The £5.2bn link from London to Kent cannot be justified on passenger numbers alone, said the House of Commons Public Accounts Committee.

Regeneration benefits were needed to ensure value for money and taxpayers may be forced to pay more, MPs said.

The second stage of the link from north Kent to St Pancras is due to be finished by next year.

The link is expected to speed up journeys from London to Paris and Brussels, and improve services on domestic routes from 2009.

"No one really knows how much money taxpayers will be required to cough up in future" - Edward Leigh, committee chairman

The report also said the cost of the second stage may continue to be a problem for South East England as construction projects are hit by high inflation.

Other major projects such as the Olympics in 2012, the widening of the M25 and the Thameslink 2000 rail scheme were also creating an extra drain on resources, the MPs added.

The committee report said a forecast of passenger numbers had not been reached.

London & Continental Railways, which bid for the project in 1996, said there would be 21.4 million Eurostar passengers by 2004, but the actual number then was only 7.3 million.

Guide to the Channel Tunnel Rail Link, due to open in 2007 click here At-a-glance guide to the Channel tunnel

The committee's chairman, Edward Leigh, said: "The CTRL is undoubtedly a magnificent project and a boost to our national prestige but the economic justification for it remains marginal.

"No one really knows how much money taxpayers will be required to cough up in future."

A spokesman for the Department for Transport said the link would provide substantial regeneration benefits.

"In addition to improved passenger services, it will support an estimated 100,000 new jobs, 18,000 new homes and over 40 million sq ft of office space along the route of the link," he said.

See also:

MPs criticise slow start to Britain's fastest railway line as costs mount

The Guardian: May 4, 2006
Andrew Clark, transport correspondent

Public accounts committee berates wild forecasts of ticket sales that left Channel tunnel link underfunded

It is billed as a marvel of modern engineering that will drag Britain's railways into the 21st century. But the Channel tunnel rail link's benefits are "marginal" and planning has been dogged by wildly optimistic assumptions, according to parliament's spending watchdog.

A report by MPs on the public accounts committee will upbraid the government today for failing to manage risks adequately on the £5.2bn project, which is Britain's first internationally recognised high-speed railway, with trains running at 186mph.

Ticket sales on Eurostar trains, which were supposed to help fund construction, have barely reached a third of the level forecast by the Department for Transport's advisers. The final section of the line, to open next year, is running £200m over its £3.3bn budget as a glut of construction projects in the railway industry pushes up wages.

Edward Leigh, the Tory chairman of the committee, said government guarantees on financing the project could yet be called upon: "No one really knows how much money taxpayers will be required to cough up in future."

He said that although the line was "undoubtedly a magnificent project and a boost to our national prestige", it had been poorly financed. "The link has been bedevilled from the outset by inaccurate forecasting of the number of passengers likely to use Eurostar and the amount of revenue this would generate," he said.

Designed to end the national embarrassment of cross-Channel trains slowing to a crawl on the British side of the tunnel, the 68-mile rail link has been under construction since October 1998.

A first section, between Folkestone and Fawkham Junction in north Kent, opened in 2003 and in a test run, trains broke the national speed record by hurtling through the countryside at 208mph. The rest of the link will open late next year, terminating at the rebuilt St Pancras station, which will be Europe's biggest rail passenger hub.

Questions have been raised about whether the line provides value for money. Under the government's own cost-benefit analysis, it will fall short purely as a transport endeavour unless the number of cross-Channel passengers unexpectedly rockets. But regeneration benefits could deliver a positive economic case if it helps to create an anticipated 100,000 jobs and 18,000 homes in down-at-heel areas of north and east London.

"The justification for public funding of the link is dependent on wider and unquantifiable benefits, such as regeneration and national prestige," says the committee, pointing out that it will be difficult to isolate the regeneration due to the line from the benefits of parallel projects such as the 2012 Olympics.

London & Continental Railways (LCR), a consortium including Bechtel, Halcrow, National Express and SNCF, won a contract to build the line in 1996. At the time, it forecast that Eurostar's passenger numbers would reach 21.4 million by 2004 but they only reached 7.3 million. The shortfall in revenue forced the government to lend more money to keep the project afloat.

Particular criticism is reserved for an American consultancy, Booz Allen Hamilton, which drew up passenger forecasts in 2001 and 2004 for the government. Its estimates proved hopelessly high - yet the Department for Transport has hired it again to compile another set of forecasts.

The MPs said: "The department was unable to say whether a competition had been held to see if anyone else could have made more realistic forecasts. Nevertheless, the department said it was satisfied that Booz Allen Hamilton had done the best professional job it could do at particular points in time."

London & Continental made much of the fact that it opened the first section of the line on time and within budget. But costs are piling up on the final stretch of track as wage and material costs edge up. Experts say the costs of construction have accelerated well ahead of inflation in the south-east, where other planned work includes the widening of the M25, the Thameslink 2000 rail modernisation project, Olympic preparations and new homes in the Thames Gateway.

An LCR spokesman said the cost of the line remained "within the budget range" but admitted it was at the top end of this range. He brushed aside the committee's report: "It provides a very incomplete picture when you put it alongside the greatly reduced journey times we'll be delivering for commuters and international travellers."

The fastest trains on the line will go from London to Paris in 2 hours, 15 minutes, cutting 40 minutes off the trip. A journey to Brussels will take one hour, 51 minutes. Local trains to towns in Kent will cut commuters' journeys by up to half an hour. The line's advocates also pointed out that it played a central part in London's successful Olympic bid as it will be used for Javelin shuttles carrying passengers between central London and the games in Stratford.

A spokesman for the Department for Transport said ministers would study the report's recommendations, adding: "The substantial regeneration benefits the link will deliver should not be overlooked."