatever is advanced is recovered, and the actual amount on which we are at risk is £15 million, or, if it runs to £35 million, E17½ million. But where is the equity capital? Has not that to be withdrawn? We have not got to advance the money for the equity capital.

The noble Baroness spoke of refinancing the guaranteed loans in Phase 1. I confess that I am not enough of a financier to understand why that is necessary. If the loans have been made and guaranteed, there they stand, and I do not understand why it is necessary to refinance them. I suppose the suggestion is that the cost of refinancing is added on to the liability that arises from this Bill. What about the interest? We are guaranteeing the interest as well as the capital, and at least during the period of construction that guarantee is bound to be called on because there is no revenue out of which the interest can be paid. So it seems to me that the figures in the Bill are very difficult to relate to the facts set out in the White Paper, and I hope that the noble Baroness will be able to help us later. This is not our business in this your Lordships' House, but I hope that it is in order to seek enlightenment.

My Lords, in the course of the previous debate it was said on several occasions —and I think the noble Baroness almost repeated it to-day—that there was no likelihood of the guarantees being called upon and therefore, in effect, the taxpayer was not at risk. I agree with the noble Lord, Lord Greenwood of Rossendale, when he said that if in fact there was no risk, it would not have been necessary to seek a guarantee. We were told that it was necessary because certain foreign institutions were not permitted to invest in matters of this kind without a Government guarantee, and also, very properly, that the result of the guarantee would be to get a lower rate of interest. But I wonder whether we can really feel so sure, in the most uncertain conditions that face us, that there will be no call on these guarantees. In particular, as I have mentioned, the guarantee of interest during the construction period must be called on. Later on, if the venture proves profitable, we can recover it; but that may be quite a long time away.

I have one other question on finance. The noble Baroness said that the latest figures showed an estimated return of 17 per cent. on the capital investment, including, I think she said, the return on the new rail link. I was delighted to hear that, but also rather surprised. If a new rail link built at present-day prices can produce a return of 17 per cent., what on earth is happening to the rest of British Rail?

I now turn for a moment to the project itself, which we are allowed to debate to-day. Here I must declare a very minimal interest in a small company now operating a ferry service across the English Channel, so far to the West that I do not think we are likely to be affected by the Tunnel, when it is built. But there are two points to which I would draw attention in the hope that they may lead to further discussion before we get the final scheme—because that is what we are going to get. The first point is about the car terminal at Cheriton. The noble Earl, Lord Amherst, powerfully advocated on May 2 that the aim must be to provide through-rail services from internal points in this country to internal points on the Continent. Since then there has been very wide public disapproval of this submerged car ferry concept. I would suggest to your Lordships that since that time a new factor has come to light—perhaps not a new factor, but one to which we have been alerted; namely, the possibility of a reduction in oil supplies and the almost certainty of increased oil and petrol prices. If there are still people in the 1980s, as I hope there will be, who can afford to go abroad for their holidays, I cannot conceive that if they find the price of petrol has gone up, as my noble friend Lord Stokes suggested, to something like £1 a gallon, they will not prefer their car to be carried by train as far into the Continent and as near their holiday area as possible. This seems to me to be a strong case for developing the through car-sleeper services from central points in the country to Milan, Munich, or to wherever one can take them, rather than having cars pouring down the roads through Kent to transfer into a tunnel at Cheriton and come out at the other end at Sangatte. Incidentally, the changed position in regard to petrol supplies may well have falsified many of the estimates made about the amount of traffic of this kind that will be obtained. But let us leave that for the moment.

My Lords, my second point on the project refers to the rail link to London. It is clearly sensible for a single rail link to be built, at least initially, to the Continental loading gauge, but why to London? At present, because the Continental trains run from Victoria people who want to go to the Continent by train come to London and then leave it again. Now that we have an opportunity of looking at the matter afresh, why do we repeat this mistake? Why do we make thousands of people come to London for the sole purpose of getting out of it? London is one of the most congested parts of the country. I wonder whether British Rail and the Government have looked—I hope they have—at alternative sites outside London. It is said they looked at alternative sites in London, but have they looked at alternative sites outside London; for instance, somewhere near Reading, which would be very well placed and where the rail link would not be much longer than the rail link to London? Reading is well served by rail and by road—not so very well by road, but it is just off the M.4. It seems to me that if one did that then people taking their cars abroad do not clutter up London; even people going abroad by train do not clutter up London. I know there will be opportunities to discuss this matter elsewhere, but I hope that the Government anti British Rail, and indeed the promoters of the Tunnel, will think of these points.

I have only one more thing to say and that is about timing. I agree with the noble Lord, Lord Greenwood of Rossendale, that one could hardly think of a worse time to undertake this project, but I am equally aware that with a big capital investment of this kind one has to look forward in planning and one cannot always choose the right time to do it. At the same time, I feel that the Government, as I am afraid I have sometimes felt in the past, are rather insensitive to public opinion, that at a time when they are having to cut back public investment in many areas of direct importance to the people in this country, and particularly the less well-to-do, they should, as it were, in the same breath go ahead with this tremendous investment. And what advantage does it bring? If we are to believe the Prime Minister—and it is nice to believe him sometimes—the problem we are up against to-day is not to sell what we produce but to produce what we can sell. The Channel Tunnel will not produce anything. It may marginally assist the selling side; but then we are told that is not the pressure at the present time. We on these Benches and on this side of the House perhaps do not care very much if the Government make themselves more unpopular; but we do care deeply, and I know noble Lords opposite care deeply, for the people of this country. It is terrible that they are having to tighten their belts and do without things they badly need while the Government at this moment use our over-pressed resources for this project.

4.34 p.m.

LORD DAVIES OF LEEK

My Lords, it is a pleasure to follow the noble Viscount in his constructive, careful and qualifying analysis of this project, which has been thrust upon the country at a moment when, as my noble friend on the Front Bench indicated, economically and generally we have never been faced with so many difficulties. I look at this project from the point of view of one who has objected to it from its inception and from the narrow point of view, because I am hoping we shall have a debate later on the Finance Bill. By virtue of the Constitution we are limited in the activities we can pursue today, and it would be wrong to try to take any action, but I deprecate the way in which this Bill has been rushed through Parliament. Parliament is losing its powers. I hope the noble Baroness will contradict me if I am wrong but we were promised in this Green Paper 18 studies. At the end of September we had had two, and we have not had the complete studies now which would enable us quietly at home, or wherever we work, to look in depth into this project.

What is more, an element in Parliament begins to think that one is unpatriotic if one questions this. I remember the inception of Concorde. One was regarded as "knocking" the nation if one dared to ask questions about its viability. Now some pompous Parliamentarians take the same view over the Tunnel. We want to analyse why they take that view, and what is happening. Multi-national firms are now in a position where they threaten Parliament or leaders of Parliament; they will take them to the Hague Court or to the Common Market if they do not fit in with the multi-nationals. Companies now have more power. They are much more subtle. They do not make pompous noises, but their power is greater than that of Parliaments. I worry. Since the 1967 Act, which made it essential for companies to show their political donations, it is interesting to see that, despite all the shouting, there are 167 companies which up to last year gave the Conservative Party £632,086–companies in which all sorts of Members of Parliament may have interests. All these companies say, when one approaches the directors or any of the people associated with them, that they are completely non-political. This of course is sheer rubbish. The element of pressure in private business and in private enterprise is greater today than ever in the history of the British democratic system, and it is growing so powerful that it can dictate to Parliaments.

The Conservative philosophy is changing. It has made a U-turn and it has discovered a complete new approach to enterprise. It has discovered the theory of privatising the profits and socialising the losses. If we take any great schemes, like the Concorde, we see that the taxpayer pays for the research and the profit goes to the private firms. I will illustrate this a little later with the Tunnel. Take nuclear energy. I do not know whether noble Lords are aware that the General Electric Company now have the right to produce nuclear reactors. They are the only ones that can produce them. We socialise the losses, and we "privatise" the profits. For the research, some £500 million or more is paid by the British taxpayer. It is time some form of Committee or Commission looked into this spreading formula or "privatizing" profits and socialising losses of modern national enterprises.

