Railtrack in administration as Byers refuses extra funding

Rail users have been promised a “fresh start” by Transport Secretary Stephen Byers following the collapse of Railtrack.

A special High Court hearing granted an order placing Railtrack into the hands of administrators who will run the railway signalling and track operations company.

During the hearing lawyers representing Mr Byers told the court that Railtrack would require funding of £700 million by December and that this figure would rise to £1.7 billion by March 2002.

The Transport Secretary had previously turned down a request for the extra cash and had asked the judge to make the administration order. Mr Buyers said that Railtrack could expect no “bail-out” from by the taxpayer.

Accountancy firm Ernst and Young have been appointed as administrators of Railtrack, which run track, signalling and stations on the UK rail network. Share trading in Railtrack has been suspended and over 250,000 shareholders will now have to wait for the administrators to decide on what if anything will be paid out to the company’s shareholders. Prior to the administrators being brought in, share prices in Railtrack, which had once traded at over £17, hit a low of under £3.00 last week.

Steve Marshall, Railtrack’s Chief Executive, announced his resignation over what he claimed to be the Government’s “shoddy and unacceptable” handling of the company. He said that he had not been consulted about the decision to place Railtrack into administration.

The Government-appointed administrators will now embark on a programme to set up a private company to replace Railtrack. It is understood that the new company will have no shareholders and that profits will be ploughed directly back into the rail network.

The Government has pledged to provide £30 billion of public money for the railway network over the next 10 years.

As laid out in the Government’s 10-year transport plan it is hoped that another £30 billion of private sector money can be attracted in to the new private company. (SP)