Railtrack to bid for infrastructure of Tube in network sell-off

London's Tube network is likely to be broken up into two or three companies and sold off, according to the boss of Railtrack, the owner of the country's mainline track and stations.

Gerald Corbett, Railtrack's chief executive, admitted the company had been in talks with the Government over the future of London Underground. "I understand that the Tube will be split into two or three infrastructure companies on long leases," he said yesterday.

Mr Corbett added that the train companies - such as the Piccadilly Line - would be kept in the public sector. Railtrack confirmed that it would bid to buy up the whole network. "It makes sense for us ... we have 1,300 engineers in rail-based investment projects," he said.

The decision to split up the Tube is a half-way house between Treasury plans and Deputy Prime Minister John Prescott's idea of a public-private partnership. Mr Prescott proposal was to lease all the infrastructure - the tunnels and the tracks - to one company for 30 years. The only firm big enough handle that large a contract is Railtrack.

However, the Treasury argued that by offering up three separate bits of the network, as well as the train companies, to the market, bidders would compete - on the basis of lower subsidies - to take over sections of the Tube. The compromise is also likely to placate the unions.

Railtrack said it had offered ministers a small stake in the company in return for taking over the Tube. However, ministerial sources said this had been rejected - because the plan gave the Government no say in what the company was doing.

Mr Corbett said London Underground would be a priority for Railtrack and said the company could upgrade the ailing system. "There is a lot we could do. For example, new orbital lines linking south London or a line from Stratford to Heathrow."

Railtrack executives were answering reporters' questions in response to a BBC radio interview with Gavin Strang, the transport minister, in which he announced that the Tube was to be "modernised".

The Tube, which carries more than 1.6 million people every day, is falling apart and in dire need of cash. Next year it will receive pounds 300m for its "core" operations. That is pounds 50m short of the amount needed just to stop the rot. To clear the "investment backlog", the service needs more than pounds 1bn.

Mr Strang also said that improving the network was a priority, not just for London, but the whole country. "We have to invest more in the Underground and we have to improve the standard and level of service and capacity."

A six-month delay to the opening of the pounds 2.7bn Jubilee Line extension was announced yesterday because of continued signalling problems.

London Transport said it regretted the delay, which means the line will now open in Spring 1999 instead of this September. The 10-mile extension, from central London to Stratford, via the millennium Dome in Greenwich, was originally due to open in March of this year.

London Underground's managing director, Denis Tunnicliffe, said: "I understand how frustrating a further delay will be for businesses and communities in south and east London who are eagerly awaiting the real benefits the new underground line will bring."

- Randeep Ramesh