Eurotunnel has confirmed it has frozen planned UK freight projects. The French owners have cried foul on what they describe as “unsustainable” British taxation. The revenue-raising regime has made investment “non-viable.” Among the casualties are proposals to reopen the Barking international freight terminal and a proposed launch a direct Lille‑London freight service, both of which are now on hold indefinitely.
The company has claimed that the UK Valuation Office Agency (VOA), a body that assesses for asset-based taxation, plans to increase Eurotunnel’s business rates liability by around 200%. That would see its UK tax liability rise from £22 million to £65 million (about €26m to €78m), potentially raising total tax levels to roughly 75% of earnings. Eurotunnel described the proposal as “unjustified and confiscatory” and warned that it threatens the long-term development of cross-Channel rail freight.
CEO delivers sharp message and cancels freight projects
CEO Yann Leriche was interviewed by British broadcast media and did not hold back his disdain for the proposed hike in liabilities. In an interview with the BBC in London, he said that under the current tax regime, the whole business case for Eurotunnel was in the red. “All our investments, all our plans are becoming unsustainable,” he said.
“To face such an increase is a real issue for us,” continued Yann Leriche. “Because we know in rail, we invest for the long term.” His words could be echoed by a wide swathe of UK industry. It is understood that the Valuation Office Agency has engaged with Eurotunnel and its advisers over the past 18 months, but discussions have yet to yield a resolution.
Eurotunnel said it will use “all measures at its disposal – including legal action” to assert its rights under the 1986 Franco-British concession. – the legislation that gives the owners Eurotunnel and their parent Getlink a legal right to challenge unilateral taxation anomalies – such as the unprecedented hike in business rates on the UK side of the operation.
The abandonment of the Barking terminal (where the first “New Silk Road” train arrived from Yiwu amid much fanfare less than a decade ago) and the proposed Lille‑London freight link underscores a serious effect UK fiscal policy is having on international operations and trade. The sharply increasing taxation burden in the UK is obviously deterring private investment in UK rail freight, particularly where long-term, high-capital projects are concerned. Eurotunnel’s announcement is merely the highest-profile such move. These cancellations highlight the risks to both investment and decarbonisation targets.
Opinion: Barking mad Government policy under fire
“This is nothing short of a damning indictment of the UK Government’s fiscal policy,” says Simon Walton, UK Editor. “The announcement, coming as it does less than a week before Chancellor Rachel Reeves presents her Budget, could not have been timed to send any other message.
“The language used by Eurotunnel is not that of a broker’s margin call; this is an outright ‘stop-loss order’ – when nerves have broken and dealers see no recovery. In short, the dealers’ screens have gone red, and they’re getting out before they get rinsed. Is this an overreaction? Not really. This is an international response to the domestic policy of the UK Government and, if the international markets take note, this could be very serious indeed. It’s not just Eurostar’s freight plans that are off the rails; it’s the UK economy as a whole.”
See this week’s Friday Forum Column, “An opportunity for a Budget for freight”.