It’s called business risk – taxpayers should not compensate Eurotunnel

Outlook

Eurotunnel's claim really doesn’t stand up to scrutiny (Reuters)

How much should taxpayers pay to compensate a company for the impact of a geopolitical crisis?

The answer, according to Eurotunnel, is €29m (£23m). That is the sum it wants from the British and French governments “to compensate essentially the revenue losses due to migrant pressure”.

Now the security of the fixed link between the two countries, which has become one of the flashpoints in Europe’s migration crisis, is the responsibility of Paris and London, and they have both pumped money into improving it.

What Eurotunnel is seeking here is an extra – money from the taxpayers for what normal companies might have to call on business interruption insurance to provide.

Whether taxpayers should be doing this is highly debatable.

Let’s look at the finances. In the same press release detailing the compensation claim, Eurotunnel revealed it had increased revenues by 5 per cent to €1.2bn in 2015, on which it made a net profit of €100m. That is an increase of nearly a third on the €74m recorded the previous year. Funnily enough, the profit surge was omitted from the headlines in the release.

What all this tells us is that despite the pressure on Eurotunnel – and I accept that it faces considerable challenges – the company is doing rather well.

The build-up of migrants in Calais that is causing it so many problems has been fuelled by various geopolitical and economic crises in Africa and the Middle East – including, but not limited to, the appalling civil war in Syria.

Where I would agree with Eurotunnel is that the British and French governments could, and should, work harder to find solutions both to the problems in Calais and further afield. But that shouldn’t require them to compensate Eurotunnel. It is not the only business that has to deal with these issues. The most obvious comparison is with airlines – which don’t get to run to governments for compensation for business lost because passengers tend to fear flying in the wake of terrorist incidents.

Geopolitical tensions affect markets in a variety of ways, but the businesses involved have to trade through those issues.

Which is what Eurotunnel should do. Which is what Eurotunnel is doing.

You can’t blame it for asking – its job is to make money – but its claim really doesn’t stand up to scrutiny. Rather than fattening the balance sheet of an already profitable company, wouldn’t a better use of the funds be to alleviate the problems in Calais?

Why ‘Blackout Britain’ could edge closer with Brexit

People tend to be sceptical about the pronouncements of energy suppliers, and with good reason. But perhaps it’s time to listen to Iain Conn, who is the boss of British Gas’s owner, Centrica.

Mr Conn raises an issue that hasn’t had much of an airing yet in the debate over Europe: the impact of Brexit on the UK’s energy supply and energy security.

Earlier this week I covered the subject of the new nuclear plant at Hinkley Point, the future of which is hanging in the balance while French power company EDF debates whether to go ahead.

Meanwhile, as Germany’s renewables industry powers ahead, the UK’s is on the hard shoulder awaiting the RAC.

Which means the country is going to have to import gas if it wants to keep the lights on – and increasing amounts of it. The price of that gas will have a big impact on British citizens, which is why Mr Conn says that the UK needs to stay in Europe. Only by doing so will it be able to ensure that European gas markets remain as competitive and as favourable to it as possible.

This country already imports half its gas now, and while there has been much talk about the environmentally destructive proposals to allow fracking and even the so-called “Gatwick oil Gusher”, they aren’t going to help for a long time. Hence Mr Conn’s plea for the UK to remain part of the European club where it will be able to influence the gas market to its benefit.

Bond fund manager Pimco puts the risk of exit at about 40 per cent, and superstar fund manager Neil Woodford has stirred the pot by suggesting the UK economy could benefit from being out of the EU, after commissioning the consultancy Capital Economics to do an exhaustive study on the issue. If Brexit becomes a reality and Mr Conn has it right, it might just pay Mr Woodford to get some exposure to candlemakers.

Ashley can cry freedom if Sports Direct quits the market

Time for a Sports Direct Stexit? By which I mean an exit from the Stock Exchange, which hasn’t been a happy place for Mike Ashley’s unhappy retailer.

The denials keep coming, but they’ve done nothing to stem a tide of speculation. The latest comes from analysts at Jefferies, who reckon Mr Ashley could afford to pay nearly £1.5bn to take his company private.

That would represent a 35 per cent premium to where shares in the punch- drunk owner of Lonsdale currently languish.

It would also leave Mr Ashley free to run the company as he wants, without all those pesky governance watchdogs criticising, and free to buy what he wants, without all his minority investors complaining.

It wouldn’t stop the controversies about the way his workforce is treated, but Mr Ashley is supposed to be taking a look at that. Perhaps a bid will be forthcoming when he’s done?