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Rail Off Track
has debts of about £3.3bn
Railtrack, the company that controls Britain's
rail infrastructure, has
been put into administration, it has debts of about £3.3bn - TranzRail
next?
The order means Railtrack is now under the control of government-appointed
administrators, who will continue to run the railways. The government
asked
the High Court to take the action after it refused to put any
more money
into the struggling company. "This is clearly a case where the
making of a
railway administration order is not only appropriate but absolutely
essential and I shall therefore make that order immediately."
Justice Gavin
Lightman said at a special sitting of the High Court in London.
Railtrack's
shares are expected to be suspended when trading resumes on the
London
stock market on Monday. Shareholders are expected to get little,
or
possibly none, of their money back.
Rise and fall of Railtrack:
1996: Privatised. Shares cost £3.80
Sep 1997: Southall crash kills seven
Oct 1998: Shares hit highs of £17
Oct 1999: Ladbroke Grove crash kills 31
Nov 1999: £1m a day profits
Oct 2000: Hatfield crash kills four
May 2001: Posts first loss - £534m
June 2001: Accused of "lamentable failure" in Ladbroke Grove report
June 2001: Boss Gerald Corbett resigns
July 2001: New boss John Robinson apologises for "appalling" year
October 2001: Placed into administration
The court was told that the company needed £700m in funds by December,
rising to £1.7bn by next March. The Transport Secretary Stephen
Byers said
he had turned down Railtrack's pleas for more money, and had asked
the
judge for the order. "For Railtrack, there will be no bail-out,
no
last-minute rescue deal paid for by the taxpayer," he said. "Our
action
today will see the end of Railtrack. In my judgment, time had
come to take
back the track and put the interests of the travelling public
first."
It is expected that Railtrack will be restructured into a non-profit
making
trust, where profits are reinvested rather than given to shareholders.
Mr
Byers hinted that reform in the rail industry could spread beyond
Railtrack. "This is only one part of a fundamental restructuring
of the
rail industry. "I intend to rationalise the present system of
regulation to
provide a more united approach, with stronger strategic direction
while
stopping the day-to-day interference in the industry."
Government sources have said there will be no job losses at Railtrack,
and
rail services will be unaffected. Liberal Democrat transport spokesman
Don
Foster said: "At last there is recognition by the government that
action
needs to be taken over Railtrack. "The part of Railtrack directly
related
to running the railways should be held in not-for-profit public
investment
company. "The obscene conflict between passenger safety and shareholder
profit would be over."
Prime Minister Tony Blair hinted at the plans earlier this week
in his
speech to the Labour party conference. There are areas where the
private
sector has worked well and areas where, as with parts of the railways,
it's
been a disaster Prime Minister Tony Blair He said: "There are
areas where
the private sector has worked well and areas where, as with parts
of the
railways, it's been a disaster."
At the same conference Mr Byers said the government would not
renationalise
Railtrack because it would be too
expensive at about £8bn. Conservative Party leader Iain Duncan
Smith said
Railtrack's situation had been made worse because Labour had "meddled
and
muddled" since coming to power in 1997. "If there's any lesson
to take from
the last four years it is: Make yourself clear," he told BBC One's
Breakfast with Frost. "If they're going to be in the private sector
then
let them get on with running their company, set the strategic
objectives
but don't fiddle with them day-to-day and lecture them every time."
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