Byers attacked over £2.8bn bill

STEPHEN BYERS has upset Gordon Brown and fellow Ministers over his handling of Railtrack's closure, it emerged on Thursday night. The Transport Secretary has angered the Chancellor because his decision to declare the company bankrupt will mean an unplanned £2.8bn bill for the Treasury at the end of the year.

The saga is said to have led to soaring costs of accountants, lawyers and City advisers. Officials fear it could paralyse rail investment and deter the City from providing vital cash for public services.

Amid growing signs that Byers is in deep political trouble, one senior Minister has taken the unusual step of contacting the Tories, urging them to question him more closely about the cost of his decision. He said Byers' handling of the affair was 'a complete dog's breakfast'.

The signs that some senior colleagues are turning against Byers came after former Tory Cabinet minister John Redwood challenged the Government to admit the precise costs. In a remarkable response he was given private guidance by Ministerial sources confirming the £2.8bn figure.

Redwood said: 'Stephen Byers has created chaos out of trouble. His scheme has produced massive delay, no real progress and a huge increase in costs. Gordon Brown is livid and Byers is on his own.'

As the crisis escalated there was open despair in Byers' own Department of Transport, Environment and the Regions. One senior official said: 'I feel like a deckchair attendant on the Titanic.'

Insiders are furious because, as Railtrack is now under the control of an independent administrator, it cannot raise cash from the City. Hundreds of rail improvement schemes have been frozen.

Byers' Government colleagues also accuse him of blundering into a conflict with European competition law. By declaring the company bust he will now have to open up the bidding to take over Railtrack to buyers across the EU. That means the railway network could be taken over by a private French or German company.

The most worrying news for Byers is that Ministers have begun helping the Opposition undermine him. One Whitehall source said a senior Minister contacted the Tories to urge them to press Byers harder. The Minister told them that Byers and Brown were 'at daggers drawn'.

'The Treasury wanted the firm to remain in private hands and for it to be sorted out from within,' he said. 'It did not believe the State could provide the investment needed. Instead Byers has pushed the Treasury into a corner. He has handed the firm over to an administrator who has effectively got a blank cheque because he is independent and so there is no way to control costs. He has made a total and complete dog's breakfast of it.'

Byers was seen going into Number 10 early on Thursday. It is understood Brown has complained to Prime Minister Tony Blair about the mess. Brown is said to be alarmed at the belligerent way Byers has dealt with shareholders and company directors in his efforts to maintain the impression to his Left-wing supporters that he was 'renationalising' Railtrack. The Chancellor fears this has wrecked any chance of raising from the City the estimated £1bn in capital investment needed before the end of the year to get Railtrack back on its feet.

In addition, the Treasury believes a further £100m will be needed to pay the lawyers, accountants and financial advisers Byers has called in.

The Government has already promised £800m to deal with the day-to-day operation of Railtrack while it is in administration, and thinks this figure will rise by a further £650m.