PUBLIC POLICY

There are few projects against which there exists a deeper and more enduring prejudice than the construction of a railway tunnel between Dover and Calais. Again and again it has been brought forward under powerful and influential sponsorship. Again and again it has been prevented. Governments of every hue, Prime Ministers of every calibre, have been found during successive generations inflexibly opposed to it. To those who have consistently favoured the idea this ponderous and overwhelming resistance has always seemed a mystery. Winston Churchill, 1936. (cited Hunt 1994 p 151.) The idea of a fixed link between Britain and France was first mooted by a French engineer in 1802, much to the horror of the British military, who had recently secured the Peace of Amiens. Little came of the project and many of the others that were proposed over the years, save a collection of entertaining drawings. The first project to actually start digging was a railway tunnel which was begun in 1880 by Watkin, the chairman of the South Eastern Railway in collaboration with the Chemin de Fer du Nord. Watkin's company, which became the Channel Tunnel Company in 1887, received a charter from Parliament for experimental works, in order to test the tunnelling technology. Watkin lobbied hard for a full rights and government finance for his activities, but increasing opposition from military prevented an extension of the charter. Although technologically feasible, on the basis of the triumphs of the railway tunnels through the Alps and the invention of the Beaumont/English tunnel boring machine, the project was defeated by weight of opposition on military grounds, and establishment opinion in cultural circles (Travis 1991). The work stopped after an injunction had been served against Watkin in 1883 after some 1800 metres had been bored at both Sangatte and Shakespeare Cliff. Undaunted, engineers and entrepreneurs from both sides of the Channel put forward a wonderful variety of schemes over the next 80 years. These came closest to fruition in the period after World War I, when elements of military opinion realised that the existence of the tunnel would have been of considerable logistical benefit during the war, and provisions were made in the Versailles treaty for its construction. However, these proposals met a similar fate when establishment opinion mobilised against the project. The extraordinary convolutions of this opposition on military grounds are well told by Wilson (1994), but, as both Wilson and Travis show, this opposition was undoubtedly rooted in a cultural insularity that pervaded many sections of the British establishment. It was not until 1955 that Harold Macmillan, then Minister of Defence, stated categorically that there were no defence objections to the construction of a fixed link, but it still took another 40 years to realise the project. In 1957, the Channel Tunnel Study Group was formed, including the concessionaire companies of the 1880 attempt, and a White Paper in 1963 (cmnd 2137) proposed an essentially privately funded project. A joint statement was issued by the British and French governments in February 1964 favouring the initiative. Considerable debate ensued, particularly in Britain, and only in October 1972 were agreements signed between the two governments, and the Société Française du Tunnel sous la Manche (SFTM) and the British Channel Tunnel Company (BCTC) for Phase 1 of the works. These two companies combined national banking and the nationalised rail interests (SNCF and BR) and the old Channel Tunnel Company which had led the 1880 attempt. Notably they did not include construction interests; SITUMER and RTZ Development Enterprises, respectively, were appointed as project managers. The agreements provided for the two companies to build a tunnel with a combination of risk capital and loans guaranteed by the two governments in proportions ranging from 10:90 to 30:70 in favour of guaranteed capital. It was to be handed over to a publicly owned corporation upon completion. The estimated construction cost in 1973 prices was £486m. The project was divided into three phases. The main tasks of Phase 1 were the completion of technical and financial feasibility studies, and the preparation of the legal and financial documentation for Phase 2. A government review of Phase 1 (cmnd 5430 1973) recommended moving forward, and the Phase 2 agreements were signed in November 1973 after the signing of the Treaty between the two governments. Amongst other things, the Treaty and Phase 2 agreement obliged the British government to support British Rail in providing a high speed rail link from the tunnel to London. Phase 2 consisted mainly of engineering design work and preparatory construction works. Full construction works awaited agreement on Phase 3, which depended upon ratification of the Treaty between the two governments. However, politically uncertainties and a change of government in Britain in May 1974 delayed the bill, and in the November the new Labour government announced that it would not go ahead with the rail link. After an attempt at renegotiating the agreements, the tunnel's fate was sealed by an announcement from the British government that it was to be abandoned in January 1975. In the opinion of Hunt (1994 p 152) the project was sacrificed to the need to gain political stability and reduce public expenditure at a time of considerable crisis for the British state, despite the fact it had joined the (then) European Economic Community two years earlier. Morris and Hough (1987) are more explicit, and argue that the structure of the project was flawed in a number of ways. Firstly, there was the lack of a single client - SFTM and BCTC remained independent entities dealing separately with their national governments. Secondly, there lacked a political champion on the British side, particularly after the change of government. Thirdly, although British Rail was a full shareholder in BCTC, it lacked commitment to either the tunnel or the high speed rail link, and saw them as diversions from providing a commuter service in the home counties, a view that is shared by Bonavia (1987 Chap 10). Fourthly, the shareholders of BCTC lacked the incentive to fight for the project at the end of 1974 due to the generous cancellation terms contained in the Phase 2 agreements. Despite the fact that the oil crisis improved the competitiveness of the tunnel against the airlines, the overall political and economic