Politics: Taxpayers lost pounds 1.2bn in Tory rail privatisation

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The Independent Online
THE Tory Government was so desperate to sell off part of British Rail that it accepted pounds 1.2bn less than it originally wanted on the deal, a committee of MPs heard yesterday.

Taxpayers were the losers on the sell-off of three rolling stock leasing companies, already heavily criticised by the Comptroller and Auditor General, Sir John Bourn.

Brian Souter, executive chairman of the bus company Stagecoach, told the Public Accounts Committee that he had dropped out of the bidding after hearing that the then government wanted pounds 1bn each for the three companies.

It eventually received pounds 1.8bn in total for them. The purchasers then sold them on within months for a total of pounds 2.65 billion, making multi-millionaires of some of the managers.

Mr Souter's company was one of the buyers during the second round of sales, paying pounds 826 million for Porterbrook leasing. He said yesterday that if he could have raised the money to bid in the first round, he would have done so.

He was put off after one of his aides rang the government's consultant on the sale, Hambros bank, to find out the price.

"Some desperately posh guy at Hambros told us they were looking for pounds 1bn ... we simply weren't in that ballpark," he told the committee.

The government had allowed a fatal flaw to be left in the sale contracts, he said.

"If I had been handling the sale I would have put a claw-back clause, in that future profits would have been shared with taxpayers. To me that was the fundamental flaw."

Mr Souter said he believed that today, Porterbrook was worth about pounds 1bn. However, because of investment by his company and a general rise in share prices, that did not indicate that he bought it cheap.

All three rolling stock companies were sold on, with Porterbrook going to Mr Souter's firm, Angel Trains to the Royal Bank of Scotland and Eversholt to Forward Trust.

John Prideaux, who also gave evidence to the committee yesterday, made pounds 15m from the sale of Angel Trains, while Sandy Anderson, a former BR manager, made pounds 36m after leading the buyout of Porterbrook. Andrew Jukes made pounds 15.9m from a stake of pounds 110,000 in the sale of a third leasing company, Eversholt, to Forward Trust.

n A scheme to safeguard beautiful areas of countryside was mismanaged by the government, the Public Accounts Committee said yesterday.

After 10 years, less than half the eligible farmland was in the scheme, which cost pounds 32.5m per year.

In one case, though, 3,000 hectares of Dartmoor received grants from the Environmentally Sensitive Areas scheme even though only 2,000 hectares was eligible.

Inspectors found that farmers who received pounds 310,000 were not complying with the scheme, but they only recovered pounds 3,200 of the money. Administrative costs made up almost half the cost, though this had dropped recently.