Civil servant grilled over rail sell-off

THE TOP civil servant at John Prescott's Department of Environment, Transport and the Regions will receive a grilling today from MPs over the way the sale of Railtrack shortchanged taxpayers by up to pounds 1.5bn.

Sir Richard Mottram, Permanent Secretary at the DETR, will appear before the Commons Public Accounts Committee to be quizzed over the National Audit Office's (NAO) highly criticial report into the sell-off.

The controversy about the Railtrack flotation has flared up again, with reports over the weekend suggesting that the Government could have raised an extra pounds 1bn by conducting an auction of the business. Trade buyers including Stagecoach, the transport group, and the Japanese bank Nomura had expressed an interest in buying the business.

In its report, the NAO concluded that the Railtrack sale could have fetched an extra pounds 600m to pounds 1.5bn had it been carried out in stages. The flotation in May, 1996, raised a total of pounds 1.9bn but Railtrack has quadrupled in value since then.

Appearing alongside Sir Richard will be David Freud and James Sassoon of the investment bank SBC Warburg Dillon Read, who advised the then Conservative government on the sale. Warburgs was also criticised by the NAO for having had a potential conflict of interest because it was both the adviser to the government and co-ordinator of the actual flotation.

However, the NAO report itself was also widely criticised when it was published in December last year for failing to mention the pivotal role played by Clare Short, Labour's spokeswoman on transport, at the time of the flotation.

Ms Short was held to have been partially responsible for the under-valuation of Railtrack because of her threats to renationalise the business once Labour got into power. In the Railtrack prospectus she wrote that "dependent on availability of resources, and as priortities allow" Labour would "seek by appropriate measures to extend public ownership and control over Railtrack".

It was this statement that persuaded the government and its advisers to rush through the sale and sell 100 per cent of the shares, rather than an initial 60 per cent or 80 per cent, as the NAO recommended.

In the event, Railtrack shares did not begin to rise sharply until after Labour came into power, Ms Short was moved from the transport brief and it became clear that the threat of renationalisation would not be carried through.

NAO officials were furious at the criticisms made of the report and are thought to have briefed members of the Public Accounts Committee ahead of today's hearing.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Guru Careers: Pricing Analyst

£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Sales Team Leader - Wakefield, West Yorkshire

£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders