Clause 1

Channel Tunnel Rail Link (Supplementary Provisions) Bill – in a Public Bill Committee at 11:30 am on 4 December 2007.

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Powers of Secretary of State

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I beg to move amendment No. 1, in clause 1, page 1, line 5, at end add—

‘(3) In subsection (1) “railway services” refer only to those services that both originate and terminate in the United Kingdom.’.

It is an honour and privilege to serve under your chairmanship, Mr. Atkinson. I am sure that you and other members of the Committee will be relieved to hear that I do not intend to use words such as “consultation”, “arbitration” or “registered delivery”. Those who were in this room last week will understand the significance of that remark.

The Bill is small. In many ways, this is an exercise in refining the Railways Acts of 1993 and 2005, and the Channel Tunnel Rail Link Act 1996. We support that premise because it is important that the new high speed rail link is given the statutory support that it needs so that it can be the success we hope it will be and in order for it to achieve its value.

Clause 1 attempts to clear up possible confusion about whether the Government may continue to provide financial support to the rail link, and the services running on it, now that the construction phase is completed and the services are being phased in.  As we have heard from the Minister, that is deemed necessary for the avoidance of doubt in case of any future purchase or re-financing of the rail link. My fear is that the current wording does not confine that financial assistance to domestic services.

The explanatory notes say:

“the Secretary of State will also provide revenue funding for domestic services operating on the CTRL under a franchise.”

That was presumably the intention. However, it is not the intention to provide that funding for the Eurostar international services. The Bill states:

“nothing in sections 31 to 33 of the 1996 Act prevents the powers of the Secretary of State under section 6 of the Railways Act 2005 (c. 14) from being exercised in relation to the rail link or railway services on it.”

I contend that if we leave the phrase

“or railway services on it” unamended, funding will not be restricted to domestic services. Therefore, in the spirit of helping the Government to remove any ambivalence or query, I contend that the amendment would clarify the matter and make clear that the railway services on the rail link that would potentially attract such support are only those services that originate and terminate in the United Kingdom.

Will the Minister confirm that it was his intention to provide financial assistance only to domestic services? If that is the case, I hope that he agrees that my amendment is the appropriate way of enshrining that in the Bill.

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I also welcome you to the Chair, Mr. Atkinson, and apologise for not having done so earlier. We are all treading in new territory at the moment, and I am not sure when there would have been an earlier opportunity.

The hon. Member for Wimbledon always tries to be helpful. I can tell when he is doing so because he says that he is trying to be helpful. However, as in this particular case, it never quite works out that way. I understand the sentiment behind the amendment, and I sympathise with his intentions and the commercial principle that he promotes. It would be wrong for the UK taxpayer to subsidise services across the continent. Members of the Committee might take comfort in the fact that the Secretary of State would not have the power to do so, even if she wanted to. The power to support services under the 2005 Act extends to Great Britain only—not to France, Belgium, or anywhere else where a commercial operator might wish to run services.

Eurostar is a joint venture. Its present structure is supported by a set of cost and revenue-sharing protocols among the three partner companies in the UK, France and Belgium. Under those agreements, Eurostar UK Ltd—the UK partner owned by London and Continental Railways—pays only the access charges on the UK side, and half of the charges for the tunnel itself. Any restructuring of the joint venture would also have to be on terms that protected taxpayers’ interests.

The amendment would rule out leaving in place some of the historical support that the Government  have already agreed to provide to Eurostar UK Ltd, such as the access charge loan and the guarantees of its rolling stock places. An objective for next year’s restructuring is to make Eurostar and all LCR’s businesses independent, self-standing and financially sustainable. The Government and LCR should be in a position in which a full range of options is available to meet that objective so that decisions taken best protect the taxpayers’ interests.

The hon. Gentleman is right in that the Government’s intention behind the clause is to allow continued subsidy or support for domestic services, not international services. I said on Second Reading:

“It does not mean that the Government have any long-term intention to offer public subsidy to Eurostar.”—[Official Report, 20 November 2007; Vol. 467, c. 1156.]

With that reassurance, I hope that he will withdraw the amendment.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

Before I consider that, may I press the Minister on two things that he said in his explanation? First, he said that there is no power in the 2005 Act for the Secretary of State to subsidise services across the continent. I understand that point. However, in extremis, does not the Bill allow the possibility of part of the service that Eurostar is running in the UK being open to revenue funding? Is that really what the Government intend to do?

Secondly, I fail to understand how my amendment could possibly have an impact on the guarantees that were previously given on access and rolling stock. Will the Minister clarify why he thinks that it would in any way affect those?

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

On the hon. Gentleman’s second point, I think that it is quite feasible that if we were to amend the Bill in the way in which he suggests so that it said that international services were precluded from any such public subsidy of any shape or form, any existing financial agreements, such as rolling stock leases, could clearly be challengeable in court.

On the first point—will the hon. Gentleman remind me what his first point was?

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

My first point was that the Minister rightly stated—we all understand this—that the intention was to provide financial assistance for revenue operations, potentially regarding the domestic service only. He said that there was nothing in the 2005 Act that would allow the Secretary of State to subsidise services operating on the continent. However, I am saying that if the Bill is not amended, there might be a position in which it will be possible for her to subsidise the UK portion of Eurostar’s operations. Is that really what the Government intend to do?

Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport)

I am grateful for that clarification.

In essence, if, in the short term, any extra subsidy were to be provided to Eurostar Ltd, such as through the leasing stock agreements, the hon. Gentleman is right. That could be interpreted as being a short-term subsidy from the Government. However, as I have said repeatedly, it is not the intention of the Government publicly to provide any subsidy to Eurostar in the long term. However, there will be an interim period  following the restructuring of LCR in which there will be a necessity for perceived public funds to be available to Eurostar, but it will be only a short period. Certainly, in the long term, we do not expect Eurostar to be publicly funded; we expect it to be a viable commercial operation that stands on its own two feet. The hon. Gentleman’s amendment would preclude us from offering even short-term support in whatever form, such as through subsidy or leasing stock agreements.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I have listened carefully to what the Minister has said. If he had wanted such a provision, as we have seen from other pieces of legislation that we have examined, he could have done so though the use of an interim period clause. I accept that the Government intend to concentrate revenue funding on domestic services. However, I shall examine carefully why the Minister thinks that the measure has an impact on matters such as the leasing arrangements for Eurostar because it seems to tackle the operation of domestic services. We might revisit that on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.