Furious ministers to strip rail chiefs of power

Rail bosses are to be stripped of much of their power by ministers, who believe the ramshackle network is running out of control, The Independent has learnt.

The decision will concentrate power in the hands of Alistair Darling, the Secretary of State for Transport, and represents a dramatic stage in the "creeping nationalisation" of the industry which was privatised in 1995. Mr Darling is planning to extend his control by taking power from the Strategic Rail Authority, the semi-independent body which receives billions of pounds of taxpayers' money but has failed to enhance performance, relegating it to the same status as the Transport Department's Highways Agency. It will have fewer resources, less power and more accountability to the Government and parliament.

The move follows what was in effect the renationalisation of Railtrack, the infrastructure company replaced last year by the state-backed Network Rail. Mr Darling's decision reflects his dissatisfaction with the style and performance of the authority's chairman, Richard Bowker.

He may be forced to resign because of the humiliating nature of the initiative, but ministers are determined to press ahead with a fundamental shake-up in a desperate attempt to turn the industry round before the next election.

The SRA has been banned from issuing its annual strategy document. Drafts have been dismissed by ministers as a "wish list" which only show up the failings of the industry. The present semi-independent structure, over which the SRA presides, was denounced last night by a senior industry source as "a massive waste of public money".

The SRA's spending is understood to be running £200m ahead of its budget. That comes on top of the industry's £2bn deficit registered last year. Apart from the network's reputation as a multibillion-pound black hole, the authority has gained a reputation for extravagance. The SRA employs 500 staff and spends £140m on office costs, including £50m a year on consultants. Mr Bowker, whose authoritarian style has angered senior colleagues, is also seen as a "bringer of bad news".

In a recent meeting in Whitehall, Mr Darling reacted angrily when the SRA chief told him it would take 25 years to recoup the costs of ERTMS, a full protection system for stopping trains going through red lights. The bluntness of the SRA chairman, a former senior director at Virgin Trains, is viewed in Whitehall as political ineptitude.

The SRA's colourful communications chief Ceri Evans has also angered Mr Darling. Mr Evans came to the minister's notice when he called Lord Berkeley, head of the Rail Freight Group, a "f***ing dilettante" in a voice-mail message. Then he told The Independent that the Rail Regulator, Tom Winsor, was little more than a supermarket price-checker. More recently, he said Mr Winsor's decision to allow Network Rail an extra £7.4bn to maintain the system, was like giving "whisky to an alcoholic". The regulator's decision had been endorsed by Mr Darling, who was reportedly "furious".

But it has been the industry's ability to spend massive and increasing state subventions, and the dire performance of train operators that have been the key motivators for the new approach. Despite an increase in spending, punctuality had failed to improve and, in the case of inter-city services, had deteriorated. The Department for Transport had also become concerned that the SRA was getting "too big for its boots" by trying to assert control over Network Rail and the much-delayed West Coast Main Line project.

The industry's reputation for financial incompetence was reinforced on Friday when Network Rail failed to pay its 15,000 employees amid rumours that the organisation had gone bust. A spokesman said that the company responsible for making the payments had failed to take into account that last Thursday was a bank holiday.