Another political philosophical thought in relation to projects as big as the Channel Tunnel that is worth remembering is that we are unable to change the direction, because the problem to-day is not the problem of capitalism or communism, but the problem of the breakdown of industrialism. It is nothing to do with the "isms" or "warms" of communism or capitalism. Industrialism is breaking down. And here is a project foisted on the public. We have not enough postmen—we are 9,000 short in London; not enough engine drivers, Tube drivers; not enough miners to cut coal. But suddenly the Government are going to divert energy and wealth into a project like this at a most inappropriate period in the history of this country. The last sentence of the Explanatory Memorandum to this Bill is completely irrelevant. We are told that it will not affect manpower in the Civil Service. How much of the Tunnel the Civil Service is going to build I do not know. What does that phrase mean? It is just blinding us with verbosity.

The whole of industrial activity to-day is faced not with the machinations of the capitalist, Communists, or Labour, as such, but with the idolisation of growth for growth's sake. The tycoons behind the Tunnel will look at this project and will make lovely speeches at banquets about the growth that is now going on; but this growth is cancerous. It needs controlling, because there are only so many people who are able to keep that growth under control. What happens? Scores and scores of industrial projects are neglected, or losing money, because they have been over-ambitious, and this is one of them.

It is interesting to note in the case of steel that the old owners were not so keen when they had good compensation, but the Government have directed the British Steel Corporation to sell off some of its interests to private capital. British Steel should have taken an interest in the Tunnel, or in a link. A bridge would have been a much more comprehensive link, if you want any link at all, than the Tunnel. Professor Baker and others at the Imperial College of Science have appealed to Parliament, to the Ministry of the Environment and to Ministers for sensible replies; I have not seen any sensible replies. These are people who know what they are talking about. I attended a session and a whole day's discussion at Surrey University where we had engineers from all over the world discussing the possibilities of a bridge and a tunnel; and whether they were for a tunnel or a bridge the one thing about which there was general agreement, as the noble Viscount illustrated, was that this issue should be thought out in depth. That is why, when we were promised 18 studies in this Green Paper, I was prepared to spend my time trying to understand them; but no Member of Parliament has had the chance of studying these in depth.

The Tunnel now dominates the scene, and certain things have not been agreed. For instance, the final diameter of the Tunnel has not been agreed. The amount of money has been agreed, but when the physical dimensions, the trigonometry and the geometry, have not been agreed, how can you agree on the capital costs? How can you agree on the profit and loss of the Tunnel? This has not yet been agreed upon. We were promised studies of this subject in depth. The sponsors made certain assumptions, and they are in these White Papers. The sponsors were arrogant enough to tell a group of our Members here in the Moses Room (the right name for it). I went in, and they were very kindly and gentlemanly in their approach. When I quietly asked, "This is not enough. How is Parliament going to make up its mind?", they let drop a beautiful phrase. They said, "The officials have all the information that is necessary to get on with the Tunnel." That is the attitude to Parliament. I am not concerned that the officials should know, I am concerned that the representatives of the people should know, and that Parliament should have the chance of turning it over and talking about it. Who are these officials who know all this? The document showing Her Majesty's Ministers and servants shows that three officials deal with the problem of the Tunnel. I am not prepared for Parliament to accept the decision of three officials. Correct me if many more have been working on it; but if they have been, why have we not had the 18 studies we were supposed to have?

The Channel Tunnel Association, after much study, pointed out that the sponsors' assumptions were challenged from the beginning. The frequency, speed, reliability and safety of the service, and the capital and operating costs and pricing, have been questioned by the noble Viscount. Judging by the present overcrowded world and the shortage of people willing to work in transport, this official recommendation that there will be a two and a half minute frequency of service and a 60-minute journey through the Tunnel is absolute rubbish. A two and a half minute frequency and a 60-minute journey through the Tunnel is being pumped into us. Here I quote: The main interest of the sponsors of the Channel Tunnel lies not in running it"— let your Lordships remember this— but in building it and in handling the related banking operations where these are officially guaranteed. This has been admitted by the chairman of the Rio Tinto Company, Sir Val Duncan, in his annual report of May 16, 1973. It is natural that the sponsoring consortium would promise the Governments concerned a generous share of any forecast of profits after 1980, because they make their profits in the building. If anybody doubts this, this was pointed out to the Ministry in a report from the Channel Tunnel Opposition Association, but we did not get much change. The Government have dodged the process of an outside expert inquiry where all witnesses could be cross-examined. That is due to the formula of the Hybrid Bill.

I went to another meeting upstairs, and a number of people mumbled almost incoherently some explanations that nobody at the back of the room could hear. We had the room for one hour, and they mumbled on and on. There were people outside waiting to come in, and that was the end of that meeting about the Channel Tunnel, and nobody could ask a question. They shrugged their shoulders, and said, "We have explained to the poor mugs who came in", and out we went, no better informed than when we went in. The whole matter has been a sidestepping of the Parliamentary process and a mockery. The interests of the British taxpayer are being ignored.

We are digging a hole under Big Ben. If it escalates by £1 million more than they said in the short time that they are digging a hole to take a few cars, God help us on the estimates for the Channel Tunnel! An inquiry should have been held. This House could have been presented with an analysis of the Japanese tunnel, 33.6 miles long, the Seikan tunnel. We could have discussed the project of the bridge over the Bosphorus. As things are at the moment it would not have hurt us to take another year over this matter, and we could have appointed a Parliamentary Select Committee to go into the problem in depth with the sponsors and report to Parliament.

The other matter is the rail link. Any tinpot little builder who wants to build three houses has to get permission from the planning people and the county council, but here we talk with absolute certainty about their building a rail link right into the centre of London, including a tunnel, and that is going to be an expense on top of the estimate given for the Tunnel. How long will the legal cases take? If I were a lawyer I know that I should make a lot of money out of this project. If Lord Davies of Leek owns about three acres of the land, he is going to hold out as long as possible. How quickly do they think that they are going to get a rail link? All these rosy pictures are given to Parliament. It is wrong. I can expand that example. The rail link and tunnel combined estimate, £1,096 million in January, 1973, has gone up already. The Channel Tunnel opposition people consider that there is already £150 million to be added to that estimate, if the Tunnel is all that good, why is it not funded by private enterprise completely? If it is all that wonderful, why should the British taxpayer, on top of Maplin, on top of Concorde and on top of the other enterprises, socialise the losses and "privatise" the profits?

Page 20 of this document gives another example that should be taken into account. In the past three years 215 people have lost their lives travelling through tunnels. We have not had a report on the viability of this Tunnel so far as accidents are concerned. Can anyone prove that a saboteur could not do more damage to a tunnel than to a bridge? If you are on a bridge you may fall into the water but at least you stand a chance. You cannot be deader than dead in a tunnel. The amazing thing is that Parliament has been so gullible. No wonder Sir Philip Sydney said just before he died: The only disadvantage of an honest heart is credulity. I consider this to be the most credulous Parliament that we have ever had. It should be called "The Credulous Parliament". This project is one of the most airy-fairy projects for any nation to accept at this moment in history.

4.52 p.m.

LORD ORR-EWING

My Lords, we always enjoy the robust, very Welsh speeches of the noble Lord, Lord Davies of Leek. I think he uses figures rather vaguely. He tells us that the travelling time in the Tunnel will be 60 minutes. In fact, it is going to be 35 minutes at the start, reducing markedly as the advanced passenger train service gets faster. Of course that is only a two-to-one error. The noble Lord went on to say that we could not possibly afford this financial load. The load in the Bill is £9 million of the company's own money in the year 1974 and £6 million of the company's own money in 1975. It seems strange that, spread over two years, we cannot afford to allow someone else to use that sum of money at a time when the miners have just turned down a pay offer amounting to an increase of £46 million—and that is going to be public money as against private money. It illustrates that the noble Lord is prejudiced against the Tunnel and is not really looking at the facts.

