'Passengers safety first' - Byers

Transport Secretary Stephen Byers this afternoon mounted a robust defence of his handling of Railtrack, describing it as a "failed Tory privatisation" which had to be brought to an end for the sake of passengers.

Confidential documents have revealed that Mr Byers may have made the decision to wind up the company before the admitted date.

Today he defended the decision to start preparing legal documents at least a week before the announcement was made to take the rail network operator back into administration, arguing that it was part of contingency planning, and that preparing 71 pages of documents overnight would have been impossible.

He told the Commons: "Railtrack represents much that was wrong with railway privatisation, with the travelling public seen as an inconvenience getting in the way of the shareholders. The time has come to put delivery to passengers before the dividends to Railtrack shareholders." But shadow transport secretary Theresa May said his decision to order a draft set of the insolvency orders to be prepared and published on 28 September, a week before the decision was announced on 5 October, was morally and legally questionable.

"It suggests that staff and shareholders were misled because while he had decided to wind up Railtrack, thousands of employees were investing more of their savings in it," she said.

Mr Byers said the Government had been faced with some stark choices back in July, when the company chairman, John Robinson-told him that Railtrack's financial position was far worse than he had thought in April.

The Transport Secretary said Mr Robinson made it clear that unless extra financial help was given, "it was clear that on 8 November, when Railtrack was due to give its interim results, it would be unable to make the critical statement that it was a going concern. The effect of that would have been disastrous".

Meanwhile, Tony Blair today promised that Railtrack's 250,000 shareholders will receive "what they are entitled to" after the company was forced into administration. Many have seen their savings collapse as as result. However, the Prime Minister opened himself to accusations that he was trying to help the shareholders with a meaningless promise, given at the CBI Conference in Birmingham. Mr Byers has already stated that he will not use taxpayers' money to bale out shareholders.

What is now being considered is the possible use of around £360million held by Railtrack Group, parent company of Railtrack plc, which owns much of the valuable property portfolio. How this money will be used is under discussion.

Railtrack said it was " confused" over Mr Blair's remarks. "Exactly what shareholders are entitled to is under discussion," said a senior source. "Nobody knows at the moment what that figure will be."

Mr Robinson today called for an independent inquiry into events which led to the company being forced into administration.