In a surprise vote, peers decided by a majority of 38 to allow British Rail to bid to run services under an amendment moved by Lord Peyton of Yeovil, a former Conservative transport minister, during the Railways Bill's committee stage.
The Government has insisted that BR should be barred from bidding for franchises. It would be 'invariably the case that BR will be able to undercut the opposition,' John MacGregor, Secretary of State for Transport, told MPs during the Bill's Third Reading.
Tory peers united with Labour and the Liberal Democrats to inflict the defeat. That may only be symbolic since ministers may seek to reverse it in the Commons.
Lord Caithness, minister of state at the Department of Transport, had reiterated that that the amendment would undermine the whole franchising process. Brian Wilson, a Labour transport spokesman, said the Government would find the vote very difficult to reverse.
When a similar amendment was moved by Labour in the Commons two Conservatives - Stephen Day (Cheadle) and Hugh Dykes (Harrow East) - defied their whip. But rail has proved again to be one of the least popular privatisations.
To ensure a break-up of the monopoly, the Government wants to confine BR involvement to bids from management and employee buy-outs. Ministers were considering last night whether to press for the vote to be reversed.
While John Prescott, Labour's transport spokesman, pledged to campaign against that eventuality, Mr MacGregor refused to rule out the possibility of accepting the vote.Reuse content