MPs to investigate BR depot sell-off

The powerful Commons Public Accounts Committee is to investigate the controversial sell-off of British Rail's Eastleigh maintenance depot, it emerged last night.

British Rail has been forced in the meantime to change its procedures on selling subsidiaries, following the mistakes made in the sale of the Hampshire depot revealed exclusively in yesterday's Independent.

The committee's chairman, Labour MP Robert Sheldon, said: "If they were trying to conceal something that would be very serious. I'm sure we shall be looking into it."

The Independent revealed that the depot had been sold to its management buy-out team, Wessex Traincare, for pounds 7m but its accounts showed pounds 5.4m cash reserves which may not have been known to rival bidders, according to a Price Waterhouse investigation of the sale. A leaked internal Department of Transport document headed "Not for NAO Eyes" [National Audit Office, the public spending watchdog] reflected anxieties that the buy-out team might have been enabled to make their acquisition by using taxpayers' money.

Lord Harris of Greenwich, a Liberal Democrat peer, last night put down an emergency question for answer tomorrow, asking whether the Government would give instructions to departments to refrain from using the "Not for NAO Eyes" formula to conceal information.

Brian Wilson, Labour's transport spokesman, last night welcomed the committee's decision, but said it should cover not only Eastleigh but other British Rail Maintenance Limited depots alluded to in documentation surrounding the case.

All BR subsidiaries are now to be sold off without any cash holdings and a compliance officer has been appointed to ensure that all terms of contracts are met. The role of BR's vendor unit, which has been the subject of private criticism by the DoT, has also been reduced in relation to future sales, with BR board members expected to take a greater interest in sales of subsidiaries.

The transport department yesterday accepted that the business had been sold with the cash but said that since then "lessons had been learned" and that BR companies being privatised now returned cash to the department before sales were completed. The department also argues that while the cash in hand may not have been known to the bidders, the accounts clearly showed the money as owed to the depot and therefore other bidders would have been on an equal footing.

Because the Price Waterhouse investigation raised a number of issues on which the department needed "reassurance", the department commissioned a second investigation, by Ernst and Young, of the sale and the five other BR maintenance companies. Although the unfinished report has identified some "procedural weaknesses", the department said: "Ernst and Young is confident that there was a strong and fair competition and that all the necessary information, including details of the company's cash balances and its future trading prospects, was available to all bidders."