situation of Britain in 1974 meant that these flaws were starkly exposed and led to its cancellation. To these factors, Lemoine (1994 p 94) adds the "attitude foncièrement aniteuropéenne qui repose sur le vieux sentiment isolationniste" of the British, which is again supported by Bonavia (1987 p 130). Renewed initiatives followed after the affirmation of British membership of the EEC in the referendum of 1975. These first came from BR and SNCF, but the French were generally very cool towards these initiatives (Hunt p 160) - understandably since perfidious Albion had twice let them down. The change of government in 1979 proved them right, as the incoming administration made it clear that a public sector scheme was not acceptable. The change of government in France and the rapport that was quickly established between Mitterrand and Thatcher warmed relations up, and in September 1981 the two governments announced preparatory studies. However, the Anglo/French Study Group report of June 1982 was dismissed by the cabinet. The project was kept alive by the banks who financed their own study with a modest contribution from the European Commission. The breakthrough came with Thatcher's statement of 30th November 1984, which demonstrated that she personally backed the project and thereby silenced opposition within her government (Henderson 1987). An invitation to tender was opened on 2nd April 1985, and closed on 31st October of the same year. The announcement of the winning tender was made on January 20th 1986 to the effect that the Channel Tunnel Group and France-Manche were successful. An accord was signed between the two governments in Canterbury Cathedral on 12th February. This provided for matters such as the establishment of the Intergovernmental Commission (IGC) (Commission Intergouvernmentale) to supervise the project on behalf of the two governments, particularly with regard to the safety of users, and border, customs, and immigration matters. Article 1 specified that the construction and operation of the scheme "shall be financed without recourse to government funds or government guarantees of a financial or commercial nature". The concession agreement (cmnd 9769 1986) was signed on 14th March for a period of 55 years from the date of ratification of the treaty. It reiterated that the facility was to be financed entirely with private funds without any government guarantees. In return there was to be no regulation of the fares charged, and a commitment not to support any other link with public funds or guarantees for the life of the concession. The service tunnel was to breakthrough within 7 years of date of operation of the agreement, and construction was to be completed within 10 years. The concessionaire agreed to provide at least one shuttle per hour. CTG/FM also agreed to present proposals for a road link before 2000; they then had the option to take up these proposals until 2010. In turn, the governments would not facilitate a competing fixed link before 2020. This offer to investigate a road link was a tactical move made at the last minute in order to fend off competition from the Euroroute proposal for a drive-through bridge and tunnel (Henderson 1987), as it was believed that both governments favoured such a scheme if it were feasible. The concession agreement also provided for the appointment of a Maître d'Oeuvre (MdO) at the expense of the concessionaire to ensure that the works were carried out to the relevant specifications, and to the agreed timetable and cost projections. It was to act not only on behalf of the client, but also on behalf of the IGC, ensuring that the terms of the concession were followed. The treaty was finally ratified after a difficult passage through the British legislature and an easy one through the French, and the texts were exchanged in Paris on 29 July 1987. The British problems were a combination of the more complex British procedures for the scrutiny of proposed legislation, and greater opposition. The two different public policy processes are compared in some detail in Holliday et al (1991). The decision to let a concession for the construction and operation of the tunnel was a radical innovation in British public policy terms (Marcou 1992). The concession has a long history in French construction dating from the time of Louis XIV, and provided the basis for the construction of the French canal and rail network in the nineteeth century. The essence of concession is the promotion of projects by the state which are implemented through private finance reimbursed by payments for the use of the facility for a determinate period. The British canals and railways, on the other hand, were built on the basis of charters in which a private sector promoter and financier obtained from the state the right to exploit a facility for an indeterminate period. The concession is an active instrument of public policy for infrastructure development, while the charter is a passive regulatory instrument. In the opinion of Holliday and his colleagues (1991 p.29), the channel tunnel concession agreement represents a "purification" of French concession practice, because many French concessionaires were, in practice, in receipt of public funds or guarantees - a situation that the British were determined to avoid. Throughout the last hundred and fifty years, the attitude of the British government with regard to the financing of the project has changed little. it has always been seen as a wholly private sector concession contract. This continuity is, perhaps, best expressed in this statement made in 1874: The Board of Trade can have no doubt of the utility of the work if successfully completed, and they think that it ought not to be opposed so long as the English Government is not asked to make any gift, loan, or guarantee (cited Hunt 1994 p 35). The only exception to this policy over nearly 150 years was that the two governments were prepared to guarantee a high proportion of the loans required for the 1973 attempt. The successful arrangements reached for the third attempt, and the reasons behind the failure of the second attempt, suggest that it has never been a priority of the British government to improve fixed communications with the rest of Europe. Its attitude has always been one of facilitator rather than initiator; regulator rather than investor. Such an investment, and the associated investment in a high speed rail link to London, has never been seen as a worthy use for public funds.