MPs sound alarm on rail privatisation: Tory-led committee cautions that programme 'could go badly wrong'

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A TORY-DOMINATED parliamentary committee yesterday delivered a carefully-worded but comprehensive warning on rail privatisation, saying that it could go badly wrong because it was taking a 'novel and experimental' form.

The unanimous report by the Commons Transport Committee will fuel Tory fears that the privatisation could be the biggest own-goal since the poll tax. Several senior Tory backbenchers are planning to table amendments at the Report Stage of the Railways Bill, which yesterday completed its Committee Stage.

The 170-page report says that the privatisation of British Rail is being undertaken in a policy vacuum because the Government did not set out, in the White Paper prior to the Bill, what the role of rail should be. It also questions the failure of the Government to invest in the rail system, suggesting that unless there is increased private and public investment in the railways, 'it will scarcely matter what structure of ownership or management is put in place'.

In the interest of unanimity, the language of the criticisms in the report is muted. But a careful reading shows that the whole thrust of the Government's plan is questioned. Far from privatisation offering improvements in service at a lower cost, the committee warns that because of the expense of setting up the new administrative structure, 'there must be a possibility that, under the Government's proposals, the cost to the taxpayer of providing the same level of services will actually rise'.

The committee warns that the radical nature and form of the proposed privatisation is unique: 'That does not of itself mean it cannot succeed. What it does mean is that because of the lack of previous experience to draw upon, the risk that something could go badly wrong is that much higher.'

The MPs call for a cautious approach, saying there should be a clear period of evaluation of the initial franchises, scheduled to begin next year, before the Government proceeds to the full privatisation.

The committee is worried that there will be pressure on lines to close. The MPs say there 'is a real possibility of budgetary pressures . . . leading to service reductions and, ultimately, closures'.

On fares, the committee says that passengers will not find it acceptable to continue the above-inflation rises unless they are linked to improvements in the quality of the service. The MPs want to see safeguards in the legislation setting strict limits on rises.

The committee reiterated previous criticism about the structure of privatisation, most notably the separation of the track - which will be run by a new authority, Railtrack - and the services that will be offered to private operators. The report suggests private operators should be allowed to take control of both the track and the services. In a suggestion likely to be taken up by one of the Tory amendments, the MPs also suggested that BR should be allowed to bid for franchises, contrary to the Bill which prevents such bids.

Yesterday's press conference to launch the report was chaired by the Labour MP Gwyneth Dunwoody, as the committee's Conservative chairman, Robert Adley, a long-standing opponent of the privatisation, recently suffered a heart attack.

Roger Freeman, the Minister for Public Transport, tried to play down the importance of the committee's report by suggesting that many of its recommendations had already been taken up by the Government.

But he again refused to guarantee the future of the Railcard for students and pensioners and the London Travelcard, by saying it was up to the private operators to decide whether these were commercially viable. On line closures, he said: 'There is no reason why any services should close as a result of franchising. The only services that will close, and I am sure that will happen, will be because of lack of passenger demand.'

Brian Wilson, his Labour opposite number, said: 'This is a damning critique of the Government's proposals, made all the more powerful by its unanimity. The warning could not be clearer that privatisation offers an unpleasant cocktail of risks and costs.'