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Thursday, 28 March, 2002, 17:35 GMT
Should the government bail out shareholders?
The UK government has pledged 300m to the company which is ready to buy out the shareholders of Railtrack.

Network Rail could pay up to 2.50 a share for 250,000 Railtrack shareholders.

Although a government spokesman denied bailing out shareholders of Railtrack, Simon Haslam, a leading member of the Shareholder Action Group, said that he considered the deal "a modest victory".

Some Labour backbenchers have criticized Transport Secretary Stephen Byers for what they see as a u-turn, but it was welcomed by some city institutions. The City had opposed the decision to pull the plug on Railtrack even though the group was solvent.

Do you think the government is doing the right thing? Is this move an unnecessary intervention in the financial market? What will be the political fallout of such a move?

This debate is now closed. Read a selection of your comments below.

Your reaction

What most people, when they say "Shareholders took a risk, and now they should pay" don't understand, is that the Government stole the company. I myself have lost a lot of money in some blue-chip stocks - I am perfectly willing to accept my loss. What I am not prepared to accept is that shares in a solvent company were stolen by the Government. Even now, the Government are not giving back shareholders the full value of their shares. I am surprised that Byers has not been kicked out by now.
Pat, UK

No, it should not buy them out. They got into this themselves, they should get themselves out of it. The stockmarket is a gamble, they lost. Tough luck, that's the way the dice roll. Personally I think they were opportunistic bloodsuckers with no sense of social or moral responsibility for the society they live in, and deserve everything they got. Privatising services like that doesn't work. Pay them money, they'll never learn. Don't pay them, it's a lesson that'll stay with them for the rest of their life. I'm a teacher, I know which one I'd prefer.
David, Colombia, ex-UK

Buying shares is a risk. The shareholders should have looked more in depth at privatisation and what was required long term for the company. Like a number of industries which have been put into the public domain, investors have made quick profit. However on this occasion they lost and I do not see the reason why the tax payer should foot the bill.
Les Jones, Scotland

What I can't understand is that when all these services, like rail and post and energy and so forth were government controlled, they worked well and were paid for by our taxes

Victor D., Amsterdam, the Netherlands
What I can't understand is that when all these services, like rail and post and energy and so forth were government controlled, they worked well and were paid for by our taxes. Now that they have all been privatised they work badly, are more expensive and our taxes still go up? Where is all this money going? Let those who have this money now in their bank accounts pay back the shareholders.
Victor D., Amsterdam, the Netherlands

The government seems inconsistent in willing to compensate those who lose money on the markets seeking profit from their excess savings, but not those who fall victim to the self same "market forces" (and to incompetence in the regulation of the industry by the government) and see their Pension fund values slashed (the FSA and Equitable Life debacle) so being condemned to future poverty or dependence on state handouts. It was the previous Government's predilection for (and the present Governments mistaken continuation of) the fallacious doctrines of privatisation and deregulation that is responsible for both the Railtrack and Private Pension fiascos.
R Hobler, UK

Governments prove time and again their infinite capacity and ingenuity to screw things up

Mark, USA
Whether it's de-regulation of energy in California or privatisation of the railroads in Britain, governments prove time and again their infinite capacity and ingenuity to screw things up and delude themselves that they have accomplished something profound. Then when the consequences of their stupidity become manifest, they come up with another rabbit out of the hat to fix it. Had they left well enough alone in the beginning, things would be no worse than they are now and the taxpayer would be a whole lot richer. Shareholders took their chances thinking they would get rich and lost. Now the government should take it over out of bankruptcy and give the shareholders no more than a small percentage of their investment back. It will cost the taxpayers more than enough to put it right again.
Mark, USA

At 72 years of age and having paid taxes all my working life how many times do I have to buy the railways?
Les Heaton, England

Byers has not bailed out the shareholders. I presume that he/Network Rail has made an offer to buy (some of) Railtrack's assets from Railtrack/the Administrator. When Railtrack is finally liquidated, the shareholder gets a share of what is left after various creditors are paid. There are only two issues: Should private investors have owned the nation's railway assets in the first place? (Morally, no, but legally they do) - and - Has Network Rail offered too much for these assets, if the shareholders are going to finish up with as much as 2.50? (Remember shareholders have already had excessive dividends). Possibly. But if they had offered less, would yet another private sector organisation get their hands on the railway network, with the potential for a rerun of the last few years?

They've finally done it! Privatised the wealth and nationalised the debt.
Tally, Australia

Buying shares is a risky business. A bit like buying a train ticket. Third rate performance and unfortunately sometimes they crash.
Keith Jones, UK

I don't see the government bailing out shareholders of any of the internet ventures that went wrong. When you buy shares you do so knowing that there's a risk involved. There's also the potential of making a lot of money. You win some and you lose some. If you're not prepared to accept the outcome you shouldn't have bought your shares in the first place. If you cannot handle the risk you should keep your money in a savings account.
Christine, UK

If the government bailed out every person who made an incorrect gamble on shares, this country would be bankrupt

Richard Hawley, UK
If the government bailed out every person who made an incorrect gamble on shares, this country would be bankrupt. No. Don't bail them out. I'm sorry if the workers spent their life savings on them, but if you play the market successfully you win, if you choose the wrong thing you lose. These people chose wrongly (as do thousands every day) and have paid the price. Shares are a gamble however they are presented to you. It's not a get-rich-quick scheme, it's a risk you take. And you need the knowledge, intuition and regular checking to be able to buy and sell when the need arises.
Richard Hawley, UK

