Railtrack prospectus `misleading'

The flotation of Railtrack was last night thrown into confusion by a leaked letter from the chairman of the British Rail board, John Welsby, warning the Government that the pathfinder prospectus might be unduly optimistic.

In the starkest terms, Mr Welsby warned the Government: "I remain concerned that the information on performance regimes and their financial impacts may mislead."

The release of the letter from Mr Welsby to Sir Patrick Brown, permanent secretary to the Department of Transport, led last night to calls by Labour for the sell-off to be halted.

"This is extraordinary and unprecedented. It throws further doubt on the fitness of Railtrack to be offered for flotation. The paints raised by Mr Welsby must be addressed in detail by ministers and if the charge of misleading information is sustained, then heads must roll," said Brian Wilson, the Labour transport spokesman.

The letter is certain to cause the Government acute embarrassment today in a full-scale attack on the privatisation of Railtrack by Labour in the Commons, increasing the risk of defeat in the knife-edge vote.

The letter was written on 2 April on British Railways Board headed notepaper to warn Sir Patrick, the most senior civil servant at the Department of Transport, about the concerns of British Rail over the prospectus before it was issued on Monday this week. It is understood that in spite of the strong terms in the letter, no substantial changes were made in the prospectus as a result.

Mr Welsby complains that the prospectus for the general public, does not "strike the same tone" as another report aimed at train operating companies which gives "a very fair view of the vulnerabilities involved in running a railway in the current climate".

But the most serious criticism of the prospectus's failure to give the public a true picture of the rail industry is over its performance information. "The drafts include no information about Railtrack's performance as manager of the rail infrastructure network. We have serious concerns regarding the service offered on the lines in and out of Euston, but that is only part of the story.

"In recent months there has been a significant downturn in performance on a number of passenger train operating companies, for example, Inter City East Coast and Great Northern. This is surely material information for investors."

Vote hangs by thread, page 4