A week in Westminster THE worsening financial crisis for Railtrack really had only one sensible end, and, as you would expect, I believe that the decision taken by Stephen Byers to ask the High Court to put the company into administration was the only prudent route he could take in the circumstances.

It was to be expected that shareholders would not be pleased with the decision, but speculative ventures inevitably carry risks.

The constant demand by Railtrack for more taxpayers' money, which would otherwise be spent on key public services such as schools and hospitals, was unacceptable. Public money should never be used to compensate for the poor performance of private sector companies.

The purpose of public utility privatisation was to shift the excessive burden of subsidy from the taxpayer into what the Conservatives saw as a more efficient private sector. The Railtrack privatisation was unique of course, in that it was the only publicly floated utility subsidised by the Government. The subsidy made up the majority of its income, in that some two thirds came from the taxpayer and, in my view, it was doomed from the start.

The Company failed to manage its costs over a number of years, with examples like the £4billion cost-overrun on the West Coast Main Line Project.

Worsend

In April of this year the Company approached the Government for more help and the Government brought forward £1.5 billion of investment from beyond 2006 in order to assist. In May, June and July the position worsened and the Chairman of the Company demanded more money. In August Railtrack's advisers came back to say that there were three options: restructuring, renationalisation or receivership.

The Secretary of State had a simple choice, either keep writing blank cheques, or explore the need for railway administration. Railtrack had asked for Government funding to cover all its costs, plus a profit and a four-year suspension of the regulatory system.

The petition to the High Court showed that there would be a deficit of £700 million by December 8, rising to £1.7 billion by the end of March next year.

The Government is committed to investing £30 billion of public money in the railway network over the next 10 years. And, if Stephen Byers had continued to allow Railtrack to mismanage the system, there was the danger of it being eaten up by Railtrack's inefficiencies and excessive profits.

By David Crausby

MP for Bolton North-east