HL Deb 27 January 1988 vol 492 cc696-714

7.41 p.m.

Lord Mountevans rose to ask Her Majesty's Government whether they propose to give financial assistance to British Rail to enable it and the regions of the United Kingdom to realise to the full any benefits of the opening of the Channel Tunnel.

The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

With your Lordships' consent I shall briefly explore the benefits which I believe would stem from the opening of the Channel Tunnel. Those benefits have been quantified in terms of traffic forecasts and British Rail has announced plans reflecting those forecasts. My feeling is that under present BR thinking and the legislative framework governing that thinking some of the benefits may not be realised. My reservations stem from doubts about British Rail's access to two resources: finance and time.

Perhaps I might deal first with the time resource. One cannot build, or even rebuild, a railway overnight. The last major line built in Britain, the Selby Cut-Off in Yorkshire, was conceived in 1974, authorised in 1979 and completed in 1983. The Stansted Airport link (only four miles) was first considered in 1979 but only authorised in 1986. That work only started last October, with perhaps some five years to go before its completion. Similarly, the Snow Hill project—a matter of reinstating a railway of a little over a half a mile long—has taken some five years.

Conception, planning, consultation and legislation all take time. That makes me wonder whether the time-scale given to British Rail in Section 40 of the Channel Tunnel Act, together with the three-and-a-half years left between December 1989 and the tunnel's opening date, is adequate.

Both the passenger and freight implications of the Channel Tunnel will prove to be of benefit to the regions. On the passenger side ease of access is paramount for the business and the leisure traveller. Through passenger trains, as well as those involving a break of journey in the City, will both contribute to an increase in out-of-London travel, not least as the perceived sea barrier between this country and Europe will in European eyes have been replaced by a land link.

On the freight side I foresee simpler, cheaper and quicker transportation contributing to an increase in trade with Europe, as will eventually I hope the single European market. I also believe that these enhancements will lead to an increase in inward investment in manufacturing industry in this country. That is a field in which Britain is in European terms the market leader. All those factors should lead to an increase in manufacturing jobs and, given the location of much of our manufacturing industry, should bring benefit to the regions. The maximisation of those benefits is to a certain extent dependent upon British Rail's ability, quite literally, to deliver the goods.

When considering Channel Tunnel traffic we have a wealth of forecasts provided by the project's promoters, by British Rail and by other interests such as Transport 2000 and the British Tourist Authority. It seems to me that British Rail's forecasts are most relevant, as these are the ones on which it is basing its plan. Its low forecast is for just under 13.5 million passenger journeys using the tunnel and through rail in 1993, the opening year of the tunnel; of these 13 per cent. would board or alight at Ashford, 70 per cent. would use London stations and 17 per cent. would travel to or from points beyond London. These latter two groups amount to 11.6 million journeys between Ashford and London, a large figure even if it is based on a low forecast and one whose size grows when re-expressed in terms of an additional 21 to 25 passenger trains each way each day being grafted onto Network SouthEast. Furthermore, there is freight traffic. BR projects an additional 3.5 million tonnes of freight each way each year. I understand that that will lead to an additional 21 freight trains per day.

British Rail's plans are prepared against the background of these figures and of the legislative framework whereby Section 40 of the Channel Tunnel Act lays a duty upon BR to prepare proposals to increase the volume of passenger and freight traffic between the regions and Europe by through trains, and also the statement in Section 42 (the self-denying ordinance) that the Government may not make grants towards the capital cost of providing through services.

Mindful perhaps of what happened to the 1970s Channel Tunnel proposal, British Rail's face is set resolutely against a new railway through Kent to cater for this new traffic, which is in addition to existing domestic traffic. The environmental damage threatened by such a concept was one of the Labour Government's reasons for cancelling the earlier project. Hence British Rail's plans limit investment on new track, signalling and stations between London and the tunnel mouth to £192 million only. Even allowing for the need to make the project viable, because the Channel Tunnel operations of British Rail will be a sector outside the grant network, that sum is inadequate.

We shall have through trains, which will travel through France and Belgium at speeds up to 180 mph between Paris or Brussels and the French tunnel mouth and which will suddenly find themselves limited in Kent to only 100 mph where circumstances permit. Average journey speeds between Cheriton and London will range from 53 to 61 mph, which can hardly be called either impressive or commercial.

I mentioned the limitation on speed where circumstances permit. We are talking about routes which are already saturated at certain periods. Chris Green, the director of Network SouthEast, admitted as much in an otherwise positive briefing which he gave to me, to the noble Lord, Lord Underhill, and to others last autumn. The Monopolies and Mergers Commission, also last autumn, in its report on Network SouthEast drew attention to current service densities on the route which we are discussing tonight, to a decline in punctuality and to concern expressed by commuter groups in Kent about the impact of a Channel Tunnel upon their services and journeys. Network SouthEast gave a public commitment that those passengers—earlier I called them the domestic traffic—would not be disadvantaged by the traffic arising out of the tunnel.

