US firm poised to buy royal train service

PETER VICTOR,

CHRISTIAN WOLMAR

and JOHN RENTOUL

The royal train service, operated by British Rail for the last 150 years, is on the verge of being taken over by an overseas company. A letter obtained by the Independent suggests that British Rail is likely to sell the train service, that transports Her Majesty the Queen, to US-based Wisconsin Central Transportation Corporation (WCTC).

Rail Express Systems (RES), the BR division which operates the royal train and the Royal Mail service, is to be sold under the Government's privatisation programme.

Two bidders have expressed an interest in the railway, the US based railway operator and a management buy-out team. A letter dated 24 November, from Charles Belcher, managing director of RES to all the company's staff, says: "I have to tell you that the RES MEBO [management employee buy-out] is not the preferred bidder for the purchase of RES."

This leaves the way clear for WCTC to be announced as the preferred bidder before the end of this month. The company has a history of overseas acquisitions. Earlier this year it took over 300 miles of the Canadian Algoma railway and it has a 31 per cent stake in New Zealand's national railway.

Tom Power, spokesman for the WCTC, said: "As far as RES is concerned we don't comment on potential acquisitions. We've been looking diligently at RES. We think it has lots of potential for improvement in terms of service."

Last night a BR spokesman said: "We are not prepared to comment on prospective buyers."

Labour's transport spokesman, Brian Wilson, called for the sale to be put on hold: "It is a further Tory humiliation that we need Americans to own and operated the engines which pull the royal train. Britain is the country which gave railways to the world. Now the world is being handed our railways."

RES is involved in another privatisation dispute. Waterman Railways, which bought British Rail's Special Trains division last year, had hoped to take over the royal train service. But a memo from the British Railways Board director of finance, obtained by Mr Wilson, says that Waterman has "not been paying RES invoices and an amount of approximately pounds 1m is now outstanding".

RES is a division of BR which provides Waterman with locomotives and maintenance. Peter Waterman has been involved in a dispute alleging RES has overcharged him.