Rail companies could face windfall tax

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The Independent Online
PRIVATE companies who have made huge profits from the sale of the railways could face a windfall tax, the Government suggested last night. The transport minister, Gavin Strang, said the public had been ripped off and declared that a windfall tax was "certainly something that should not be ruled out".

Dr Strang's comments, on BBC Radio 4's The World Tonight, came after the revelation that the privatisation of rolling-stock leasing companies had cost the taxpayer hundreds of millions of pounds. The Department of Transport received pounds 1.8bn from the sale of the three rolling stock leasing companies. Yet within months the companies were re-sold for a total of pounds 2.65bn in deals which made multi-millionaires of some managers.

The damning report on the original sale by the National Audit Office comes after The Independent revealed days ago that some staff at a privatised rail company could became millionaires as early as next week as a result of a takeover deal.

The bus and train company FirstGroup is in discussions about possibly buying Great Western Holdings, which runs Great Western services out of Paddington and Waterloo stations in London to the Midland, South Wales and western England. If the takeover is approved, seven GWH directors could well net more than pounds 10m between them.

Labour has introduced a windfall tax on the privatised utilities to fund its New Deal for the young and long-term unemployed. Asked about repeating the move in the case of rail rolling stock companies, Mr Strang said: "A windfall tax is something which many people are talking about. It won't be easy, because these people have taken their profit: these people have bought the company; they've sold it, and moved on ... but it's certainly something that should not be ruled out."

But a spokesman for the Department of the Environment, Transport and the Regions, headed by the Deputy Prime Minister John Prescott, said there were no plans for a new levy at the moment.

Mr Prescott has risked putting the "old" back into new Labour by guaranteeing that London Underground will remain "publicly controlled and publicly accountable". The pledge was in a letter to former Tory MP Hugh Dykes, an opponent of rail privatisation. The phrase echoes words used by Labour in opposition. The commitment was dropped from the election manifesto.