Foreign firms can buy Railtrack

Government offers no protection against overseas bidders snapping up network after flotation

FOREIGN companies will be able to take over Railtrack, the core company in the broken-up railway system, as soon as it is privatised in May, the Independent on Sunday has learned.

The company, which owns all the track, signalling and stations of Britain's rail network, is to be floated on the stock market without the normal "golden share" that protects privatised firms from foreign takeover.

That raises the prospect of many of Britain's landmark structures, including the Forth Rail Bridge and York and St Pancras stations, as well as 23,000 miles of track and many historic viaducts and tunnels, ending up in the hands of foreign companies.

Labour yesterday roundly condemned the move. Brian Wilson, transport spokesman, said: "This confirms that the Tories do not have the slightest interest in who ends up owning Railtrack as long as they can get rid of it before a general election.

"We already have one third of the rolling stock sold to a Japanese consortium and Rail Express Systems [owner of the Royal Train and the postal service operations] sold to Americans. The country which gave railways to the world is now giving the world its own railways."

It is also understood that the entire share capital of Railtrack is to be sold, not just the 51 per cent once envisaged. A wholesale privatisation would make it much harder for a future Labour government to take Railtrack back into public ownership.

However, Mr Wilson said: "Our commitment to a publicly owned, publicly accountable Railtrack is clear and was given with the assumption they might go for the full 100 per cent."

A Department of Transport spokeswoman said no decision had yet been taken on the question of a golden share. She refused to confirm that 100 per cent of Railtrack equity would be sold, saying only that it would be "more than 51 per cent".

However, sources close to the privatisation say that all the preparations for the sell-off are going ahead on the assumption there will be no golden share and that the entire share capital will be sold.

That is supported by the arithmetic of last year's Budget: only by selling Railtrack in its entirety can the Government have any hope of reaching its stated pounds 4bn target for asset sales in 1996/97. The flotation is expected to raise between pounds 1.5 and pounds 2bn.

Golden shares - devices which allow the Government to veto changes in ownership - have been included in most previous privatisations, including British Telecom, British Gas, British Steel, Rolls-Royce, the British Airports Authority and, most recently, the National Grid.

Some are permanent, but others only stay in effect for a number of years and then lapse. As soon as the five-year golden shares protecting the 12 regional electricity companies expired last year, for example, many of them were immediately bid for in a flurry of takeovers.

At least 30 per cent of Railtrack shares will be offered to small investors in a share offer planned for May. Members of the public will be offered the shares at a lower price than institutional investors. The pounds 4m advertising campaign for the share offer is due to begin in March.

Railtrack is likely to be regarded as a relatively safe investment. The bulk of its revenues from the train operating companies are virtually guaranteed for seven years or more. Profits from its substantial property holdings are seen as icing on the cake. Labour tomorrow will launch a fresh campaign to stop privatisation. It hopes to table a Commons motion in late February or March and will lobby hard in the Tories' marginal constituencies.

It also plans to publish fresh examples of rail fares which have gone up sometimes by as much as twice the inflation rate. The campaign follows last week's revelation by the Consumers' Association which suggested passengers were being overcharged in nine instances out of 10.

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