I do not believe that an investment of £193 million is sufficient to fulfil that promise made by Network SouthEast. I recall days spent at Shorncliffe in the late 1950s when commuter traffic and boat train traffic, which was then at its peak, either stopped or crawled on, as line capacity permitted. The noble Lord, Lord Deedes, may well recall those days; if he does, he will I hope support my contention that that must not be allowed to happen again. He may also recall that when the line to Ashford and Folkestone was electrified in the early 1960s, every hour one could travel from Waterloo to Ashford in 50 minutes. Today, 27 years later, that time has increased to 57 minutes, which hardly fills me with confidence regarding what is to come.

In 1993 such regional benefits as we can look forward to in a British Rail context must take as their starting point the routes between the tunnel mouth and London. If British Rail fails here (as I fear it may) freight and passenger benefits will not materialise in London or in the regions. The Cheriton-London routes become the cornerstone of the infrastructure at this end of the Channel Tunnel and we must ensure that this infrastructure is funded so as to meet the needs of tunnel traffic and of domestic rail users.

If grant cannot be paid under Section 42 towards capital works for dealing with tunnel traffic, can investment be authorised which is to the demonstrable benefit of the domestic sector, thus fulfilling the network promise to the commuter associations? Alternatively, is the new line solution, if I may call it that, as dead as BR believes? If built it would alleviate the domestic problems noted by the Monopolies and Mergers Commission and could arguably fall outside the scope of Section 42. Would it fail on environmental considerations, as it did in the past, or would the very considerable environmental benefits of taking trucks off roads, as demonstrated by Transport 2000, be seen as an offset? Perhaps a radical solution like Costain's Neptune network would be the answer, with its realisation that it is not just a matter of getting people to London but also round London.

As I said in my opening remarks, time is not on our side. I am looking forward to hearing the views of other noble Lords, particularly the Government's views on Section 42 in relation to demonstrable benefits to the network commuters. This and the new line concept seem particularly important to me. One cannot fault Her Majesty's Government on the level of rail investment, some £3 billion, authorised since 1979, but one may hope that it will continue its enlightened policy in respect of such investment, particularly in the context of the investment needed to maximise the benefits which the Channel Tunnel offers to the regions.

7.50 p.m.

Lord Deedes

My Lords, I join this short debate in the hope that there may be a little fresh light thrown on the subject most pertinently raised by the noble Lord. Like him, I feel that the time-scale gives rise to some anxiety in relation to the Channel Tunnel and British Rail. It has long seemed to me, as one resident in the district, almost at the mouth of the tunnel, that those who put their hands to the Channel Tunnel are taking a certain amount for granted in respect of what British Rail, as it is now constituted, will be able to contribute to the grand design.

I have spent a great part of my working life travelling on the line in question, on this very heavily stretched line linking London and what will be the Channel Tunnel mouth. I have no cause for complaint about my experiences, but I have great cause for anxiety about the future. I feel that those who believe that as it stands this system could accommodate high-speed trains and thereby deal with at least another 12 to 15 million passengers a year, ought to think again. For one thing, it is clear—and the noble Lord will take the point I am about to make—that in addition to the problems he raises, the domestic commitment of this railway line is destined to increase quite sharply during the next few years. East Kent is designated as a growth centre, with the town of Ashford, which I know very well, as a focus for the additional growth. All this has been approved by the Kent County Council. It seems to me that with the Channel Tunnel traffic added to these domestic demands, we shall be in danger of putting, or trying to put, not one quart but two quarts into a pint pot.

I am aware, as is the noble Lord, that British Rail intends to spend a great deal of money on the system. Various figures have been mentioned, one of which is about £400 million. But very little of this money is related to the track down which these trains will have to travel. As I understand it, new trains and the accompanying stock will take about half British Rail's investment. New terminals at Waterloo and Ashford will take a great deal more. There is a relatively small sum at present envisaged for the track.

Without dwelling unduly on the difficulties which I am quite sure wiser heads than mine have already put their minds to, it is clear enough that for much of this stretch of track between London and the coast, fresh lines will have to be laid. If high-speed trains are to run between the capital and the coast, then they will have to run through fresh country in order to avoid the curves which characterise much of the track in question. As Mr. Richard Hope, editor of the Railways Gazette—a greater authority than many of us on this subject—has observed, unless an extra pair of tracks is built from the tunnel to the outskirts of London, either commuter or international services will have to be restricted in quantity.

It seems to me that three questions therefore arise. First, has all this been envisaged? I am sure the answer to that must be that it has been envisaged, in which case I think the moment has arrived when we might he told a little more. Secondly, what is now reckoned to be the likely demand on both land and finance for purposes of giving this line the appropriate scale required for the demands on it? Finally, and most pertinently, who is going to pay?

It is as well to bear in mind that British Rail is not altogether a free agent in this matter. It is not open to business propositions. I think I am right in saying that this particular region of British Rail has a commitment to the commuting population in respect of which it receives a subsidy of something like £200 million a year. All my inquiries suggest that there is a wide gap between the prospective performance of the French railway system and our own when this Channel Tunnel traffic starts to move. It seems to me in many respects unfortunate that on our side the Channel Tunnel railway service has to depend on a region which—how shall I put it?—has not been the front-runner among the different regions which serve this country. Indeed, it has been a poor relation of British Rail for many years and is already beset by internal timekeeping and other difficulties.

