New watchdog mauls Railtrack

RICHARD BOWKER, the new chairman of the Strategic Rail Authority, has lashed out at the management of Railtrack and also at his own predecessor. He warned, too, of a shake-up of the train operators.

Bowker, outgoing co-chairman of Virgin Trains, replaces the outspoken Sir Alastair Morton as head of the nation's main rail regulator, He said the rail industry had lacked clear direction.

'My message to the City is that you have every right to expect the industry to be properly managed and structured. We have got to restore some confidence,' he said.

He wants to encourage mergers to cut the number of train franchises, and to give the train-operating companies more control over the track. His message reinforces Transport Secretary Stephen Byers' blueprint for the industry.

But Bowker will have a tough time as this plan has had a lukewarm response from the City and the industry. A source at one of the major train companies said plans for Railtrack's successor so far contained little improvement on what went before. Many punters are wary of investing further in the railways, having lost most of their money when the Government put Railtrack into administration.

Shareholders are becoming increasingly sceptical that they will get anything more than £1 a share, well below previous estimates of £1.80 or the £2.80 at which the shares were last traded.

A Government source said that shareholders are likely to have little claim on Railtrack's property, while Byers has cast doubt on the £400m valuation of its Channel Tunnel rail link.

'If you put all that together in its most favourable way, you are struggling to get more than £1 a share,' said Simon Haslam, chairman of the Railtrack Shareholders Action Group, which represents City institutions. The shareholders are threatening legal action and want up to 360p a share. Moody's Investor Services said bondholders have little choice but to accept the Government's plans for Railtrack's debts.