'Byers will add years to rail renewal'

OUTGOING Railtrack chief executive Steve Marshall has blasted Stephen Byers' plans for upgrading the rail network. Marshall said the Transport Secretary's proposals will delay rail renewal by at least two or three years.

Byers is proposing all major rail upgrades be carried out by 'special purpose companies', whose finances would be separate from Railtrack's successor. But Marshall said contracts for such ventures take a long time to develop and require significant financial contribution from the new not-for-profit company that will run the track and signalling.

He added that Byers' reforms will not save taxpayers money or risks. 'The government is seeking to put in exactly the same or more capital and at the same time assume all the risks,' he said. He followed with a hard-hitting letter to Byers seeking 'urgent clarification of the government's intentions' more than two weeks after Railtrack plc was put into administration.

Marshall wants Byers to spell out whether shareholders will get new Government-backed bonds, and whether he will 'do nothing to impede a full consideration of any cash bid from a third party'.

Byers is expected to tell Parliament today of his plans. He is also expected to give Railtrack's successor, dubbed Newtrack, up to £1bn as a contingency fund to protect against the costs of major events such as crashes. Marshall said the cash looks like 'shadow equity' performing exactly the same role as shareholders' equity did at Railtrack.

Newtrack is expected to be run by 10-15 directors who report to a board of 30-40 members drawn from the train operating companies, freight and passenger groups and trade unions.

German bank WestLB's bid for Railtrack's assets, excluding the safety and signals systems, is now with Byers It is confident of beating the 140p-180p shareholders look like getting at present. Byers extended the period Railtrack bondholders have to accept the government's terms to roll their debt into Newtrack. The extension by three weeks until 14 December is designed to soothe investors worried about the approaching deadline.