LEADING ARTICLE: One tunnel going under

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The Independent Online
Concorde - bah! Beautiful-looking, but an expensive case of how the taxpayer ends up forking out so that the wealthy can shave two hours off the flight to Bloomingdale's. The British Library - pooh! Enormously over-budget, decades late, bought at government expense, so that eggheads can get material for their books. Trident? We've had the damn thing for years and never once used it.

These are the follies that have cost all of us a great deal of money. Whenever they've gone wrong, the public purse has been plundered to make it all better. Contrast these with the case of Eurotunnel, which yesterday told the world that it was in danger of going under. The revenues from Le Shuttle and the fees from Eurostar are far less than the cost of servicing Eurotunnel's massive debts. The company says that it will survive. But even if it goes bankrupt, the taxpayer will not have to pay a penny. The cost of this fiasco will be borne by the private investors and shareholders who took the risk.

Every now and again private capital will take a punt on some incredibly costly and dubious project. Bullish sentiment, persuasive enthusiasts, or just a lot of money sloshing around in the kitty, can addle the brains of even the most level-headed investor. The building in which this newspaper is based, Canary Wharf, is a good example. A vast project is conceived in a golden age and money is borrowed on the basis of preposterously inflated expectations of income. Sometimes the project takes too long, goes over budget and still more is borrowed. When it is completed, it soon becomes apparent that the prices that would have to be charged to users are too high. The income just is not there to pay off the debt incurred.

If the worst happens, the company involved will go bust. A new venture will take over the assets of the old one, but without all of its debt. Using a new and more realistic business plan, it can turn the situation around. Commercial success can be plucked from the jaws of disaster. Or, just possibly, (as in the case of the Mont Blanc tunnel) the project goes according to plan and all who invested get a very nice return, thank you.

When work first began on the Channel tunnel, many argued that the Government should be involved. After all, was this not the infrastructural project to end them all? How could it be left to the private sector? Today, they got their answer. Had the Government bankrolled the tunnel, it would now be the taxpayer, in some guise or another, who would be paying the £2m per day interest charges. Instead, it is the markets - which is why borrowing a copy of Margaret Thatcher's memoirs at the British Library and reading it on the flight to New York may cost the taxpayer a packet, but taking Le Shuttle to Disneyland Paris will not.

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