Q61 Mr Davidson: Then what happens?
Mr Rowlands: Then the Government has a right, if it so wishes, I believe, to terminate that agreement.
Q62 Mr Davidson: Then what happens?
MrRowlands: It would all revert to the Government.
Q63 Mr Davidson: It all reverts to the Government in a situation where it is basically bankrupt! So we have the consolation that if it all goes wrong and the money cannot be repaid, we get it.
Mr Rowlands: Yes.
Q64 Mr Davidson: What exactly is the advantage to us of having this asset that is making such an enormous loss that it cannot repay the money that we have lent it, coming to us?
Mr Rowlands: We would still get infrastructure costs of some £5 billion. The British share of the Eurostar train sets that run the joint service with SNCF and SNCB-it may come back on the basis that it is not a profit-making enterprise at that point. If it came back in those circumstances I guess that would be true, although I have to say that much the same can be said of the existing national railway system.
Q65 Mr Davidson: Is there a limit to the amount that the Department for Transport are prepared to lend to LCR?
Mr Rowlands: That is why we have set a cap on the maximum drawings under the access charge loan agreement.
Q66 Mr Davidson: There is a limit and that is it!
Mr Rowlands: As I say, they would be in breach of their development agreement at that point. The Government would then have to decide what to do.
Q67 Mr Davidson: Can we turn to the question of regeneration benefits. Our previous recommendations indicated that there should be a "robust appraisal" of the regeneration benefits. Has that been done yet?
Mr Rowlands: We cannot do a robust appraisal perhaps in the sense that you mean until this project is built out and section 2 is running. We have seen the consequences in terms of the finalised proposals for King's Cross, Stratford, Ebbsfleet; and because it is, although not part of LCR's plans, also Eastern Quarry in Kent, which ties into Ebbsfleet.
Q68 Mr Davidson: Is much work on the methodology of that being done at the moment, or are you waiting until everything is finished before you start that?
Mr Rowlands: No. As I said to Ms Ussher, we have put out guidance on how to put together an economic impact report, when looking at the employment consequences of large and indeed small transport infrastructure projects. It is a non-trivial exercise. I believe the report being done for Crossrail is not yet finalised, and it has taken 12 months already and is expensive to produce. We will in effect do this for this project once it is built out and running.
Q69 Mr Davidson: How will you be able to separate the boost to areas like east London from this project, as distinct from the Olympics, or from anything else that is happening?
Mr Rowlands: I should not trespass into whether or not the Olympics came here because of this project, although it certainly helped at the margin. It will be a challenge to disentangle some of the Olympic effects, but that is less so in the case of the King's Cross railway lands, which have stood there semi-derelict for heaven knows how long, and only this project has kicked it into life. Ebbsfleet would not exist without this project, and the Stratford railway lands similarly have stood desolate for decades. I think there is a real task to separate it out. There are lessons to be learnt, and it is a real task to separate out the genuine regeneration consequence from the background noise, and I cannot give you a defined answer today. That is one of the challenges for us when this project completes.
Q70 Mr Williams: Mr Rowlands, in reply to the Chairman you said that the Government underwriting all debt was the most efficient way of funding risk in the private sector. Is that right?
Mr Rowlands: I think the Chairman had asked what was the benefit for the Government seemingly underwriting every last penny of this project. I think I said in reply that it helped to maintain this project in the private sector, and therefore the carrying of a substantial degree of risk of cost overrun and proper management therefore in the private sector.