Who can mend flawed results of a hasty sell-off?

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The Independent Online

"The system was made into too many different companies. I agree wholeheartedly that we need to change the way the railway is run." That was not a firebrand from one of the rail unions speaking yesterday or even a spokesman for Save our Railways.

"The system was made into too many different companies. I agree wholeheartedly that we need to change the way the railway is run." That was not a firebrand from one of the rail unions speaking yesterday or even a spokesman for Save our Railways.

It was the Opposition transport spokesman, Bernard Jenkin. With those words he came the closest a Conservative frontbencher ever will to conceding that the way in which the last government privatised the rail industry was fundamentally misconceived.

Gerald Corbett, the chief executive of Railtrack, put it even more bluntly, saying the industry had been "ripped apart" to "maximise the proceeds to the Treasury". The first half of his assessment is right. When the Conservatives sold off British Rail in 1995, they splintered it into more than 60 different companies. In addition to Railtrack, privatisation spawned 25 passenger train operators, five freight firms, three rolling stock companies, 18 infrastructure maintenance businesses, two parcel carriers and a host of other tiny firms engaged in everything from creosoting railway sleepers to making barriers for crossings.

But Mr Corbett is wrong in the second half of his assessment. Far from maximising proceeds for the Treasury, rail privatisation shortchanged the taxpayer on an heroic scale because of the speed with which it was done.

Those who cashed in were the buyers of the assets, very often former BR executives, who became overnight millionaires as they later sold on their businesses at vast profit. Sandy Anderson, the BR manager who bought the rolling stock company Porterbrook for a few hundred thousand pounds, demonstrated what a gravy train it was when he made £33m by selling out to Stagecoach.

Given their time again, the Conservatives would not privatise rail in the same way. Mr Corbett said: "It was not a structure designed to optimise safety, investment or, indeed, cope with the huge increase in the number of passengers."

Mr Corbett has now called for a "radical rethink" of the way the industry is structured and run. But what does that mean? No one seriously expects that BR is about to reborn so that a single organisation once again owns the tracks, buys the rolling stock, runs the trains and builds new lines.

But there will be a lot fewer moving parts in future. By the time the passenger franchising director, Mike Grant, has finished redrawing the rail map and reletting franchises, there are expected to be only 21 of them compared with 25 at privatisation. Mr Grant's boss at the shadow Strategic Rail Authority, Sir Alastair Morton, has indicated it is prepared to see the number of train operators come down from the ten at present to perhaps six or seven. At the same time, there has been some consolidation among the rail maintenance companies.

The radical rethink Mr Corbett has in mind has therefore nothing to do with who owns the railways, but how the players in the industry work with each other. Railtrack wants to overhaul the performance regime, which dictates who is penalised if the trains run late and who is rewarded if they run on time. He also wants changes to the "possession" regime so Railtrack can speed up the replacement of broken rails and the modernisation of the rail network. In short, Mr Corbett wants to put investment and safety before punctuality and cost-savings.

This may sound prosaic and it is. But such changes would have a profound effect on train passengers. Under the present system, Railtrack has access to the track to carry out repairs and ugrades at night and during off-peak periods. In future, Railtrack wants possession for days on end.

When the Great Western line went from being a wide-gauge to a narrow-gauge railway in 1892, the 300 miles of track from London to Penzance was dug up and replaced in a weekend by a workforce of thousands. It is more time-consuming these days. Railtrack, for instance, closed the entire east aoast main line over the last August bank holiday weekend just to rebuild a bridge over a dyke near New-ark in Nottinghamshire.

If Railtrack has its way, these sort of interruptions will become commonplace. That, in turn, would have a knock-on effect on passengers and train operators. The fewer trains they are able to run, the greater the penalties Railtrack would have to pay under the performance regime.

The difficulty in implementing this new structure is that Tom Winsor, the rail regulator, has already decided what revenues Railtrack will be allowed to earn over the next five years and how the performance regime will operate. His review, to be announced on Monday morning, is expected to give Railtrack a £5bn increase in resources, but at the cost of performance targets. It is a trade-off between allowing Railtrack to build a safer railway and ensuring passengers receive a decent service.

As one insider at the regulator's office said: "Railtrack's performance in the last six months has been so poor it is a wonder passengers are not rioting. Corbett thinks he has the blueprint for saving the planet, but he has got to put his own house in order first."

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