Is our most subsidised line taking us for a ride?

AT 10.42AM a 60-year-old London Underground train grinds slowly out of Ryde Pier Head station on the Isle of Wight carrying a handful of passengers. The conductor walks down the train's two carriages checking tickets. At 11.06am it pulls into Shanklin - the end of the route - on time. Welcome to Britain's most efficient railway.

By repeating this feat twice an hour, seven days a week, Island Line has been named by the Rail Regulator as a model for the rest of the industry. Forget the 140mph Great North Eastern Railway from London to Edinburgh and, most definitely, disregard Britain's most famous line, Brunel's Great Western Railway.

Island Line was the only railway company to receive an "A" for punctuality and reliability under a new grading system launched last week. It ran 99.6 per cent of its scheduled services, 95 per cent of which were on time. In an average week only seven of its 1,711 services were cancelled - and just 86 were late.

Given that the line is made up of just 8.5 miles of (mostly) single track, this good record is hardly surprising.

"The most efficient railway? So we ought to be, being the smallest," said the line's general manager, Alan Cracknell.

Island Line is also the most heavily subsidised in Britain, with the taxpayer contributing 63p for every passenger mile travelled. This is the equivalent of a Treasury contribution of pounds 5.40 on top of the pounds 2.70 fare for the railway's eight miles and 616 yards from Ryde Pier Head to Shanklin.

Stagecoach, the parent company, receives pounds 2 million a year to run a service that does not even connect to the island's capital, Newport. "This is not value for money for the taxpayer and it could be better spent," said an industry insider.

The Island Line franchise expires in 2001. If it is to continue as a railway, it will need massive investment in track and trains. The Government recently said that it might replace the line with an "infinitely better, faster, more modern, more accessible coach service". But for Labour to close a line in the heart of middle-class southern England could be politically unwise.

Another option would be for the Government to end the subsidy and make a one-off investment in an upgraded tram system to connect Newport. One estimate put the cost at pounds 20 million, equivalent to a decade's subsidy.

The Government has made clear that only good operators will be allowed to take part in the railway of the future. Stagecoach will point to the performance figures, a 10 per cent cut in fares since privatisation, and the fact that it co-ordinates its trains to meet the ferry.

But there is growing anger within the railway industry that the system that made Island Line best operator will be used to choose which companies have a future in the industry.

One senior railway figure said that the new system, which takes no account of the size of the network or the age of the infrastructure, had been fixed to paint an appalling picture of the railways and allow the Government to claim credit for an improvement in a year's time.

He is furious that his service received a low grade despite improving in 1998 and hitting almost all the targets set under the old regime.