Byers: Railtrack shareholders will get no more aid

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The Independent Online

Stephen Byers will say in a Commons statement today that "not a penny more" of taxpayers' cash will be used to refund Railtrack shareholders.

The defiant Transport Secretary will also make clear that both Tony Blair and Gordon Brown were fully informed of his decision to put the firm into administration earlier this month. Amid claims that he has been made a scapegoat for the Railtrack fiasco, the embattled minister said yesterday that Downing Street and the Treasury had agreed the plan beforehand. Mr Byers will attempt to meet one of the shareholders' main grievances today when he writes to the privatised company to allow it to secure £400m from the valuable Channel Tunnel Rail Link.

The move would in effect make available an extra 75p a share for shareholders, many of whom are small investors and employees, taking the total offered to 150p a share.

"We are looking at how we can best release the value of the company's assets without adding a burden to the taxpayer," a senior government source said.

But the offer would still be well short of the 360p demanded by the firm. Yesterday Steve Marshall, Railtrack's chief executive, accused the Government of "ambushing" his firm. "It's like a python coiling itself around your windpipe and just as your last breath is going to be squeezed out of you the python turns to you and says, 'It's not my fault, guv, I think you probably would have died anyway'," Mr Marshall told Breakfast with Frost on BBC1.

In a series of carefully placed interviews, Mr Byers said he had not acted alone in deciding in effect to wind up Railtrack on 5 October. "Obviously, the Chancellor and the Prime Minister knew about this. They agreed the strategy. I told the Prime Minister on Thursday evening and the Chancellor on Friday morning." His remarks, which echo strong backing from Downing Street, follow claims that some in the Treasury wanted to exploit his difficulty and blame him for the affair.

The Chancellor is keen to distance the Railtrack episode from his own campaign to get more comercial companies involved in public-private partnerships. "At the end of the day, Stephen is the Transport Secretary and it was his decision," a government source said.

Last night, the Tories attempted to step up the pressure on Mr Byers by calling on the Financial Services Authority to investigate the way the affair had been handled.

Michael Howard, the shadow Chancellor, told Breakfast with Frost that investors may have been misled after the Government's announcement in April that it would make £1.5bn available, a decision Mr Byers reneged on. "There are also questions which a number of commentators have raised about the extent to which there was a false market in Railtrack shares because the decision to all intents and purposes must have been made before it was announced last weekend.

"What we have seen is naked confiscation of the worst kind ... thousands of employees are affected, there are thousands of pensioners affected, there are thousands of people whose pension funds have invested in Railtrack.

"Even more fundamentally, the capital markets have learnt to their cost that they can't trust the Government. That is going to have very far reaching ramifications on the ability of the Government to bring private-sector money and private-sector resources into the public services – the great public-service infrastructure projects that matter so much for the quality of life in our country."

John Prescott, the Deputy Prime Minister and former transport secretary, said Railtrack had undermined its position by coming forward with huge cost overruns such as that for the west coast line upgrade. "Whilst people talk about the shareholders' interest, the taxpayers' interest has to be to the fore as well. Taxpayers were being asked for billions more each year."