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Channel Tunnel Rail Link (Supplementary Provisions) Bill

My Lords, I predicted that this would be a slightly lonely debate and that there would not be too many of us involved in it. Despite that, I have enjoyed the contributions of noble Lords opposite, who have asked a range of interesting questions and made some valuable points as part of our continued discussion and debate about our nation’s rail network. I suppose that hidden among those questions and comments was a broad welcome for the Bill—at least that is how I interpreted them until I heard the noble Lord, Lord Bradshaw, say that he was a little suspicious. Suspicion was probably the general tenor of the comments and questions. I do not anticipate a lengthy Committee stage, but I am certain that noble Lords will seek to flesh out some of the issues to which they have referred during today’s short discussion and debate. I shall in due course deal with as many of the questions that have been raised as I can. I certainly agree with the noble Lord, Lord Hanningfield, that we have an asset of which we can proud. He prefaced that by saying ““finally””, but, in general, our railway network is an asset of which we should be proud—and we should be proud of this rail link in particular. Although it went through a slightly difficult phase after the passing of the 1996 Act, our Government when they came to power put together a very successful rescue package which has underpinned the development of High Speed 1 and enabled us to reach today’s position of being able to look forward to a well managed package of sales and ensure a successful future for, and running of, the Channel Tunnel Rail Link. As I observed at the outset, and other noble Lords have since reflected, the Bill has only five clauses. It does not trigger the restructuring of LCR, and its provisions, I think we can all agree, are technical and limited in scope. The Bill confirms that the Secretary of State can continue to provide financial support to the rail link, and the train services that run on it. This is not a new power; it simply clarifies what was already the Government’s interpretation of existing legislation. As the noble Lord, Lord Bradshaw, said, we are tidying it up for the benefit of removing doubt. The Bill tidies up existing provisions in relation to the regulation of the railway. It also gives the Office of Rail Regulation the ability to make a reasonable charge for any new functions that it may carry out in relation to High Speed 1. It changes the definition of ““development agreement”” in the Channel Tunnel Rail Link Act 1996 to make it more relevant to the context of an operational railway today. As I have already reflected, the Bill is only a first step in the process of restructuring the Channel Tunnel Rail Link project. The link has already delivered reductions in journey times for international services with similar cuts in local travelling times secured. As I have said on several occasions previously, the project is driving regeneration in priority areas across a wide stretch of the country. Noble Lords anticipated that in some of the points that they made. I shall try to work through as many of the points as I can that were raised by noble Lords, as that will help to clear the ground for Committee. The noble Lord, Lord Hanningfield, raised the issue about the legal uncertainty in Clause 1, which I have dealt with in part. A fuller answer is perhaps due. We take the view that when two pieces of legislation potentially speak to the same issue, there can be confusion as to what Parliament intended. The Department for Transport and LCR have identified that it is not clear from a literal reading of the CTRL Act whether the Secretary of State’s ability to provide financial support to the High Speed 1 railway applies in the operational phase, when, for example, he or she would wish to provide financial support to a domestic service franchisee. The impact of any uncertainty over the legal and regulatory powers could be binary, in that due diligence on behalf of the purchaser or financer of the railway could identify a flaw in legal or regulatory powers supporting the project’s revenues and financing. That might lead to a position in which reduced bids from some potential investors in HS1 could deter others from bidding at all. Of course, we would not want that situation to arise because that could compromise securing best value for money. The noble Lord also asked whether Clause 1 allowed for Eurostar services in the UK to be subsidised and how that might affect the access charge loan and the guaranteed rolling stock leases. Clause 1 gives the Secretary of State the same commercial flexibility to support HS1 as she has for the national rail network, including flexibility to subsidise international operators in the same way as we currently support domestic franchise operators. It would also allow the Secretary of State to support Eurostar through the access charge loan or by continuing to guarantee rolling stock leases if the Secretary of State chose to go down that route. However, it is the Government’s objective to reduce international operators’ reliance on public support, so we do not intend to subsidise international services through a franchise or any similar arrangement. The noble Lord, Lord Hanningfield, understandably made a plea for services to stop at Stratford. I would expect that of him, given his keen advocacy of all things Essex. No doubt he sees Stratford as the gateway to Essex—and I might be with him on that