I was very interested in the speech of the noble Lord, Lord Greenwood. I remember the responsible position that he held in a Labour Government. I wondered exactly what excuse he would have for turning a somersault this time. He said that he was a strong supporter—I suppose when he was a member of the Government and when his very good friend Mrs. Barbara Castle negotiated the agreement with the French to start to build the Tunnel—but that now: "I am an implacable opponent". He has got into the habit—

LORD GREENWOOD OF ROSSENDALE

My Lords, I said that I was not an implacable opponent, even now.

LORD ORR-EWING

My Lords, he was a strong supporter but is not now an implacable opponent. Is that what the noble Lord says: not now an implacable opponent; although he is against it? He turned a somersault on the Common Market and he was a staunch member of that Cabinet. He turned against industrial relations and legislation on prices and incomes policies. I suppose he found it easier the fourth time round to turn a somersault on the Channel Tunnel. I did not find his reasons convincing, but I will enlarge on that later.

I think that in thise debate people (certainly so in the House of Commons last week) are less worried about the environmental objections. Naturally, there is anxiety, but these issues seem to be less dominant than when we discussed this matter in the summer. The three M.P.s most closely concerned are the M.P. for Ashford, Mr. Deedes; the M.R for Folkestone, Mr. Albert Costain and the M.P. for Dover, Mr. Peter Rees. In their speeches, though they had some reservations, they felt broadly that the Tunnel was on balance a benefit rather than a disadvantage to the environment of Kent.

The figures that my noble friend gave when she introduced the debate are one of the causes. If you can divert to rail from the year 1980, no less than one quarter of a million heavy lorries from the Kentish roads to the Tunnel and if, in the year 1990, you can divert half a million lorries, you are making some impact, bringing about some alleviation of the natural wear and tear and environmental damage that this huge amount of traffic which at present runs to the ports at present is creating in Kent. Perhaps noble Lords saw the "Panorama" programme in July when the Chairman of the Kent County Council, Mr. Robin Leigh Pemberton, said: I think it can help us environmentally if we get the right sort of safeguards that the country has. It can also help us economically although it is going to mean changes economically. But fundamentally the environmentalists have got no positive alternative to solving this problem of the Channel Tunnel going through the county. Traffic is going to grow, whatever happens. I think that on balance the environmentalists have now come to realise that it is probably slightly less worrying if there is a Tunnel.

I have looked at the report of the South-East Road Construction Unit, a part of the D.O.E. which deals with this. It showed that the M.20 is going to be built, anyway. I thought it interesting that only 11 per cent. of the traffic going down the M.20 would be going to the Tunnel. The other 89 per cent. would be going to other places. This means that some 2 million vehicles a year will be aiming for the Tunnel against a total of 18 million going elsewhere.

My Lords, I turn next to this question of the drain on resources. [he noble Lord who opened the debate for the Opposition and the noble Lord, Lord Davies of Leek, and also the noble Viscount, Lord Simon, made points on this. In this Bill we are discussing Phase 2, £30 million, shared beween the two nations. The United Kingdom private expenditure in 1974 will be £9 million; in 1975, £6 million. The number of men employed during this phase is likely to be 100–and if we go on, if it is successful and we go to the next phase and the complete construction of the Tunnel, is it envisaged that at no time will the total number of men employed at any one moment be more than between 2,000 and a maximum of 3,000.

The noble Lord who opened the debate for the Opposition was a Minister of Housing. Does he remember how many people were employed in housing? He kept saying that "this load"—a hundred men at the moment and, at peak, 2,000 to 3,000–was going to hold back housing, hospitals and a whole string of other things. Does he realise that 900,000 men are employed (these figures are in the Divest of Statistics for July, 1973) in civil construction at this moment and another 420,000 men are employed on house construction, making a total of 1.32 million men. We are asking here for 100 now and later a peak of about 2,000. Has he not rather over-stated the case when he says that houses and hospitals are going to be held up because of this?

VISCOUNT SIMON: My Lords, the noble Lord will forgive me if I probably did not make my point clearly. I take his figures as correct. The point is that the Government have said that they are going to cut back on public expenditure and at the same time they are initiating this project. It is that which I think will strike people who do not understand it as well as the noble Lord. Lord Orr-Ewing, as a rather damaging decision.

LORD ORR-EWING

My Lords, I am grateful to the noble Viscount for his intervention. As I remember it, the Statement made in another place was that the public expenditure increase in real terms would be held to a 2 per cent. increase for next year and the year after. This is not a cut-back; this is holding the increase down to 2 per cent. So I do not think that it is serious. I concede, of course, that in addition to the Tunnel and the terminal something like £145 million is to be spent on the railways. Therefore I have been looking to see whether this is a big extra load for British Rail. The facts are that in the year 1973 they are spending £140 million in a single year on capital equipment and construction electrification and the like. The project to the White City will peak at about £35 million, so that it is a small percentage of the annual expenditure at current rates. So, my Lords, whether you look at the load on civil building, whether you look at it in terms of the number of men or of the load on the railway capital construction programme, the figures are very small indeed.

It has been suggested that we are going to divert cement from valuable housing. Here the figures are equally convincing. Only 1 per cent. of our annual consumption of cement will go to the Tunnel during the period of construction, and that is over a period of only five years. With regard to aggregate, in Kent there are enough sources of aggregate close to the end of the Tunnel so that there will be no difficulty in getting the necessary aggregate.

LORD DAVIES OF LEEK

My Lords, I apologise for interrupting the noble Lord, and of course I accept what he is saying. I want to point out that the cost/benefit study was made by the accountants who also act for the Channel Tunnel interests and for Rio Tinto Zinc. They were the people who gave the Department of the Environment this cost/benefit study. I believe that an independent study should have been made.

LORD ORR-EWING

My Lords, I will come to that later in my speech.

The noble Lord suggested that we abandon the Tunnel, even at this late stage and go for a bridge. Surely he has not looked closely at this. A bridge would be at least twice the price he is complaining about, and it would have no greater capacity than a tunnel. It would not provide an all-weather solution. There would be times when high winds would slow down or stop the traffic on a bridge. We have this on some bridges now, like the one across the Severn. There would be hazards to shipping; it would necessitate an international agreement for all ships using that busy Channel thoroughfare. Lastly—this is very important—the basic research on some of the steel alloys which would be needed for a bridge has not yet been done, so we should be going into an area of unknown or not proven technology. On all those grounds I do not think that his solution makes sense.

LORD GREENWOOD OF ROSSENDALE

My Lords, if the noble Lord will forgive me for interrupting him, may I say that this Bill is to pay for the research which is continuing because, in the case of the Tunnel too, it is quite unproven. When I spoke of a bridge I said that if it was ultimately decided that a fixed link was necessary a bridge would have many attractions.

LORD ORR-EWING

My Lords, I do not think that the noble Lord, Lord Greenwood of Rossendale, has looked at the White Paper very thoroughly. It makes absolutely clear that known and proven technologies are being used in the boring of this tunnel. In fact I think that the basic borimg machine was conceived something like 50 years ago. It has been increasingly improved and is more reliable. And I do not think that anyone who studies the Report would think that there are advanced technologies in the Tunnel solution. I would say to the noble Lord that there might come a time when the Tunnel would be overloaded and we should want a bridge in addition, perhaps a rather longer link connecting France and Britain in a slightly different area. It might be an addition at the end of the century, but not an alternative now.

I turn now, my Lords, to the financial section. May I make clear again, as it does not seem to be understood, that this is not Government money. It is true that there is a Government guarantee behind 90 per cent. of the money. But surely, many of us have children. I have four sons. As they have grown up there have come times when they have bought a car, or perhaps something less ambitious. To do this they undertook under a hire-purchase agreement to make certain repayments. When they were under 21 I was needed to stand as a guarantor. But it was never my money. I was the guarantor should something go wrong, and that is the position of the Government on the Channel Tunnel scheme. If something goes wrong they stand behind. If the companies are unable to service the loan, the Government stand behind. I am sure that if this simple illustration is understood it will be better understood that this is not Government money which is involved.

