Railtrack contracts to cost 4,000 jobs

More than 4,000 jobs are likely to be shed by rail maintenance companies following the privatisation of the industry and the signing of tough new contracts with Railtrack, it has emerged.

Under the new agreements with Railtrack, owner of the country's track, signalling and stations, the seven former British Rail infrastructure maintenance units are facing a 20 per cent reduction in revenues over the next five years.

The contracts, together with track renewal work, are worth pounds 1bn a year and are the area of costs that Railtrack has identified for the biggest savings.

Eddie King of Amey Railways, new owner of BR's former Western maintenance unit covering the Paddington to Penzance line, estimated that it would have to cut its 2,500-strong workforce by about 600 over the next five years.

The six other maintenance companies will have to make similar or even bigger job cuts to improve productivity and offset the reductions in revenues. The Western maintenance unit had already shed 1,600 jobs in the two years leading up to privatisation but some of the other maintenance units are still operating with inflated BR-style staff levels.

Job cuts are also likely among the six former BR track renewal units which have about pounds 200m worth of contracts with Railtrack a year.

Instead of building in annual reductions in the revenues they can earn, Railtrack has agreed that increasing amounts of work can be put out to competitive tender.