Cut-price rescue proposed for Channel tunnel link

The high-speed Channel tunnel rail link could be rescued and built for under pounds 1.5bn - less than one-third of the current projected cost - under plans put to the Government by Railtrack, the owner of the nation's track, signalling and stations.

The new scheme, which could see the line opened only months after the original start date in 2003, would scrap an expensive 12-mile tunnel and station at Stratford, east London, built for Eurostar services to the North. The new Railtrack route would also not need a new international London terminus, planned for St Pancras.

The proposed pounds 5.4bn rail link fell into disarray last month after London & Continental Railways (LCR), the company responsible for building the link and running the Eurostar service, admitted that it could not meet its passenger forecasts and needed another pounds 1.2bn of taxpayers' money.

The Government declined to bail out LCR which had already been promised pounds 1.8bn of public subsidy by ministers.

Railtrack's "Southfleet option" would see passengers follow a route through Kent and up through south London into the existing international terminal at Waterloo station. The total cost, said Railtrack, would not be more than pounds 1.4bn. "You get half the benefits for a third of the cost," said Gerald Corbett, its chief executive."You would obviously need considerably less subsidy."

Britain has had to watch enviously as its Eurostar partners, France and Belgium, have trains running at 186mph following the completion of their high-speed links. Railtrack's "Southfleet" option would reduce journey times from London to both Paris and Brussels by 15 minutes - only half the time saving proposed by LCR. Eurostar trains currently reach Paris in three hours.

As Railtrack does not wish to run the service, which will not break even until 2001, the Government could keep the trains in public hands. Another possibility would see the Virgin Group run the service, with Railtrack owning the rail link. But the proposal needs to conform to the "development agreement" setting out the business case. If not, the Government may face legal action from the European Commission.

Millions of Kent commuters, who had been promised a high-speed commuter link as part of LCR's deal - would also be left with nothing from the deal. And ministers would have to fork out pounds 150m for a new station at St Pancras to cater for Thameslink 2000 - another Railtrack project - which LCR had also promised. A pounds 2bn "new town" planned in Kent would also be jeopardised by the Railtrack plan. This office and residential development was to be planned around a international railway station at Ebbsfleet. The Railtrack Southfleet option runs four miles short of the proposed development.

Railtrack sources stressed that four options were on the table. One was Southfleet. Another was running trains to Ebbsfleet. The third was services to Stratford, east London and another to do the whole LCR project.

A spokeswoman for the Department of Environment, Transport and the Regions said no decision could be made until the end of the month - the deadline for LCR to return with another business plan.