The other point is that if the receipts from the Tunnel are not as great as is expected it will be the companies who will take the main knock. Payments to the companies are totally eliminated before the Government's guarantees are called on at all. In winding up for the official Opposition in another place Mr. Mulley said that the bulk of the profits would go to private enterprise. My Lords, that is not true. If you study Annex 8 of the Government's White Paper in depth you will see what are the facts. In Phase 2 where the cost is £30 million, £8 million comes directly from the companies—£4 million from the French companies and £4 million from the British—and £22 million is raised in loans by the companies from the source where they can best get the money. There is a Government guarantee but no Government money. If things go reasonably well, it is expected that in 1981 the gross receipts will be £128 million. The operating costs will be £17 million. The debt servicing, a very heavy figure, will be £68.6 million. The French and British companies, between them, will share £22.4 million and the French and British Governments, between them, will share £19.6 million. So at that stage, in the very first year of full operation the profits, if there are any, will be shared one for one.

By 1983, only two years later, there will be £26 million shared between the United Kingdom and French companies, and £47 million shared between the Governments. So by then the Governments will be gaining in profits almost two to one. By 1990, £45 million will be shared between the companies and £197 million will be shared between the Governments. So the Governments are taking £4 for every £1 that goes to the companies. By the year 2000 the ratio will be £90 million to the companies and £647 million to the Governments, a ratio of one to seven. If I had any criticism at all, it would be that I think the taxpayer is doing extremely well, and in some ways I am surprised that the companies which have so limited a share in the profits after risking their own money on this venture. My Lords, please remember, too, that after 50 years the Tunnel companies have no rights what-soever. Not only does the Tunnel become the Government's property but all the profits come to the taxpayer. So in return for a guarantee which should not call for any money at all the Government are getting a long-term investment which should amount to a tremendous value to this country and to the taxpayer.

For those who say that we cannot afford the annual loan, the men, or the materials and other resources, I think I have shown that they represent only a drop in the ocean when compared with other investment programmes. For those who say that we cannot afford Concorde, Maplin and the Tunnel together (I think that was the theme of the noble Lords, Lord Davies of Leek and Lord Greenwood of Rossendale) I would point out that the time scales are totally different. Concorde was started in 1963 and all the development will be phasing out at the end of the 1970s, unless we go for another mark; Maplin will not be started for some while; the Tunnel will be started straight away. They are also geographically spaced. Lastly, totally different manpower is used for building the Concorde at Bristol than will be used for constructing the Channel Tunnel.

What is this inferiority complex that we have developed which makes us say that we cannot undertake these ventures? Sometimes I despair. When one travels to France one sees that they are building an ambitious new Paris airport at Boissy. It is an immense airport, costing hundreds of millions of pounds. They have agreed to share half the cost of Concorde and the Channel Tunnel. The French are undertaking these huge developments in the South of France, and a nuclear capability and the Force de Frappe, and a host of other things. They do not squeal; they get on with the job.

My Lords, I believe that this is a coherent, viable, and rational plan. I believe that it would be a great aid to commercial and leisure traffic. I believe it would be of great importance to British Rail. I hope the noble Lord, Lord Champion, who is to wind up, and who has great experience, will expand on that. The people of Kent recognise that on balance, Kent with a tunnel will be better than a Kent without. The tunnel will link Britain with Western Europe, with whom our destiny lies. Let the companies risk their own money, their reputations and their judgment, and get on with the job.

5.12 p.m.

BARONESS STOCKS

My Lords, whenever the question of a Channel Tunnel is discussed, much can be said about the extraordinary vulnerability of such a tunnel from the activities of Irish terrorists, Arab terrorists, or strikers. That is a subject I shall not discuss. What I am going to discuss are the economics of the project, but I shall do it very briefly. My noble friend Lord Greenwood referred to another partnership project, the Concorde. That may be a matter of national prestige for both Governments, but I do not think anybody now regards it as an economic proposition. On the other hand, the Channel Tunnel is, from the point of view of the French Government, an economic proposition of some importance. They are anxious to develop North-East France. We are not anxious to develop South-East England. Far from it! I do not, for a moment, suppose that Kent will be the better for what happens if we have a Channel Tunnel. That is what we must remember. The French want to develop North-East France which includes the part of Calais which is not a very attractive area—a rundown area I am told. We have no reason for wishing to develop South-East England, and I hope we shall not. That is the chief point that I wish to make in opposition to this scheme.

There is one other point I would raise, and it is the question of where the rail terminal of the Tunnel should emerge from the ground. It might be at the Surrey Docks, or it might be at the White City in North Kensington. Apparently the favourite is the White City in North Kensington. That is an area which is virtually desirable, for the development of housing in North Kensington has been more or less immobilised because of the doubt as to its future with regard to the Channel Tunnel. I think that that doubt should he resolved as quickly as possible by dropping the whole horrible project.

5.15 p.m.

LORD VERNON

My Lords, unlike most noble Lords opposite who have spoken, I have no doubt whatever about the wisdom of constructing the Tunnel at the present time. Anyone who believes as fervently as I do in the importance of European unity and integration—and I believe it more with each day that passes—must surely favour a project such as this, which will so dramatically increase communication between this country and the Continent. Indeed, I wish it had been built 10 years ago. I also think it is in a completely different category to that of Maplin and Concorde.

My second reason for supporting the Tunnel is environmental. I strongly favour the development of rail transport at the expense of road transport—and the Tunnel should give a shot in the arm to British Railways. But on the extent of that shot in the arm is where I part company with the Government. In my view, my Lords, the Government have dismissed far too summarily the case for a rail-only tunnel. I listened to the noble Baroness, Lady Young, and I am bound to say that, even as she went into this aspect a little, I was totally unconvinced by her argument. Those of us who advocate such a tunnel are told that we are living in the last century. It is not we, but the Government, who are living in the last century. They have failed to take account of the increasing public revolt against pollution and congestion from road traffic; of the likely extinction of world oil supplies; of the increased price of petrol, mentioned by my noble friend, Lord Simon; and the exciting technological possibilities being opened up in the field of rail transport.

The Minister for Transport, arguing in another place against the rail-only tunnel, seemed to rely largely on the fact that a shuttle-service tunnel will be far more profitable. The noble Baroness endorsed his remarks this afternoon—I believe she said that a rail-only tunnel would cost more in money, resources, and environmental damage. My answer to that is that where the environment is concerned a project such as this cannot be measured in terms of money only, because in drawing up a balance sheet—and exactly the same applies where motorways are concerned—no figure is ever included for environmental damage, loss of agricultural land, and so on. These types of balance sheets tend to be quite misleading. But even on the figures given by the Channel Tunnel Company—an operating figure of £48 million and net receipts of £0.5 million in 1981 with a rail-only tunnel compared with an operating profit of £95 million, and net receipts of £26 million with a shuttle service—certain important factors appear to have been omitted. For example, the profit is gained largely at the expense of the existing ferry service. No account has been taken of the boost which a rail-only tunnel would give to the existing and admirable motorail service of British Railways, or of the additional freight which would be attracted to the railways if no shuttle service existed.

The noble Baroness has suggested that there would have to be extra ferry capacity if the shuttle service did not exist, or at least that that traffic would all be carried by the ferry service. But would it? Is it not more likely that most of the expected increase would in fact go to the railways, although there would still be enough to keep the ferries in business? Moreover, the freight traffic carried by ferry would continue to be distributed, as now, among the different ports, instead of all being siphoned through Kent and, on the Minister's own admission, considerably increasing traffic congestion there.

