Channel tunnel rail link deal nets £2.1bn

A Canadian consortium today won the right to operate the High Speed 1 (HS1) Channel Tunnel rail link for the next 30 years in a deal worth £2.1 billion to the Government.

The 68-mile London to Folkestone HS1, on which Eurostar trains can travel at 186mph, has been a wholly-owned subsidiary of London and Continental Railways (LCR) which, in turn, is Government-owned.

Announcing the sale of the 30-year HS1 concession today, Transport Secretary Philip Hammond described the deal as "great news for taxpayers and rail passengers alike".

The Canadian consortium beat a challenge from, among others, Channel Tunnel company Eurotunnel.

The winning consortium comprises Borealis Infrastructure - the infrastructure investment arm of a Canadian pension plan company - and the Ontario Teachers' Pension Plan.

The new operators will take on management of HS1 later this month.

They will be responsible for running the line as well as stations such as the Channel Tunnel international terminal at St Pancras in London, and the international stations at Stratford in east London and at Ashford and Ebbsfleet in Kent.

HS1 is also used by the Japanese-built Javelin trains operated on domestic services in Kent by the Southeastern train company.

The sale had been expected to fetch between £1.5 billion and £2 billion. The £2.1 billion deal announced today represents far less than the £5.8 billion cost of building the link.

However, the Government will be able to re-let HS1 in 30 years time.

Mr Hammond said: "This is great news for taxpayers and rail passengers alike. It is a big vote of confidence in UK plc and a big vote of market confidence in the future of high-speed rail.

"It also shows that the decisive action this Government has taken to reduce the deficit is already paying dividends and that investors believe once again that Britain is open for business."

He went on: "The £2.1 billion receipt exceeds the highest expectations for the sale and will make a welcome contribution to reducing the deficit.

"I look forward to working with the new concessionaire and to the benefits passengers will see as HS1 seeks to attract new services to the line, allowing British passengers to travel by high-speed train to even more destinations across Europe.

"This is an exciting time for rail travel and an important step in our plans to develop a truly national and international high-speed network for British travellers."

LCR chief executive Mark Bayley said: "HS1 is a unique, high-quality infrastructure asset which speeds tens of thousands of people between London, Kent and continental Europe every day.

"I am very proud to have been associated with the business and its excellent management, and believe that we have achieved an extremely good price for HS1 through a very competitive process."

Bob Crow, general secretary of the Rail, Maritime and Transport union, said: "This announcement is just another act of political vandalism on the UK railways.

"The most modern section of the UK rail network has been sold off for a song in what amounts to nothing more than a fire sale of the family silver to prop up the financial deficit caused by the bankers and speculators in the first place."

The performance of the new HS1 operator will be monitored by the Office of Rail Regulation which said today that it was looking forward to working with the winning consortium and would regulate "to ensure the line supports a service which is safe, meets the needs of rail users and gives value for money".