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Thursday, 27 June, 2002, 18:36 GMT 19:36 UK
Will rail passengers benefit?
Railtrack HQ
Railtrack is reborn amid a new mood of co-operation

When the government pulled its support for Railtrack last year, putting the company into administration, ministers were anxious to avoid further disruption to Britain's rail passengers.

There have not been too many problems on the tracks attributable to Railtrack, despite the chaos in the boardroom.

Now Railtrack's operations are to be handed over to the control of Network Rail headed by the chairman of Ford UK, Ian McAllister.

He is likely to keep the existing chief executive in place - John Armitt is a senior engineer, and Railtrack hasn't had too many engineers running things in recent years.
Railtrack workers in Wimbledon, London
Network Rail will have to maintain existing track

Mr Armitt's continued leadership is likely to be good for passengers.

Within the rail industry he is seen to have a firm grasp of the unique problems of the UK's railways. He is also well respected.

In general nothing much will change as far as the company's operations are concerned.

But any profits made by Network Rail will be ploughed back into track, stations and signals, unlike Railtrack which, as a public company, was obliged to pay shareholders.

Envy

It is this not-for-shareholder-profit status that might benefit Network Rail most because it will allow the government to feel more comfortable about putting public money directly into the railways.

Ministers did just that on Thursday - they promised a total of 21bn to cover any potential financial crises the company might run into.

Unlike Railtrack, Network Rail will also benefit from a long term arrangement with the government which will invest billions more under its Ten Year Plan for public transport.

The government appears to have created the perfect environment for Network Rail to flourish

Railtrack can only look on with envy at the treatment afforded its replacement.

The new company will also be born amid a new mood of co-operation within the rail industry.

Because it will be owned by 120 train companies, unions and passenger groups, for the first time the very structure of the privatised railways will encourage fewer arguments.

That will delight the Strategic Rail Authority. Its chief executive, Richard Bowker, has made it his mission to draw the disparate elements of the UK's railways together.

Blame factor

The SRA will do all it can to help this new enterprise.

Network Rail also has a smaller job to do than Railtrack.

It is tasked with maintaining existing track. Large scale replacement projects, and proposals for new lines will be co-ordinated by the SRA.

This is crucial because Railtrack's finances were partly ruined by the spiralling costs of new railway.
John Armitt
John Armitt is respected

And then there is the blame factor, never far away given a hostile media and disgruntled passengers.

When things went wrong for Railtrack, as a private company it was an obvious target.

Network Rail may find it is the government that takes the blame in future rather than itself.

The government appears to have created the perfect environment for Network Rail to flourish.

Hardly surprising given its desire to have a not-for-profit company running the railways. But then, that's politics.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Simon Montague
"City investors seem certain to accept the deal"
Shareholders' action group's solicitor, David Green
"The offer is unacceptable"
Geoffrey Howe, Chairman Railtrack Group
"We believe the proposal we're putting to shareholders is in their best interests"

Key stories

Background

Safety crisis
See also:

27 Jun 02 | Business
27 Jun 02 | Business
24 Jun 02 | Business
03 Apr 02 | Business
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