Rail bond plan lifeline for Byers

RAILTRACK shareholders have thrown Stephen Byers a lifeline by saying they could accept bonds in the Government's successor to the collapsed rail network operator.

The plan could help the embattled Transport Secretary honour his promise not to pay shareholders with taxpayers money and avoid the shareholders' legal action, said a spokesman for the powerful Institutional Shareholders' Committee. The ISC, which brings together the main UK investor bodies, is promoting the plan.

The news came as Byers and Railtrack chief executive Steve Marshall went head-to-head over a £1.7bn hole in Railtrack's budget. On the Breakfast with Frost programme on Sunday Byers said Railtrack is in a worse state than he expected.

It is unlikely to be taken out of administration within six months, while the bill to keep the network running has risen from £1.8bn to £3.5bn. Marshall said the extra bill was Byers' fault because he had put Railtrack into administration.

It also emerged that Schroder Salomon Smith Barney suggested that Railtrack sell its property assets for up to £3.7bn to escape its financial problems. This will raise questions over whether Byers considered alternatives to administration.