Steel, railways, phones, mail, gas. Shareholders deserve all they get. Next we will see mass redundancies at Railtrack2 in order to turn a short-term profit.
Andrew, UK

The new CEO of Railtrack is I believe a barrister, brought in specifically to handle the legal case Railtrack where about to embark on. As a barrister I don't suppose he knows a train engine from a wheelbarrow, which I guess he will fill with his golden handshake when he departs from Railtrack in the next few weeks. Getting rid of Railtrack is worth any price even 300m, particularly the directors and shareholders, the real workers are the ones I feel sorry for, they have to feel the brunt of delays and cancellations.
Cliff, UK

If I bet on horses or buy a lottery ticket I don't expect my money back if I lose. Railtrack shareholders were gambling on making profits. They were getting dividends even as the government were giving the company our tax money to keep them going. They lost their bets. We shouldn't be giving them more of our money.
Kim M, England

since the government feels it has to get rid of Railtrack as soon as possible to get some sort of order back to the railways, they may well feel that they cannot afford to antagonise those employees of Railtrack who were shareholders

Alex Blackburn, UK
There are several ways of looking at this. Legally, it's possible that the government acted unlawfully when it forced Railtrack into administration, although I suspect only a contract lawyer could really answer that. Practically, since the government feels it has to get rid of Railtrack as soon as possible to get some sort of order back to the railways, they may well feel that they cannot afford to antagonise those employees of Railtrack who were shareholders, and that since all public sector projects in future depend on the PFI, that the same applies to the financiers in the City. Morally, I think some of the other posters here have got it just right when they say that if there's any compensating to be done, it ought to be the British taxpayer who gets compensated. Firstly, billions of pounds worth of property assets were handed over to Railtrack when BR was privatised for free; secondly, far more subsidy was paid to Railtrack, who did an appalling job, than was ever paid to BR. Thirdly, yet more billions of our money are going to be spent by the government to keep some semblance of a railway system going; lastly, we now see that the shareholders, who surely should have seen that it was becoming politically unacceptable for the government to keep paying for Railtrack's incompetence, are going to get several hundred million of our money. Oh wonderful!
Alex Blackburn, UK

The shareholders should not be bailed out, Stephen Byers should go. They'll be asking us to bail out Consignia shareholders next. A very disgruntled labour-voting taxpayer.
Bev Owen, Wales

No - shareholders are in effect gamblers and know the risks. Some you win and some you lose and it's all driven by greed, not steam, diesel or electric!

If Railtrack truly was going bankrupt there would be no way the bond holders would be getting all their money back

If Railtrack truly was going bankrupt there would be no way the bond holders would be getting all their money back. Marconi's bonds trade at about 30% of face value, Railtracks are at least at 100%. This means the government already have a good idea of the value of Railtrack and its more than enough to pay off the bondholders. The 500m offered for the equity is an insult. When will people realise these are the shareholders assets and the government is simply trying to buy them to give to its CLG. We don't want compensation from the tax payer we want a fair price our assets.

Surely when shares are bought on the stockmarket they are then subject to financial fluctuations-or am I mistaken?
Adrian, UK

I think those employees who were pressured to take their bonuses in shares should be compensated properly. As for the rest, don't they realise that if the government had not acted then the company would have become insolvent as a result of the bills it had coming for the safety expenditure which had previously been delayed or reduced for commercial reasons? Had this been the case then the shares would have been worth practically nothing and the rail system would have ground to a halt too. The lesson which needs to be learned here is that the market is fine for flogging cars & washing machines or fruit & vegetables but cannot measure up to the needs of public services where safety, reliability and quality cannot be traded off against market determined price.
Chazza, Scotland

Absolutely not! Anyone who invested in the failed bubble companies lost a lot of money. Often companies would declare bankruptcy and be bought out by someone else and the shareholders wouldn't see one penny of their money back. I don't see why Railtrack shareholders should be any different. Buying stocks is a gamble, and it seems they just want to feed at the government trough because Stephen Byers had the good sense to end this ridiculous and deadly privatisation of Britain's rails. Let them eat cake.
Stacey Turner, England

The Government and Stephen Byers have been forced to step down

Tim S, UK
Yes. The Government and Stephen Byers have been forced to step down after realising that Railtrack were not, in fact, insolvent, and also that the Government have no power to effectively confiscate people's hard-earned money.
Tim S, UK

I seem to remember that at the last general election we were told by Labour that the railways could not be renationalised because it would be too expensive, and they wanted to spend what money was available on things like the NHS. Now it would appear that they have the money to buy back railtrack without bringing it back into public ownership, whilst at the same time privatising the NHS with PFI schemes. Perhaps they have adopted the Lewis Carroll idea of "a word means what I want it to mean", and the Mad Hatter is ensconced in number 10.
Paul, UK

When people criticise the "ineptitude" of the present party in government, they appear to have short memories. It was an inept and morally bankrupt Tory government that sold off the rail system against the advice of many. We don't really have much choice but to buy out the shareholders if we're to get an essential national resource on the rails again. It's wholly different to bailing out a retailer. Wake up Britain!
Colin, UK

Sometimes you win and sometimes you lose

Nat Knight, UK
As a shareholder I believe I would be fortunate to get any money back. I took the risk of buying the shares and I have taken the consequences. Sometimes you win and sometimes you lose.
Nat Knight, UK

I'd be more happy if I knew that Railtrack was going to be nationalised in which case the government would be keeping what it's paying for but as it is we're left with a company that could easily be sold off at some unknown time in the future. Even if Labour doesn't do it any future Tory government would and then we're back to square one.
James Pittman, England

We are constantly told that MPs deserve their vast salaries, because that's what they would earn in the commercial world. Who in their right mind, would employ people as inept as our present government?
David Norris, Scotland

I wonder if this corrupt government will pay me back my losses?