Then what of the environmental damage to Kent? My noble friend Lord Orr-Ewing said that he does not think there will be any. I think the noble Baroness said that she thought there would be more in environmental damage with a rail-only tunnel. The Government have admitted that problems will arise here. The French have no such problems, because the Pas de Calais, as we know, is a most unattractive area of France, and the French are in any case anxious to develop the Sangatte area. One has to be exceptionally naive to imagine that development in South-East Kent can be restricted in the way that the Government have suggested. The lure of the terminal area at Cheriton will be absolutely irresistible, and the resulting damage to rural Kent incalculable. As. M. de Sainte Verant, the General Manager of the French Tunnel Company, put it graphically in an interview on September 1: The Tunnel entrance will already have its own activity and will require a certain number of employees of different categories. All around and further away there will be an activity which depends no longer on us and of which we do not want to speak. That was certainly very frank.

LORD ORR-EWING

My Lords, I should not wish the noble Lord to misunderstand me. What I said was that I thought, on balance, there would be less damage to the environment with the Tunnel than there would be without the Tunnel. I quite concede that there is bound to be great disturbance to South-East Kent as a result of the vast number of lorries and people travelling to and from the Continent through that area.

LORD VERNON

My Lords, I take the noble Lord's point. But I am dealing with a rail-only tunnel, and I say that there will be even less with a rail-only tunnel. My Lords, there are other aspects of the shuttle service that are disquieting. There is the very important question of whether lorry capacity on the shuttle trains can be adequate to meet demand, bearing in mind that there is a maximum to the number of lorries that can be carried on one train and a maximum to the number of lorry trains which can be run through the Tunnel without disrupting the inter-city passenger, freight and motorail services. It is, I think, significant that the Channel Tunnel Company, in the special note that they prepared on the rail-only tunnel, conceded that as the Tunnel approaches full capacity problems in this area will arise. And that is not so far off; we are talking about 1990.

We are told that there is going to be no discrimination between road and rail, but one cannot help being sceptical about that; there is already such obvious discrimination against road transport. To take one example, rail users have to pay as part of their fare for the cost of track, whereas road users do not. What happens when the Channel Tunnel Company approaches full capacity? Are the regular train services going to be cut to cater for the freight shuttle traffic? I think we are entitled to know, because that time is not far ahead. I hope the noble Baroness will be able to say something on that point.

My Lords, I am the last person to want to hold up construction of the Tunnel. I want to see it built, and built quickly. But I believe that the concept of the shuttle service, a form of undersea ferry, is out of date and was more suitable for the 1950s and 1960s than for the 1980s and 1990s. It provides a tremendous incentive to road haulage at the very moment when we should be seeking to get heavy freight traffic—the dreaded juggernauts—off the roads and on to the railways. Modern railways are efficient; they are non-polluting and are relatively harmless to the environment. What we want as we enter the 21st century is not a limitless quantity of motorways, which serve only to generate more traffic, but a first-class railway system, staffed by first-class personnel, getting first-class rates of pay—a service which is no longer the Cinderella of the public services. I believe that a rail-only tunnel would serve in some measure to bring this about. I urge the Government (I know they have taken a decision to go ahead with this Tunnel) not to rule out, but to discuss with the French, even at this late hour, a different type of tunnel from that envisaged in this Bill.

5.25 p.m.

LORD SEGAL

My Lords, I feel it would be quite wrong at this late hour to prolong our debate unduly, but this is one of those rare occasions, if I may be allowed to say so, when I should like to join issue with my noble friend Lady Stocks. She asked: how are we able to prevent the development of South-East England in an unsatisfactory manner once the Channel Tunnel is completed? But what is the alternative? Supposing there is no Channel Tunnel, that will not prevent the enormous increase in cross-Channel traffic. The congestion in Kent and the Garden of England is bound to be far worse than if part of this traffic can be syphoned away from our ports of Dover and Folkestone. The Channel Tunnel provides us with an opportunity of creating a terminal which will not necessarily be the final terminal, but which may be extended, as my noble friend says, to Kensington and beyond: and I hope that it will be extended to Kensington, and beyond Kensington, to provide rail traffic to our provincial areas, to Scotland and to Wales. What is most important is that should any ulterior development result in South-East England as a result of the completion of the Channel Tunnel, it should be a controlled development. It should be strictly regulated, so that the minimum amount of harm is done to the environment of a part of England which I think we all agree is one of the most beautiful in the country and which should be preserved as much as possible.

My Lords, if I followed the noble Lord, Lord Vernon, aright, I feel that possibly a road tunnel, or a road bridge, or even another rail tunnel may be one of the questions which will face us in the distant future. But this Channel Tunnel is now an immediate project. It is the cheapest alternative means of cross-Channel transit now available, and it is the soonest likely to be completed. I think that by now all the arguments for and against the Channel Tunnel have been deployed in both Houses over and over again, almost ad nauseam. Everyone is completely familiar with these arguments, and it only remains now, I hope, to get on with the job as quickly as possible. I should like to congratulate the Government on giving the go-ahead to the scheme, which may in time prove to be one of the most constructive and imaginative projects achieved during this century. Further delays will obviously only add to the cost. So far from being a waste of public money, it will, I am convinced, prove to be a thoroughly sound capital investment. While inflation continues at its present rate, the sooner construction is begun the better. Even the high estimated cost of the project may well, in 20 years' time, prove to have been cheap at the price. Future generations may have good reason to approve of our foresight and imagination in proceeding with this work with the minimum of delay.

As one who always enjoys travelling to the Continent by sea, with or without a car, I should nevertheless object to being compelled to do so; and if we are going to try to avoid congestion in South-East England, are we going to compel motorists, willy-nilly, to travel by a longer sea route? Of course there is no question of compulsion, and those who are anxious to get across to the Continent as quickly as possible are bound to go in the direction of South-East England. We cannot prevent their doing that, so the sooner we go ahead and complete the Channel Tunnel the better it will be for the avoidance of congestion in South-East England. We ought to be given some alternative mode of transport and I, like so many others, welcome the prospect of a through journey to the Continent by train at any time of the year, free from the hazards of the weather. At least the Channel Tunnel will liberate us from the risk of storms, gales and fogs. The traffic to the Continent must inevitably be faced with an alarming rate of growth even before the Tunnel is completed, and certainly over the remainder of this century and beyond. It will be essential to ensure that such growth is balanced growth by providing an acceptable alternative to the crossing by sea or air.

A whole new prospect will open up for British Railways and it should give them at last an opportunity of coming into their own. I only hope that through train services will be developed far beyond London so as to prevent part of the congestion which always builds up during the summer months. There are many provincial centres and holidays grounds far afield from London, and they should be enabled to receive their share of the added prosperity which we all hope the Channel Tunnel will bring to this country. In this connection I hope that motor-rail charges, enabling visitors to travel not only to London but much further afield, will be kept reasonably low, so as to enable visitors to this country to do something to relieve the congestion which always threatens our capital during the holiday months. I think we should do well now, at the end of our long debates on this subject, to speed on the building of the Tunnel and to complete it with all possible speed, even before the scheduled date of 1980. I would ask the noble Baroness, when she comes to reply, what degree of priority will be given to the construction of the Channel Tunnel and what are the prospects of its being completed even before the scheduled date.

5.33 p.m.

LORD FERRIER

My Lords, I should like to add my voice to those of the noble Viscount, Lord Simon, and the noble Lord, Lord Greenwood of Rossendale, and to put forward a rather plaintive grumble about the way this debate has been forced upon the House to-day in the way that it has. Because of a long-standing engagement, I was unfortunately unable to take part in the debate which was held last May, and I was lulled into some sense of lassitude by statements in Hansard (they have been referred to this afternoon by the noble Viscount) that we should have further opportunities of discussing this matter before it reached the stage it has now reached—because, after all, our debate to-day is merely beating the air and we have no power to stop the momentum, minimal though it is, which has been put behind the business.