My instinct tells me that ultimately the Government will have to find a considerable sum in order to assist here. Of this, I think we should perhaps be told a little more. We all know that the tunnel is to be built with private capital, there is no argument on that score. But the extension of the motorway, the M.20, from Maidstone to Ashford now in hand in respect of the tunnel, is clearly a charge which will fall to the Government. If, as we may hope, the rail facility linked to the tunnel reduces the volume of road traffic, why is that not also a legitimate public charge?

In conclusion, these are not abstract questions for this reason: the main line is also the lifeline for upwards of half a million people who live in the county of Kent but whose work lies in the capital and who are already stretching the system to its present limits. Were too little done on the railway in anticipation of the tunnel, were the commuters' share of this line to be diminished, they would face a very serious situation indeed. Moreover, as I have already observed, there are to be more of them not fewer in the years ahead.

We are therefore committed to a new, modern and, I apprehend, expensive railway system linking London to the coast. On this, my Lords, I think and hope we should be told a little more at this point.

8 p.m.

Lord Ezra

My Lords, I feel that the noble Lord, Lord Mountevans, has been absolutely justified in raising at this relatively early stage after the construction of the Channel Tunnel has been committed the question of the rail link on the British side. Both he and the noble Lord, Lord Deedes, have very clearly set out the issues that are worrying a number of us. Indeed they are not new issues. They were seen at a very early stage.

I need only refer your Lordships to the Select Committee's report of your Lordships' House which on 6th May last drew attention in paragraph 13 to this problem. It stated: The key to spreading the benefits which could flow from the project will mostly lie in the hands of British Rail, at present totally dependent on Government for its resources. The restraints which the Government has accepted … could possibly inhibit the capacity of British Rail to invest in the infrastructure to exploit the potential". On that I asked the noble Lord, Lord Brabazon of Tara, during the Third Reading of the Channel Tunnel Bill on 2nd July (at col. 367 of Hansard) what his views were as to what the Government might be doing about this. His answer was: The position is clear so far as concerns British Rail investment. If they put forward to the Government commercial proposals the Government will look at them in the way that they normally do so. If they are sound proposals permission will be given for them to go ahead". That was the answer that I received at that time.

As time goes on the importance of the Channel Tunnel becomes greater because we are now committed as a nation fully to the integration of the European market, which is intended to be completed by 1992. Indeed the Department of Trade and Industry under the noble Lord, Lord Young of Graffham, will he promoting this concept throughout the country before very long to make sure that British industry responds to the challenge. That challenge in simple terms will be to open up a total market which in GNP terms will be worth £1,600 billion compared with our £350 billion and which in population terms will represent 320 million as compared with our 55 million.

In order to penetrate that market, which will then be much more open than it has ever been, we of course need to have the means to get there. We shall need the means to link our centres of industrial growth in the North and in the Midlands through to the Continent. So it is extremely providential and timely that we have agreed unanimously in Parliament to go ahead with the tunnel project.

Unfortunately the rail connections on the British side raise many issues. The noble Lord, Lord Mountevans, referred to the various estimates made of the potential increase in traffic, both passenger and freight. Even on the low estimates, which as he says, British Rail has put forward, these are very large increases indeed. That excludes of course the traffic which will go on the shuttle operated by Eurotunnel. The prospects of movement of traffic from the overloaded roads on to the railways are considerable if the kind of technical developments which were examined in the Transport 2000 report of July 1987 are followed.

So there is considerable scope here for an increase in rapid, prompt movement of traffic between Britain and the Continent. What is disturbing to British eyes is the fact that this problem has already been seized so firmly by our Continental friends. As we all know, the TGV Nord project, jointly financed by the French and the Belgian railways, will cost nearly £2 billion compared with the £400 million which is being spent on the British side.

As we have heard, the speed of trains on the Continent will then reach up to 180 miles per hour. They will link up at that fast speed with Paris and Brussels and then beyond to the high speed networks fanning out throughout the Continent. The unfortunate thing is that even after the expenditure indicated by British Rail the speed of trains on the British side will barely, on average, for that relatively short journey exceed 60 miles an hour. That compares with 75 miles an hour through the tunnel itself. Not only is there that problem of speed—it might be said that for such a short journey speed does not matter so much—but there is also the question of reliability.

Along with other Members of your Lordships' House I paid a visit to Sangatte in the latter part of last year at the invitation of Eurotunnel and British Rail to see what preparations our French friends had made for the construction of the tunnel. It was indeed very impressive to see the vast shaft which had been prepared from which the work would then start to tunnel under the Channel. The worrying part of the whole visit was the delay on the British side. We were told before we left that British Rail was going to do everything it could to make sure that we got there on time. We were in fact half an hour late and we had to send an emergency message to the hovercraft to wait for us.

There was another half hour delay on the return. I do not think that one can blame British Rail for this. The rail connection between London and Dover is a very difficult one and the slightest problem that arises on that line leads to delay, however important the train might be regarded as being, as ours apparently was on that occasion. So it seems that the weak link in the whole enterprise is the railway network on the British side, particularly between London and the Channel mouth.

If we are going to try to put this right, as the noble Lord, Lord Mountevans, said, we really must move very fast. As we understand it, British Rail at the request of the Government is presently studying this question and it will apparently come forward with proposals for strengthening this link round about May or June of this year. I do not know what the status of its report will be, but I very much hope that, considering the vital importance of the questions with which it deals, we shall have the opportunity of seeing the report, of studying it and then of having another debate of a more informed nature on the whole subject.