Malcolm, England
I, as well as tens of thousands, have lost a lot of money in Marconi through bad management. I wonder if this corrupt government will pay me back my losses?
Malcolm, England

Byers did the right thing as the situation on the ground was out of control. He has to offer compensation to avoid court action. This problem shows that shares should never have been offered for essential supply-side services like railways. This affair will have some benefit if British voters realise that in future they should think before they vote.
Peter Davidson, UK

My answer would be definitely not.
David Dutton, Hamphire, UK

I would never in my wildest dreams have thought the government would give me my money back after I had lost it

G McGrath, England
The price of shares can go up as well as down. Thank God for this government. It now means that statement is no longer valid. My money is safe despite knowing the risks when I bought my shares. I would never in my wildest dreams have thought the government would give me my money back after I had lost it. It simply beggars belief. I think I will risk a bet on Leicester City winning the league after this. I know it is unlikely but maybe Byers will help me like this again.
G McGrath, England

Imagine this: My neighbours have enough money to buy shares in a company. Unfortunately the company loses millions of pounds and the shares are worth nothing. They knock on my door and tell me they have lost thousands so, instead of giving my tax to the government to pay for essential services, they ask if I could give it to them instead. Stupid, isn't it!
Mrs Nightingale, England

No - shareholders bought the stock and they knew that prices might rise or sink. They should not whinge if they become worthless. It will be Joe Public that will indirectly pay for this government's decision to bail out the shareholders. It's just a way of buying votes.
Pete Jones, Wales, UK

The taxpayers of Great Britain have been paying for the expansion and maintenance of our railways since the middle of the last century. We saw great freight terminals built to replace our shipping and our canals. We then saw all this taxpayers investment sold off to the highest bidder. Privatisation of the railways has lacked in long term commitment and foresight thus leading to the demise of quality and the cumulative growth of cost to the customer; most of the general public cannot even afford to use rail transport and now the government might use our taxes to try and preserve what's left. The phrase "throwing good money after bad" is all too familiar.
James, UK

In getting quite so exited over this, people - including the media - are forgetting exactly what Railtracks being in "Administration" means. A firm being put into Administration DOESN'T mean that the ownership of it's assets has been transferred. The shareholders are still entitled to any money left over from the reserves and the sale of assets after creditors have been paid off. It was never going to be possible to just "hand over" the rail network to a new firm.
Andy Dawson, UK

The question is tendentious. "Bail out" implies someone, with no obligation to do so, is making good losses. In fact, what is proposed, and not before time, is that the shareholders are compensated for an asset that has been confiscated.
Neil, UK

I knew what I was doing by gambling my money and so did all the rest of the shareholders.

Robert Aitken, UK
I am a Railtrack shareholder. I bought 5000 worth because I thought I could make money but like all my share portfolio I bought these shares in the full knowledge that it was a risk. If the government is stupid enough to give me my money back then great... but I knew what I was doing by gambling my money and so did all the rest of the shareholders. We deserve nothing but Id like to thank the tax payer for being so generous!!!!
Robert Aitken, UK

Railtrack did not go bust but was stolen by Byers. The shareholders would have got money from a buyout or takeover if the government had not interfered, or failing that from the sale of the company assets. Shareholders are happy to take normal market risks but not theft of assets by Government. We paid for those assets with the privatisation, so either compensate us or let us sell them to the highest bidder.
Phil Thompson, UK

The management of Railtrack have completely failed to strike a proper balance between the interests of the rail traveller, the operating companies and the Railtrack shareholders, who had it far too good for far too long. The only reason the Government has intervened is to safeguard a key component of the UK transport system. It deserved to go to the wall, but couldn't be allowed to. Returns on shareholdings are a reward for risk. The shareholders should realise this.
Graham, Scotland

Forgive me if I'm wrong, but when you 'play' the stock market, aren't you warned that the value of shares may go up or down and that the market is very volatile???? If you are going to invest in shares you should be prepared for no return if the shares collapse.
Marc, UK

Some people resented Railtrack paying dividends to shareholders, and at tragic times like Hatfield I would agree with that. But all funding has a cost that depends partly on the borrower's trustworthiness. Unless the Govt re-establishes some trust by compensating shareholders then the cost to the taxpayer of funding future public projects could be higher than any dividends.
Martin, UK

I subscribe to the belief that you should only gamble what you can afford to lose

Paul, UK
I subscribe to the belief that you should only gamble what you can afford to lose. However, in this case the situation is far from clear since Railtrack, although failing, was still solvent. The Government made a political decision to put the company into receivership. It is possible, though perhaps somewhat unlikely, that Railtrack could have recovered. As such I do have some sympathy for the shareowners, but to give money over to them would set a dangerous precedent.
Paul, UK

Is buying shares not a risk in itself? They should have sold and bought in something else before all this started. No, they deserve nothing.
Chris, Manchester

Stephen Byers is being unjustly pilloried for the failure of foresight by his predecessors as Transport Secretary. The original privatisation issue should have dealt with the contingency of the privatised companies needing to demand state aid for their survival. Even the most ardent supporter of privatisation would surely agree that this cannot go on indefinitely. Presumably the Tory secretaries of state refused to countenance the possibility of such bail-outs on ideological grounds ("private operation is bound to work"), while John Prescott failed to tighten up this glaring omission during his four years in the job. Byers then took up the post, and promptly had to come up with a quick solution to the mess.
Bill Hartree, UK

By all means, bail them out. But as Railtrack was originally a public asset, the shareholders should first recompense the taxpayers from whom it was taken.

