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Sunday, 7 October, 2001, 14:29 GMT 15:29 UK
Railtrack privatisation 'flawed'
A train leaves London Victoria station
The way Railtrack was sold off in the first place was the ultimate cause of its downfall according to rail industry observers.

Analysts say the method by which the rail industry was fragmented made it difficult for Railtrack to be a success.

And there is a warning that putting Railtrack under the control of a non-profit making trust is no guarantee of a turnaround.

"It basically shows that the rail industry should not have been privatised in the way that it was done," said rail analyst Christian Wolmar speaking on BBC News 24.

Reorganisation

"Railtrack should not have been hived off and expected to make a profit as an infrastructure company - that was a fundamental flaw and now the government has had to change the structure."

When the old British Rail structure was split up, Railtrack took control of the track, signals and stations.

The 28 train operating companies, who run the actual passenger services, paid for the use of this infrastructure.

Stewart Francis of the Rail Passengers Council agrees that the original split caused problems.

"The actual privatisation formula itself left a very fragmented industry... and it took a lot of time for the companies and Railtrack to learn how to operate an industry in a joined up fashion," he said.

"There was a compete underestimate of how much it costs to renew, enhance and maintain an aging infrastructure that had suffered from a lack of investment for many years."

Billions needed

But Mr Wolmar warns that reorganising Railtrack will still not guarantee its success, with so much investment still required.

"I think that unless they put in quite a lot of extra money, and we're talking a few billions here, they're not going to get the improved network that everyone wants to see," he said.

"To get the fundamental new railway we need for the 21st century will need a ten year programme of concerted investment, and with Railtrack's collapse a lot of the money that was previously promised is not there because the private sector can't pay for it so the government is going to have to cough up."

 WATCH/LISTEN
 ON THIS STORY
The BBC's Simon Montague
"One of the biggest failures in UK corporate history"
The BBC's Quentin Sommerville
"The City has long been looking for a solution to the Railtrack problem"
See also:

05 Aug 01 | Business
Railtrack may axe managers
02 Aug 01 | Business
Railtrack operations chief axed
23 Jul 01 | Business
Railtrack funding under threat
24 May 01 | Business
Railtrack reports massive loss
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