Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence

Memorandum by London & Continental Railways Limited (RES 8)


  1. This memorandum is provided at the request of the Transport Sub-committee to inform its inquiry into the prospects for regional Eurostar services.


  2. In February 1996 LCR won the competition for the right to design, build, and to operate international train services on the proposed Channel Tunnel Rail Link to be built between London St Pancras and the Channel Tunnel at Cheriton. Under the terms of the resulting contracts, entered into in February 1996, the ownership of European Passenger Services Ltd ("EPS"), the company formed to own and operate the UK's assets which contribute to the provision of Eurostar train services, was transferred from Government to LCR. EPS was subsequently renamed Eurostar (UK) Limited ("EUKL").

  3. On 3 June 1998 the Deputy Prime Minister announced to Parliament new arrangements which provided for the restructuring of the LCR Group to enable the CTRL project to proceed to the construction phase. These arrangements included the award of a contract for the management of the EUKL business by LCR and EUKL to a consortium, subsequently named as Inter-Capital and Regional Rail Ltd (ICRR), comprising of National Express, SNCF, SNCB and British Airways. The EUKL business is defined to include "the management and operation of international passenger train services to and from the United Kingdom through the Channel Tunnel".

  4. The contract between LCR, EUKL and ICRR requires certain EUKL activities to have prior approval from the EUKL Board. These reserved items include any proposals for making "the provision of any new rail services to/or from origins and/or destinations not served by the Eurostar UK Business or the carrying on of any new business not reasonably incidental to the Eurostar UK Business". For these purposes the Eurostar UK Business means the business ordinarily carried on at the date of signing the Agreement with ICRR and includes the "management, exploitation and operation of EUKL's rolling stock". During the period of ICRR's management contract LCR has the right to appoint directors to the EUKL Board who will have sufficient votes at any Board meeting to form a majority of any vote which might be taken. Accordingly any proposals to introduce Regional Eurostar services or to use the Regional Eurostar rolling stock in the EUKL business would have to be considered and approved by the EUKL Board.


  5. The agreement which originally provided for the transfer of EUKL to the LCR Group introduced the concept of a "Ring-Fenced Business" with "Core Assets". The definition of "Core Asset" includes the seven Class 373/2 "Beyond London trains" (the Regional Eurostar trains) and under the terms of the ring-fencing these trains cannot be disposed of by EUKL without the prior written approval of the Secretary of State.

4 December 1998

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