THE sale of Eurostar left taxpayers more than £2 billion out of pocket, a National Audit Office report has concluded.
The NAO said although the sale was 'run well', its timing was 'primarily driven' by the Government's desire to complete the deal before the election in May this year. One union leader condemned the deal as a 'gross rip-off'.
The sale of Britain's 40 per cent stake in the international operator raised £585.1 million, which was significantly higher than the Government's valuation of £305 million. But the public purse had invested approximately £3 billion in developing Eurostar over the years.
It has also been revealed that the Treasury was concerned about the high costs involved, of some £8 million, which was shared by financial adviser UBS and legal adviser Freshfields. The legal cost for an internal transfer of shares from the Department for Transport to HM Treasury was £500,000. The Treasury was concerned about the cost of the legal work and considered re-appointing a legal adviser during the sale, 'but it decided a change of legal team mid-way through the process would be inefficient and problematic,' said the report.
The NAO said that Eurostar's profits are forecast to increase from 2016 once it has introduced new higher-capacity Siemens Velaro trains, the first of which should enter service by the end of this year.
The NAO added: "The government considered waiting to sell after the new trains were introduced as it thought higher profits could feed through into a higher price. It concluded, however, that any delay would come with uncertainty and risks, so the government decided to sell in early 2015 rather than wait."
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.”
Meanwhile RMT general secretary Mick Cash said the deal was a 'gross rip-off' and that taxpayers had lost out.
“However you dress it up the fire sale of the UK’s Eurostar stake before the election has cost the taxpayer billions in wasted investment and lost future profits,” he said.
"With another £62 billion of our public assets set to be flogged off under this government, the Eurostar fiasco paints a grim picture of profiteering and bargain basement deals that rob the British people.”