Letter: Rail disasters

Sir: Your Outlook column of 16 December ("Short-changed on Railtrack sale") criticised the National Audit Office report on the privatisation of Railtrack for suggesting that it might have been possible to sell shares in the company in stages rather than all at once. Yet the report demonstrates that this could have been possible.

Top investors in the company confirmed that they had no fundamental objection to participating in a partial share sale. Railtrack shares were clearly attractive to institutions in that they bid for 10 times as many as were available. And where sales have been done in stages, final proceeds have nearly always been higher: in 1991 when National Power and PowerGen were floated ahead of a General Election, and in the face of political opposition, the department was advised not to sell in stages but did so because it could not be sure of getting full value from the initial price. Ultimately, the shares were sold in two tranches, at an additional benefit of pounds 2.3bn to the taxpayer.

GABRIELLE COHEN

National Audit Office

London SW1