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Byers forced into New Railtrack climbdown

TRAIN OPERATORS this week forced the government to rethink plans to change to regulatory framework for the rail industry.

The industry was expecting transport secretary Stephen Byers to unveil plans to reform the regulatory system this week.

But he pulled back from announcing them to MPs during his statement to Parliament on Monday night.

One industry source said that Byers had included plans to scrap the rail regulator in his statement, but had stopped short of revealing them.

Instead he restricted his statement to a comment that 'there would be a continued need for some form of independent economic regulation'.

The operators had insisted to Byers that the industry would still need an independent regulator when the future of the track operator had been decided.

Industry sources said Byers' climbdown showed that the government lacked a clear strategy for Railtrack, having put it into administration. So far it has released sketchy details of a plan to set up a not for profit company to take over the track operator (News last week).

One merchant banker said:

'There is no structure, responsibility outlines, funding proposals or timescale, and there will be no industry progress for the foreseeable future.'

Sources in the financial community warned that unless the government released more details it would lose vital private sector support for its 10 year, £49bn rail investment programme.

Around £34bn of this money is expected to come from the private sector.

In addition, Railtrack was expected to raise up to £2bn through a rights issue and borrowings. The new company will be under pressure to do this instead but will face higher financing costs following the Railtrack collapse.

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