Orders of the Day — Channel Tunnel Bill

Part of the debate – in the House of Commons at 12:00 am on 5 December 1973.

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Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton 12:00, 5 December 1973

The hon. Member for Croydon, South (Sir R. Thompson) has obviously been reading through the fascinating correspondence in The Times about the ins and outs of trains going through a tunnel at 100 mph. What he did not mention was the loud whine that they are supposed to make at either end and the whirlwind that they are supposed to create. We have had some of the symptoms of a whirlwind going through the Chamber each time we have had a debate on the Channel Tunnel, particularly from some of the benches on this side—and I am not talking about those occupied by my party.

I do not wish to return to some of the old arguments about the Channel Tunnel. The only thing that seems incredible now is that the present Minister still thinks that he can get away with it. We have now had before the House the lessons of Concorde, the London motorway box and the third London airport at Maplin. It still seems that the Minister and the Government just blunder on through, as though everyone had to be assumed to be in favour.

Perhaps the right hon. Gentleman is learning from the example of his French counterpart, who, I believe, openly goes about boasting that all he had to do to build the third Paris airport was compensate seven farmers. Perhaps the right hon. Gentleman believes that the Channel Tunnel can be built on the same basis. Perhaps it is the fact that, once the words "national prestige" are mentioned, the Prime Minister automatically assumes that we do not need to talk about it—that no debate can be allowed because everyone has to be agreed. We do not share those beliefs.

It is particularly regrettable that this Minister, who has a great respect for the traditions of the House, still thinks that he can get through this kind of procedure in this kind of atmosphere.

Even the hon. Member for Edinburgh, North (Mr. Alexander Fletcher), who made his maiden speech this afternoon—and I am sure that the whole House congratulates him on it—recognised the importance of the procedures of the House and the way in which we process things. Because of the conciseness of his remarks, his depth of feeling, and his contribution as a whole, we look forward to many more speeches by the hon. Gentleman on debates such as this.

I hope the Minister recognises that the opinion expressed by his hon. Friend the Member for Edinburgh, North is shared by those who do not feel too keenly about this project, and that with that in mind he will realise that this project has never had the benefit of a full study of the range of possible alternatives. This project is in the same category as Stansted, Maplin and the London motorway box. All progress on the tunnel project has been on the assumption that we need not even study the alternatives. Had there been a full study of all the alternatives, including that of augmenting the ferry services and some of the air services, and an allowance for some of the technical innovations that we are bound to see in the shipping scene over the next 10–20 years, different conclusions might have been arrived at.

Instead, we have had to debate this project without having the necessary documents before us. We are in the position that the Government are committing themselves to guarantees before putting them to the House for approval. Even now, before there has been a full policy statement, we are expected to come to conclusions about the rôle of the railways in using the tunnel. All this is happening despite the fact that for the last two or three years we have been pressing for such a statement. All that we have had from the Minister is a statement which, quite frankly, could be interpreted either way.

It is true that there was a Green Paper—one of the greenest of Green Papers that I have seen since coming to the House. It was an extremely scantily-clad document. The Government updated that with a White Paper. That was followed by some of the forecasts put up by Cooper Brothers, which once more updated the White Paper. This afternoon we had the Under-Secretary of State suggesting that we might have to reconsider some of the estimates of the number of vehicles needed to carry cars through the tunnel.

I go so far as to suggest that, despite the appearance of the White Paper as recently as September, there is a need for another White Paper, because we have reached the stage at which the Minister must recognise that the oil and energy crisis will alter all the calculations, that the European Union of Railways is already talking about 4,000 miles of track to carry 180 mph trains, and that the aviation fuel surcharge is adding £4 or £5 to the cost of package holidays. All those factors must alter some of the calculations on which the Minister has been basing his thinking about the tunnel.

The hon. Member for Faversham (Mr. Moate) said that with the present rate of inflation and the leaps and bounds upwards of interest rates, the figure of £846 million was already out of date. If the right hon. Gentleman really fancies boring a tunnel through this kind of sand, I suggest that walking across might be safer, but I do not think that even he would presume to do that.

