Eurostar sale more ‘evidence of undervaluing assets’

The sale of the UK government’s stake in the Eurostar train service is “further evidence” of assets being undervalued, according to MPs.
Eurostar sale
The government eventually sold its 40% stake in early 2015 for almost double the estimate by financial advisers.

That was good news for the taxpayer, but it underlined a “repeated tendency” to undervalue assets, the Public Accounts Committee said in a report.

The PAC also criticised delays in publishing data on the HS1 rail line.

MPs said it was “unacceptable” that there was a two-year delay by the Department for Transport in publishing an evaluation of Britain’s first high-speed rail line.

It meant that important information that could have been used by Parliament to consider other projects, including the HS2 high speed line, was not available.

The PAC claimed it denied Parliament the ability to use “important information” when considering HS2.

Meg Hillier, the committee’s chairwoman, said the issues over the Eurostar sale and the HS1 report “raise serious questions about the government’s approach to valuing public assets, as well as its commitment to considering the value for money of public spending on such expensive projects”.

She highlighted concerns that the sale of Royal Mail, whose shares soared after its stock market flotation, was also undervalued.

The Treasury, the PAC concluded, relies too much on a “small pool” of financial advisers.
‘Misleading’

The government’s 40% holding in Eurostar was sold for £585.1m to Patina Rail, an investment consortium. But the Treasury, and its advisers UBS, put a price tag of £305m on the stake.

The sale of the government’s entire stake in Eurostar has netted £757m, although that is far less than the estimated expenditure on the project of £3bn, the PAC said.

A Treasury spokeswoman said: “The government welcomes the committee’s conclusion that the sale of our stake in Eurostar was well-handled and secured a good return for the taxpayer.

“Releasing public assets we no longer need is at the heart of our long-term plan to tackle Britain’s debts and boost economic growth, and that’s why we’ve recently identified up to £4.6bn of further asset sales, to help build on the huge progress we’ve already made.”

She said it would be misleading to suggest the government “set out” to undervalue its assets and added that its approach to Eurostar was approved by an independent adviser.

News resource:  Bbc.com

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