Rail supply firms face 'annihilation'

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A WARNING that the railway supply industry could disappear completely with the loss of 30,000 jobs was given yesterday to the Commons Select Committee on Transport, which is preparing a report on rail privatisation.

David Gillan, director of the Railway Industry Association, warned that unless the uncertainty over privatisation was quickly resolved and new money made available to pay for investment, his industry was 'staring annihilation in the face'. All its expertise and staff would be lost forever and any future orders would have to be placed with firms in Europe. 'We won't be there to take advantage of any upturn.'

He said the 62 members of his organisation had orders that dried up between mid-1993 and mid-1995. No new rolling stock was on order after mid-1994 and InterCity, one of the main potential customers, had no trains on order at all in its five-year plan. The situation was similar for both track and signalling work.

The Chancellor's Autumn Statement had offered no help. Mr Gillan said that both InterCity and Network SouthEast had told him they were unlikely to make use of the Government's move to allow them to lease pounds 150m-worth of new trains over the next two years because they could not afford the rental payments. The state of the industry was the worst his members could remember.

Mr Gillan warned that privatisation was causing uncertainty and that the Government's plans to franchise out lines would not result in any immediate investment. Initial franchise holders were unlikely to commit themselves to massive new investments and the lines that would attract franchise bids were likely to be those, such as the Chiltern Line, where there was new rolling stock.

The association said in its written evidence that the plans were 'unworkable' and asked the Government to publish an annual 'Railplan' White Paper, similar to the Roads Programme. It also wants the Government to commit itself in the forthcoming privatisation legislation 'to ensure continuity of investment in the national rail infrastructure'.

Roy Woodward, managing director of Brush Traction, told the committee that the competitiveness of British industry was at risk: 'There will be a brain drain of engineers to where they can get more remuneration and permanent employment and we will lose the technology. There will be no one left apart from ex- BR engineers.'

Mike Harvey, general manager of CAIB UK, which leases out 3,280 rail wagons, urged the Government to rethink its policy of privatising BR's two freight companies, Railfreight Distribution and Trainload Freight. He said this would create local monopolies. Instead, it should ensure that private freight operators had access to the lines.

He confirmed recent reports in the Independent that freight was leaving rail because of large price increases by BR. 'Since September, our customers have been facing rises of between 80 and 120 per cent,' he said. Many were deserting rail, contrary to the Government's policy of encouraging freight on to rail. The costs were being spread more thinly between remaining users, making it less viable for them.

He said he had tried to find out from BR and the Department of Transport about the policy behind these rises but had been unable to get any answers.

The Conservative chairman of the select committee, Robert Adley, yesterday wrote to John MacGregor, the Secretary of State for Transport, saying it had found a collapse in confidence over two key areas, investment and freight. Action could not wait for publication either of the committee's report or of the privatisation bill: 'We look to urgent indication of your intentions,' he wrote.

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