There are, as the noble Lord, Lord Mountevans, also said, other ideas which are being put forward, for example the Costain project, which was very clearly referred to in the Daily Telegraph on 4th January. I am happy to refer to that in the presence of the noble Lord, Lord Deedes. That is a project for a separate line to be built with private sector money, as I understand it. It could cost something like £800 million and it could then be leased back to British Rail in order to ensure an effective connection between London and the tunnel mouth.

As the noble Lord, Lord Deedes, emphasised in particular, the problem that we shall have if we continue as is presently planned is that not only could we well have an inadequate international connection but the already heavily strained commuter traffic could suffer still more. We could end up with the worst of both worlds.

In addition to the movement of rail traffic between London and the tunnel mouth, we have to think about the movement from the North and the Midlands. One of the major objectives of the project is to link the whole country to the Continent both for passengers and freight. Here also discussions are taking place. But how soon will action be taken? Are we going to have the number of inland clearance depots that are needed? Are the various facilities for quickly dealing with freight in hand? What has been the response of industrialists who have been consulted on this issue? For example I was talking to an important official of the railways on this and he said that one thing that worried him to date was that the railways were not receiving many ideas from industry. I do not know how vigorously industry is being asked for its views, but sooner or later we might find that we have not done the things that we should have done to get this whole traffic moving.

We have here a very serious issue. It is right that it should receive an airing tonight. I very much hope that the report being prepared will be made available to us and that later in the year we shall be able to come back to the subject, perhaps in the knowledge that by then positive action has been decided upon by British Rail and the Government.

8.10 p.m.

Lord Dunleath

My Lords, I hope that the noble Lord will not consider me to be unduly opportunist if I utilise the occasion to make a few general remarks about rail transport as opposed to road transport. I am grateful to the noble Lord, Lord Mountevans, for having asked the Unstarred Question this evening. I think it raises important points.

With your Lordships' permission, perhaps I may say how much I welcome the fact that Her Majesty's Government in collaboration with the French Government decided to make the fixed link a rail link rather than a road link. I think that that raises some general points of transport policy for the future. If, as 1 hope, that decision means that there is going to be greater emphasis on rail transport for long distance haulage, that will be of considerable significance environmentally, socially and economically. I sincerely hope that that will be the case.

I have not driven on any of the motorways of Great Britain for 10 years and I sincerely hope that I shall not have to do so again. I do not enjoy it. One can endure with equanimity being overtaken by a member of the Royal Family in the fast lane. However, what scares the wits out of me is that if, due to visibility or road conditions, I feel it prudent to reduce my speed to perhaps 60 miles an hour, I have a 38-tonne lorry or 49-seater coach sitting on my tail, so close behind me that I know that if I were to brake sharply for any reason there is no way that the vehicle could pull up without going into my backside. I do not enjoy driving on motorways and I do most of my travel in England—what little I do—by British Rail InterCity, for which I have a very high regard, despite the many criticisms that are made.

Of course travel by British Rail is not as exciting as it used to be in the days of the King class and the Pacifics. However, I must concede that it is quiet with continuously welded rail, it is comfortable, it is clean and in most cases it is fast. For that reason I feel that not only for passengers but for freight as well it would be much more desirable environmentally to see more traffic on the railways and the already overstretched roads being relieved to a certain extent.

The demands of motor transport are very damaging environmentally. Much of our countryside has been spoilt by the demands of motor traffic and so have many of our towns and cities. The railways are there already. I am sure that in the 19th century there was an outcry about the environmental effects of railways. However, they do not in fact impinge on our lives to any adverse extent at the moment.

In New Zealand when I was there 15 years ago there was a regulation whereby any haulier had to have a special licence to take a heavy lorry on the road beyond a certain distance. In other words, the load could be taken to the nearest railway station, but unless the haulier had a special licence for carrying perishable goods he was not allowed to run the lorry throughout the road network of the country. The load had to go by rail. When I was in South Africa last year the roads were delightfully free of heavy traffic, yet there were enormous freight trains carrying a large majority of goods throughout the country.

Therefore I urge Her Majesty's Government to pursue that policy which they seem to have embraced and to encourage more freight and passengers to go by rail. I salute the Docklands Light Railway on which I travelled recently. It is a most civilised form of transport. I hope that that sort of development will continue to get more and more traffic, both freight and passenger, off the roads.

I also sincerely hope that any pressure that there may be on British Rail—I think there is pressure in certain areas—to be self-sufficient financially will not price passenger services out of the market. After all, motorways are a very expensive commodity. Even those which were built in the last few decades are already calling for considerable expenditure.

I thank the noble Lord for having asked his Question. I commend Her Majesty's Government respectfully for their commitment to rail traffic through the Channel Tunnel and I hope that they will pursue that policy in a concerted manner.

8.15 p.m.

Earl Attlee

My Lords, I have to declare two interests. First, in about four years' time I shall be in receipt of a very modest pension from British Rail. More importantly so far as the debate is concerned, I am chairman of a public relations and marketing company which has as one of its clients the largest container company in Europe, Tiphook International plc.

