No public money for Railtrack shareholders, insists Byers

Railtrack investors will not get a penny of taxpayers' money in compensation for the demise of the infrastructure company, Stephen Byers, the Secretary of State for Transport, told them on Wednesday.

The shareholders, who claim they were betrayed by assurances that Railtrack was a sound long-term investment, met Mr Byers for the first time in London to ask what they could expect in compensation.

Mr Byers told them that they would get "fair and appropriate treatment". But he added: "There is no question of using taxpayers' money, yours and my money, to compensate the shareholders for what was basically a bad investment." He said the needs of the travelling public had to come first and that Railtrack "had become part of the problem rather than part of the solution".

Andrew Chalklen, the chairman of the Railtrack private shareholders action group, whose train was delayed yesterday, said he was pleased Mr Byers had recognised the need for a "fair deal". But he also said: "There is a sense of betrayal. We invested in the company thinking we had invested in the railways for the long term. I'm sure people would have acted differently had they been given more information."

In the House of Commons, Michael Howard, the shadow Chancellor, said Mr Byers' description of Railtrack as a bad investment was a "disgrace".

Accusing the Government of abusing its powers, he said: "The Railtrack fiasco has not only hit shareholders but threatens the Government's ability to raise private funds for Britain's crumbling public services. Investors have made it clear that they will demand a premium to compensate them for the risk of what Labour might do."

Theresa May, the Tories' Transport spokeswoman, asked My Byers to confirm it could take up to a year to put into place Railtrack's replacement, and that public investment had been guaranteed for only two years rather than 10.

Mr Byers denied Railtrack had become a bad investment because the Government had put it into administration, saying: "If Railtrack had not been insolvent the company could have opposed my petition to the court. It did not."

Gwyneth Dunwoody, who chairs the Select Committee on Transport, said Railtrack's replacement should put passengers first. Otherwise, "all the problems created by incompetent management could easily be found again in the new company", she said.