Minister urged to resist all-French Eurotunnel plan
The Guardian: June 5, 2006
Andrew Clark, transport correspondent
Labour and Tory MPs say dual structure must stay - Contract granting 99-year concession could be vital.
The transport secretary, Douglas Alexander, is facing cross-party calls to safeguard British influence over the Channel tunnel by preventing Eurotunnel from ditching its dual nationality and becoming a French company. A rescue plan announced last week involves abandoning its carefully balanced Anglo-Gallic structure, put in place when work began on the tunnel in 1986, and reconstituting itself as a French parent company with a British subsidiary.
Senior parliamentarians say this is a step too far for a business which is already run by an all-French board in Paris and has a French-dominated share register. The government could block the change if it is judged to be a breach of Eurotunnel's 99-year concession to run the tunnel.
The concession agreement requires twin British and French undertakings to operate the undersea link. Clause 29 of the document, obtained by the Guardian, requires the "central management and control" of the British concessionaire to be "at all times exercised in the United Kingdom and in no other place".
Shadow transport secretary Chris Grayling said: "The Channel tunnel is of such strategic economic importance that it's essential to retain the international balance of its structure. It's always been an Anglo-French project and if there's any danger of change, the government needs to look with some urgency at the implications."
Gwyneth Dunwoody, Labour chair of the transport select committee, said vast amounts of British money had been pumped into road and rail links to the tunnel: "It is essential that this access route to the UK is not controlled by one of the parties. I'm sure the UK government will look closely at the terms and conditions under which so much British money has been made available."
Eurotunnel maintains that its present structure is wasteful and time-consuming. It points out that it is required to hold every board meeting three times - for its French arm, British arm and the "group" which the two sides jointly own. It claims it would be hard to get a "clear verdict" on its efforts to slash its £6.2bn debt if it was required to continue juggling twin companies.
The restructuring will be put to a vote of shareholders next month but is facing a challenge from bondholders, who are working on an alternative proposal.
The Guardian has established that a cost-cutting drive by Eurotunnel involves reducing staffing levels in critical areas -measures which have come under scrutiny from the inter-governmental Channel Tunnel Safety Authority. Eurotunnel has successfully applied to reduce the number of employees from three to two on its lorry shuttles. These carry 80 heavy goods vehicles and one such shuttle caught fire in 1996. The company has also asked for approval to amend minimum staffing at its emergency centre and to change the frequency of maintenance on undersea doors between tunnels.
In its annual report, the safety authority made it clear it was monitoring Eurotunnel's swift turnover of senior executives, noting "the departure of a number of experts from among the company's managerial staff".
A Eurotunnel spokesman said many of the tunnel's safety guidelines were drawn up when the tunnel opened. "We've now got 12 years of experience of how the tunnel runs, what the risks are and how to deal with them. In that sense, it's entirely natural to use historical data to show what we really need in terms of safety and to modify how we run the business."
He dismissed criticism of the company's plan to become French, saying that it would have a British subsidiary registered at the tunnel's Folkestone terminal. He accepted it would be overseen by a French supervisory board which would generally meet in Paris: "The registered company address is the terminal in Folkestone. Where they [the directors] hold their meetings is neither here nor there."