Byers 'is about to take over Railtrack'

Railtrack is on the brink of bankruptcy and the Government is preparing to take over day-to-day control of its business, it was reported last night.

Directors of the company, which owns Britain's rail network, have been in rescue talks with the Department of Transport, Local Government and the Regions since Friday afternoon. Stephen Byers, the Secretary of State for Transport, is expected to apply for a High Court order under the Railways Act over the next two days to give him sweeping powers over Railtrack's operations. A spokesman for the Department of Transport refused to comment.

Administrator Ernst and Young is believed to be preparing to assume control over the company's day-to-day management, and trading in its shares is expected to be suspended immediately.

Mr Byers, who is expected to make a public announcement on his plans tomorrow, told the Labour Party conference last week that the government would not fully renationalise Railtrack because it would be too expensive at about £8bn. However, the plan to place it under Government supervision would be regarded by many as ending its chequered history as a private company, leaving a £3.3bn debt to be cleared up.

The £5bn cost of upgrading Virgin Rail's West Coast line, which runs from London to Glasgow, is thought to have finally pushed the company's accounts into chaos.

Tony Blair's speech to the Labour conference last week hinted at alarm among ministers over the growing crisis at Railtrack. "There are areas where the private sector has worked well and areas where, as with parts of the railways, it's been a disaster," he said.

Railtrack's problems have spiralled since the Ladbroke Grove rail crash in 1999, which led to calls for billions of pounds of investment in rail safety systems. The Hatfield crash last October threw the railways back into chaos and led to a collapse of Railtrack's share price.

Don Foster, the Liberal Democrat transport spokesman said: "At last there is recognition by the Government that action needs to be taken over Railtrack. Liberal Democrats have long argued that Railtrack needs to be split in two."