Watchdog to blast Network Rail for wasting millions in public funds

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The Independent Online

The Government's spending watchdog is to savage the funding of Britain's railways by issuing a damning report on Network Rail.

The National Audit Office (NAO) report was due to be published next week, but officials have decided to rewrite sections of the document so that it will become an official submission to the review of the railways ordered by the Secretary of State for Transport, Alistair Darling.

The report, due out by the middle of next month, will be the most comprehensive examination to date, both of the way the Government pulled the plug on Railtrack, and of the performance of its successor, Network Rail. If, as expected, it is critical of both, it will be a heavy blow to the Government.

The NAO refused to comment, but it is understood that officials believe the Government did little to ensure it got best value for money when it backed Network Rail's not-for-dividend bid to take over Railtrack.

The Government's attempts to keep Network Rail's debts off the public balance sheet, by guaranteeing commercial debt instead of providing government loans, will also come under attack. The NAO estimates this will cost the taxpayer £35m a year.

The report will also worry the bosses of Network Rail. The NAO is expected to be particularly critical of the lack of cost controls within the company and its slow rate of progress in changing the culture within the railways.

A source close to the NAO said that the report was being rewritten to make it "as wide-ranging and comprehensive as possible".

The fiery Public Accounts Committee hearing last week into why so few old trains had been replaced will also feature in the report, the source said.

The Government is expected to publish the results of the review of the railways in July to coincide with the Treasury's Comprehensive Spending Review.

Mr Darling has been criticised for not issuing any guidelines in connection with the review, and railway experts are worried that the ensuing debate could become a free-for-all.

One of the review's fiercest critics is the rail regulator, Tom Winsor. He has warned the "Cassandras will parade their ignorance, their vendettas and their prejudices".