The rolling stock companies welcomed the announcement, predicting it would bring greater certainty to the industry. But the pressure group Save our Railways criticised the move and called on the industry to be forced to spend more on new trains.
John Prescott, the Deputy Prime Minister, ordered a review of the three rolling stock companies - Porterbrook, Eversholt and Angel Train Contracts - in January. The move followed widespread criticism over their bumper profits and the fortunes made by British Rail managers who bought them on the cheap when they were privatised. A report in March from the National Audit Office concluded that the taxpayer had been short-changed by up to pounds 900m.
In his report to Mr Prescott yesterday, Mr Swift said regulation of the rolling stock market should be introduced only as a last resort. Instead, he recommended that the industry be governed by voluntary codes of conduct and the powers under the Government's new Competition Bill.
One of the biggest areas of concern is the fear that the leasing companies may abuse their market power when existing contracts come to an end and train operating companies need to renegotiate leases early next century.
Mr Swift said it was important not to lay down rigid controls, which would be inappropriate to deal with possible abuses when the leases, which cover 11,000 existing vehicles, start to come up for renewal.
Stagecoach, which owns the train leasing company Porterbrook, welcomed the regulator's review. Mike Kinski, chief executive, said it would bring greater certainty and encourage more investment in rolling stock. Stagecoach shares rose 9.5p to 1215.5p.
Angel Train Contracts, which was taken over by Royal Bank of Scotland last December, said it looked forward to drawing up a code of conduct in consultation with the regulator.
But Jonathan Bray, of Save Our Railways, said it was imperative the leasing companies, which made combined profits of pounds 348m last year, were compelled to invest more. "We need tough action on the rolling stock companies who are currently profiting from old and overcrowded trains to the tune of pounds 1m a day, " he added.
The pressure group said that in the four years since privatisation only 961 vehicles had been ordered, against the 2,000 BR delivered in the five years prior to that.
But Mr Swift said that orders worth almost pounds 2bn for 2,000 new vehicles had been placed and that there was no need for regulation of new rolling stock orders since there was a growing competitive market for financing.
He also came down against any further mergers between rolling stock and train operating companies. Stagecoach also owns South West Trains but Royal Bank of Scotland, which owns Angel, and HSBC, owner of Eversholt, have no passenger train franchises.Reuse content