Rail freight seeks £26m in state aid

Britain's largest rail freight operator, English Welsh & Scottish Railway, has asked the Government for a £26m bailout to keep running services through the Channel Tunnel.

Britain's largest rail freight operator, English Welsh & Scottish Railway, has asked the Government for a £26m bailout to keep running services through the Channel Tunnel.

The company faces a cash crunch next April when it must start paying Eurotunnel, the Channel Tunnel operator, access charges to cross to France.

The British Government now pays EWS's access charges under an agreement with the French. But this will expire in April, and EWS has warned that unless the Government helps out it will be forced to stop operating through the Tunnel.

"The sum we are taking about is small beer, but for our international freight business it is the difference between operating or not," said Graham Smith, EWS's planning director. "We need to reach an agreement with the Department for Transport and the Strategic Rail Authority."

EWS wants the Government to pay its access charges until November 2006, when another charge the company currently pays Eurotunnel will expire.

EWS's cash call will present the Transport Secretary, Alistair Darling, with a dilemma. He will want to avoid using more public money to prop up the private rail industry, but the Government also wants to promote rail freight. And if the Government does pay, the European competition authorities could class the money as illegal state aid.

A spokesman for the Department for Transport said: "It is too early to say what our decision will be, but we are keen to encourage rail freight through the Channel Tunnel."