Imagine if you had shares in a retail store and you are told "we've gone bust and you've lost your money" only to find that the shop is still open. That's how we feel

Stephen Griffiths, England
I am a signaller for Railtrack. In my workplace during the last few months nothing has changed. We still do exactly the same job. The same trains run every day. There are no more or less passengers than there were. Imagine if you had shares in a retail store and you are told "we've gone bust and you've lost your money" only to find that the shop is still open, with full shelves and customers buying things. That's how we feel. Of course we should be compensated.
Stephen Griffiths, England

You cannot have it both ways. If an investor wants to play the stock market then he/she should be prepared to lose money as well as gain. Why should Railtrack investors be treated differently from anybody else? After all doesn't the "market" rule?
Andrew Watson, England

In the six months before Railtrack was re-nationalised it made over J300m profit. The only problem it had was that it ran short of money which was brought on by government insistence that it bring forward all major repairs in the wake of the Hatfield crash. Not only is it right that the government compensate all shareholders, but that they give them the full value of their investment according to proper accounting rules. The only good that could ever come out of this affair is Byers being kicked out of government closely followed by Blair.
Andy W, UK

The Government is not bailing out the shareholders, but paying them for shares the government seized

Phillip, UK
There would appear to be a lot of "misinformation" about on this page, perhaps an info page to support this debate might be worth considering. The Government is not bailing out the shareholders, but paying them for shares the government seized. To use the Marks & Spencer example, if the government took over M&S tomorrow, and didn't compensate the shareholders/pension funds, there would be uproar. One point that everyone appears to have forgotten (conveniently) when the government sold Railtrack, it received a large amount of cash for the sale... what has it done with it? You can argue to kingdom come about what the company is currently worth, (cash/property/rights etc.) - does anyone know? Has the government got a bargain? Is it bankrupt stock? Would the government survive a court case?
Phillip, UK

No they shouldn't pay Railtrack shareholders. Investment is based on risk and return. You take a higher risk for a higher return. When the shares stood at J17, was anyone complaining? No - because they were sitting on a fat "paper" profit. They should have got out then, rather than bleat now.
Stuart, UK

Whether the government "should" or "shouldn't" is irrelevant; it's what would happen in court that would matter, and unfortunately the shareholders have probably taken on a no-lose gamble. Had the company been allowed to collapse just like any other failing company, then the shareholders would have reaped the proper consequences of getting the railway cheap from the taxpayer in the first place! I only hope that the J300m government grant which will go to the shareholders will be self-financing (i.e. hopefully it is cheaper than keeping the company in administration). Then at least the taxpayer will have got something.
Steve, UK

They deserve nothing!

Why did these shareholders invest in Railtrack in the first place? Out of a patriotic duty to support our rail networks? No, it was out of greed and they lost. Tough! The idea of doling out compensation to such bad gamblers is pathetic. They deserve nothing!

Just about all of the shares that I've bought in the last three years are now worth less than when I bought them. If I sent that nice Mr Blair a list do you think he'd consider reimbursing me for my bad investments?
Dave Cross, London, UK

Of course not! Shareholders in private companies know that there is a 50-50 chance that they will make or lose their money. Why should shareholders in a public service treated differently to those in a private concern?
Sylvia Woolhouse, UK

One stupid decision after another. What are the bounds of this government's incompetence?
David Daly, UK

So if I go to the bookies I can expect to get most of my money back even though I lose? Brilliant idea!

Welcome to the free market!

Mark M. Newdick, US/UK
If these are the same shareholders that took profits in the "good times", then they have nothing to complain about if the company subsequently goes into receivership ... heh, welcome to the free market! That said, if the company was over regulated and free enterprise interfered with, then government was responsible for its demise ... either through design or incompetence, then they (the taxpayer) have a duty to compensate those who risked their capital. However, I would argue that anyone who invests in a key communication enterprise (especially one previously owned by government) should weigh all the risks, including that of government regulation and interference. What a mess!
Mark M. Newdick, US/UK

Can't afford to bet? Don't bet!
Mark, England

Railtrack bonds were trading on the verge of junk status about a year before Byers pulled the plug - it's not as if the City didn't know it had been a dodgy bet.
Anonymous, UK

Buying stock is a gamble

David Thomas Stafford II, USA
No. Buying stock is a gamble. England will survive the bankruptcy, and so will the shareholders.
David Thomas Stafford II, USA

Can we stop calling this a "bail out"? Railtrack legally owns the assets and Byers wants another company to have those assets. That being the case they have to buy the shares (as they would with any other business.) The alternative is that the government intends to add theft to its record of lies and sophistry!
John, UK

