Darling mulls plans for 'son of the SRA' in rail shake up

Alistair Darling, the Transport Secretary, is considering plans to set up a new Railways Agency just two months after he promised to simplify the railways with the abolition of the Strategic Rail Authority (SRA).

Alistair Darling, the Transport Secretary, is considering plans to set up a new Railways Agency just two months after he promised to simplify the railways with the abolition of the Strategic Rail Authority (SRA).

The agency will be responsible for awarding franchises to the train operating companies, but the news will lead to charges that the Government is rowing back on its commitment to reduce the number of rail bodies.

Government insiders said that plans for the agency were included in early drafts of the White Paper on reforming the railways, but the idea was dropped because Mr Darling was worried that the body would be viewed as "the son of the SRA".

But it is understood that Mr Darling is now reconsidering the idea because officials have argued that the Department for Transport (DfT) may be overwhelmed with work.

Speaking at a conference last week hosted by investment bank UBS, Mr Darling said that "a department discrete from ministers" would award rail franchises. A spokeswoman for the DfT said that no final decisions had been made. However, she admitted that Mr Darling was considering setting up an agency similar in structure to the Highways Agency.

If the body is created then it will make some of the most controversial decisions on the railways. In the past, the SRA has become embroiled in industry rows, after replacing incumbent rail operators with new companies. Under the new system, once the franchises have been awarded by the agency, DfT officials will take charge of day-to-day franchise management.

If Mr Darling opts for the Railways Agency then he is likely to announce the plans in the late autumn as the SRA's powers start to be transferred to the DfT. Mr Darling has told the SRA that he wants its main statutory functions wound up by autumn 2005. "We want to do things as quickly as possible. [Now] we have made the decision to do this... we don't want to hang around," Mr Darling told delegates at the UBS conference.

However, he warned of further cost cuts in the rail industry. "We need greater cost control. Since the creation of Network Rail [the organisation that replaced Railtrack], there has been better cost control ... But there are still too many people out there who think that the Government will pay for whatever they ask; we won't and we can't," said Mr Darling.

"Over the next few years, there will be some difficult decisions to be made. There has been an increase in costs on the railways and I will be taking steps to control these."