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Eurostar deal provokes union wrath

The Government has been warned that the "British" is fast disappearing from British industry following the sale of its stake in cross-Channel rail giant Eurostar.

Chancellor George Osborne hailed the £757 million agreement to sell the Government's stake to a Canadian-led consortium as a "fantastic deal for UK taxpayers", but critics accused him of "selling off the family silver" for short-term gain.

The Treasury said the money was "significantly ahead" of the price expected when it began inviting offers last October.

But watchdog Passenger Focus said customers cared more about punctuality than who owns train companies, while rail unions tore into the coalition, accusing it of a "pre-election act of public sector destruction".

The sale also fuelled controversy over ownership of famous British products after previous sales including chocolate favourite Cadbury to an American firm and once-British cars being built by carmakers based in countries such as Japan, India and Germany.

Recent research showed that around three quarters of the UK's private rail contracts, were now owned by foreign state-run or backed railways, with the vast majority being from France, Germany and the Netherlands.

Unite assistant general secretary Tony Burke said: "The 'British' in 'British industry' is disappearing fast - the sale of the 40% stake of Eurostar being sold off to an Anglo-Canadian consortium is the latest example. Most of the car industry is in foreign ownership, and this also applies to rail and water companies."

The Eurostar deal should complete in the second quarter of this year subject to regulatory approval, though the state-owned French and Belgian rail operators who own the rest of Eurostar have the option to step in but only if they are willing to pay 15% more.

Mr Osborne said: "It's great that we have reached an agreement to sell the UK's shareholding in Eurostar that delivers a fantastic deal for UK taxpayers that exceeds expectations.

"Investing in the best quality infrastructure for Britain, getting the best value for money for the taxpayer and tackling our country's debts are key parts of our long-term economic plan, and in today's agreement, we are delivering on all three."

It comes after the Government set out plans last year to sell off £20 billion of assets by 2020.

Chief Secretary to the Treasury Danny Alexander said: "There's no virtue in the Government owning assets it does not need to.

"This sale, at a much higher price than market expectations, is a model example of how this Government is securing great value for money for taxpayers as it helps rebalance and rewire our economy."

Manuel Cortes, leader of the TSSA rail union, said: "George Osborne, because of his outdated belief in unvarnished Thatcherism, is once again selling off the family silver for short-term financial gain.

"The reason that France and Belgium already own the majority stake in Eurostar is that they believe in running a publicly-owned railway for the benefit of everybody.

"One-eyed Osborne, on the other hand, prefers the private English model where fat cat bosses are at the front of the queue, way ahead of the passengers."

Mick Cash, leader of the Rail, Maritime and Transport union, said it was "just another short-sighted, pre-election act of public sector destruction" after the recent return of the East Coast mainline to private hands.

The deal will see Caisse De Depot Et Placement Du Quebec (CDPQ), a Canadian pension and insurance fund institutional investor, and Hermes Infrastructure, a UK-based fund, buy the Government's stake.

The consortium, known as Patina Rail, will pay £585.1 million, while Eurostar has also agreed to redeem the Government's preference share, raising a further £172 million for the Exchequer.

CDPQ will own 30% of Eurostar and Hermes 10%, with the other shareholders comprising France's SNCF, which holds 55%, and Belgium's SNCB, at 5%.

Macky Tall, senior vice-president of private equity and infrastructure at CDPG, said: "We are becoming partners of a highly strategic asset that will generate stable and predictable returns for our clients."

Peter Hofbauer, head of Hermes Infrastructure, said: "Eurostar is a high quality asset providing a direct link between the UK and Europe that has historically offered attractive investment characteristics."

Last month Eurostar reported 2014 sales revenue up 1% to £867 million, like-for-like operating profit up 2% to £55 million and passenger numbers up 3% to 10.4 million.

Eurostar began life in 1994, since when it has carried more than 150 million passengers - 10 million last year alone - the Treasury said, with traffic growing every year for the last decade.

Today its high-speed services link London's St Pancras, Ebbsfleet, Ashford, Paris, Brussels, Lille, Calais, Disneyland Paris, Avignon and the French Alps.

TUC general secretary Frances O'Grady said: "The fact that it's being sold off to a pension fund looking for long-term stable returns shows how short-sighted the Chancellor has been.

"The French and Belgian governments understand its value, which is why they have held on to their shares. And once again passengers' interests have been put last, and private shareholders first."

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