Eurostar passengers travelling between London and the continent could face higher fares after the Government moved to sharply increase the tax bill on the Channel Tunnel.
Eurotunnel, which operates the undersea link, says a business rates revaluation will triple its payments from £22 million to £65 million from April, leaving the company facing a 75 per cent tax rate on new investment. The firm says the cost will be pushed onto train operators through higher access charges, which are likely to be passed on to passengers. Eurostar said the plans “would be at odds with the government’s ambition” to promote rail travel.
The rise will also hit rail freight. Eurotunnel said its plan to reopen Barking freight yard in east London will now be dropped.
The dispute comes ahead of a Budget expected to include targeted tax rises after Chancellor Rachel Reeves abandoned a wider increase in income tax.
Eurotunnel has accused the Valuation Office Agency (VOA) of failing to explain how it reached the new valuation. “All of the users of the tunnel pay for access. When business rates go up, that's split amongst the different users,” said John Keefe, director of public and corporate affairs. “At this stage, the numbers aren't one hundred percent known, because we're hoping we can talk a bit more with the government about this… But there is a mechanism whereby everybody contributes.”
The changes would also raise costs for Virgin Trains, the new operator aiming to launch services to Paris, Brussels and Amsterdam by 2030.
Keefe told Politico that the increase follows a series of steep rises: “Since 2017 we've had, over three valuations, a nine-times increase… This time it's gone up, multiplied by three, from £22 million to £65 million.”
“It needs to be based on what business can actually pay… Because if you take all the money in business rates, there's nothing left for investment… While we're hearing leading up to the budget, 'growth, growth, growth', nobody can invest at that level.”
He said the VOA’s calculations were “opaque beyond belief,” adding: “They say, 'here's the number.' And you go, 'why did you get the number?… And they go, 'there's the number.'”
A VOA spokesperson said it had “engaged with Getlink and their advisers on multiple occasions” and that discussions “remain ongoing.” Ratepayers have the right to challenge or appeal their valuation, they added.
Eurostar also voiced concern. A spokesperson said: “Our priority is enabling more people to travel sustainably, which includes offering affordable lead-in fares and products, and we remain fully committed to our growth plans regardless of the VOA review.
“Eurostar continues to engage with the Government and the Valuation Office Agency and is determined to find a positive way forward. However, a three-fold increase in business rates for Channel Tunnel users for the second time would be at odds with the Government’s ambition of economic growth, pioneering European rail connectivity, and encouraging low-carbon rail travel.
“Throughout our conversations, we have urged fairness by treating international rail in the same way as domestic rail in business rates terms. Nevertheless, Eurostar continues to commit to its own ambitious growth plans and investments including €2bn in new fleet and new destinations of Frankfurt and Geneva direct from London.”
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