There have been various attacks on British Rail. Whenever I hear of such an attack, my hackles rise like one of Pavlov's dogs and I have to answer the attacks, since, for seven years, I was a public relations officer at Waterloo. Perhaps I may thank the noble Lord, Lord Mountevans, for raising the Question and then take him to task. He mentioned that speeds on the Continent are 180 miles per hour in France and Belgium but only 100 miles an hour in the United Kingdom. Looking at a map of France and at one of the United Kingdom, it is obvious that our railways twiddle all over the place. However, the French, in order to get speeds of 180 miles an hour. have had to build new tracks. To build such tracks in southern England would cost an absolute fortune.

The noble Lord, Lord Deedes, said that there was no capacity. I think he was speaking of London and the South-East. In fact, all the trains are coming up to London in the morning and it would therefore be possible to send freight trains from London down to the Channel ports.

The fact is that British Rail has the smallest subsidy of any railway in the world. The Southern Region also has the most highly utilised railways in the world. The train service between Working and London has been acclaimed as being the most highly successful and the finest railway system between any outside station and the capital. I went with the noble Lord, Lord Ezra, to visit Calais. As I understood it, the reason we were late was that the train was slowed down so that we could look out the window and take photographs of a minuscule hit of the tunnel workings.

I do not see how British Rail can do its job without government intervention; nor how it can find out of its own finances the rolling stock that it has to build and all the infrastructure unless it reduces services or puts up prices, which would be unacceptable. The fact remains that after all these years and two false starts at last we are to build the Channel Tunnel. I believe that when the tunnel is built it will have a dramatic impact on the whole country—the commercial world, the passenger-travelling world and everyone.

There are still people who are opposed to the Channel Tunnel, as far as I can see for three reasons. First, they are worried about rabies. I think that that fear has been shown to be of no consequence because one can build under the rail tunnel the biggest rabies trap in the world; no animal that went in would ever get out. The next reason is the worry about terrorists. To my knowledge there has never been a terrorist attack on the two tunnels under the Thames, the tunnel under the Mersey, any of the tunnels going through mountains in Europe, or indeed on any tunnel anywhere in the world.

The third reason is even more peculiar. People say that we are an island—we all know that—and if there is a link between the United Kingdom and Europe we shall no longer be an island and therefore the invading hordes will come pouring through the tunnel. That seems to me to be equally stupid.

I believe that the Channel Tunnel will provide fast, uncomplicated and, above all, weatherproof travelling. No more will heavy goods vehicles travel down our main roads and motorways to reach the Channel ports and then, because there is fog, or very rough seas, sit in huge parks waiting for the weather to clear. With the Channel Tunnel it does not matter what the weather is like; in the tunnel the weather will be perfect.

It is freight traffic that will make or break the Channel Tunnel. I do not think that it matters how many millions of passengers travel through the tunnel from our side to the other. That will bring revenue to British Rail, but it is merely gilt on the gingerbread. I believe very sincerely that in the chunnel (I keep saying that but in my own mind I call it the "Chunnel" and I must not)—in the Channel Tunnel, it is freight that matters.

As far as regions are concerned, once we have a Channel Tunnel our goods for export can be loaded in the Midlands, in Scotland, or in Wales, and the next day they can be in the heartland of Europe, which is the largest export market open to us. For the first time we shall be able to compete with our Continental rivals purely and simply because we can get our goods to destinations such as Paris, Dusseldorf, Milan or Rome, as fast as our competitors from France or from Germany.

Having said what I have about the Channel Tunnel, I am amazed that I have not bought any shares in the project.

8.24 p.m.

Lord Underhill

My Lords, like other noble Lords who have spoken, I am grateful to the noble Lord, Lord Mountevans, for initiating this debate at this time. He dealt at some length with the position of Network SouthEast; I prefer to go a little wider in my remarks.

Unless there is any slip-up, the tunnel will he built and operating by 1993. Surely the task now is to secure for Britain's railways, for industry and the regions the full potential benefits of this great project. I echo what the noble Earl, Lord Attlee, said. Let us not overlook the fact that Britain gives the least financial assistance to its railway system of any country in Europe. That must not be overlooked when we talk about the question of further necessary investment in British Rail.

Reference has been made to the £400 million investment already approved for British Rail, which the noble Lord, Lord Deedes, has analysed. The noble Lord, Lord Ezra, stressed the fact that the French have recognised the possibilities and the potential and are investing heavily not only in rail but also in other associated developments. Together with other noble Lords, I participated in the visit which took a preliminary look at what has taken place.

The potential for rail passengers has been emphasised, and I need not dwell on it, nor on the significant time saving. However, surely it is critical to the operation of the passenger rail services that there should be the introduction of on-train Customs and passport controls. The Government made a clear commitment to that system, but there seems to be evidence of continuing resistance to the proposal from Customs and Excise. It would be helpful to hear from the Government about the progress of negotiations on this vital matter. There is not the slightest doubt—and the Government accepted this view during the debates on the Channel Tunnel Bill—that on-train Customs and passport controls are essential to deal with the huge increase in passenger traffic through the tunnel when it is completed.

What financial help do the Government envisage for the development of through passenger trains on electrified routes from South Wales, North Wales, the West of England and the East Midlands as far as Sheffield? Are there any plans? It seems to me that we need fast through passenger trains with Customs and passport controls on board as well as on trains from London itself.

