The UK’s stake in Eurostar will be sold off, Osborne announces
On Monday George Osborne will be announcing the UK government’s decision to sell 40% of its stake in Eurostar – the Channel tunnel train operator.
Osborne has said that the privatization of Eurostar will raise up to £300 million.
In his speech Osborne will say:
“I am determined that we go on making the decisions to reform the British economy and tackle our debts. So we will proceed with the potential sale of the UK’s shareholding in Eurostar today.
“Ensuring we can deliver the best quality infrastructure for Britain and the best value for money for the taxpayer are key parts of our long-term economic plan.
“As part of our aim to achieve £20bn from asset sales by 2020, the sale proceeds would make an important contribution to the task of reducing the public sector debt.”
The chancellor will be looking for bids by the end of October and is being advised on the sale by the Swiss bank UBS.
For over two decades the UK has part-owned Eurostar. The decision to sell its stake in the train operator is part of the Treasury’s goal of cutting the national debt through selling off state assets.
SNCF, France’s state owned railway business, owns 55% of Eurostar, and 5% is owned by SNCB, Belgium’s state owned railway company. SNCF has said that it is not interesting in buying the UK government’s stake in Eurostar, although it has the right to buy the holding at a 15% premium at the end of the bidding process.
The government expects the sale to be complete in the first quarter of 2015. Potential bidders include investment funds and infrastructure funds.
Osborne has been at the forefront of selling the government’s stake in Lloyds bank through giving offers to private institutions – as opposed to a public sale.
Other state owned assets that will be sold include the uranium enrichment company Urenco, Royal Mail pension assets, and the income-contingent student loan book.
Unions have expressed strong opposition of selling off Eurostar and there is increasing debate about private versus public ownership of British railways.
In 2013 Eurostar reported net profit of £18.6 million, of which £7.4 million was given to the Treasury.
The UK has a national debt of £1.4 trillion and the sale will only make a very small difference. The national debt refers to how much a country’s government owes – its outstanding borrowings.