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London and Continental Railways

I announced on 14 February 2006 that my Department had been independently approached by a third party, with an interest in the potential acquisition of the shareholders' interests in London and Continental Railways (LCR). LCR is the company responsible for the development of the Channel Tunnel Rail Link, including the railway itself, the associated development sites and the operation of the UK interest in the Eurostar train company. LCR is a heavily indebted company, owned by private sector shareholders, but funded by approximately £6 billion of Government-backed debt. In recognition of this Government support, the contracts governing the development of the Channel Tunnel Rail Link give the Government certain rights, including the right to consent, refuse or force a sale. The Government believe that, in the current circumstances, the best way of delivering continuing value for money for the taxpayer is for there to be an open, transparent, competitive process. Accordingly, as a first step, potentially interested parties should put their propositions to my Department as well as to the LCR shareholders, so that we can establish how overall best value for the taxpayer can be achieved. My Department is continuing to discuss this approach with LCR's shareholders so as to ensure value and transparency, with a level playing field for all participants, including the incumbents. The Government's objective will be to ensure continuing value for taxpayers' money, including the successful delivery of the Channel Tunnel Rail Link and the continuing safe and efficient operation of Eurostar, as, for instance, under the existing arrangements whereby the Government is entitled to 50 per cent. share of any future profits on the development of the sites around the CTRL.