Taxpayers will have to fork out substantial additional sums of money to keep the company behind the Channel Tunnel Rail Link afloat, an influential committee of MPs said yesterday.
The Commons Public Accounts Committee said the rescue deal struck by the deputy Prime Minister, John Prescott, with London & Continental Railways four years ago would "expose the taxpayer to substantial risk for many years to come".
Edward Leigh, the Conservative chairman of the committee, said the Government had allowed the project to proceed on the basis of a "fundamentally flawed" business plan which was all too reminiscent of the Dome.
The MPs also criticised the Government for the way in which London & Continental's shareholders were insulated from financial risk and said the consortium's over-optimistic passenger forecast numbers should have been questioned more robustly earlier in the project.
The first phase of the £5.2bn link from Folkestone to Ebbsfleet in Kent is nearing completion and is due to enter service in September next year.
The second phase, which will take Eurostar trains direct into St Pancras station, is due to be complete in late 2006 and enter service early in 2007. Phase two involves boring 13 miles of tunnel underneath London.
Under the terms of the deal, the Government has agreed to guarantee £4bn on bonds being issued by London & Continental and provide a further £3bn in direct grants.
In addition, London & Continental will be able to draw on £300m of public funds to subsidise Eurostar UK's losses once the link is open.Reuse content