I can see from several of the mails sent in already that there is a general misunderstanding about exactly who is out of pocket here. Many investors into Railtrack were hardworking employees who had been given shares rather than a rise for working 70-hour weeks over the last five years. Far from not being able to change their Mercedes, many were losing life savings. This also goes for the many shares held in private pension funds and self-administered pension schemes. Please look at the facts rather than media hype.
Rob Churchill, UK

To all those whining about compensating the rich etc. Institutional shareholders may hold the bulk of the shares, but the money isn't theirs. It belongs to people saving for retirement, saving to pay off their mortgage and maybe just saving so that they can give their children a helping hand in the future. In other words, when the government decides on a whim to renationalise Railtrack without compensation, a lot of ordinary people suffer whether they realise it or not.
Ian, UK

I do not believe the Government should give the shareholders one more red cent in 'compensation'

Robert Sunderland, England
I do not believe the Government should give the shareholders one more red cent in 'compensation'. When one makes an investment, the chance of losing some or all of one's money is ever-present. Even with investments which are meant to be 'safe', such as AVC's with Equitable Life. I have won some and lost some. When I lose (e.g. Cambridge Instruments, Acorn Computers and Marconi, which has gone pear-shaped despite Ian Duncan-Smith being a Director), I do not cry but put it down to the way capitalism works. It is of concern that Byers has turned down what would appear to be a better option which would not involve any more taxpayers' money because he is frightened of the response of the City. So who runs the finances of Great Britain? The Government or the International Financial Institutions?
Robert Sunderland, England

Never mind the hospitals. Let's hope Mr Byers doesn't become ill and need to use a NHS hospital. People who invest should be aware that the shares go up as well as down, other investors don't go around asking for there money back.
Helen Ledger, UK

Ever since the original privatisation, every complaint about the state of the railways has been met by one bodge after another by the Government; each time trying to pacify one group but making things worse for everyone else. It was only to be expected, as this Government seems utterly incapable of leaving anything alone. The only winners, of course, are the administrators, the contract lawyers and bankers who suck fat fees out of every deal.
Julian Hayward, UK

the capitalists not get it - any investment is a risk?

Terry Johnson, Oxford, UK
This is a sop to Gordon Brown, who is being put under pressure by the City. Do the capitalists not get it - any investment is a risk, and if they advised their clients that Railtrack was a good bet, they were missing several blindingly obvious facts about the state of our railways!
Terry Johnson, Oxford, UK

Maybe the shareholders should pay back the money they make on dividends and rises to the government too?
Simon Soaper, England

People who buy shares stand to make large profits if those shares do well, but they also buy in the knowledge that they could lose their money if the shares go down in price or are suspended. They should not expect to have it both ways. If they want safe investments, people should put their money in deposit accounts. If they want the chance of high gains, then they should accept the risk that goes with share ownership. The Government is completely wrong to give in to Railtrack shareholders like this, no matter how many of them are big noises in the City. But then, having seen the way in which the Names at Lloyds of London wanted it both ways, I suppose we can't expect Railtrack shareholders to settle for any less.
David Hazel, UK

Please bear in mind that "government" means the taxpayer

Wendy, UK
Please bear in mind that "government" means the taxpayer. I think this is a very expensive way of recompensing the shareholders who may not all be taxpayers.
Wendy, UK

Will the shareholders pay it back to the government out of their divvies? No, didn't think so.
Joe Whiteley, UK

I think it needs to be kept in mind that the majority shareholders in Railtrack were the pension funds of ordinary hard working citizens. Also a lot of people coming close to retirement bought privatisation shares as a nest egg towards their retirement.
Mark Olive, UK

Yes, the British Government should repay the Railtrack shareholders. OK, as a shareholder, you have virtually no stake in the event of a bankruptcy, but we are not talking about losing a few points of a large fund's value here - lots of Railtrack shareholders were everyday working class people (a great proportion of whom would have invested a considerable amount of their savings)- many of them employees of the company. Yes, as a purchaser of shares, one takes a risk, but many of the shareholders did not have financial expertise and trusted the government that they had voted in. A British Government spin-off, should be, in theory, one of the safest forms of investments and should yield results near to that of a Government-backed bond. It is outrageous that the aforementioned everyday people have been the ones to suffer on this occasion and should be taken care off. Who will invest in a like venture in the future?
Sheenal Thaker, UK

Railtrack is not the first listed company to fail and had it been left to its own devices it would have collapsed taking the railways with it. Intervention was essential. Perhaps Santa Byers could extend his generosity to Cammell Laird workers who had shares in their company when it collapsed. Or perhaps the taxpayer could just underwrite the whole stock exchange so "The value of your shares could stay the same as well as go up."
Antony, Liverpool

There are thousands of ordinary people who had a lump of their pension stolen by the government

Matt, Amsterdam, Netherlands (ex. UK)
I'm sure the outraged masses will imagine the shareholders to be overweight businessmen sat round a shiny table, and I am also sure that someone will have to use the buzzword "fat-cats" somewhere in this forum. However, there are thousands of ordinary people who had a lump of their pension stolen by the government when they decided to put a solvent company into receivership because they were too ashamed of their mishandling of the situation. Unfortunately for Mr Byers, this one couldn't be swept under the rug, so he has to set the accounts straight. Really, it's quite frightening to see his ineptitude.
Matt, Amsterdam, Netherlands (ex. UK)