I also agree with what the noble Lord, Lord Greenwood, said about not having any access to what was said in another place last night. I must apologise to your Lordships for not having put my name down to speak; but in fact I arrived from Scotland only at half-past two, and although I rushed to see what the plans were, the Bill was discussed in another place too late to appear in the OFFICIAL REPORT to-day. Be that as it may, it is perfectly clear from the short debate we have had that this House has considerable contributions to make to further deliberations on this matter. I myself have always felt that, among other considerations, Scotland's needs have not been sufficiently considered. The noble Lord, Lord Segal, said just now that there were advantages in a rail-only tunnel; and, of course, services could be extended further North. There could be massive numbers using an under-sea ferry in South-East England. My recollection goes back to the figures we have seen, and particularly to the technical details. The gauge problem could be a serious one if a rail-only tunnel is going to serve Scotland or any other place farther than the gauge suitable for the Tunnel can reach.

However, I am in absolute agreement with what the noble Baroness, Lady Stocks, said about these tunnels being very vulnerable. A tunnel is an absolute plum for a saboteur, and a bridge across the English Channel runs a very real risk of being severed, not only in war but also in peace. I have felt for sonic time—and I have taken some advice on this matter —that it is a pity that more research has not been done into the problems of rail ferries. Again, my mind goes to coastal ports situated further North on the East coasts of England and Scotland. Also, I regret that more research has not been done into the development of the hovercraft, which vessel, in massive dimensions, might offer for our goods a very real and flexible service across the North Sea.

LORD SEGAL

My Lords, would the noble Lord forgive me for interrupting? Would not the hovercraft, however developed, still be subject to the vagaries of the weather?

LORD FERRIER

Yes, my Lords, as ships are; but my information is that within a couple of decades the hovercraft may turn into an extremely seaworthy vessel with a very high carrying capacity.

I will not detain your Lordships further, but I should like just to repeat my moan about the way in which this debate has been landed upon us, and I would express the hope that before we start on these later stages this House will be given an adequate and proper opportunity to thresh the matter out in its own way.

LORD VERNON

My Lords, before the noble Lord sits down, may I point out that he mentioned the difficulties concerning the gauge in the case of a rail-only tunnel, but the plates provided in the White Paper by British Railways show, both for inter-city daytime services and an initial freight container network via the Channel Tunnel, services going right through to Glasgow.

LORD FERRIER

Freight container services, yes, my Lords; but I was speaking particularly of passenger stock such as sleeping cars.

5.39 p.m.

LORD COLERAINE

My Lords, I am grateful to your Lordships for allowing me to intervene for a very few minutes, despite the fact that I have not put my name down on the list of speakers. May I say first of all how very much I agree with what my noble friend Lord Vernon said about the Tunnel in relation to Europe. I am one of those who believe that to-day the whole future of Western civilisation is at stake, a future that can be saved only through a united Europe, and that a Channel Tunnel is an essential link and an essential part of the structure of a United Europe. I agree, too, with my noble friend that it would be preferable if it could be a rail only tunnel; and I agree with the noble Baroness, Lady Stocks, that it would be much more convenient if the entrance of the Tunnel could be in the North-East of England rather than the South-East, but unfortunately that is not possible.

The point I rise to make is quite different and one that I do not think has been made or, if it has, I have not heard it. If I make it now your Lordships may think it entirely fanciful. I have a recurrent nightmare: I think that to-day the Soviet Union can deploy in the North Atlantic a fleet of submarines many times the size of the fleet which was deployed against us in the last War. I can conceive, as I could not have conceived twenty years ago, a situation in which we might be blockaded by submarine warfare without any declaration of war. Provided that the Soviet Union did not make a direct attack upon Europe, without any assurance of support from outside—I am not an expert on defence; I know very little about it—I consider that the existence of a Channel Tunnel might be a most valuable reassurance to us at some time in the future. One has only to think of what is happening in the Middle East to-day and the oil blockade to see how vulnerable we are without any declaration of war. The Soviet submarine fleet is a potential threat of the same kind. I believe that the Channel Tunnel would in some measure be an insurance against that threat.

5.42 p.m.

LORD CHAMPION

My Lords, I am not going to follow the noble Lord, Lord Coleraine, in his fear, the possibility of which everybody must hold and think of from time to time. My only doubt about it is that if it actually occurred I cannot imagine its not being possible to find some weapon which would pierce the chalk above the Tunnel. But I do not want to enter into this aspect; it is not part of my consideration of this matter.

The noble Baroness, Lady Young, at the outset of this debate told us that this is a very limited measure, designed to authorise the provision of the necessary finance for Phase 2. The authorisation sets the limits beyond which the Government are not authorised to provide the guarantees mentioned in Clause 1 of the Bill. But the debate has ranged fairly widely over the whole project, and it is surely right that this should happen. Bills on Second Reading can be discussed in their widest aspects, and not only as to what is in the Bill, but what has been left out, and what is behind it. This has been taking place today.

It is not my task now to answer the various points raised in the debate. That task must fall to the noble Baroness, Lady Young, who I am sure will tackle it with her usual competence. From this Bench I am bound to say that we on this side have considerable doubts about the financial arrangements set out in the White Paper, despite all that the noble Baroness, Lady Young, said in her speech and all that the noble Lord, Lord Orr-Ewing, said in his remarks. Doubts have been expressed in various financial papers and journals, and certainly in the other place, as to the wisdom of the apparent generosity of the amount of income from the Tunnel to be allocated to private interests. My noble friend Lord Greenwood made this a telling part of his speech. To that aspect we shall undoubtedly return when the major hybrid Bill promised to Parliament for later this month comes to us for consideration. I think, too, there are questions to be asked and answered about the phrase, "Without discrimination between road and rail traffic", but not today so far as I am concerned.

When this matter was last discussed in this House, I said that I was a supporter of the idea of a better link with the rest of Europe. That remains my position, for nothing has happened in the meantime to change the view that I then held that the Tunnel might be a stepping stone—if that is the right phrase —towards travelling freely to and from the Continent of Europe without the restrictions of passports and visas. I mentioned in my last speech on this matter that this was Ernie Bevin's concept, a concept of being able to go down to somewhere and to cross to the Continent of Europe, and to do it freely without the restrictions that I have mentioned. That was Ernie Bevin's conception and I feel that is my conception of our relations, or what ought to be our relations, with the rest of this Continent of Europe, of which we are a part. While that is my basic position, I must admit that I am particularly interested in the project from the railway point of view. Although I was a railway man, and still in thought I suppose am a railway man, I hope I am also a transport man prepared to look at the wider aspects of transport. I cannot think wholly in these days in terms only of railways. Time after time when we have been discussing transport for Britain we have been told that the tragedy of our railways in relation to the carriage of freight is that we are a small country and that most of our freight movement is short-haul, hence the heavy lorries and the juggernauts that clutter up our roads to-day.

Keen though I am on the maintenance of our railway system, partly because I believe that eventually we shall more and more have to turn back to the railways for both freight and passenger traffic, in the short term there is no argument I can adduce which will provide a satisfactory answer to the short-haul argument in favour of the roads as against rail. But in the Channel Tunnel proposal there seems to be the unanswerable case, not only for their retention but also for a considerable expansion and modernisation of the railways. I believe that this lies here. As the Government's Green Paper of March last put it at paragraph 4.12: The Tunnel would give British Rail an opportunity to provide freight services over longer distances. Distances in this country are generally too short for the lower trunk haul costs by rail to outweigh the costs of transshipment for collection and delivery. I believe that statement to be incontrovertible and I also accept the concluding sentence of the same paragraph which says: Both types of service, by moderating the use of our roads by heavy lorries would make an appreciable contribution to the environment. I accept that as a contribution to the environment that we rightly consider in this whole connection. If we are to take full advantage of the Tunnel and the direct rail link with the Continent, clearly there will need to be a large capital investment in our railways.

I see that the September White Paper puts the estimated cost of a high quality rail link between London and the Tunnel portal at £120 million at 1973 prices, but I frankly do not think that that amount would be the end of the country's expenditure on providing the sort of railway system that could take the maximum advantage from the rail Tunnel. That would not be enough—just providing that link from London to the portal of the Tunnel.