Most noble Lords have stressed that the potential for rail freight is greater than that for passengers. Some of us may feel that freight is of higher importance. I am one of those who at the outset said that unless there was provision in the Channel Tunnel for fast through freight trains then my enthusiasm for the scheme would be less. Let us not overlook the fact that at present British Rail carries only 2 per cent. of our international freight traffic. In comparison, the French railways handle 20 per cent. and the Belgian railways about 50 per cent. That shows how far we have to catch up if we want to increase our international freight traffic by rail.

We have always said that a great opportunity exists for faster and cheaper rail freight services over longer distances—we used to say in excess of 200 or 250 miles. However, I noticed in the Financial Times of 21st January: Technical changes in the capacity and reliability of wagons mean that rail is once again quicker and cheaper for journeys of more than 175 miles If that is the general position accepted by experts, then the potential for the advance of rail freight is quite clear. This could also make a great contribution towards restoring the economic balance between the regions of the country. At the moment freight traffic can be forwarded from the customer's own sidings, from rail freight and freightliner terminals. There is not the slightest doubt in my mind that the Channel Tunnel will stimulate increased demand for rail freight transport.

Although British Rail has stated that Section 8 grants—that is for private sidings under the 1974 Act—have tended to fall off in recent years, it is likely that demand for existing terminals will be expanded and new terminals will be constructed using this Section 8 procedure. I understand that British Rail have had discussions with customers and local authorities about the provision of public terminals and the requirement for inland clearance depots at major centres. This would appear to me to be absolutely essential if we are to reap the benefits of increased freight traffic.

British Rail believes that investment by the local community in freight facilities for international traffic could help to attract new development. The noble Lord, Lord Ezra, referred to some discussions —which were not altogether happy—with certain potential customers. I understand that British Rail will be happy to discuss possibilities not only with potential customers but also with local authorities as regards the development of inland clearance depots at major centres, but surely more needs to be done to promote and liberalise arrangements for the Section 8 grants for private sidings. In the United Kingdom there are only 1,500 private sidings. In France there are 10,600. In West Germany there are 15,500. The Association of Private Wagon Owners, which represent operators carrying 80 per cent. of British Rail's non-bulk freight movements, regards the development of more private sidings as essential to reduce the cost of rail freight. I presume that these Section 8 grants will not be affected by Clause 42 of the Channel Tunnel Act. I hope that the Government will be doing all they can to increase the development of Section 8 grants.

I was interested in what the noble Lord, Lord Dunleath, said about road and rail. However, there are considerable possibilites of combined road-rail transport. Perhaps I may say a few words about it. The development of road-rail transhipment centres will be important if the full benefits of the Channel Tunnel are to be derived by regions outside the South East. As was explained by the noble Lord, Lord Mountevans, at the outset, Section 40 of the Channel Tunnel Act places an obligation upon British Rail to forward practical schemes relating to measures vital to increase the use of rail freight by manufacturers. This section of the Channel Tunnel Act refers in particular to the development of, collection and distribution centres for goods", and also the development of Customs clearance centres. Those two points are laid down quite clearly in the plan which British Rail must produce by 31st December 1989. Detailed studies with local authorities and industry will be necessary if that is to be achieved. Some financial assistance may be required by the Government to carry through these studies. The Government must be willing to approve capital schemes of local authorities and provide the necessary resources if these parts of the plan in Section 40 of the Channel Tunnel Act are to be realised.

British Rail is considering other initiatives to increase flexibility to meet customer needs. I shall not go through these in detail, but they are very interesting. I make some reference to them. BR is considering various types of inter-modal vehicles. One is the mini-link, with small containers capable of easy transfer from rail wagons to road vehicles—in other words, we have the rail-road combination. The maxi-link vehicles are ordinary containers for transfer from rail wagons to road trailer. The trailers themselves would carry very simple equipment for this purpose. Then there is the piggyback—a low floor rail wagon capable of carrying a road trailer within the existing British Rail loading gauge. Then there are swap-body trailers with exchangeable road and rail wheels.

I understand that all these developments will be undertaken by private manufacturers but they are carrying out their discussions in conjunction with British Rail's research centre at Derby. This is a rail road combination which will benefit the environment and our system of freight transport. I am informed that a report by independent consultants has estimated that up to 10 million tonnes of freight might transfer from road to rail if some way could be found of carrying road trailers on British Rail tracks—a system which is used very extensively on the Continent. This would be the equivalent of 3,500 heavy goods vehicle movements a day. The environmental benefits of this are therefore absolutely clear.

British Rail and the Government have stated that the Channel Tunnel must be viable and that social cost benefit would not be appropriate in appraising these benefits. If necessary, would not financial aid for inter-modal vehicles be justified either on financial grounds or on grounds of the social cost benefit which will arise? Reference has been made to Transport 2000. I understand that it commissioned some research into the question of this type of inter-modal wagon. The research concluded that, if fully exploited, the use of such wagons would reduce heavy flows on the eastern half of the M.25 by between 10 per cent. and 24 per cent. It that survey is accurate, those of us who occasionally use the eastern half of the M.25 can envisage the environmental benefit that would follow. The potential benefits to the United Kingdom regions are substantial.

