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Channel Tunnel Rail Link (Supplementary Provisions) Bill

My Lords, I beg to move that this Bill be now read a second time. The Channel Tunnel Rail Link, High Speed 1, is now open, on time and within budget. Passengers can now travel the 68 miles from St Pancras to the tunnel at up to 186 mph. They can go from London to Paris in two hours and 15 minutes, and from London to Brussels in 1 hour and 51 minutes. For commuters living in Kent, journey times will be slashed from December 2009, with a new fleet of trains. The company that built the rail link, London and Continental Railways—LCR—estimates that the project will generate an additional £10 billion of private sector regeneration investment along its route. Management of construction has been a tremendous success. That, in part, is down to the structure in place: the corporate structure, the contracting structure and the roles played by all stakeholders—LCR, the Government and a range of other partners. However, managing a construction project is not the same as managing an operational railway. The Bill makes a small number of changes to support a restructuring and make sure the future structure is as effective as the existing one. I shall digress into some of the history behind the current discussions. In 1996, London and Continental Railways won a contract to design, build and finance the Channel Tunnel Rail Link and to own and operate the UK arm of the Eurostar joint venture. LCR also acquired brownfield development land around Kings Cross and Stratford. The first part of the High Speed 1 line opened in 2003 and the second section opened, to much celebration, in November last year. The project’s original financing plan depended largely on borrowing against Eurostar revenues, but even before construction began it became clear that, with Eurostar passenger numbers falling below the earlier estimates, those plans would not give lenders sufficient security. To make sure the project was completed, the Government and LCR agreed a comprehensive restructuring exercise to secure the project’s future. Subsequently, the National Audit Office concluded that the restructuring was well thought out and helped to maintain private sector discipline over cost. The arrangements put in place have now proved their effectiveness, with the project being completed on time and within budget. The new railway is now fully open as planned, with Eurostar services successfully moving from Waterloo to St Pancras International. Work to allow domestic services to access the redundant platform 20 at Waterloo is expected to be complete by December this year. Government support will always be needed to fund major rail projects, but given the investment made by taxpayers, we now need to get the best possible return. In 2006, the board of LCR and the Secretary of State agreed to undertake a joint programme of work to evaluate potential restructuring options. The objective of that work was to identify and implement a future structure for the company that was both affordable and maximised value for taxpayers. What is planned is a separation of LCR’s three different businesses: the infrastructure, including the track and stations; the land interests; and the UK stake in Eurostar. Ultimately, as the Secretary of State said last year, we anticipate that there will be an open, competitive process for any sale to secure best value for the taxpayer. Outside the Bill, a number of regulatory approvals must be granted, but if the timetable proceeds as we anticipate, the most significant sale—that of the rail infrastructure—is likely to take place in 2009. The Bill itself, although short, is the first visible step in the restructuring work package. One of the key drivers for the Bill was to remove the uncertainty that existed in some quarters as to whether the Secretary of State was able to provide financial support in the operational phase of the railway. Any uncertainty over those legal and regulatory powers could jeopardise the Government's ability to get the best price. Due diligence on behalf of a potential purchaser of the railway could raise concerns about the legal or regulatory powers supporting the project's revenues and financing. That might in turn lead to a reduced bid from investors, or might deter others from bidding at all. The Bill's first clause confirms that the Secretary of State's powers in the Railways Act 2005 to provide financial assistance can be applied in relation to High Speed 1 and the train services that run on it. The second and third clauses change existing provisions in relation to the regulation of the line. Although High Speed 1 is not subject to periodic price reviews by the Office of Rail Regulation under the Railways Act 1993, the ORR is the appellate body responsible for deciding disputes that may arise in relation to access to and charges for HS1. Clause 4 allows the Office of Rail Regulation to charge a fee for the costs it reasonably incurs in carrying out its functions in relation to HS1. The Bill also amends the statutory definition of ““development agreement”” in the Channel Tunnel Rail Link Act 1996 to include ““operation””. We are now starting to see the full extent of the CTRL project's value to the UK taxpayer. The financial receipts from any sales are likely to be significant but the benefits of the rail link are wider than any financial transactions. LCR estimates that the new line is facilitating £10 billion in private investment for regeneration along its route. For example, Kings Cross Central is a 27-hectare former goods yard which will house new-build homes and reused warehouses, shops, offices and significant leisure facilities. Taxpayers will receive an agreed proportion of the proceeds from this development. In Stratford, a 13-million square foot development including a new station, shopping centre and accommodation for athletes will support the successful staging of the Olympic Games in 2012. Journey times to the Continent have been cut by at least 40 minutes compared with before High Speed 1 was built, and through tickets are now available from regional stations across Britain. More than that, local people in Kent will experience significant reductions in journey times to London from 2009, with travel to Folkestone and Canterbury estimated at around an hour. The brand new fleet of Class 395 Hitachi trains will also be used to deliver the high-speed Javelin service during the 2012 Olympics, travelling from St Pancras to Stratford in seven minutes. The Bill sets in motion a restructuring package which will optimise value for money for taxpayers and put the railway on a firm financial footing for the future. In those terms, I commend it to the House. Moved, That the Bill be now read a second time.—(Lord Bassam of Brighton.)