Eurorail in last-ditch bid for channel link

EURORAIL, the rival consortium to London & Continental Railways (LCR) for construction of the fast-speed Channel Tunnel Rail Link between London and Folkestone, has embarked on a last-ditch bid to gain control of the project.

LCR is teetering on the verge of insolvency. It was saved from collapse last week when John Prescott ordered a 30-day reprieve for the firm, while a rescue package was hammered out.

The Deputy Prime Minister said Railtrack had emerged as the likely saviour of the project at this stage, joining forces with LCR. It seemed this had scuppered any prospect of a rival offer.

But Eurorail chairman Keith Clarke has responded by letter to Mr Prescott's House of Commons statement, stating Eurorail would expect to be considered, were LCR to be stripped of the contract. In his letter, Mr Clarke reaffirmed that Eurorail would submit a revised proposal within one month. Eurorail has stated the project will require pounds 2.3bn in public subsidies - far ahead of the pounds 1.8bn projected by LCR. But LCR has said it would have needed an extra pounds 1.2bn if it is to complete the construction on time, and cover Eurostar losses.

The Eurorail consortium is privately concerned that Railtrack may appear to have been handed the project on a plate. The company said it would be unwilling to assume any of the pounds 400m in debts that LCR has notched up. A spokesman for LCR said negotiations with the Government were "at too delicate and sensitive a stage" to discuss on what basis Railtrack intends to be involved.

There is scepticism in the City that the project is feasible on current terms. One analyst questioned if a Channel Tunnel Rail Link could be justified. "There is nobody defending the taxpayer's interest. With six million passengers last year, it is questionable if the public sums can be justified," said Mike Stoddard of stockbroker Charterhouse Tilney.

The further delays to the project have raised the spectre of legal action by the Channel Tunnel Rail Link Action Group, a group of businesses in Kent which have suffered because they are losing customers, suppliers, and bank loans as a result of the scheme's uncertainty. LCR was meant to issue compulsory purchase orders for the affected businesses, but so far no compensation has been paid out.

Geoff Fleming, chairman of the group, which has 26 members and represents over 1,000 employees, says the group will consult members over the latest developments. "We are considering whether to pursue legal action through the European courts."

Within the next fortnight the House of Commons transport select committee, chaired by Labour MP Gywneth Dunwoody, will be revealing details of a strategic review of the country's transport needs. It promises to make specific recommendations on the duty government has to the taxpayer over avoiding the sort of chaos that has engulfed LCR.

Ms Dunwoody said: "Any infrastructure project needing heavy investment must look at how it manages its relations with private sector companies, and Railtrack is no exception. The watchword for the taxpayer must be value for money."