July 21, 2005

NAO finds channnel link costs unrealistic

Written by brian_turner

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A report by the National Audit Office (NAO) has found that passenger revenue forecasts for the Â£5bn Channel Tunnel Rail link between London and Kent, made in 1998 and 2001, underestimated the cost. As a result taxpayers may have to make up the shortfall.

According to the report “The economic justification for the project remains marginal”.

The NAO says the government should take measures to minimise potential risks to taxpayers by reviewing costing forecasts more regularly. This would enable the Department of Transport to estimate the value and timing of future lending to London and Continental Railways more realistically. London and Continental Railways is building the link.

The NAO did acknowledge that Section 1 and 2 of the scheme had been completed on schedule and within budget.

Edward Leigh, chairman of the House of Commons Public Accounts Committee called on the Department of Transport to monitor the scheme carefully.

He said “This project is a sorry tale of something that started off in the expectation that all the risks would be borne by the private sector and has ended up today as one where they are all backed financially by the government”.

On a positive note, Mr Leigh said that the plans to provide a fast link between London and the Channel Tunnel in Folkestone were “bold and prestigious” and had been a factor in helping the UK secure the 2012 Olympics. The link will be used to carry spectators from central London to Olympic sites.

Filed Under Business