BR sell-off to cost taxpayers pounds 700m

Subsidy levels among several fears raised by all-party group of MPs

Taxpayers are likely to have to fork out as much as pounds 700m a year more for privatised railways than they did when the network was in the public domain, an all-party Commons committee reported yesterday.

In 1993-94, before restructuring, the cost of grants to the taxpayer was pounds 1.073bn a year, said the Transport committee, which has a majority of Conservative members.

But by 1997-98, this figure is likely to rise to between pounds 1.56bn and pounds 1.76bn.

"Assuming that the level and quality of services remains substantially unchanged, we question whether (such) an increase ... can be justified," the committee reported.

The concern over subsidy was only one of a number of worries expressed by MPs in their report into railway finances, in which they made 20 recommendations to the Government.

Among the other concerns were:

n Service levels: the report says they may be lower in 1997-98, and MPs said if that was the case, the Comptroller and Auditor General should immediately examine the whole franchising policy

n Passenger service requirements: these establish the absolute minimum number of trains operators must run, but the committee said the PSR did not necessarily guarantee services in all circumstances. It recommended that the bidders for private lines be told that any attempt to reduce services would amount to a breach of contract.

n Signalling work: the Railway Industry Association told MPs the network was managed by a bewildering variety of equipment, some dating back to the last century. MPs expressed concern at the gap between what the association maintained was being spent on signalling and the information obtained from Railtrack.

n Privatisation proceeds: MPs asked the Government to give an entire list of what had so far been sold, what the proceeds were, and the corresponding loss of income to British Rail. The committee also wanted dates for the implementation of other parts of the privatisation plan, and a full explanation for any delay.

n Scrapping of loss-making lines: MPs said their axing would only be acceptable if the money saved was used to support other services, or the amount of subsidy paid to the railways was reduced. "What would be unacceptable would be for the same amount of subsidy to buy fewer rail services," they said.

n Railtrack's plans: Railtrack should publish its 10-year strategy as soon as possible, said the report. Its failure to do so had "seriously hampered" a proper assessment of Railtrack's investment needs.

The Labour Party's transport spokesman, Henry McLeish, said last night that the report was "an excellent overview of the deep crisis which has infected the railway industry in Britain".

He added: "The committee, representing all parties and with a majority of Tory members, casts doubt over almost every aspect of the privatisation experiment.

"The Government is being driven by dogma alone. How else could they justify writing off pounds 600m of our money, every year, without promising a single extra train, service or station?" he said.