BR rates blamed for derailing Charterail

CHARTERAIL, one of the biggest private users of Britain's rail network, is to go into liquidation because it cannot afford British Rail rates, it said last night.

Set up two years ago to draw freight from the roads to rail, Charterail also blamed its financial collapse on 'unfruitful discussions' with Roger Freeman, the Minister for Public Transport.

The collapse will be seen as a severe blow to the Government's rail privatisation plans.

In a statement after discussions with BR, Charterail said that although its new style of integrating road and rail distribution had worked, it could not compete with the price of distributing goods by road.

'The critical element in the cost equation has been the high price of rail locomotion. British Rail's locomotive haulage rates have always exceeded the original expectations of the joint venture. The directors of Charterail do not see any evidence of BR achieving the productivity gains that had been thought possible.

'Moreover, BR has been unable to reduce rates in response to the downturn in the economy.'

Charterail is 22 per cent-owned by BR. GKN, the engineering group, holds 15 per cent, while the rest is controlled by City finance houses.

Two months ago it set up a new fast freight service from London to Warrington and Glasgow with the support of 13 companies, including Safeway and Heinz.

Mr Freeman said on the BBC Nine O'Clock News last night that the 'unfortunate history of Charterail . . . in no way shakes the Government's resolve to press ahead with British Rail privatisation'.