Posted 13th October 2014 | 6 Comments

Sale of UK share of Eurostar sparks opposition

THE RMT union has reacted angrily to a Treasury announcement that offers are being invited for the 40 per cent stake in Eurostar which is owned by the British government. Labour is also opposing the proposed deal, and calling for a National Audit Office inquiry.

Reports suggest that the British stake in Eurostar could be sold to a third party investor for some £300 million, although the Treasury is not commenting on this estimate for 'commercial reasons'.

Most of Eurostar, which celebrates its 20th anniversary next month, is already owned by SNCF, which has 55 per cent. The Belgian operator SNCB has a 5 per cent share.

SNCF and SNCB have agreed not to compete or take part in the bidding. However, if a third party purchaser does emerge, both national railways have the right to step in and buy the stake themselves, paying a 15 per cent premium to do so.

The Chancellor George Osborne said: "I am determined that we go on making the decisions to reform the British economy and tackle our debts. So we will proceed with the potential sale of the UK's shareholding in Eurostar today. Ensuring that we can deliver the best quality infrastructure for Britain and the best value for money for the tax payer are key parts of our long term economic plan. As part of our aim to achieve £20 billion from assets sales by 2020, the sale proceeds would make an important contribution to the task of reducing the public sector debt."

However, the RMT has pledged that it will oppose any sale, which is being timed to be complete before the general election in May.

RMT general secretary Mick Cash responded: "This is a gross act of betrayal of the British people by a right wing government hell bent on selling off the family silver regardless of the real cost. This sell-off is just a short sighted act of industrial vandalism based on a bankrupt pro-privatisation ideology. RMT will fight this tooth and nail."

Labour is also concerned about the Treasury plan. Shadow transport secretary Mary Creagh said: "Eurostar is a national strategic asset that is set to grow and to return increased profits to the UK taxpayer with new routes to Geneva, Lyon, Marseille and Amsterdam. After the staggering incompetence of the Royal Mail sale fiasco, which lost taxpayers a billion pounds, people will worry that this is yet another rushed and undervalued sell-off.

"City adviser UBS made millions from Royal Mail and is advising on the Eurostar sale.  Lord Myners is still conducting his review into government privatisations after Royal Mail, and ministers should await his report before any sale begins.

"The National Audit Office should urgently conduct a value-for-money enquiry before this sale proceeds.  We must ensure that taxpayers are not ripped off again by bungling Ministers and poor financial advice from the City."

A prequalification letter is being published today, and interested parties must respond by 12 noon on 31 October.

However, the sale is not a foregone conclusion. A Treasury note added: "We will continue to test offers against our sale criteria at all stages of the process. If value for money is not being achieved we will take the decision not to sell the stake at this point."

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Roshan, Leeds

    I think, as this is a cross-border operation, that we should retain our share of Eurostar as to have some power in the company. Eurostar is also making a lot of money now, so it is really of benefit to the UK.

    @ Lutz - This is not exactly like DOR which is owned directly by the government. The government has a share in the company - it doesn't own it completely.

  • Lutz, London

    I suggest that there is good reason to get rid of the stake in the business while it is still in reasonably good shape; it will soon have to deal with direct competition for the first time, and it will have to raise money to replace the existing fleet in the not too distant future.

    So, those minuscule profits are likely to quickly shrink in coming years with the added problem of demands for additional funding likely to be made. The potential funding demands are likely to be small compared to the those coming from other parts of the Government, but when measured against the original expectations the service has been an abysmal failure and the cause for the write-off of significant investment.

    Lastly; running railways is not the job of the Treasury.

  • MikeB, Liverpool

    Some parts of the media have called this proposal "privatisation", whereas others have just refer to it as a likely asset sale. However, if/when a deal is struck, either description would be correct, depending on the identity of the buyer:
    If the buyer is Virgin, National Express or even Eddie Stobart - privatisation.
    If the buyer is DB, SNCF or another EU state-owned railway - an asset sale.
    Sale to one of the latter examples would be the most likely outcome as I doubt that any British company would be able to fork-out the estimated £300 million.

  • Darren, Durham

    I wonder what the Rush is? Unless a certain company has become the front runner in the soon to be announced East Coast franchise bid? Strangely enough a Keolis Eurostar success for the East Coast would increase the value of Eurostar, nothing like a bit of insider trading!

  • Roger, Darlington

    Why is it that this Govt. immediately sells anything that is starting to make money for the taxpayer?

  • Lutz, London

    Makes little difference who owns it, so the Left-wing dogma can be ignored. It has also been shown that the Royal Mail sale was at a fair price so again just more political dogma from the old-world left wing dogma - don't they know yet the cold war was lost yet?