Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

PRESCOTT ANNOUNCES DEAL TO BUILD CHANNEL TUNNEL RAIL LINK

  • Comment
The Channel Tunnel Rail Link (CTRL) will be built in its entirety ...
The Channel Tunnel Rail Link (CTRL) will be built in its entirety

without any significant extra funding from the taxpayer, deputy prime

minister John Prescott has announced.

Key elements of the new, innovative deal with a re-structured London

and Continental Railways (LCR) are:

- a contractual requirement to build the link in its entirety from

Folkestone to St Pancras;

- only£140m of extra taxpayers' money needed - down from£1.2bn - to be paid in year 2010;

- a Public Stakeholder share to give the taxpayer a significant new

dividend with the government getting about 35% of LCR's pre-tax

surplus after 2020 as well as not less than 35% of the proceeds of

any LCR sale and a veto on any sale of LCR before 2011;

- it guards against excessive windfall profits;

- a huge reduction in the length of the LCR concession from 999 years

to only 90 after which the railway will revert to the Government; and

- the whole railway including Eurostar will revert to public

ownership in 2086, the same time as the Channel Tunnel Concession

ends.

Welcoming the deal with LCR, Mr Prescott said:

'We have delivered an exciting and imaginative package that is

good news for people travelling to and from mainland Europe; puts us

on a level footing with French and Belgian railways who already have

high-speed links; brings certainty to those areas along the route

affected by blight; and regeneration benefits for the Thames Gateway.

Above all this is a good deal for the taxpayer.'

The rail link will be built as planned from the Channel Tunnel to St

Pancras. Railtrack will commit to acquire the section from the

Channel Tunnel to Fawkham Junction in north west Kent, which is due

to be completed by 2003. They will also have an option to buy the

section from north Kent to St Pancras, due to be completed by 2007.

If the option is not exercised, LCR will be contractually obliged to

complete the link to St Pancras.

The management contract for the operation of Eurostar (UK) Ltd will

be awarded by LCR to a consortium comprising National Express,

British Airways and the national railways of France and Belgium and

the UK Government share.

LCR will raise the capital they require through a combination of

commercial debt and bonds. These bonds, through a one-off arrangement

with HM treasury, will be government-backed to reduce the overall

cost of financing.

As part of the deal, the government will be entitled to share in any

savings resulting from the construction of the link, rather than

these being passed on purely for the benefit of the private sector.

Mr Prescott added:

'We have spent the last four months building a public private

partnership to construct the Channel Tunnel Rail Link at the earliest

opportunity. The agreement I am announcing today will deliver the

economic, regeneration, transport and environmental benefits of a

link on a basis which will be durable and which provides a fair deal

for everybody.'

Notes

1. The government and LCR signed the Development Agreement which

underpins the design, construction, finance and operation of the CTRL

on 28 February 1996. The Agreement obliges LCR to build the CTRL

according to the scheduled works authorised under the Channel Tunnel

Rail Link Act 1996.

2. LCR informed the government on 28 January 1998 that it was unable

to fulfil its Agreement obligations. In accordance with the

Agreement, the deputy prime minister provided LCR with a cure period

in which to produce revised proposals acceptable to the government.

That deadline was subsequently extended twice with LCR's latest

revised proposals being received by the government on 15 May 1998.

These proposals have provided the basis for the creation of a

Statement of Principles which underpins the deal and which will

provide the framework for a Supplemental Agreement to the Development

Agreement.

  • Comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.