Of course not. When you make an investment you accept the risk that that investment can go up or down. People seem to have forgotten that stocks don't always go up! Are we to bail out every investor whose stocks decrease in value?
Ann, UK

I lost a few quid on the horses at Cheltenham last week. I hope the Government will now bail me out, as the principle appears the same.
Martin, UK

Steven Byers made a serious error when he placed Railtrack into administration last year. His claim that the company was insolvent was simply untrue, and his action was un-warranted. It is only right that the government should compensate the shareholders. It was their Minister's gross incompetence that caused the loss in the first place. It is a pity that after un-necessarily costing the taxpayer billions of pounds through his ill-advised actions, Byers has not had the decency to resign.
Andrew Rose, UK

A fairer price would have been at least J3.80

Douglas Price, England
This Government talked the Share price and the Industry into liquidation. A fairer price would have been at least J3.80. I hope the offer is refused and Railtrack take these incompetent politicians to court.
Douglas Price, England

Boy, I wish I could get a deal like that ... in the Stock Market I always believed you take risk ... but apparently Railtrack shareholders are immune to that reality. I think it's a deplorable action by a deeply flawed minister.
Tom, UK

The only people who should be compensated are Railtrack employees who were given shares in lieu of pay or pension rights. Everyone else took a risk and has to accept the outcome. The Tories subsidised the privatisation of the rail industry to the tune of 5 billion. Everyone sensible knew it was a farce at the time. It's a bigger farce to hand over even more money now. We the taxpayer should be asking for our money back from the private companies. Now the private TOCs want 14-year franchises. I predict a long line of them coming back to the government cap in hand over the next few years looking for more hand outs and state support. We should bring the entire rail industry back into state control and finance it from general taxation in the same way as we finance the road network.
John Allen, Scotland

No the Railtrack shareholders do not deserve any compensation. The alleged profit Railtrack claims disappears once liabilities and the amount it had to beg from the Government are taken into account. Railtrack is a loss-making shambles and the shareholders should be paying US to take it off their hands
Bill Wallace, UK

If shareholders own the assets, then why do they not also share the burden of debt too? What would they have done if the whole business went bust (like Enron)? As always the taxpayer is the loser in this farce and I think those in the city should apportion some of the cost.
Dr J Barnard, England

There's no limit to the amount of tax I'm willing to pay to bail out the governments incompetence

Alex Keenleyside, England
There's no limit to the amount of tax I'm willing to pay to bail out the governments incompetence. Have a blank check Mr Blair, just make sure some upbeat stories appear in the paper about it all being for "the NHS"
Alex Keenleyside, England

Even though greedy Railtrack shareholders getting further money greatly irritates me, it is still an overall saving considering how the railways were flogged off at a bargain basement price. Further, the media, including the BBC, should not have suddenly become pro-Railtrack as soon as the government at last stood up to them. After presenting Railtrack and its shareholders as oppressed victims, now I assume your editorial direction will be that the government is appeasing rich investors at the expense of the poor taxpayer. Shame on you.
David Owen, Wales

I wish I could bet on the horses in the same way, if I loose the government will compensate me.
Jack Clayton, UK

It seems to me this whole business rests on the legality or otherwise of the decision to put Railtrack into administration. At the time we were told Railtrack was insolvent but subsequently the weight of evidence supports the view that Railtrack was in fact solvent. The decision to put it into administration seems to me to have been taken for political not commercial reasons. It's a shame this can't be tested in the courts - it would seem that if it was a political decision it is a very sad day for both our democracy and the rule of law.
A. Clough, England

No, they should not be given their money back. Shareholders owned the company and when it failed it was their fault - what interest did they take in the running of the company? They were simply content to sit back and take easy money. The shareholders of Railtrack have let the country down. Further, I was given "share as you earn" shares in the company I worked for as part of my salary deal over many years. That was a government-encouraged scheme. The company went bust. That tough cookies for me and I am content with that - it is just tough cookies for Railtrack shareholders too. It is also a massive smack in the face for all of us members of the public that did not want our public assets sold off cheaply to people with spare cash. I still feel robbed by the Tory sell-off of what were my (national) assets - the shareholder profits have been at my expense in large part.
Brendan, UK

Another u-turn from what is fast becoming a very disappointing government

Pete, England
Another u-turn from what is fast becoming a very disappointing government. Buying shares involves risk, and when things go wrong you have to accept your losses.
Pete, England

Yes it should especially as most of this fiasco is the fault of the said Byers. The government should become the major stakeholder and get this railway system back to being a national entity that functions.

Investing is risky. If the government buys back an industry that was previously public, then the investors should get the minimum amount per share, or less, that the stock was worth when they purchased it. Investor greed leads to pressures for privatisation of industries run in the public interest, so they should accept the risks of privatisation failing, just as they are so eager to accept the rewards of a public enterprise's failure.
Shawn, USA

The Government must not refund shareholders for their losses. These investors owned the shares at a time when things were uncertain for the company and there was never any guarantee that they would get their original investment back. That is the risk you take when you are an ordinary shareholder. If Railtrack shareholders are going to get bailed out by the Government, does this mean that Marconi & BT shareholders will also get a refund? Mr Byers may as well start refunding all losing bets on the 2-25 at Chepstow as this is, in effect, what he is doing.
Will Faulkner, Cheshire, UK