The only full and frank discussion that has taken place on this subject has been within the Labour Party. I am glad that my hon. Friend the Member for Merioneth (Mr. William Edwards) told the House that he is a shareholder in European Ferries. That explains some of the things that he said. Whereas the NUR and ASLEF appear to be fairly committed to a tunnel, the T and GWU has some hesitation about the degree of commitment which the Government appear to have made.

There are divergences of opinion in the Labour Party about the matter. But that does not worry me half as much as the so-called independence of the studies on which the Government appear to have based their whole reasoning. All the studies the Government have so far put before the House, except the one on Kent, have been done by the firm of Cooper Brothers. All have been called independent studies.

I do not wish to question the integrity of Cooper Brothers. I know that it has done very good work in calculating some of the social grant formula upon which the Minister's railways estimate is based. But the firm of Cooper Brothers is the business adviser to the British Channel Tunnel Company and Rio Tinto Zinc Development Enterprise, the project managers, and is the joint auditor, along with Spicer and Pegler, of Rio Tinto Zinc. The joint auditors are paid £500,000 for doing the books.

One is bound to conclude that the people in Cooper Brothers who do the independent studies of which the Minister speaks must talk to those who do the books for Rio Tinto Zinc and the British Channel Tunnel Company. I have the greatest respect for the integrity of Cooper Brothers, but I cannot see how its independence, its free-willing thoughts on the matter, can be treated as that independent when it has those connections with people much more committed than itself to the project.

One of our greatest worries concerns the finance proposals in the Bill. The White Paper says that the return on the project will be between 14 per cent. and 17 per cent. If that is so, how is it that the project needs a Government guarantee? It has been said several times today that North Sea oil exploration is considerably riskier than the Channel Tunnel, yet investment in that exploration does not carry a Government guarantee.

Is it, then, that some of the financing companies which have been associated with the project do not believe the Government when they say that there will be a return of up to 17 per cent.? Do some of them know that when the engineering started on the Mont Blanc tunnel, although it too was supposed to be known technology, the costs escalated by 250 per cent.? Is it because some of the investors know that we may be spending up to £1,000 million just to reduce by 10 per cent. or 20 per cent. the rates for crossing the Channel? Any first-year economics student could have told the Minister that in a situation of 74 per cent. excess capacity what one had to do was not to build another project which increased that excess capacity but to change the pricing policy. The arguments put forward not only by the ferry operators but some of the genuinely independent people who have examined the project have cast doubt on many of the ferry costings. Ferry charges are at present before the Monopolies Commission.

Because of all that and all the Government guarantees, one is bound to wonder why the companies have to be given the degree of prominence that they have. If they get out of the project before 1975 they have to be compensated by the Government. The Government must meet the guarantees. Even they get out after 1975, the Government must still buy them out. Their fixed capital must be paid off over 25 years.

In view of the rate at which the companies will receive their return compared with the rate at which the Government receive their return, one is bound to come to the conclusion that everything has been angled to give the companies their maximum profit as quickly as possible. If the companies must have a guarantee because it is a risky venture, why should not they share the same degree of risk, through time, as the Government are being asked to take?

In addition to that, however, the worrying thing is that if we get an escalation in costs beyond the estimated total of £846 million, to about £2,000 million, shall we have a situation in which the private risk is still that £84·6 million with the Government being asked to give guarantees to £1,915·4 million? If the Government are to guarantee that kind of increase in costs, even if they do not have to meet those guarantees, making provision for meeting them at the kind of interest rates envisaged is a very risky business. All the signals seem to have been at green in this project for the companies. But a great many of the signals for the Government, if not at red, are certainly at double amber.

The calculations on which the project has been based are worrying. The hon. Member for Faversham mentioned this matter. To think that until 1980 the Government have provided for a rate of inflation of only 4·9 per cent., when they know very well that in the period between the Green Paper and the White Paper the construction costs rose by 11·2 per cent., and to think that the Government can reduce the rate of inflation to 4·9 per cent., is to believe in a fantastic achievement.

