Railcards pledge staves off threat of Tory revolt: Privatisation plans back on track but BR remains barred from franchise auction

BRITISH RAIL is to remain barred from bidding for franchises after privatisation, the Government insisted last night - because the state system could provide services more cheaply.

But, in the latest Government U- turn in the face of a threatened backbench revolt, cut-price railcards for young, elderly and disabled people will be safeguarded by law. The Government also pledged action to curb fare increases.

Speaking during the closing Commons stages of the Railways Bill, John MacGregor, Secretary of State for Transport, said that if BR was allowed to bid for franchises it would be 'invariably the case that BR will be able to undercut the opposition'.

A Labour amendment on that issue was defeated by 309 votes to 290, with only two Conservatives supporting it - Stephen Day (Cheadle) and Hugh Dykes (Harrow East).

Tory rebels secured the expected climb-down over guarantees for railcards, however, as Mr MacGregor buried his earlier objections to writing these into the legislation.

Averting a rebellion in the lobbies by the group of Tory members led by Sir Keith Speed, the MP for Ashford, Mr MacGregor gave an undertaking to bring forward, in the Bill's Lords stage, an amendment imposing on the franchising director a duty to require participation in discount schemes for senior citizens, disabled and young people. Later, Roger Freeman, Minister of State for Public Transport, promised to include a further duty on the franchising director to ensure that fares were 'reasonable'.

Mr MacGregor, who wants to encourage bids from BR management/employee buy-outs - 30 are said to be interested - conceded the technical possibility of foreign-owned railways bidding for franchises.

Operators of loss-making routes will receive public subsidy. Nick Harvey, for the Liberal Democrats, said: 'Why should the taxpayer have to pay for the ideology of a Government hell- bent on pushing this into the private sector?'

Mr MacGregor confirmed that BR could continue operating services if there were no acceptable bids. But he insisted that if it made bids of its own, it would make 'the most optimistic assumptions, believing that if its forecasts proved unrealistic, somehow or other the taxpayer would be at the back of them to bale them out'.

Mr MacGregor said that he would give guidance to the franchising director over travelcard schemes covering various forms of transport in cities, but offered no guarantees on family railcards.

Brian Wilson, a Labour transport spokesman, said that the range of things the franchising director was going to do would be 'the beginning of the Government's troubles, rather than the end'.

Sir Keith was the effective leader of the most gentlemanly Tory rebellion in recent times - due in part to Mr MacGregor's reasonable approach during negotiations. Sir Keith is non- executive chairman and a minority shareholder of Westminster Communications Limited, public relations consultants to InterCity, a connection he has openly declared. During the Bill's Commons passage, he suspended dealings with InterCity, the company said yesterday.