GOVERNMENT PLANS to set up a company limited by guarantee to take over Railtrack mirror the model recently adopted for Welsh Water, now owned by Glas Cymru.
Glas Cymru was set up to take over Welsh Water after the water company's owner's Western Power Distribution (WPD) decided to sell.
WPD sold up in the face of increasingly tough restrictions on prices and investment from the water regulator. New owner Glas Cymru has no shareholders and ploughs profits back into its infrastructure rather than paying a dividend.
Railtrack's problems stem from the fact that it had to satisfy the Rail Regulator's demands for investment while providing a return for shareholders.
A recent report by Institute for Public Policy Research senior researcher Tony Grayling suggests that the Glas Cymru model could be used as a template for the new Railtrack owner.
Grayling's report says that if Railtrack is taken over by a company limited by guarantee it will be under less pressure to produce sustained profit growth.
This week the Department of Transport Local Government & the Regions said Railtrack's new owner was - like Glas Cymru - to have a board of 'stakeholders'.
For Railtrack this would include the Strategic Rail Authority, the passenger and freight operators, train operators and bankers.
Grayling's report suggests that this management structure would 'foster a culture of cooperation' adding that the previous ownership structure was 'adversarial and fostered a culture of blame.'
His report adds that a 'stakeholder' board would also reduce the need for the type of tough regulation which was put in place to control Railtrack in its position as a monopoly supplier to rail infrastructure.
'As an economic regulator, the main job of the Office of the Rail Regulator was to stop Railtrack abusing its market power and making excessive profits. With no shareholders and no profits, that danger would be removed, ' says the report.
INFOPLUS www. ippr. org