The Government, local authorities and industry must be considering what help is needed in various directions. One need is absolutely clear. I believe that all noble Lords who have spoken have treated this as absolutely essential. There must be a modern, up-to-date rail network if full advantage is to be taken, in particular of the potential benefits of freight traffic. I echo the plea that has been made. It is hoped that the provisions of Clause 42 of the Channel Tunnel Act—the reference to there being no grants for the provision of international railway services—are not to be interpreted as preventing investment in improving our rail infrastructure or developing the road-rail transport combinations to which I have referred. If that is the interpretation, then I must ask the Government to take another look at this question, because it will be a great tragedy if, having gone thorugh all the discussions, having eventually constructed the tunnel, we find in operating it that the real benefit to regions and to industry in the development of freight traffic has not been realised.

Lord Hylton

My Lords, before the noble Lord sits down, will he agree that the common internal market is supposed to be in place by 1992, one year before the tunnel comes into operation? May we not therefore hope that both passport and Customs control will have been abolished between England and France?

Lord Underhill

My Lords, I am certain that the noble Lord is raising a different matter altogether. By the time those discussions take place in the Council of Ministers we might have found that we need dozens of meetings if what has happened on other matters has still not been realised. We must wait to see what the Council of Transport Ministers has to say about it and whether Britain agrees.

8.40 p.m.

The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara)

My Lords, the noble Lord, Lord Mountevans, has with his usual clarity and enthusiasm placed before the House his views on the Channel Tunnel and the benefits it would bring both to British Rail in particular and to the country as a whole. The contributions of other noble Lords show that he has raised a matter which excites considerable interest in your Lordships' House. I should like to join others in congratulating the noble Lord on initiating this debate.

I welcome the noble Lord's support for the Eurotunnel scheme, and his refreshingly positive attitude in wanting to see that the benefits of this great project are fully realised. The Government share this desire and are keen to ensure that the opportunities which the tunnel will bring for the railways, for travellers, and for industry and commerce, will be spread throughout the country. and not just concentrated in the South-East of England.

The regions stand to benefit from the construction and operation of the Channel Tunnel in two main ways. First, through job creation: Eurotunnel has so far placed contracts worth over £150 million—the majority of them with companies in the Midlands, the North and Scotland. That pattern is likely to continue, as the suppliers of the materials and equipment needed for the tunnel are concentrated in those regions. In total, Eurotunnel expects to place £700 million-worth of orders, and the work created by those orders outside Kent during the construction period is likely to exceed 50,000 man-years.

Jobs are also likely to be created in those same regions by British Rail's orders for rolling stock, which will probably exceed £200 million. The second main way in which the tunnel will benefit the regions is in the opportunities which it will provide for British Rail, and it is this aspect of the tunnel to which the noble Lord, Lord Mountevans, has particularly drawn our attention. The tunnel will integrate this country into the European rail network. Not only will the tunnel enable British Rail and its Continental partners to operate direct passenger services from London and other UK cities to European destinations such as Paris and Brussels, but it will also provide the opportunity for long hauls for British Rail's freight business, which becomes increasingly competitive with road haulage at distances over 200 miles. Indeed, the noble Lord, Lord Underhill, referred to the new figure of 175 miles which was quoted recently.

If British Rail successfully grasps these opportunities—and I am confident that it will—rail passengers will benefit from the new international services, using trains of the very highest international standards of comfort and quality, and rail freight consignors will gain from the reduced transit times which the tunnel will allow, helping them to he more competitive in reaching their European markets. Customers in the Midlands, the North, Wales and Scotland stand to gain particularly, with savings of between 24 and 48 hours for freight traffic to Continental destinations.

I agree with the noble Lord, Lord Dunleath, that the environment will also benefit from the likely switch from road to rail freight. BR expects a threefold increase in its international rail freight traffic when the tunnel opens, which it estimates will help to keep 1,500 lorries off UK roads every day. The noble Lord, Lord Underhill, quoted a figure somewhat higher than that which was suggested by another recent survey.

In order to enable it to take full advantage of these opportunities, British Rail is planning to invest several hundreds of millions of pounds in connection with its services through the tunnel. The Government have already approved in principle much of the expenditure proposed, and we remain willing to support any further proposals for worthwhile and soundly-based investment.

The noble Lord, Lord Ezra, claimed that British Rail's investment in Channel Tunnel services pales into insignificance compared with the expenditure proposed by its French counterpart, SNCF. The noble Lord claimed that the French are investing nearly £2 billion in track and other infrastructure improvements compared with only £400 million being spent by British Rail. I welcome this opportunity to explain that those figures do not really represent a valid comparison. The figure quoted for French investment not only includes Channel Tunnel-related expenditure, but also investment in connection with other international services (for example between Paris and Brussels) as well as French domestic rail services, which will benefit from the TGV-Nord network. The investment properly attributable to Channel Tunnel services is less than half the total French investment. When one considers that the distance between Paris and the French portal of the tunnel is over twice that between London and the UK portal, British Rail's proposed investment compares reasonably favourably with that proposed by SNCF.

