Fears for services in rail subsidy cuts

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MPs launched an urgent investigation into rail finances amid fears of sweeping cuts to services after it was revealed that British Rail is facing a £400m shortfall next year.

The decision by the all-party Commons Transport Select Committee to carry out an investigation into the cash shortfall came on the eve of the announcement by the franchising director, Roger Salmon, of the basic level of services that will be subsidised under the new privatised regime for the railways.

Mr Salmon's decision will be closely watched because services that are no longer subsidised will be liable to be cut.

In particular, he is expected to say that only hourly services from London to Birmingham should be subsidised, raising fears that the current half- hourly service will be halved.

There are likely to be severe cuts to sleeper services, particularly those going into the Highlands. It is thought that the service between London and Fort William is particularly at risk.

The MPs will be examining "the scale of the cash shortfall facing BR in the coming months and details of the likely effect on passengers and freight services". The MPs will also consider whether the cash shortfall over the next two or three years could delay the privatisation programme.

The threat of closures dominated a Commons clash yesterday between the Prime Minister, John Major, and Tony Blair, the Labour leader, who said that if the Government pressed on with privatisation it would only show "how out of touch" it was with the British people.

Mr Major dismissed reports predicting widespread closures as "scare stories". The Transport Secretary, Brian Mawhinney, had recently said that franchised services would be broadly based on the existing time-table. "That remains the position," the Prime Minister said.

According to a report, written for the committee by its two advisers, Bill Bradshaw and Richard Hope, both railway experts, British Rail faces a cash crisis because of the progressive reduction of subsidy by the Government, the £145m cost of the signallers' strike, the loss of revenue from coal and the extra costs caused by privatisation such as legal bills and new computer systems. They say "only a drastic reduction in passenger services "could meet the 10 per cent savings target set by BR''.

BR is also losing out because the Channel tunnel service, Eurostar, is being handed over to the private sector consortium which will build the new high- speed rail link, while BR will have to continue paying the interest on the £800m spent on the new trains and improvements to the track for the service.

While widespread closures, which are mooted in the report, are unlikely in the near future because of the complexity of the closure procedure, BR is considering widespread cuts in Sunday and off-peak services, rendering some lines completely unviable.

The report says that the alternative to closures "is to cut trains out of the timetable right across the network".

Over the past year, British Rail has been broken up into 25 train-operating companies and the track and infrastructure has been handed over to a new organisation, Railtrack.

The two authors of the report suggest that "there is pressure to announce any service reductions quickly" because the contracts between the various players in the new railway must be tied up by the end of March next year.