Election timetable biggest threat to rail sell-off

"The plan to slash the number of stations that sell through tickets made privatisation look like a plot to do for rail what Arthur Scargill managed for coal."

Find an enthusiast for rail privatisation and that person is likely to have thought up the scheme in the first place or be involved in the sell-off as politician, adviser, manager or purchaser.

The unpalatable truth for Railtrack, the only part of the railways that will be sold in a public flotation, is that almost no one in Britain yet believes that breaking up the network into more than 60 units and selling them individually will be anything other than a disaster for the customers and very possibly for investors as well.

That is not a good background for a Railtrack sale next year that could raise around £3bn. So it was hardly surprising that Warburg, in its first public pronouncement since taking on the job of Railtrack's adviser, yesterday tried to weld together a few loose rails by asserting that passengers' fears of axed services and wholesale closure of the network were unfounded. Privatisation would put a sharper focus on customers and provide a seamless service, with performance standards enshrined in contracts, said analysts Andrew Fitchie and Bill Dale.

For the first time, government subsidies for uneconomic services would be transparent,managers would know the real cost of services and there would be rewards and penalties for good and bad, they enthused.Was it coincidence that John Swift, the rail regulator,also dropped his madcap scheme to slash the number of stations that sell through tickets? This was possibly the single biggest obstacle to convincing passengers that privatisation was anything other than a government plot to do for rail what Arthur Scargill managed for coal.

Mr Swift, whose work on performance standards for Railtrack has been much praised, is showing himself to be a pragmatic regulator. His new decision could prove a turning point in public perception of privatisation.

Warburg does not put a value on Railtrack, since there are still too many unknowns. But given that 90 per cent of its income from train operators will be fixed by contract, it should not be hard to price and sell once details are known. The greatest risk is not the structure of the rail sell-off, which can probably be made to work after a fashion, but the indecent haste with which it is being done to meet an election timetable. Speeding causes accidents, and the railways are no exception.