Labour warns rail companies over contracts

LABOUR yesterday warned potential private rail operators it would not honour contractual arrangements granted by the present government if the party wins the next general election.

Labour's transport spokesman, Frank Dobson, speaking on the eve of the break-up of British Rail in preparation for franchising, warned potential franchisees they should beware of a future Labour government: 'We will not guarantee the length of franchises nor the level of subsidy to private firms who have taken on franchises.'

Mr Dobson's warning is likely to make it even more difficult for the Government to attract private investors into the railway.

Earlier this month, the Government announced that the first franchises would not start operating until mid-1995, a year later than originally intended. Mr Dobson's warning may deter potential investors, given that a general election, which must be held by the spring of 1997, will take place so soon after the start of the franchises. So far, the only likely candidates appear to be management buy-out teams of British Rail employees.

From today, BR's track and infrastructure will be in the hands of a new company, Railtrack, headed by Bob Horton, a former chairman of BP. The services are being divided into 25 train-operating companies in preparation for franchising out to the private sector. Mr Horton also wants to see Railtrack privatised by early 1996.

Mr Dobson has calculated that privatisation will have cost British Rail and taxpayers about pounds 300m by 31 March next year, the end of BR's financial year. Using parliamentary answers from Roger Freeman, the public transport minister, he said restructuring within BR will have cost pounds 146m by then and funding for redundancy will cost a further pounds 100m.

Mr Dobson said: 'The cost of rail privatisation will be huge and disastrous for the economy and for every rail user. Like the poll tax, rail privatisation is a scheme which began life in a right-wing Tory think tank and it will suffer the same fate.'