It is because the Government recognise the importance of tunnel rail services for the regions that we incorporated in the Channel Tunnel Act what is now Section 40. This requires the board to publish a plan setting out its proposals for through services between the tunnel and different parts of the UK. As well as the proposed pattern of services, the plan will include any proposals for additional investment in facilities such as freight collection and distribution centres, and inland Customs clearance depots, which the board considers will be needed to support its international services. BR is required to publish its plan by 31st December 1989, and it intends to make good use of the intervening period by consulting as widely as possible with interested parties.

The noble Lord, Lord Underhill, raised the question of on-train Customs and immigration controls. I can confirm that it is British Rail's view that on-train controls are essential if through-passenger services are to be provided to and from destinations to the north of London. Section 12 of the Act—which your Lordships may recall was added to the Bill at Report stage in this House—requires on-train controls to be provided for those services if BR asks for them and provides acceptable facilities.

Discussions are already in progress between BR and the frontier control authorities on the implementation of this requirement.

It would be unwise of me to comment on the question posed by the noble Lord, Lord Hylton, about whether the completion of the internal market in 1992 will make all this unnecessary. That is something which the Government will have to consider very carefully indeed at Foreign Secretary level.

The noble Lord, Lord Mountevans, and most noble Lords, also raised the question of the capacity of the existing network between London and the tunnel to take the additional traffic which will be created by the tunnel. BR is quite satisfied that capacity will be broadly adequate to cope with the additional traffic when the tunnel opens. Where there is a conflict, which may arise in the case of traffic wanting to leave London during the evening peak, BR has given repeated undertakings that domestic services will not be curtailed as a result, and that international passengers will be encouraged to travel at other times of day.

British Rail recognises however that, by some time in the 1990s, assuming that traffic through the tunnel grows as expected, there will be no capacity on existing routes through Kent for further growth in commuter traffic or for the progressive development of international services. It is currently engaged therefore in a detailed assessment of options for augmenting route, seating and terminal capacities. My honourable friend the Minister of State for Transport has asked the hoard to let him have the results of its assessment by 1st June this year. We shall have to see what the report recommends.

My noble friend Lord Deedes said that not much of the £400 million investment proposed was for improvements to the track. That is true at present; but the study could identify need for additional investment on track.

BR's study will consider a large number of options. A new high speed line is only one of many possible options, and it seems unlikely to emerge as the most cost-effective solution for the future. If, however, BR wishes to propose a new high-speed line, then its plans—including any environmental effects—would be the subject, in the first instance, of consultation with the relevant local authorities and other interested bodies, and ultimately if it were to proceed, would require British Rail to promote a private Act of Parliament, as is normal for development by the board. So the House would clearly have further opportunities to debate this issue if it arose.

I, along with other noble Lords, was interested to read the press reports that Costain's may be interested in financing a new high-speed rail network. These ideas have not so far been the subject of any discussions with the Government. Clearly we should he bound to consider carefully any proposal which Costain's—or anyone else—might wish to put to us.

Finally, I should like to address the point made in the noble Lord's Question about government financial assistance. The Government are certainly prepared to approve any proposals which are put to us by the British Railways Board for worthwhile investment in connection with the Channel Tunnel. As I said, however, and as the noble Lord, Lord Ezra, quoted to me from the Third Reading of the Bill, we cannot consider any direct financial assistance to the board. Section 42 of the Channel Tunnel Act precludes the payment of PSO or deficit grants to BR in respect of their international services. This provision was included in the Act in response to widespread concern that government funds might percolate through to Eurotunnel by way of subsidies to British Rail, which could, for example, have enabled BR to pay tolls to Eurotunnel at a level higher than they could justify commercially. Our approach is also consistent with the Government's general policy that long-distance travel—by whatever mode of transport—should not benefit from government subsidies.

The approach enshrined in Section 42 of the Channel Tunnel Act appeared to be generally accepted in both Houses during the Bill's passage through Parliament. It means that British Rail's investments in connection with the tunnel must be justified in accordance with its normal commercial criteria. While such developments may be eligible for Section 8 grants or support from European sources such as the European Regional Development Fund if they meet the normal criteria for assistance, there can be no question of any form of special government funding.

Lord Ezra

My Lords, may I ask the noble Lord on this subject whether similar constraints as to government funding have been applied on the French side?

Lord Brabazon of Tara

My Lords, I understand that they have from the point of view of any funds which might filter through to Eurotunnel.

Given the advantages which the tunnel will create for British Rail and which I referred to earlier, there is no reason why this constraint should prevent BR from taking full advantage of the opportunities which will become available to it.

My noble friend Lord Deedes asked why the Government were paying for improvements to the M.20 when they would not pay for rail improvements. The motorway was needed anyway. It would have been built even if there were no tunnel. Motorists pay for road-building through fuel tax and vehicle excise duty, and so this is not a subsidy.

In conclusion, this has been an interesting and stimulating debate, for which we are indebted to the noble Lord, Lord Mountevans. I have listened carefully to the views expressed by your Lordships today, and I have tried to deal with as many of the questions asked of me as I could. If there are any points for the Government's consideration which I have failed to cover, I undertake to write to the noble Lords concerned. I have no doubt that the British Railways Board will have followed this debate with interest, and I am sure it will be happy to deal with any outstanding railway matters which your Lordships have raised. British Rail is certainly gearing itself up to grasp the great opportunities that the Channel Tunnel will provide, and I know that it is looking forward to the challenge presented by this historic project.