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Strikes scupper early sell-off of Railtrack

THE STRIKES by signal workers have forced the Government to reconsider the early privatisation of Railtrack, which owns the track and infrastructure of the railways. It had hoped the sell-off would bring in pounds 3bn to Treasury funds before the next general election.

Instead, the Government is seeking to make early sales of the three companies which own British Rail's trains and locomotives and of the 13 companies responsible for maintenance of the track and other engineering work.

After the legislation to privatise the railways was passed last autumn, ministers realised that their best hope of making a quick impact on the railways was through the sale of Railtrack. They realised that franchising out the 25 train-operating companies would be a slow process and unlikely to reduce the level of subsidy.

Bob Horton, the chairman of Railtrack, was particularly enthusiastic about an early sale. However, according to senior rail managers, such hopes have been dashed. One said: 'Confidence in the City has been dented by the rail strike and it is doubtful that investors would be prepared to come forward. The strikes have also completely messed up the financial figures for this year on which privatisation bids will be based.'

Railtrack managers also suggest that the long-term lack of confidence in rail caused by the strikes will make Railtrack an unattractive buy. Ministers privately concede that the target for allocating franchises to the private sector - 50 per cent of the network is supposed to be in private hands by April 1996 - is now impossible to meet and in any case the franchises would not result in any revenue to the Government as they are all loss-making.

Therefore attention has turned to the rolling stock and the infrastructure units. Earlier this year, the Government created three companies (ROSCOs) which now own all the rolling stock and these are being earmarked for an early sale. However, there has been little interest in them from private companies.

British Rail insiders suggest there is much more interest in the infrastructure companies. However, to be sold at a good price, they would need long-term contracts with Railtrack guaranteeing them work for several years.