Prism to shed another 600 jobs

Prism, the AIM-listed rail group which runs train services in South-east England and South Wales, is to make at least another 600 rail workers redundant within the next year. It has already laid off 300 employees since being awarded four rail franchises by the government as part of the controversial privatisation of British Rail, reducing its workforce to 3,600.

Giles Fearnley, chief executive of Prism, said yesterday: "Our staff levels will fall further. As a rule of thumb the rail industry will probably reduce staff by about 25 per cent. Our own reduction will be in line with this. At LTS [London Tilbury and Southend] staff reductions could be as high as 30 per cent." Prism employs 600 people on the LTS line.

A spokesman for the Rail Maritime and Transport Union, which represents more than 60,000 rail workers, said: "We are extremely unhappy that they are shedding staff. We will take the matter up with the company to assess if they are making unnecessary redundancies."

The announcement will add to the controversy that has dogged the group since Mr Fearnley and nine other founder members of Prism amassed 8 million free shares, currently worth more than pounds 23m, under a controversial share ratchet system which awarded them a big parcel of shares every time they won a new franchise. Prism only ended the scheme after pressure from its institutional shareholders. Mr Fearnley was paid a salary of pounds 180,000 last year but has decided to forego a new share option package.

"I have not been awarded any share options in Prism," Mr Fearnley said yesterday. "I now own 1 million shares and felt that was enough incentive to do well."

Prism announced maiden profits of pounds 6.9m for the 14 months to March before a restructuring cost of pounds 12.4m to cover redundancy payments.

Investment column, page 26