Leading Article: Rail sell-off gives the wrong signals

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Along with all its other health warnings, today's prospectus for the sale of Railtrack ought to carry a sticker saying this: "However many shares you buy as a private investor, this company is never going to belong to you." Public ownership of nationalised industry often meant precious little to the public; mass shareholding in the privatised companies means even less. What happened to electricity and telecoms was summed up in those recent words of British Gas chairman Richard Giordano to the effect that Sid - the small shareholder - can get lost.

Privatisation promised much, including the better education of the British public in the operations of the capital market. The lesson seems to be this - as long-term participants in the government of private enterprise, you are not wanted. Let nobody assert, as Mrs Thatcher once did, that some new era of shareholder democracy is dawning. This giant exercise in liquidating the state's assets has taught us virtually nothing about the way companies ought to be run. On the contrary, it has been only since privatisation that the fallibilities of boardroom control have become public concerns. Accountability is a livelier issue now than it ever was.

This helps explains why Ian Lang, secretary for Trade and Industry, is now to publish proposals on the rights of small shareholders. They must, at the very least, prevent company bigwigs behaving like that other great advocate of British private enterprise, Lord Hanson, who consistently squashed any signs of shareholder activism. But why now, after the Cadbury inquiry instigated by the Confederation of British Industry into corporate governance and after the Greenbury inquiry instigated by the DTI itself? This is closing the stable door a mite late.

The object is to keep boards on their toes by assisting shareholders to ask and get answers to questions about how their property is being run. But the timing taints them. The Government is acting now for two related reasons. One is callow electioneering. The promise to pay a September dividend on Railtrack shares is part of the effort - bribery, pure and simple - but is unlikely to be effective because there are too many canny investors who will take the money, sell their shares and vote Labour. Appearing to be the friend of the small investor sounds merely opportunistic.

The other reason is deeper. New Labour has made a rhetorical splash with its musings about a "stakeholder" society. It is actually little more than a mish-mash of old Labour fraternity, new communitarianism, European social partnership and a nod and a wink toward profit-related pay. But what return fire do the Tories have? Global trends in capitalism and the changing patterns of ownership they have brought make relaunching shareholder democracy well-nigh impossible. The rise of private pension provision, encouraged by the Government itself, alters the geography of ownership and benefit. The way companies are run demands scrutiny. But reviving shareholder populism, if that is the Government's ploy, is a non-starter.