Outlook: Prescott's fast track to a railway wilderness

What do you get when you cross Europe's mightiest bank with America's second biggest construction company, Britain's largest transport operator, a French state-owned monopoly and the world's best-known bearded entrepreneur? Not, alas, a High Speed Channel Tunnel Rail Link.

Students of this ill-fated project know that history has a nasty habit of repeating itself but nobody ever seems to bother telling its many promoters, including London and Continental Railways, which duly hit the buffers yesterday. Close your eyes and John Prescott could have been Cecil Parkinson back in June, 1990 telling the last Channel Link consortium, Eurorail, where it could put its request for government guarantees.

The names differ and the sums of course get bigger - a project that was supposed to cost pounds 3bn has suddenly escalated to pounds 6bn. But, that aside, plus ca change?

The remarkable thing about LCR is how quickly its ambitions have unravelled. Four days ago, its ebullient chairman Sir Derek Hornby was telling the world that the project remained on course and he had no intention of handing back the keys.

Yesterday he all but threw in the towel. Although LCR has been given 30 days to find the pounds 1.2bn in bridging finance that Mr Prescott is not prepared to provide, the game is up. Eurostar and its eye watering losses will retreat back into public ownership, where at least they can be funded more cheaply than anywhere else, and LCR will be left to pick up what little is left of its credibility. So much for that fancy role call of SBC Warburg Dillon Read, Bechtel, National Express, Virgin and SNCF.

Despite Mr Prescott's late night Commons bravura and the cheers of Old Labour, the demise of LCR poses a ticklish question for his Government. Kleinwort Benson couldn't make the sums work in 1990 for Eurorail. Warburgs, despite its track record of luring bankers and investors into no-hopers like Eurotunnel, can't make the arithmetic stack up either. How then is the rail link ever going to be funded on the basis of a public-private partnership, without a much bigger subvention from the state?

Even Railtrack, with its vaunting ambition and triple A debt rating would be hard pressed to make the link a viable proposition without more taxpayers' money than is currently on the table. Even supposing it could be persuaded to bail out the project, perhaps in return for a deal on track access charges, Mr Prescott would still have to bribe a private operator to take over the running of Eurostar, where losses are running at pounds 180m a year or pounds 30 per passenger.

It's all so vexing when the French and even the Belgians have got their high-speed links up and running. Admittedly, pounds 6bn seems a lot for one 68-mile line which will shave 30 minutes off the journey time to Paris when the rest of the rail network was sold off for pounds 2bn. But Mr Prescott can always point to the amount of freight traffic the link will take off the roads and the commuter congestion it will help ease in the south east

Trans-continental rail networks are something Mr Prescott believes in. Unless he is happy for Britain to be stuck in the slow lane across Kent for another decade, he may have little option but to bite the bullet and conjure up some more money.