Rail link to cut London to Paris trip to 21/2 hours

Rapid transit between European capitals came closer to reality yesterday when the contract for the pounds 3bn Channel tunnel rail link was finally awarded to a consortium. When the link is completed in 2003, Paris will be reached in two and a half hours by train from London, while Brussels could be reached in just under two hours.

But the consortium, which includes Richard Branson's Virgin group, is at the centre of a fierce row over the extent of government funding for the scheme.

Sir George Young, the Secretary of State for Transport, announced in Parliament that London & Continental, a consortium of eight companies, would receive pounds 1.4bn at present prices in subsidy to build the link. In addition to the 68-mile high-speed rail link between St Pancras and the mouth of the tunnel at Folkestone, which is expected to cut about half an hour off the journey to Paris and Brussels, the consortium will also build stations at Stratford in east London and the as-yet non-existent Ebbsfleet in Kent.

From April, as part of the deal and to provide it with a source of revenue, L&C will be given the assets of European Passenger Services, the British arm of Eurostar. Sir Derek Hornby, chairman of L&C, said that Eurostar was at present losing money and the consortium's first priority was to turn it around: "At the moment it has 3 million passengers per year, and that's not enough. It is a very good service but there has been a failure on the marketing and ticketing side."

He said that by 2000, there would be "more than double" that number using the service. At present, loadings have been around 50 per cent on the Paris route and under 30 per cent on the Brussels line.

L&C's bid includes a connection to the West Coast main line, which means that trains from Manchester, Birmingham and many other regional centres will be able to connect directly with the Channel tunnel. Sir Derek envisaged an hourly service to Paris from Birmingham and Manchester, with the intermediate stop at Stratford rather than St Pancras, which will save up to an hour.

The French section of the route is already a high-speed line with trains travelling at 186mph, while the Belgian section is due to come into use in two phases over the next two years, saving half an hour on the journey.

The decision to build an international station at Stratford surprised and delighted local MP Stephen Timms who said: "The decision makes Stratford the natural base for the growing number of European companies looking for locations in London."

L&C also announced that the company would be floated on the stock exchange after the Bill enabling the construction of the route was passed, which is likely to be in the spring of 1997.

The Government has been spurred on to build the link despite the large amount of subsidy because of its embarrassment over the comparison between the journey in France on high-speed tracks and Britain where delays are often caused by the international trains having to share the line with old Southern Region rattlers. A previous attempt to build the link was shelved five years ago because the Government refused to provide any funding.

The consortium will also receive pounds 100m in grant from the European Union, bringing total public subsidy to pounds 1.5bn, in addition to Eurostar. The extent of subsidy was criticised by Labour's transport spokeswoman, Clare Short, who accused the Government of "handing over pounds 3bn worth of public assets. On top of this, the Government is writing off pounds 1.3bn worth of Eurostar debt and contributing pounds 1.4bn to the project. Thus the taxpayer is contributing pounds 5.7bn in value for a pounds 3bn project that we could have had at pounds 1bn cost in 1989".

Sir George replied that he did not believe the delay had cost more and added that the project was not just about transport but regeneration as well.