§ Mr. David ShawTo ask the Secretary of State for Transport if he will make it his policy to require British Rail to earn a net real rate of return of at least the Autumn Statement's current forecast rate of return of 12 per cent. in respect of all new investment projects including the proposed high-speed rail link to the Channel tunnel.
§ Mr. PortilloBritish Rail needs to demonstrate that all investments by its commercial sector are capable of producing a commercial return: this would include any high-speed line to the Channel tunnel, should it be financed by the board. The discount rate used to test investments is agreed between British Rail and the Department and is currently 7 per cent. It reflects the Treasury's required rate of return which is intended to ensure that commercial public sector investment programmes (such as British Rail's) provide a rate of return which is broadly equivalent to that which could be achieved in the private sector. The required rate of return was set in 1978 and is currently under review.