If Railtrack had gone bankrupt, that would have been a different matter

Rahul Mahajan, UK
Yes, in this case, the government was correct to pay the shareholders the price per share of Railtrack prior to it being taken into government "care". Now if Railtrack had gone bankrupt, that would have been a different matter, and shareholders would quite rightly have lost the value of their risk capital. But the extenuating circumstance of a solvent company being taken into public hands warrants a payment of some description to the owners.
Rahul Mahajan, UK

No the government should not be responsible for bailing out shareholders! Railtrack was just like any other company that sells shares - if you decide to invest in it then there is a risk attached. If you end up losing your money, then hard luck mate! What about people who held shares in Marconi? What about people who held shares in British Airways? Are they going to be bailed out by the government? No. If you are going to buy shares then at least be mature enough to accept the consequences of your poor investment strategy. If that's not possible, stick to the piggy bank.
Simon Moore, UK

What a total fiasco - British Railways should not have been de-nationalised in the first place, and the decision for a separate company to run the track network must be regarded as one of the most absurd political judgements of last century! Now the taxpayer is left yet again to bail out another UK government folly. This is a real case for a few political heads to roll - You could tie those who were responsible to the rails, but the 10.10 London - Manchester express has been cancelled due to track repairs! Its time to take control of the railway networks and nationalise it once again before the whole lot becomes totally de-railed and the UK railways become the laughing stock of the world - George Stevenson would turn in his grave, if he could see the state of the British railways today!
Dr. Beeching Jnr., Isle of Man UK

Shareholders owned Railtrack, the Government confiscated their shares

Guy Hammond, England
The government is not "bailing out" shareholders, and it is a poor choice of words by the BBC to suggest that this is what is happening. Shareholders owned Railtrack, the Government confiscated their shares. Even now, the courts are still deciding if this was even legal. The City are reluctant now to get involved with government projects at all. And as ever, the poor taxpayer foots the bill for all this bungling.
Guy Hammond, England

I am on the Committee of Railtrack Action Group, the action group representing 62000 members. We are being inundated with emails from very angry members. They do not want taxpayers' money, they just want full and fair value for their assets, that clearly were stolen. The courts will prove this and its there we should go. If you were mugged in the street for your mobile and months later were given it back minus its sim card and battery would you be happy?
Antony Hutton, England

Most definitely not! 'Big boys and girls' who want to play the stock market should be grown up enough to accept the risks rather than wanting their cake and eat it. The taxpayer shouldn't be held responsible for the failings of Railtrack managers.
Robert Crosby, Nottingham, UK

Privatisation of an essential public service is immoral

Trevor Mendham, England
Privatisation of an essential public service is immoral. Anyone who attempts to profit from immoral activity deserves to lose their shirt.
Trevor Mendham, England

Buying shares in anything is risky, so no they shouldn't have. However, they're looking at the number of votes they're losing (as all politicians do).
Pete B, UK

Why should the shareholders get any money? When you buy shares you take a risk, you may make money, but you can also loose money. You take a risk. It says it on everything to do with shares - "Shares may go down as well as up". Should they get any money? I don't think so!
J. Matthew Horton, Huddersfield, United Kingdom

I suspect that this is intended to head off expensive and embarrassing litigation. It looks very bad on first sight, but actually represents the cheapest and cleanest way out of the mess for Mr Byers. As for Mr Byers' future - well let's just say that he has even less in common with Caesars wife after this announcement!
Rodger Edwards, UK

Have I missed something? Have the Government taken over Marks and Spencer? They have effectively taken the Railtrack back so will have to pay something for the rail infrastructure. I think it is better that future money goes to a non-profit making organisation which is trying to run the railways better than to continue with Railtrack who would have milked the money away for imaginary profits.
Steve, UK

I can think of far better uses for J300 million of taxpayers' money than compensating shareholders. I wonder how many of them are donors to New Labour. There is an old saying that you should only buy shares if you can afford to lose them. Railtrack was a lousy company doing a lousy job. Why anyone kept their money in is beyond me. I am sure we all recall the stampede of greed as Gas, Water, Electricity etc. were flogged off in the Thatcher days. Well guess what? You don't always get rich quick by investing in privatised dinosaur industries or corporations. Tough!
Cynewulf, UK

If you bet money on the horses and your horse comes in last, you don't get a payout from the Government, do you?
Steve, UK

People with money to spare gamble it on a company's performance. There's no real difference between that and backing a dodgy horse. If you can't afford to lose it, don't do it.
Jonothon, England

This was inevitable after Byers' original incompetence in putting Railtrack into administration

Allen Chilver, UK
This was inevitable after Byers' original incompetence in putting Railtrack into administration. Effectively, he confiscated Railtrack's assets from its legal owners. Like it or not, those owners were its shareholders and not unnaturally they wanted payment. In law, Byers wouldn't have had a leg to stand on and he knew it. He had a choice - U-turn now or U-turn after a humiliating and expensive defeat in court. Either way, the taxpayer would have picked up the bill - this way at least is slightly less painful to the taxpayer. What's more interesting is what this does to Byers' political support. Until now he was the hero of the backbenches for renationalising Railtrack without compensation - where will they stand now that they've had a cold bucketful of reality?
Allen Chilver, UK

