From rolling stock to laughing stock

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Britain's railways have a new excuse: beancounters on the line. But unfortunately for commuters, Transport Secretary Stephen Byers and the accountants he has put in place to run Railtrack seem even more slippery than the leaves they have replaced. In the few weeks since Byers cut off Railtrack's money, took the business away from its management and decided he could do better himself, delays to trains caused by Railtrack have soared by 45 per cent. That wipes out all the improvement seen in the network since last Easter. And it is getting rapidly worse. The National Health Service may get the attention, but it is the railway industry which needs intensive care.

Byers does not seem to realise that industry performance is going backwards. His line is that the company faced financial meltdown, but he was humiliatingly contradicted by rail regulator Tom Winsor testifying before a Commons select committee. Certainly he fooled no one in the City. Byers will shortly face legal action from representatives of disgruntled shareholders, Railtrack's legal owners, who believe they have been robbed by ministerial double-dealing and sleight of hand. In an astonishing document published earlier this week, some of the City's most respectable financial institutions chronicle Byers's inconsistencies and evasions in the past two months, and virtually accuse him of lying. There is now a real chance that they will sue him for misfeasance in public office, the first time in living memory that a Cabinet minister would have been called to account - in court - for his actions on an issue this important.

It will serve him right but it won't help the railway. A hundred and fifty years ago a Cabinet minister was run over by a train. Byers is about to be run over by a whole industry.

The trains get later and the infrastructure starts to crumble. Anyone who has run a business (unlike Byers) can see why. Administrators are accountants. Their job is to sell a business or shut it down, not run it. But, for lack of anyone else, they might soon have to. Just when demoralised Railtrack employees were beginning to believe they had a future under new chief executive Steve Marshall, Byers pulled the plug. Rob a company of its selfrespect and self-belief and you rob its people too. Good employees look for other jobs, the bad ones keep their heads down and the business falls apart. Railtrack cannot afford to lose the people now heading in droves for the hills. Stephen Byers's new model railway will soon have no one left to run it.

It is vital, therefore, that administration takes as short a time as possible, but again Byers prefers to fiddle with his public relations while the rail industry burns. Three to six months Byers promised initially, but that is already up to "at least a year". Railtrack's Marshall thinks it will take longer than that, and if the legal action happens, it certainly will.

The performance of Railtrack is going downhill so fast it is frightening. It is already worse than it was six months ago. A few more months of this kind of stewardship and you will wait less time for a hip replacement than for the 6.32 from Orpington.

Yet it could get even worse. Word in the industry is that a string of train operators are themselves close to going bust. Most lost a packet as a result of the delays after Hatfield and they face rapidly dwindling subsidies from the Treasury as the original privatisation deal runs out. They are small, fragmented businesses with little fat to pad out the losses, and the joke is that most live day-to-day on the compensation they get for Railtrack-induced delays. Far from being able to take over Railtrack's job and maintain and build track themselves, as Byers seems to hope, they have barely enough strength to run their own businesses. Some would even like to renege on their franchises and walk away.

There is a solution, but it requires fast and decisive action from Prime Minister Blair and Chancellor Gordon Brown, both of whom currently seem happy to see Byers twisting in the wind. The business has to be taken out of administration and sold to a proper long-term owner who will nurture it. This requires three things: a settlement of the shareholders' legal action, a mediumterm strategic plan to prioritise maintenance and investment and a watertight promise of Government funding. And it must be done quickly.

Byers still seems to think the private sector will either buy the business or offer it loans - but when the bankers see how much is needed, they will run a mile. Only the state can help now, but by running it as a properly organised company whose shareholders happen to be the Government.

Last year, the Government set up Partnerships UK (Puk) as a bank to help with the public-finance initiative. It was never intended for this, but it could easily be used as a vehicle to make a takeover bid for Railtrack on behalf of the Government, so the company would be formally renationalised. It would be a good moment for the Government to recognise, too, that no major railway in the western world makes a profit, and that, whoever the shareholders are, the British taxpayer will have to stump up billions of pounds to finance rail's regeneration, a commitment which over time might also encourage the private sector to come back in on specific projects (as it has with the Channel tunnel link). The test then will be to allow the company to operate as if it were independent though nationalised - as Cable and Wireless did for years - and to avoid the dead-handed management which Governmentownership has so often implied in the past.

The Government must not allow things to drift. If the company collapses, it would be hugely costly to put it back together again. The status quo is not an option. If the railways collapse, the world will see a nation which failed to run its railways on time and decided not to run them at all. From rolling stock to laughing stock may be a fitting epitaph for Mr Byers, but Mr Blair will remind him: the voters don't think it is funny.