Taxpayers could be hit by £4bn rail rescue plan

Stephen Byers may be forced to seek additional funding of £4bn from the taxpayer to bail out the rail system for a second time – a figure that could increase still further as a result of the Potters Bar crash.

Industry sources say that Network Rail (NR), the non-profit-making company being set up to succeed Railtrack, already needs more public subsidy to carry out track repairs.

The possibility of further safety work following Friday's crash has thrown the industry into yet more uncertainty. All but £5bn in the Government's 10-year transport plan has already been allocated.

The tragedy is almost certain to put back Mr Byers' plans for NR to take over from Railtrack – now in receivership – in July. At the same time, however, many analysts believe the disaster will put an end to any remaining private-sector interest in running the British railway system, guaranteeing that the project will eventually go ahead. The banks are likely to remain confident about NR because the project is so heavily underwritten by the Government.

Parliament's Transport Select Committee is investigating the Government's 10-year plan for road and rail. It is understood that MPs will call for a huge increase in public subsidy before the end of the year.

Labour MP Alan Simpson said yesterday: "The time has come to bring the railways back under public ownership."

Meanwhile, the crash has implications for the future of the Secretary of State himself. Mr Byers will face Labour calls for the nationalisation of the rail network when he makes a statement to the Commons on the Potters Bar crash tomorrow.

Senior colleagues of Mr Byers believe that he is now so damaged that Tony Blair will have to review his position in the July reshuffle. "I think he's had it," said one ministerial source.