Railtrack hits the buffers

John Prescott; "invest or face windfall tax probe"

No Back-Track on Rail Investment Prescott Warns

Deputy Prime Minister John Prescott has warned Railtrack that he is unhappy about the level of investment it is making in the rail network. He also says he will investigate their level of profit to see if it is excessive.

Mr Prescott said he would be meeting the Rail Regulator, John Swift, to ascertain whether or not Railtrack is maintaining the level of investment promised at the time of privatisation. Commenting on Mr Swift's comments that he had insufficient powers to make Railtrack invest more of its profits, Mr Prescott said: "That's a very serious situation and I'm concerned about that. I'm looking at how I can improve the taxpayers' interest in that matter."

His comments come on the day that Railtrack announced a 27% increase in pre-tax profits to £346 million.

The pressure group Save Our Railways accused Railtrack of allowing rail tracks to "deteriorate alarmingly" and of putting profits before investment. The Rail Regulator John Swift has also been critical of the speed of Railtrack's investment plans.

Railtrack denies claims of underinvestment

Sir Robert Horton; "profits at acceptable level"

But Railtrack chief executive John Edmonds said investment in 1996-97 had risen 29% on the previous 12 months and the company's chairman Sir Robert Horton said Railtrack profits had been "invested very largely in the company".

Mr Prescott, who as Secretary of State for the Environment is responsible for all aspects of transport policy, said he regarded rail travel as a key element in the Government's plans for integrated transport in Britain.

He stressed that with the £1.5 billion made from privatisation, he would not allow Railtrack to back-track on its investment plans: "What we have here is another example of them making an awful lot of money without putting in the investment," he said.