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

Funding row: L&C consortium wins pounds 3bn contract

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 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 an international station at Stratford in east London, while a new station will appear at 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 - which hopes to be floated on the stock exchange in the spring of 1997 - 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." He said that by 2000, there would be "more than double" that number using the service.

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, saving 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 Government has been spurred on to build the link because of its embarrassment over the comparison between the high-speed journey in France and delays in Britain. A previous attempt was shelved five years ago because the Government refused 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."

Business Comment, page 21

Continental connections

The high-speed rail link between London and Folkestone is due to be completed in 2003, a decade after the completion of the French line to the Channel Tunnel and five years after the Belgian link, which is expected to be finished in 1998.

France already has more than 700 miles of high-speed route, including the 200-mile stretch from Paris to the mouth of the tunnel, where trains reach 186mph, in contrast to the British maximum of 100mph.

France: 102 kilometres (63 miles) - was opened recently to allow trains from the north to by-pass Paris on their way south, providing direct connections between Marseille, Lyon and Lille.

Belgium: The high-speed link between Brussels and the tunnel was delayed by funding problems but the first section of 10 miles near the French border is due to open in June this year. The rest of the 55-mile route to Brussels is now scheduled to open in January 1998 and will cut the journey between London and the Belgian capital by half an hour.