BR pounds 120m loss 'due to sell-off'

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BRITISH Rail will announce this week losses of pounds 120m over the past year, mostly attributable to the cost of privatising the system.

The enormous bill for getting the railways ready for sell- off - pounds 100m in 1993/94 alone - is certain to provoke a political outcry when BR publishes its annual report.

Frank Dobson, shadow Transport Secretary, said yesterday: 'Money spent on privatisation that nobody wants would have paid for the signal staffs' interim pay deal 20 times over.

'Instead of going to useful people who work in signal boxes, it has been used for outdoor relief for the advisory classes - accountants, merchant bankers and management consultants.

'I cannot imagine that anybody in Britain thinks it is better spent on them than on signal staff.'

At least pounds 40m has been spent on outside consultants. Railtrack, set up on 1 April to take over the industry's infrastructure, is understood to have spent pounds 30m on administrative back-up on top of the pounds 7m cost of establishing headquarters in London.

More than 4,000 signal workers plan to strike on Wednesday for the fourth week in a row unless Railtrack and the rail union, RMT, can reach agreement on a pay and restructuring package by then.

BR's annual report, to be published on Tuesday, will disclose that the state rail firm had to pay pounds 50m towards the cost of setting up Railtrack. Since then, Railtrack has had to hand back pounds 18m to BR's operating companies in compensation for the days that trains could not run.

Relations between BR and Railtrack have fallen to a new low over managerial mishandling of the strike, and look set to worsen further. Some BR executives favoured explicit criticism of the privatisation process, but the annual report - which has to be approved by the Secretary of State for Transport, John MacGregor - studiously avoids controversy.

The Opposition has been trying for several months to wring the true cost of privatising the railways from ministers. Estimates have ranged up to pounds 300m, and the disclosure that BR was saddled with costs of pounds 100m in one year is likely to revise calculations upwards.

A spokesman for RMT said: 'We believe that if you look at everything, the cost is nearer pounds 600m. And for all the huge costs of privatisation, the passenger and the freight operator has not noticed a ha'p'orth of difference, and is not going to benefit anyway.'

RMT officials say their soundings among the signal staff indicate that they are still solidly in support of continuing the one-day-a-week strike action in pursuit of their 11 per cent pay claim for past productivity. The strike day could be moved to Thursday or even Friday, but a move to longer stoppages is unlikely.

There are no plans for fresh peace talks, but the conciliation service, Acas, is expected to make another attempt to get the two sides together before the next walk-out.

If there is to be a fifth stoppage, RMT leaders will have to decide by Tuesday morning at the latest, so they can give Railtrack seven days' notice, as required by the law.