Seven rail executives will share profits of more than pounds 15m - a rise on average of 7,000 per cent on their initial investment - after the buy- up by the bus giant FirstGroup of Great Western Holdings, which runs services from London to Wales and the South-west and trains in the North-west.
The deal angered local passenger groups and rail campaigners who point out nearly 20 per cent of trains run late on the company's flagship Great Western service.
John O'Brien, the franchising director, approved the deal but only after he secured a "pounds 75m package of benefits" for users of the new FirstGroup train company. On Great Western, pounds 32m worth of new trains will be ordered to be in service by June 2002, and all season-ticketholders will get a week's free travel.
In addition, there will be fines for trains running late - pounds 250 for 20 minutes late, pounds 500 for 30 minutes late and pounds 1,000 if cancelled altogether. However, Trevor Smallwood, FirstGroup's chairman, said this would only cost the company pounds 1m.
On North Western - a commuter network centred on Liverpool - pounds 1m will be spent on additional passenger benefits and on Great Eastern - already owned by FirstGroup - all 96 slam-door trains will be phased out by the end of 2002.
Despite the extra cost for the deal, FirstGroup say it is a good investment. The two rail companies are receiving more than pounds 200m in public subsidy this year and Mr Smallwood said Great Western Holdings would make "not less than pounds 25m" profit.
John Prescott, the Deputy Prime Minister, was "not totally happy" with the arrangement. But the last government's weak regulatory powers left Mr Prescott with little alternative. "I don't have the power to block the deal," he admitted.
With a White Paper looming this summer, the Deputy Prime Minister is sure to be add to his legislative armoury. In statement, he said: "Whilst I welcome these improvements, within the constraints of the current law, it is clear that the passenger and the taxpayer are still not getting the best deal in the privatised railway. I am determined to start putting that right in my forthcoming White Paper."
Despite the gains for passengers, the man with most to make from his two-year trip on the gravy train is Brian Scott. Starting his career with British Rail as a ticket clerk in 1958, he rose quickly to head up the Great Western InterCity service.
A blunt-speaking patriarch, in 1993 he told the then secretary of state for transport John MacGregor that "as an experienced professional railway business manager, I would not be putting my money into a train-operating company."
Fortunately he did. His pounds 37,500 investment in 1996 has now risen by nearly 10,000 per cent to more than pounds 3.7m. Others also benefited. The average employee - which includes ticket collectors and train drivers - invested pounds 200 and will see windfalls of pounds 30,000.Reuse content