Book Description

In March 2015 HM Treasury agreed to sell its 40% stake in Eurostar for £585.1 million, almost double the valuations produced before the sale by both the government's project team and UBS its financial adviser. While some of this difference may be explained by the successful sale process and favourable market conditions, it is also further evidence of the government and its advisers undervaluing assets. We are also concerned about the seeming over-reliance by government on a small pool of costly advisers for asset sales. For example, UBS, the financial adviser for this transaction, was also involved in the sale of the Royal Mail and High Speed 1 (HS1). Eurostar also agreed, in a separate transaction, to redeem the government's preference share, providing a further £172 million for the taxpayer. The sale of the UK government's entire financial interest in Eurostar therefore generated proceeds of £757.1 million, significantly less than taxpayers' total financial investment in Eurostar which is estimated to have been some £3 billion. In October 2015, some two years later than expected, the Department for Transport published an evaluation of the economic impact and regeneration benefits for HS1. We are concerned that this delay has prevented the evaluation, which shows that the costs of HS1 far outweigh its quantified benefits, from being used to aid the scrutiny of other projects such as High Speed 2. Despite the results of its own evaluation, which it described as "world class", the Department maintains that there are further "wider wider benefits" from HS1 that it cannot yet value which make the investment worthwhile.