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Eurostar: Taxpayer £2.3bn out of pocket from sale of train operator says National Audit Office

The taypayer was left £2.3 billion out of pocket from the Government’s sale of its stake in Eurostar last year, according to a report released today.

The National Audit Office said the Treasury’s keeness to sell before the general election meant it will miss out on profits forecast over the next decade from bigger trains.

However, it said the £757.1 million proceeds from the sale was good value for money as it was more than twice the Government’s accurate £305 million valuation of its 40% stake in the operator.

Eurostar suffered an underlying operating loss in 2016
Eurostar suffered an underlying operating loss in 2016

The Treasury was paid £585.1 million after it sold to Canadian pension fund Caisse de Depot et Placement du Quebec and British investor Hermes in March.

It also earned £172 million after the operator bought back the Government’s preference shares.

“The government prepared well for the sale of Eurostar and the sale process was run effectively. I regard the sale as value for money..." - Amyas Morse, National Audit Office

However, the report said the taxpayer had invested about £3 billion in Eurostar before the sale, having spent £8 billion on the High Speed One project overall.

It said the Government wanted to sell before the election to avoid any uncertainty and risks associated with the delay.

This was despite its knowledge that Eurostar’s profits were forecast to increase from 2016 once it has introduced new higher-capacity trains, the first of which should be rolled out at the end of this year.

The National Audit Office said the sale was run well, with three bidders entered into the final round, which resulted in a price around a third higher than the first round.

Amyas Morse, head of the National Audit Office, said: “The government prepared well for the sale of Eurostar and the sale process was run effectively. I regard the sale as value for money.

“This case illustrates some general lessons for government as it embarks on an unprecedented asset sales programme forecast to exceed £62 billion over this parliament.

“These lessons include: the need for detailed business cases in support of the decision to sell; objective and robust valuations to decide if, and when, to sell; and getting good value from advisers.”


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