We now have the following situation: if rates of interest do not rise—I hope that the right hon. Gentleman will not tell us that—and if the pound stays static, if there are no unforeseen problems in boring the tunnel, if there are no changes in the specification or design and if the Government can bring down the rate of inflation from its present 10 per cent. or 11 per cent. by 0·5 per cent. a year, so that the rate is about 6·5 per cent. by 1980, the cost of this project to 1980, on the present costing, is still £1,020 million.

In other words, even on the kind of projections that we can make legitimately, based on today's estimates of the rate of inflation and interest rates, the cost of this project has risen by 20 per cent. since the White Paper was published. These are the very shifting sands through which the Minister is attempting to bore his tunnel.

Someone will have to pay—I think that it will be the Government; they have said that—for the rail link between Cheriton and London. I have prophesied previously that we would be paying 50p for a gallon of petrol before Christmas. Petrol has been on sale in Birmingham today at more than 50p a gallon. I also prophesy that before this year is out, and certainly before the present Government are out—which will not be very long—a Minister will be asking the House for power to increase the order of Government guarantee on this project. The trouble is that my prophecies come true.

The Opposition are concerned about the people who have got themselves mixed up in this project. The first point on Schedule 4 is the declaration of interest. Those of us who know something about local authorities will know the way that declarations of interest work there. I am not particularly keen on seeing that kind of declaration of interest having to be made for the British board for the authority.

We then have to look at the people who will have to have some representation. We find, for example, the British Channel Tunnel Company, with a 25 per cent. stake, RTZ with a 20 per cent. stake, and even Kleinwort, Benson Limited, with a 10·5 per cent. stake—and all the fine old names of British banking. We then find the British Railways Board, with a mere 4·7 per cent. What kind of representation on the British board will the British Railways Board have alongside all these companies? If the Minister is trying to say that all these finance companies have a great deal of transport expertise, I can only say that from reading through the list of finance companies it strikes me that these companies know about as much about transport as Brian Clough knows about the procedure of a Trappist monastery.

The issue of road versus rail has been raised. We are told in the White Paper, and in the Treaty, that the Channel Tunnel Authority will take its instructions from the two boards, and will have to show no discrimination between road and rail, but the Minister knows that all the big money in the project will come from the rolling motorways—from carrying road vehicles on trains. The biggest slice of profit in the project is estimated to come from the 75 per cent. of passengers with cars who are supposed to shift to the rolling motorway. What is the Government's policy on this? Are they trying to tell us that they favour the railways, or are they going to prove the two worst prophecies of the hon. Member for Faversham about even more lorries rolling down through Kent?

A statement from the Chairman of the British Railways Board—in fact, it was his financial submission to the Government—was based on the assumption that even less freight would be carried on the railway system in 1981 than is being carried now. The railways have only 5 per cent. of the total freight market.

The right hon. Gentleman, replying to me following his statement, or the bare bones of his statement, on railway policy a week ago admitted that he did not think the railways would be carrying any different commodity share by 1981 than they are carrying now. Do the Government favour the railways and claim that the tunnel will favour the railways, or do the Government know very well that the only way to make big profits out of the tunnel is to increase as much as possible the share of road transport going through the tunnel on trains?

The Government are a very interested party in the project. They are not only guarantors, they are also the backstop and the referee. The Government will have to implement the recommendations of the Monopolies Commission on ferry prices and negotiate international air fares on behalf of the Civil Aviation Authority. Whatever the Government do they will remain a very interested party in the financial outcome of the tunnel.

Is the Minister still telling the House that the Government will allow the tunnel authority complete commercial freedom and that they will not lay down any code of practice—I suppose that that is what it would be called—or guidelines—for the tunnel authority to follow? The Minister must be giving some kind of directive to the authority.

The Minister knows that if he allowed complete freedom between road and rail to the tunnel authority it could work only to the detriment of the railways. On the other hand, if he gives directives in favour of the railways to the authority it could work only to the detriment of the profits and consequently to the interests of the private companies. Apart from that, if he pushes the road interests or takes a neutral line and allows the tunnel authority to discriminate in favour of road interests, as he may be tempted to do, he knows he can increase the profits. On the other hand, if he does what he says he will do as regards fostering the interests of British Railways he can only depress profits and run the risk of invoking the guarantees.

