BRITAIN would be £10 billion better off if the Channel tunnel had never been built, according to a study by a former Strategic Rail Authority economist.

The study, an “ex post economic evaluation”, was drawn up by Ricard Anguera when he was at the SRA, which has since been subsumed into the Department for Transport.

Anguera’s work attempts to estimate the total costs and benefits to the British economy from the construction and operation of the tunnel, which opened for business in 1994. The construction costs of the tunnel doubled, from £4.7 billion in the original estimate by the construction consortium to £9.5 billion.

No government money was invested in the building of the tunnel, but British Rail had to invest significant sums to build up its international passenger and freight businesses as well as in the rail infrastructure leading to the tunnel. In all, the report says, BR spent £1.08 billion on works related to the tunnel.

The traffic forecasts that underpinned the tunnel’s construction “largely and systematically overestimated the total size and growth of the cross-Channel freight and passenger markets ... Eurotunnel’s forecasts were extremely optimistic, forecasting between two and three times the current numbers of passengers”.

The number of passengers using the tunnel — by car shuttle or train services — peaked in 1998 at 18.4m. Duty-free shopping was abolished the same year, since when, Anguera notes, “the market began a process of regression, which continues to the present day”.

As the construction costs of the tunnel rose in the early 1990s, Eurotunnel continued to increase its revenue forecasts “without any clear evidence or justification”.

The report calculates that the total costs of the tunnel to date have been £12.7 billion, while the total benefits have been £6.3 billion. Once the losses incurred by the backers of the tunnel have been subtracted, the net present value of the project is minus £10 billion.

“The Channel tunnel clearly has, up to the present day and in cost-benefit terms, not been a viable project,” the report says.

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