UK's Great Austerity Sell Off of State-Owned Assets Begins

The great austerity auction of state-owned assets has commenced after a pair of Canadian pension funds splashed out £2.1bn to acquire High Speed One, the UK’s high-speed rail link.

Photo: PA – Telegraph

Graham Ruddick
Telegraph

The deal means the consortium has won a 30-year concession to run the 68-mile stretch of rail between London and the Channel Tunnel, as well as the stations on the line, St Pancras International, Stratford, Ashford and Ebbsfleet.

Philip Hammond, the Transport Secretary, on Friday called the deal “great news for taxpayers and rail passengers”. The £2.1bn price is above analysts’ estimates of £1.5bn to £2bn.

High Speed One was put on the block in June and was seen as one of the most attractive assets likely to be sold by the Coalition as it seeks to reduce Britain’s national debt of £952bn. Other assets earmarked for potential privatisation are the Dartford Crossing, the Tote, the state’s 49pc holding in National Air Traffic Services – to which the Government has appointed Bank of America Merrill Lynch to advise on its strategic options – and Royal Mail.

Under Friday’s rail agreement, Ontario Teachers’ Pension Plan and Borealis, the infrastructure arm of the Ontario Municipal Employees Retirement System, will receive the track access charges paid by the train operators that use the high-speed line – Eurostar and Southeastern Trains. They will also have the right to sell further access to the track and the stations. High Speed One is generating annual earnings before interest, tax, depreciation and amortisation of £135m.

The Department for Transport played down fears the deal could lead to higher passenger fares through the consortium increasing charges for train operators. The charges on the line are capped by the Secretary of State and the Office of Rail Regulation, which monitors the performance of High Speed One.

Mr Hammond said the consortium’s business plan “very clearly” shows the desire for extra services on the line. Deutsche Bahn aims to launch services to Frankfurt and Amsterdam from 2013 that use the track. “It is a big vote of confidence in UK plc and a big vote of market confidence in the future of high speed railway,” he added.

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