My Lords, from time to time we have heard about rail proposals being submitted to the Government. If my understanding is correct, those proposals were apart from those in connection with the projected Tunnel link, and were designed to meet the existing internal situation; but I do not really know, because I have not had the advantage of seeing them. When the White Paper was being discussed in the other place on October 25, Mr. Rippon told the Commons, at column 1499, that the plan… for which many people have been pressing, will be laid before the House in November". I think it would have been an advantage to us to have that plan before us so that we could see the proposals in their entirety, because I cannot imagine that a plan prepared by the Railways for the Government was not a plan for Government assistance, either by loan or by grant. One wonders how far the proposals of British Rail are a part of a much wider plan—and I quote from the Sunday Times of the 4th of this month, which said: A massive plan to develop a high-speed inter-city railway network across the whole of Europe has been secretly approved by the International Union of Railways and is due to be announced in Florence later this month. By building 3.000 miles of completely new track (including the Channel Tunnel) and substantially modernising 8,450 miles. Europe's Railway Authorities (including British Rail) hope to launch the most ambitious project this century for adapting their services to modern needs and competing with the private car, lorry and aeroplane". That is indeed a great forward look by the Railways of Europe.

The general question which springs immediately to the mind in this connection is how soon will the Government be prepared to give the go-ahead to the high-quality rail link between the Tunnel portal and London, for a start. As I understand it, the initial construction of the Tunnel under Phase 2–that is the experimental stage—will end about the spring of 1975. To a large extent the go-ahead for the construction of the Tunnel itself will depend on the outcome of the experimental Phase 2; and if the railways are to wait until after 1975 before being told that they may go ahead with the construction of the Tunnel—London rail link, five years will be all too short a time, I think, to enable all the preparations and then the construction of all that is visualised in that link to be carried out. A glance at Plate 5 in the White Paper gives some idea what will be involved, and we have only to remember what is involved in the construction and completion of a motorway from the initial decision to construct it to see that the sooner a decision is firmly made the greater the likelihood that there will be a rail link coinciding with the Tunnel completion. I think my noble friend Lord Davies of Leek was absolutely right in his assertion that these things take a long time. Planning permission has to be sought, planning permission has to be given, lines have to be decided upon, and the general work has to be given out to the contractors. This is part of the story, my Lords, and it will be part of the story of the length of time taken to construct this link that we are talking about; namely, from the portal to the London terminal, the White City terminal.

My Lords, since we looked at the matter of this Tunnel in May last, another factor seems to me to have entered into the consideration of it, and that factor is the general consideration of fuel supplies in the light of the oil situation—a factor that makes the complete modernisation of the railway system the more urgent, and especially the electrification of the lines on which the traction is diesel, as against electricity. The sooner we face up to the fact that we are dependent upon diminishing oil supplies and that men will increasingly desert the mining industry, and the sooner we adopt a rational fuel policy adapted to our situation, the better. A rational fuel policy would involve, in my opinion, not only the production of the fuel but also its use and consumption by transport systems as one of its uses. Here I now come treading, Agag-like, rather delicately. Although my right honourable friends in the other place moved an Amendment on the White Paper to the effect that the Tunnel should be a rail-only Tunnel, without the roll-on/ roll-off capacity, I am bound to say that, while I believe that a rail-only Tunnel would be better than no Tunnel at all, to make it a rail-only Tunnel would in my opinion be a shocking waste of capital and a disastrous loss of income to the project.

I noted what the noble Lord, Lord Vernon, had to say, and of course I have carefully read all that has been said about this in the other place. But this is what I feel as a transport man looking at it with such expertise as I may happen to possess. What I am saying here in no way cuts across what I was saying about oil supplies, for I am certainly not of the opinion that the private car or the lorry will disappear, or be seriously diminished in numbers, before 1980, the expected date of the completion of the Tunnel. Indeed, all the forecasts are that they will continue to increase; for it seems to me that mankind is just hellbent on using up the world's resources at an ever-accelerating pace. That is no reason why we ought not to begin to make the necessary preparations for fuel conservation on our railways and in our electricity power stations.

My Lords, I end by saying that I cannot agree that this project is being rushed on us, for certainly in the 1960s successive Administrations agreed that the project was feasible; and since then there has been a careful examination of the means of carrying out this project. Although doubts have been expressed about much in the original Green Paper, and now in the White Paper, I am bound to say that I accept what the experts have to tell us in this matter, and I think this Tunnel should go forward. Although I have some doubts about the financial arrangements, I am bound to say that this Channel Tunnel is one project that I can welcome without the reservations that one has about Maplin and certainly about the continuation of the expenditure on the Concorde project.

5.59 p.m.

BARONESS YOUNG

My Lords, I said when introducing this finance Bill that I hoped that noble Lords would take the opportunity in the Second Reading debate to discuss not only the contents of the Bill but the wider issue of the Channel Tunnel itself. I therefore very much welcome the speeches that we have heard and the arguments that have been put forward. I should like to begin by thanking my noble friend Lord Orr-Ewing for what I thought was an extraordinarily helpful and constructive speech. He answered, I think, a great many of the detailed financial and environmental points that had been raised, and for that I am most grateful to him. I should also like to thank the noble Lord, Lord Segal, for what he said. He asked whether or not the Channel Tunnel could be built more quickly than in the timetable that was proposed. The answer to that question—and of course it is something that we should like to do—depends very much on what we discover in the course of the technical work we must do in Phase 2; this concerns the actual speed of the tunnelling machine. But there is no doubt that we shall do everything we can to press on with this particular project.

May I also thank my noble friend Lord Coleraine for his support, and for the very interesting point that he made about defence. The noble Lord, Lord Champion, made a number of very constructive and helpful comments, but I would first of all turn to the point that was made by the noble Lord, Lord Greenwood of Rossendale, and the noble Viscount, Lord Simon, about the question of Amendments that might have been made in another place. My understanding is that although Amendments were put down in the debate in another place in fact none was carried, so the Bill that has reached us is in fact the Bill that was introduced into the House of Commons.

Among other noble Lords, the noble Lord, Lord Davies of Leek, and the noble Lord, Lord Ferrier, have been very critical about the decision to introduce this Bill now. They said they felt they were being rushed into a decision and had not had an opportunity to read all the documents and studies that have been published. I am sorry that they should feel that there is any discourtesy to the House or that they are in any sense being rushed into a decision. We did have a debate on the Green Paper in May, and as I indicated at the beginning a great many studies have been published since then. I read carefully what the noble Lord, Lord Davies of Leek, said in the House last week, and I think he is under a misunderstanding about the number of documents that exist. I have looked into this matter very carefully and I can assure him that there are no documents of principle that have not been published. There are those that I listed at the beginning of my speech; there are the 20 full volumes which go with the economic study of the project, all of which are available, and I can assure him that there are no documents which have not been published which are pertinent to this debate. I was therefore very glad when the noble Lord, Lord Champion, was able to confirm that we have had plenty of time to study this matter.

Many noble Lords who have been in central government for longer than I have will know how long this discussion has been going on and will know the number of opportunities that there have been for debate; but should anybody be in any further doubt, this of course is not the end of the story. There will be the hybrid Bill which will be introduced before too long, which will set out the further details. The noble Lord, Lord Champion, asked about the rail link. I can assure him that British Railways have been asked to get on with the rail links as quickly as possible, and the design is in progress. A Private Bill is expected next year—that is to say, some time in 1974 or 1975–and all being well and with everything going according to plan, it is hoped that the actual building might start in 1976.

