British Rail sell-off heads for the back-burner

Click to follow
THE Government is on the verge of another climbdown, this time over British Rail privatisation. The Bill authorising the sale of parts of the rail system, which was expected to be published next month, may be delayed.

This follows criticism of the Government's proposals from the Conservative backbenches and the failure of two pilot schemes for private rail services. Privatisation of British Coal, another step promised in the Tory election manifesto, is now in doubt after the outcry over pit closures.

One ministerial source confirmed that there had been delays with the rail privatisation Bill, which will detail the framework for companies wanting to run rail services. Another said that there was no definite date for publication of the legislation.

Last week Robert Adley, Conservative chairman of the Select Committee on Transport, wrote to John MacGregor, the Secretary of State for Transport, asking for a delay in the Bill until his committee had completed its report on the sell-off.

Some backbenchers believe the Government's proposals will be too vague to allow companies to plan franchise bids.

Ministers are sympathetic to some delay, even though the select committee report is not expected until next March. The case for delay was strengthened last week by the collapse of the two pilot schemes for private rail operations.

Stagecoach, the company which ran two coaches on a BR London-Aberdeen service, announced that it will end the service on 1 November, and Charterail, a freight company involved in a partnership with BR, is going into receivership.

While the privatisation scheme is in difficulty, the Department of Transport will be quick to respond to the Prime Minister's call last Tuesday for new and wider forms of partnership between the public and private sectors - part of his 'strategy for growth'.

Roger Freeman, minister of state at the Department of Transport, is expected to announce plans for British Rail to lease - rather than buy - rolling stock from manufacturers, a measure which could open the door to about pounds 250m of additional spending on the railway network. Coach builders are said to be keen to co-operate.

The Treasury has resisted these arrangements for the public sector but ministers argue that the lease and thus the costs will, in time, pass to the private sector when companies begin offering services.

The privatisation of the coal industry will almost certainly have to be delayed for at least a year until the autumn of 1994 and may have to be abandoned altogether, ministers have been warned. Officials at the Department of Trade and Industry believe it might prove impossible to introduce the necessary privatisation legislation next month if the programme of pit closures does not proceed as originally scheduled.

The review that the Government has ordered into the closure of 31 pits is not expected to be completed until well into the new year. That would delay introduction to Parliament of the coal privatisation Bill for at least a year and the sell-off itself for another year after that.

Policy switch, Business section