Sell-offs 'could break' the railways: BR chairman's damning interview adds to pressure on ministers to rethink rail privatisation plans

Prospects for privatisation of British Rail were dealt another severe blow yesterday when Sir Bob Reid, its chairman, warned ministers that privatisation could 'break' the railways and would bring little if any benefit.

In a powerful interview on BBC Radio 4's The World This Weekend, Sir Bob predicted cuts in services, problems over safety, and extra costs. His forthright comments and studied silence when asked to list privatisation benefits will encourage the growing clamour for the Government to rethink its plans.

The interview will add support to criticisms within the Tory party from former ministers such as Lord Ridley of Liddesdale and Lord Whitelaw, and Robert Adley, chairman of the Commons Transport Select Committee.

Although Sir Bob fell short - just - of outright condemnation of the privatisation plans, he said there would be no economic benefit from breaking up the railway into a number of franchises to be offered to the private sector, as envisaged by ministers, and there could be a loss of network benefits such as through ticketing.

He warned that the railway was in danger of being destroyed by a 'doctrinaire' approach to reorganisation. He wanted to see a more organic approach. 'You need to make sure you mould the thing and bend the thing. If you try to restructure it, the chances are that you could break it. And if you break it, it will take a long time to put it together again.'

Asked repeatedly whether the proposals were workable, Sir Bob said it might be possible 'if you are prepared to pay the price and believe cost savings are going to come out of the process'. Pressed by Nick Clarke, the interviewer, that this sounded uncertain, he said: 'It's fair to be uncertain.'

The only positive aspects of privatisation he mentioned were that new shareholders might bring 'flair' and 'enthusiasm' to running the railways. Mr Clarke said the break-up of BR was a lot of disruption to go through for such little benefit; Sir Bob said: 'Yeah, that's about right.'

Unless the Government puts up 'barbed wire encampments' around certain lines, commercial operators would close them down, he warned. Sir Bob said he was running a railway that met social as well as economic needs, and his priorities in the public sector differed from those in private industry.

He accepted it would be difficult to ensure people could buy tickets to go anywhere after privatisation. He had just been to the US, where the system was split up, and met a person who had put a relative on the train after buying seven tickets.

He was particularly concerned about manufacturers of rolling stock and other railway equipment, whose representatives warned the Transport Select Committee recently that orders were drying up and companies faced 'annihilation'. He said: 'This is a major issue.' Workshops were full now but BR could not afford new orders and within a year there would be job losses. The industry's future was at stake and if the jobs were lost companies would be 'back at the beginning of the learning curve'. He added: 'Stop-go investment is hopeless.'

He doubted privatisation would lead to a better service, because it would cause disruption and 'you will break the momentum (towards improvement), and give yourself major safety validation problems'.

While Sir Bob has expressed doubts about privatisation, this interview took his position closer to outright opposition. It raises the question of whether he can stay when the Government begins to break up the network. The first franchises will be issued later than the April 1994 target because of lack of interest from the private sector and delays to the privatisation Bill, expected to be published next month.

Brian Wilson, a Labour spokesman, called on the Government 'to listen to the advice of people who know something about running a railway, and abandon their unworkable plans'.

Ministers were engaged last night in a damage limitation exercise, saying the Government's commitment to privatisation would produce a better service. They were also questioning the timing of Sir Bob's comments, little having changed since the White Paper was published in July. The interview was pre-recorded and Sir Bob was on holiday last night. A BR source suggested he had 'scarpered after lighting the blue touch paper'.

The controversy will be heightened by a document leaked to the Independent that shows BR managers are being advised it may be possible to use a surplus from the pension fund to help with management buy-outs.

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