The main arguments about the Tunnel have centred on two major points—the economic arguments and the environmental arguments. If I may I will deal with them in that order. The noble Lord. Lord Greenwood of Rossendale, said that here we are embarking on a prestige project at a time when we should be making a great many economies. I think the difficulty about that argument is that it assumes that if the Channel Tunnel was not built all the other problems would immediately disappear, but in fact the Tunnel would be less costly in the medium term than would other alternatives. Also it is to be built by private money. It is true there is a Government guarantee but, as I think my noble friend Lord Orr-Ewing explained very carefully, this is not the same thing as Government money. It in fact frees resources for other purposes. There would be indeed little effect overall on the balance of payments, and it is thought that in the next few years there would be a small net inflow of foreign exchange. As I said, no public money is involved if the public project goes ahead as expected. The project is justified not simply by profitability alone but because it is a sensible use of resources, and we believe that it will bring environmental benefits.

VISCOUNT SIMON

Will the noble Baroness give way? My Lords, the amounts may be quite small, but surely it cannot be correct to say that no public money is involved, because the interest during this period of construction, when there is no revenue coming in, must be pledged by the Government as a guarantee.

BARONESS YOUNG

Yes, my Lords; but the point is that the Government will only be called upon to do that if the private market cannot make the necesary payments. It is a back-up, and I can assure him that this is not something which is going to be paid for with Government money. The noble Viscount, Lord Simon, asked why we needed to raise more money to underwrite the money that is guaranteed under Phase 1. The money was raised for Phase 1, but the fact is that that project might have ended at the end of Phase 1 and it therefore had to be renegotiated for Phase 2. That is why further Government guarantees are involved. The noble Viscount also asked me why Phase 2 costs had escalated. The increase in cost in Phase 2 is due partly to the delay in bringing this Bill in now, in November, instead of at the end of July, the date that was originally in mind, so that of course the extra increase comes with this delay. Also the decision to change the actual work very slightly increased costs in Phase 2. But it is thought that the increased cost will be more than phased by certain trading in Phase 3. These are very technical points, but I hope that the noble Viscount will accept my assurances.

I was also asked why there needed to be a Government guarantee at all. A great many reasons have been given for this, but I think it must be quite clear that a project which links Britain to the Continent and quite specifically links British and Continental railways must be a concern to Governments, because at the end of the day it will have to be operated by a public authority. Furthermore, there are great advantages in having a mixed public and private enterprise especially where, as here, we can ensure that the bulk of the profits come to the Government while in fact the main risk is being borne by private interests. I would have thought that noble Lords who were worried about this matter would recognise that the Government guarantee is our assurance that we will get the major share of the profit—indeed after 50 years all the profits—and it seems to me that in doing this we have struck a very good bargain.

Turning to the problems of the environment, I very much appreciate and understand the very real worries that have been expressed on this subject. I said that I thought it was a matter of balance, but I think we have all been agreed that there is everything to be said for trying to do something which should improve the railway system and in this case give an opportunity for more goods as well as cars to be carried by rail. The first question that I was asked, I think by the noble Viscount, Lord Simon, was whether or not through sleeping car services could be arranged. I would recommend him to read (if he has not already done so) the booklet put out by British Rail which explains very carefully their proposals. They, of course, are as keen as we are to improve their services, and that booklet shows that there will in fact be through sleeping car arrangements. I would also say to my noble friend Lord Ferrier, who raised this point and asked whether Scotland was to be cut off, that, on the contrary, it will be possible to put goods on the train at Glasgow and they will go right through the Channel Tunnel to Europe. There are also proposals by British Rail to link sleeping car services with Scotland as well. So, far from taking away from Scotland, I should have thought that Scotland is brought closer to Europe.

LORD FERRIER

My Lords, will the noble Baroness permit me to interrupt? It was the question of passenger stock that was worrying me, and I am glad to hear that it can be dealt with.

BARONESS YOUNG

My Lords, the noble Lord, Lord Vernon, raised the question of whether or not we should have a rail-only tunnel. I hoped that I had made clear in my opening remarks why we do not believe that this would be anything like as satisfactory as the proposals which include not only a rail tunnel but one which adds car ferries to it. There is no evidence to show that if it was a rail-only tunnel more goods would be carried by rail, whereas if there is a rail ferry service a great many heavy lorries can be taken off the road. He asked whether in fact there was discrimination. I would give him an assurance that no discrimination is built into the arrangements, and that there is no question of giving any kind of priority to ferry trains.

I was also asked why all this traffic is routed through London. The reason, of course, is that much of the traffic goes to London in any event, and the White City is connected to all the main rail lines. In this way there can be a direct connection with all the British railway services through the Tunnel and on to the Continent. Motor rail services will run to many other cities. The initial plans indicated in the White Paper will be extended.

The noble Lord, Lord Ferrier, also raised a point about the railway gauge. I would assure him, because there is some misunderstanding about it, that the gauge —that is, the distance between the rails —of British Railways is the same as that on the Continent. The troubles, as I understand it, arise because the rolling stock on the Continent is wider and it therefore cannot get through our tunnels. On the new railway line there will need to be a realignment of the distances between platforms and signals and a building up of tunnels. The same does not apply, of course, to British rolling stock which operates satisfactorily on Continental track.

LORD DAVIES OF LEEK

My Lords, I am grateful to the noble Baroness for giving way and I apologise for interrupting. But this is one of the points that were not brought out in the feasibility studies. Even the diameter of the tunnel, and the diameter of the tunnels that we have all the way through Britain, would have to be reorganised for this wonderful through system if, as with the juggernauts, we have to give in to the European Community on the size of vehicles.

BARONESS YOUNG

My Lords, I hope I have said enough to explain how I see the system working. It is always open for us at a later phase—and I think noble Lords spoke about this—to amend the British railway system so that it is in fact identical to the Continental system. What I am saying at the moment is that it will be possible for Continental traffic to come to London on this new railway line and it can then transfer on to British rolling stock.

THE EARL OF KINNOULL

My Lords, could the noble Baroness say what it would cost to amend the British railway system?

BARONESS YOUNG

I am sorry, my Lords; I do not have with me figures of that kind. I am not even sure that it has been costed, because that would be very far into the future. But so far as problems involving the railway line itself are concerned, noble Lords will have an opportunity to deal with them when the Private Bill on this new railway line is introduced into the House.

The noble Baroness, Lady Stocks, asked why the terminus was the White City and not the Surrey Docks. The White City is in fact, as I said earlier, connected to all the main lines for through trains throughout the country. It has two London Transport Underground lines and it is near a main road junction. It is in an area of roads and railways which, with all respect to what she said—and we very much appreciate her point about housing—would not be so easy to develop for housing. The fact is that Surrey Docks cannot take through trains and would have very few public transport facilities, and it is thought that it would cost considerably more. The fact is that it would not be possible to devise a scheme for the rail terminal which would not inhibit the complete redevelopment of the Surrey Docks for some other project. Also, I think it would spoil the great prospects that this area offers for the whole of London. I hope that the noble Baroness will accept that in this particular case those are very good reasons for the choice that we have made.

My Lords, I have been very grateful for the support that has been shown for this project. We appreciate that on a very big venture of this kind it is easy to have doubts and be concerned about a great many of the matters that arise in connection with it. This is a Money Bill and there will be yet another chance to debate the matter. I hope that I said enough at the beginning to show that it is possible to abandon it if something turns up which is quite unexpected and which we do not foresee. I believe that this is a very imaginative project. I think it is something which will bring not only great economic benefits to the country but real environmental gains. I have been in your Lordships' House long enough to know how many Members are interested in the future of the railways and what they may produce, and this is an opportunity to do something in that connection. I hope therefore that your Lordships will pass this initial Bill, a Money Bill, which enables us to go into Phase 2 and collect yet more information about this project which will help us to take the further decisions which are necessary.

On Question, Bill read 2^a; Committee negatived.

Then, Standing Order No. 44 having been dispensed with (pursuant to the Resolution of November 8, 1973), Bill read 3^a, and passed.

EARL ST. ALDWYN

My Lords, I beg to move, That the House do adjourn during pleasure for 15 minutes.

Moved accordingly, and, on Question, Motion agreed to.

House adjourned during pleasure.

House resumed.