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Railtrack: now what?


Railtrack started life on the inauspicious date of 1 April 1994 and was suddenly bundled off into administration last weekend.

Since then everyone has been casting about to see who will bear the brunt of what has turned out to be one of the longest running April Fool's jokes of all time.

The shareholders who bought into the company following its privatisation in 1996 look at first sight to be in prime position. But really everyone - lenders, operators, suppliers, passengers and Railtrack's own employees - have been struggling to find some light relief in the almost unmitigated gloom that has surrounded the business in the last couple of years.

The horrible Paddington and Hatfield crashes were followed by the surreal experience of Gerald Corbett announcing he was virtually closing the network until the company could be sure the track was safe.

Confidence in the business plummetted at the same time as the real costs of the West Coast Main Line commitment to Virgin were revealed. Senior managers swung in and out of the doors at Railtrack House at alarming speed, the share price slumped and Railtrack could not fund its borrowings. It was inevitable that the grim reaper would appear and he did in the form of Stephen Byers.

Now the government is going to save the railways, apparently.

But the government does not have a great record as a backer of the rail network. In fact it has to take much responsibility for the disasters that have struck under Railtrack's care.

Railtrack inherited a patched together Victorian infrastructure that successive governments would not or could not find the funds to renew for almost 40 years. The ultimate, flawed privatisation package was designed to shift the costs of this from the public purse to the private sector, not to encourage resurgence in the railways.

But Railtrack gave it a go and was scuppered by the system it had to operate within. This obliged the firm to run more and more trains over rail that needed more and more work but which could only be funded by running yet more trains. Higher traffic levels inevitably reduced the opportunities to do the necessary work. It was unsafe, unmanageable and rather than demand a public debate (until it was too late), the company focused wildly on repairing lavatories and committing to major new projects.

Railtrack as a private sector company is now gone, to be replaced with a not for profit company. But the problems with the network are still there. Railtrack chief executive Steve Marshall made the point when he resigned this week. 'Forty year old rails are broadly neutral on the public private partnership debate, ' he said. 'Either way they need hard cash to replace them and soon, ' said his resignation letter.

The government has committed £30bn to the railways but it is expecting a lot of that to come from the private sector in in the form of loans. The chances of the City rushing forward with the cash after the rug was pulled so swiftly on its investments in Railtrack might be said to be slim. Unless the City forgives and forgets, rail infrastructure will have to go back to government control and the not so tender mercies of the public sector borrowing requirement. What real chance of improvement will the rail network have then? The Railtrack era may eventually even be seen as a golden age.

That would be the real joke.

Jackie Whitelaw is NCE's managing editor

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