particular point. I certainly understand what the noble Lord said about the access charging regime in that context. Ultimately, it is an issue for Eurostar as to whether it sees a value in services stopping in Stratford. Domestic services will call at Stratford from December 2009 and Eurostar expects to call there as soon as high quality road and public transport links are in place for all customers. There is no planning requirement to prevent Eurostar trains stopping at Stratford but there is a planning requirement that the international station cannot open until the travelator is operational. It is expected that the planning authority will accept the new DLR extension and new access from the eastern side of Stratford International station to the regional station instead. Eurostar will want to take full account of those issues and points and weigh up the issues surrounding the commercial benefit to it. The noble Lord also made some observations about the appropriateness of the Secretary of State to maintain some regulatory powers over High Speed 1 and the Office of Rail Regulation in relation to access. He asked what the respective roles were for the ORR and the Secretary of State on High Speed 1. It is important that there is clarity over commercial points before any sale process starts. Issues such as the level of access charges will remain with the Government as they affect the value that the Government will recoup on their investment in HS1. Under the development agreement, the Secretary of State oversees access contracts between the HS1 infrastructure operator and train operating companies for HS1 track and stations. Under the Railways Infrastructure (Access and Management) Regulations 2005, the Secretary of State is also responsible for setting a framework for HS1 access charges and ensuring that the charges comply with the requirements of those regulations. The Office of Rail Regulation is the appeal body under the 2005 regulations in relation to disputes over HS1 access or charges, a point also raised by the noble Lord, Lord Bradshaw. I was also asked about the Office of Rail Regulation's overriding duty and whether it would impact on the development agreement. That raises the question of whether the Office of Rail Regulation should give precedence to the development agreement. As we see it, the overriding duty of the Office of Rail Regulation is not to impede the development agreement and that is obviously an existing one. The circumstances in which one might expect the ORR to take this overriding duty into account would be, for example, if a train operator wanted to start running competing international services to those on HS1 using the main domestic rail network. Another example might be if HS1 were blocked because of engineering works or some other disruption on the line and HS1 services needed to use the domestic rail network—or vice versa, if domestic rail lines were blocked and HS1’s were needed. The overarching duty gives any potential purchaser of HS1 comfort that its interest will be taken into account when the Office of Rail Regulation is taking regulatory decisions in relation to the national rail network which could affect the operation of HS1. In overall terms, it should protect value. The noble Lord, Lord Hanningfield, also asked about how the Office of Rail Regulation's safety functions will be funded. The ORR’s safety functions are funded through the safety levy payable by all train operators, and that levy is made under health and safety regulations. The noble Lord also raised the issue of the planned use of Waterloo and St Pancras and asked why that was dropped. This is obviously a complex issue, but after the revision of revenue forecasts was made in 1998, Eurostar reviewed whether it should operate one or two terminals in London. Eurostar concluded that operating from two terminals would require the operation of two international stations, two depots and two sets of station staff, engineers, security personnel and so forth. It would require the development of a timetable for two sets of journey times into London. Eurostar thought that that was confusing, especially for continental travellers faced with trains to and from two stations. The cost of operating two terminals was financially prohibitive against the marginal revenue benefits and, in November 2004, Eurostar announced that it would move its London operations in their entirety to St Pancras and cease services from Waterloo. The noble Lord also asked about the likelihood of competition on the line. That is obviously a matter for commercial operators to agree with the owners of the railway. The Secretary of State will put in place a framework to ensure that all access charges allow for open access and fair competition. The noble Lord, Lord Bradshaw, asked about appeal rights and I have already dealt with that. The noble Lord also raised the prospect of potential buyers and gave us a menu from which we might wish to choose including Railtrack, Eurotunnel, SNCF, Deutsche Bahn, Macquarie and others. It was a fair list and I do not want to comment on the relative merits of each because it would be quite wrong of me to do so. HS1 is a valuable new asset. There are many potential purchasers. The noble Lord gave us a list. We want to see an open and transparent competitive process. The new line will not be sold automatically to Network Rail although it is a potential bidder, as was speculated. As I said, we want to ensure an open and competitive bidding process. Network Rail will be able to bid on the same basis as anyone else.