NEWS
CIVIL SERVANTS were this week accused by MPs of bungling the privatisation of Railtrack by rushing it through and failing to maximise the amount raised as a result.
In a report published on Wednesday, the all party Public Accounts Committee also accused the Department of the Environment of undermining the sale by mis-timing it and ignoring arguments for a staggered sell off.
Railtrack was privatised under the Conservatives in 1996 and floated on the stock market. Officials said the sale was hurried to maintain the momentum of rail privatisation.
The sale of shares raised £1.9bn and the sale of Railtrack debt raised another £600M. But by February 1999 Railtrack stock market value had reached £7.8bn.
'We are concerned that the Department decided not to sell the shares in stages, since there is substantial evidence to show that the true value of privatised businesses only crystallises after they have had time to develop free of public sector constraints,' says a report published by the PAC on Wednesday.
'We are concerned that in spite of this, the Department and their advisers had low expectations of the potential of Railtrack.'
The committee also criticises the Department for failing to discuss a staggered sale adequately. It recommends that the Government consider a staggered sale as a priority for future privatisations.
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