Soaring Prism renews rail sale attack

The Government's controversial railway privatisation came under renewed attack yesterday as Prism Rail, the UK's first pure railway company to be quoted since the 1940s, saw its shares more than double on the first day of dealings yesterday.

Earlier this month, it won the franchise for the London, Tilbury and Southend "misery line" after the original management team were dropped amidst allegations of fraud.

Prism's shares soared from the 100p price at which they were placed on the Alternative Investment Market to end the day at 205p, valuing the company at pounds 26.6m and chairman Godfrey Burley's stake at around pounds 1.2m.

But the windfall for Prism shareholders, coming a week after shares in the Jarvis construction group soared on news it had acquired a former British Rail maintenance company, drew criticism that the LTS franchise had been sold on the cheap.

Jonathan Bray, co-ordinator of campaign group Save Our Railways commented: "It's no surprise that Prism's shares are going up when they plan to run fewer services than British Rail and charge the taxpayer more for doing it.

"Today's news typifies all that's wrong with privatisation - the cost to the taxpayer in extra subsidy increases, while profits for companies like Prism go through the roof.

"If Labour are elected we will be pressing them to ensure that all the pounds 2bn annual subsidy to the rail industry goes into improving services, not into lining the pockets of the likes of Prism."

Labour was, however, more cautious yesterday. Its spokesman on rail, Brian Wilson, said Prism's main costs, track access charges and train leasing, were fixed. "It is hard to see where else the industry's profits are going to come from other than staff cuts and fare increases."

Meanwhile, Opraf, the rail regulator in charge of franchising, defended its decision to award the LTS route to Prism. A spokesman said the company's bid to run the service at a cost of pounds 29.5m in the 1996-97 financial year, dropping to pounds 11.2m in 2010-2011, the last year of the franchise, was "significantly" less than BR's offer, which was worth pounds 34.6m in the current year. The company's offer was also below the management team's bid and had also been tested against third-party bidders.

"If the market thinks it an attractive company to invest in, then the market must decide for itself. But they have promised to bring in new services, buy new rolling stock, open a new station at West Ham and improve passenger charter standards, all for significantly less money," the spokesman added.

Tim Worlledge, a director of Williams de Broe, nominated sponsors and advisers to the company's AIM listing, denied they had got the pricing wrong. "It was placed in our view at the right sort of level. A majority of shareholders wanted to stay aboard."

Comment, page 21

Start your day with The Independent, sign up for daily news emails
  • 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

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk