Byers faces Railtrack showdown

Transport Secretary Stephen Byers was fighting for his political life today as the Tories claimed they had new evidence to show he misled Railtrack in the run up to the firm's collapse.

He faced an uncomfortable appearance in the Commons as the Opposition called a half-day debate on his handling of the issue.

Shadow transport secretary Theresa May produced a draft letter from the Strategic Rail Authority - under the control of Mr Byers - to the directors of struggling Railtrack. The letter, dated 28 September, allegedly promises: "We will pay you £162 million on Monday 1 October."

However, the money was never paid and, on 5 October, Mr Byers told Railtrack chairman John Robinson that he was putting the company into administration.

The existence of the draft letter will fuel claims that Mr Byers was stringing the company along while secretly preparing to take its functions back into public ownership.

All the while, its shares were still being traded on the stock market, and furious investors are now preparing their own legal move against Mr Byers.

Mr Byers also faces fresh questions over the differing accounts of his conversations with Mr Robinson and with rail regulator Tom Winsor in the run-up to 5 October.

Mr Winsor claims that Mr Byers threatened to strip him of his powers if he offered Railtrack emergency funding, but the minister denies that any threat was made.

Downing Street has defended Mr Byers, and most Labour MPs also support the action taken against Railtrack. When it comes to a vote this evening, the Conservatives are almost certain to be defeated.

However, there are fears in the City that the episode will damage the confidence of business and affect in its future dealings with the Government.