The Minister occupies a confused rôle in all this. He should come before the House and clarify his own policy and the Government's long-term policy for the operation of the tunnel.

I have mentioned some of the questions that need accurate answers. The resource and opportunity costs of going ahead with a project of this stature have to be examined. There has been a lot of talk about the financial cost. We are told in in the White Paper that the project will cost £846 million. I believe that we already have to increase the cost by 20 per cent. and shall have to do so by a great deal more by 1980.

It is the resource and opportunity costs of carrying out a project like this which worry me. The Minister knows that the opportunity cost of implementing the Buchanan Report would have meant having the construction industry not doing anything else for the next 50 years. We are told that Maplin, the Channel Tunnel and the rebuilding of London's dockland will add only 11 per cent. to total construction expenditure in the South-East, and only about 5¼ per cent. to the amount of labour demand on construction projects in the whole of the South-East.

I can only say, "Tell that to any housing chairman who currently cannot get local authority housing built. Tell that to the National Coal Board, which in many parts of the country, fears that as soon as construction work begins on the tunnel a great deal of its labour force will move to the South-East because these people know that the kind of wages they will get building the tunnel will be better than those being offered currently by the board under phase 3."

The Minister has told the House that the cost is to be only 0.3 per cent. of our gross national product. If we do not have any increase in GNP it means that, should expenditure increase by 0·3 per cent., it has to come out of something else. Even 0.3 per cent. of GNP, at about £150 million we are told, is a very large sum when we face the real and serious possibility of a zero rate of growth.

If the Minister does not feel bound to examine the project once more on the lines of some of the cost doubts that we in the Labour Party would like to cast, if he does not feel bound to reexamine the project on the actual balance that it is hoped to strike between road and rail, or because of the independence of the private banking institutions, will he please examine the project once again along the lines of, and because of, the serious energy situation now facing the country?

The financial success of this project depends upon a large shift of road freight—roll-on/roll-off lorries and passengers accompanying cars—to the rolling motorway. It is estimated that 75 per cent. of passengers with cars will have to make the shift to make this project a success. Does the Minister still believe in the White Paper forecast that the number of cars on our roads will double over 10 years? Does he still believe that the increase in world demand for oil of 7 per cent. a year can be satisfied after some of the things that Sheikh Yamani has been telling European countries this week? Does he honestly believe that North Sea oil will satisfy all of our demands when we have a situation in which the total production of French, Norwegian and British reserves in 1985 could be 150 million tons while the combined European demand in that year could be 1½ billion tons?

Does he honestly think we can get by and go ahead easily and fluently, thinking of projects like the Channel Tunnel, when we face this kind of crisis situation with our energy supplies? It is time the Government realised that the days of cheap energy are over. It is time they realised that we have to stop planning along the lines, and on a basis, of infinite mobility. We must start reappraising many big projects such as this on the assumption that mobility in future will be a finite commodity. We no longer have the energy resources to go on with projects such as the tunnel.

The energy crisis facing this country is not just a temporary thing. It is not the sort of thing which, if we sit down with a strong cup of tea, will go away. It will last a long time and this Government ought seriously to start planning for it and to stop putting the blame on to garages, motorists and the oil companies. The Government have to do some planning.

Having cancelled Maplin—and if he wants a good excuse to cancel Maplin the energy crisis certainly ought to give him that—let him rethink the whole strategy of his Channel Tunnel. He now has enough excuses and reasons. There is now enough doubt cast on the figures that he put forward in his White Paper. There is now enough doubt cast on the kind of projections which have been put forward by the British Channel Tunnel Company. There is now enough doubt cast on the projections which have been put forward by Cooper Brothers.

Having said that, I can only advise my hon. Friends to oppose the Bill tonight. We do not think that it is a project that can be undertaken along the lines of the Channel Tunnel Bill. We think that it is a project which deserves very serious reexamination, and certainly, as an instant step, this side of the House would like to see an impartial examination of the whole project that we have had outlined by the Government tonight.