It's the age-old story again. Private enterprise takes over a public company or institution, takes subsidies and pays them to shareholders, strips assets and runs company into the buffers, puts out hand for a government bail-out! Everybody of sense knew that Railtrack was a dodgy investment but the investors were content to milk the government subsidy while the service their company provided degenerated from a national joke to a national tragedy - and now they squeal for their money back. What tips the balance back towards a national joke is that a Labour Government is prepared to give our money to them. The joke is this: Our Railway system is sold off at knock-down prices (in other words we subsidised selling off our own property); Railtrack then declared instant profits by simply taking our subsidies and paying dividends (and fat cat salaries, etc) with the money which was supposed to improve the service; after bleeding the system white, we now pay another huge subsidy to shareholders to buy back an asset which they have made virtually worthless, for very nearly what they paid for it! It would make Jonathan Wilde laugh- he was the Bow-Street Runner who sold back to victims the property his gang had stolen from them, and then stole it again! Same pattern, bigger business!
Nick, United Kingdom

I think it's good to see the government spending their taxpayer's money to help out the richer people in society. It is a disgrace that some Company Directors and Shareholders cannot afford to change their Mercedes this year. The public use the railways so the public should pay for the privilege of repairing them, or is this not fair?
Rob Turney, English, living in Holland.

Railtrack simply did not fit in with Byers/Blairs own political philosophy

Keith, UK
Of course the government should bailout the shareholders. Stephen Byers set the rules for putting into administration what was, I understand, a viable company. Railtrack simply did not fit in with Byers/Blairs own political philosophy. This will cost the taxpayers and rail commuters dearly. Not offering compensation is purely theft and even more galling when the majority of shareholders were ordinary working men and women employed at Railtrack. I would like to think that offering compensation is through a change of heart by Stephen Byers but feel that he is doing it simply to save his own skin and pursue his own career and glorification. Can Blair not put someone else in charge who is more concerned with getting the job done and being transparent? Spin and lying will not put our railways right.
Keith, UK

If shareholders part own company assets, then I fail to see why they're not also part responsible for negligence in failing to maintain the tracks. Fine them all, perhaps then they'd take more interest and responsibility in the company, other than the size of any dividend cheques they're getting
Neil, London, England

In reply to Andrew: I would say it was the whole of the British public that was robbed when the Conservative Government sold British Rail off cheaply in the first place. If any compensation is to be paid, it should be based on the value of the company when dissolved minus the total government subsidies paid. This privatised railway model was never going to work, and the current Government's main responsibility lies with the public majority - not with a minority of shareholders who, it could be argued, made a bad investment decision.
Richard, UK

When a government minister is so poorly advised that he has to avoid the scrutiny of the courts it is a bail out of the government that is proposed, not the shareholder. The asset value of Railtrack is far in excess of the price at suspension, the company made six monthly profits of J300m and the regulator would have considered any request for rescheduling of monies. As a shareholder I would have taken up a rights issue. Byers is accused of misfeasance let him answer in the courts
Andrew, UK

Absolutely. The fact that it should never have been sold in the first place does not legitimise stealing it back again. Legally, there is no question. Morally, it could well be claimed that the profits taken from the company instead of being reinvested in safety or service have already adequately repaid the shareholders on their investment. However, business and government run according to the law, not my or anyone else's moral sense. It's a shame that it took such an event to prove the imbecility of running a monopoly public service for private profit.
Peter Ellis, UK

This is a circle of an inept government and civil service dipping into our pockets at every stage for their own mistakes

John McIntosh, UK
I'm disgusted. No way should the government compensate the shareholders. This is a circle of an inept government and civil service dipping into our pockets at every stage for their own mistakes. I have lived and worked in the States, the taxes we pay here entitle us to expect decent rail, health, etc services. It is beyond belief how bad a job they make of everything.
John McIntosh, UK

Back in 1986 when I was doing Business Studies 'O' level my teacher asked for an example of a not-yet privatised industry which might be floated. When I suggested the railways my teacher became apoplectic at my idiocy. Nothing much has changed. It was a bad idea, it is a bad idea & it needs to be put right as soon as possible. As to the investors, well, stocks are a risk & if you're going to gamble on the stock market (or horses) you must be prepared to lose the lot.
Justin Beattie, Scotland

Mr Byers has undone any good work that Railtrack had achieved before he threw it into disarray. He has damaged morale within the organisation to the point where managers have left in their droves, thus putting passengers safety at risk. He has damaged relations between the City and Government. He has wasted J1m of taxpayer's money in fees for each day Railtrack has been under administration. He has blamed everybody but himself for his mistakes. We do not need people like Stephen Byers in charge of the most important part of our economic infrastructure. Tony Blair needs to either act to remove him or do the decent thing and resign. This is not just about Railtrack; this fiasco has shown the true colours of our government and the total disregard to the taxpaying and shareholding public.
Carl, Cumbria, UK

These shareholders got involved because they thought they were going to make money. They didn't, and that's their problem. The best solution is for Railtrack to be declared bankrupt, and for the government to buy back the assets at a few pence on the pound. This is how the business world works - if the shareholders are upset by this, then tough. If you can't take the heat, stay out of the kitchen!
Mark, UK

See also:

25 Mar 02 | Business
Byers backs Railtrack buy-out
21 Mar 02 | Business
Railtrack decision delayed
08 Mar 02 | UK Politics
Railtrack 'did not breach rules'
06 Nov 01 | Business
No deal for Railtrack shareholders
15 Oct 01 | Business
Railtrack: What happens now?
02 Mar 02 | Business
Railtrack to begin court action
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