Minister warns of 'disaster' facing rail privatisation

A SENIOR transport minister has warned that rail privatisation will be 'a disaster' unless private operators are able to increase the numbers of passengers.

Speaking at the standing committee examining the Railways Bill, Roger Freeman, the Minister for Public Transport, said: 'The private sector will want to make a higher profit. The private sector can earn higher profits only if it can increase revenue and/or reduce costs. Increasing revenue requires better marketing and if that fails, the scheme will be a disaster.'

That admission and the unfortunate choice of language deals a further setback to the Government's controversial rail privatisation plans. The number of passengers using the railways is highly dependent on the state of the economy and on ticket prices, which are likely to rise after privatisation because of extra costs and the need for private operators to make a profit.

Mr Freeman accepted that private rail companies are likely to need better rates of return than BR. 'The private sector will certainly seek a higher rate of return but will achieve it through improvements in revenue, that is, through better marketing.'

Brian Wilson, Labour's transport spokesman, said: 'It is an astonishing admission that the whole thing depends on the untested theory that private operators can bring droves of extra passengers on to the network. Certainly, as far as InterCity and commuter services are concerned, this is pure fantasy. Yet the whole future of the railways seems to hang on this blind belief.'

There was further criticism of the Government's transport policy yesterday from London Underground. Its managing director, Dennis Tunnicliffe, warned that the 'old, sprawling, overcrowded and neglected' Tube network needs more than pounds 8bn worth of investment over the next 10 years just for modernisation.

Another pounds 6.5bn would be needed over the same period for the three biggest new schemes being proposed, the Jubilee Line extension, approval for which awaits agreement of the bankers for Canary Wharf to contribute pounds 180m to its cost, Crossrail, which links east and west London, and the Chelsea to Hackney line.

Speaking to transport experts, Mr Tunnicliffe said failure to invest would push the vision of a 'decently modern metro' 20 years or so down the line.

The system was 'old' having been built by the early part of the century, 'sprawling' because it spread to outer London making it difficult to manage, and overcrowded as an increase in passengers during the mid-1980s had led to many central London stations 'groaning at the seams during the peaks'.

London Underground has already sharply criticised the Government for the cut announced in the Autumn Statement in the amount earmarked for investment for 1993-94 from pounds 866m to pounds 562m.

It said this was a return to the old 'stop-go' investment policies which it had been promised had ended. As a result several schemes, including the Northern Line modernisation programme and the East London line extension, had been deferred.