Brown is warned on rail debts

Gordon Brown's spending plans suffered an embarrassing rebuff last night from the head of the Whitehall spending watchdog.

The Chancellor has argued that Network Rail's £21bn debts should be excluded from Treasury books as it counts as a private company. But Sir John Bourn, the head of the National Audit Office, said he believed the public coffers would have to carry the costs of a collapse. He told the Commons Treasury sub-committee: "If Network Rail goes down we are not going to have no railways in country. The Government will provide them."

Adding such a large sum to government balance sheets would push Mr Brown, who was forced to increase borrowing massively in the pre-Budget report last week, close to his borrowing limits.