New setback for rail franchise plans

The fate of the Government's rail franchise plans is hanging in the balance after three Court of Appeal judges unexpectedly decided to postpone their decision on an attempt by campaigners to declare the process unlawful.

Sir Thomas Bingham, Master of the Rolls, sitting with Lord Justice Waite and Lord Justice Otton, had said on Monday that they would rule on the case brought by the Save our Railways campaign yesterday, but instead they announced a further delay of their decision until Friday.

The postponement, which the judges said was because they felt it would wrong to be "stampeded" into judgment "when none of us feel ready to do so", forced the Government to cancel yesterday's planned announcement of the winners of the first two franchises.

The cost of rail privatisation again provoked sharp exchanges in the Commons between the Prime Minister and Tony Blair, the Labour leader.

John Major sidestepped repeated demands by Mr Blair to know whether the public subsidy to the railways was set to rise dramatically after privatisation, and what was the latest official estimate. But he accused the Labour leader of trying to "smear" the sale when every previous privatisation had been a success. "Rail privatisation will produce a better service for all passengers. If Mr Blair waits for the new franchise decisions he will begin to see that himself."

The first franchises for passenger services on South West Trains and LTS (London, Tilbury and Southend) Rail were due to be announced yesterday, and Jeremy Sullivan QC, for Roger Salmon, the director of rail franchising, asked if the signing ceremonies could go ahead.

He said he would make an undertaking to the court to adjust the franchise as necessary to obey the eventual judgment, but Sir Thomas Bingham said signing of the contracts should await the judicial outcome.

The Secretary of Save Our Railways, Keith Bill, welcomed the fact that the "very senior judges" of the Court of Appeal were taking the issue seriously enough to grant a stay of the franchise signing to give themselves more time to consider. "We are very pleased the judges ordered the franchise director not to go ahead with any signing until the judgment," he said.

Although the Government - which has already missed its franchising targets several times - will be anxious to sign the first two or three away before Christmas, whoever loses this case is likely to appeal to the House of Lords, causing further delays.

Yesterday, the Independent learnt that Chiltern Railways, which should have been ready for tenders before Christmas, is also now delayed because Mr Salmon failed to consult widely enough with rail operators in the Midlands. The franchise will not be offered until next month at the earliest.

The case centres on the fact that Mr Salmon - in drawing up his "passengers service requirements" for the minimum service level to be provided by franchise operators - left out large numbers of trains which are on the timetable.

Mr Justice Macpherson had ruled in the High Court that Mr Salmon did not act "perversely, irrationally or unfairly" and dismissed the case, but the Appeal judges listened much more sympathetically to the Save Our Railways' case.

Should the case eventually be won by the campaigners, it is likely that the Government will have to start the whole franchising process again.