Europeans warn on rail investment: Christian Wolmar on some lessons Britain could learn from other countries

THE widespread scepticism about the Government's plans to privatise British Rail has been backed by senior industry executives from France, Sweden and Germany who have come to London to give evidence to the Commons Transport Select Committee.

While several European countries have drawn up schemes to privatise or deregulate their railway systems, none is adopting a model similar to the British one.

The Swedish scheme bears some resemblances. In 1988, the government decided to separate the track from train operations, just as the British government's White Paper envisages. The previous state railway SJ, became a train operator and marketing organisation. The rail infrastructure is the responsibility of a track authority, Bankervet.

The difference between this and the British model is, as Karl Sicking, deputy director of BV, explained to the committee, that his organisation receives generous state subsidies. BV is expected to recoup only one third of the marginal costs of the use of the railway and makes no charge for investment in infrastructure. The British White Paper suggests the track authority should be given no subsidy, not even for new investment, therefore placing all the burden of its costs on operators.

The other big difference is that instead of franchises, the Swedes hope to encourage private operators on to the line, but so far all but a handful of minor services are still being provided by SJ.

The big advantage of the new Swedish system is that politicians can identify where investment is going and get value for money. However, Mr Sicking warned that if there were attempts to introduce a market economy into the Swedish railway, as in the British proposal, 'it would result in shutting 60 per cent of the network'.

Mr Sicking, and his colleague Anders Lundberg, the director of corporate planning at SJ, stressed that privatisation could be successful only if there were a prior government policy of providing a modern rail network. Mr Lundberg said: 'I don't see any commitment in your proposal to modernising the railway network.'

The German railway is at a much earlier stage of privatisation and restructuring. The country's two rail systems - the Bundesbahn in the west and the Reichsbahn in the east - are being amalgamated into the DBAG. In three years, the DBAG will be split into separate companies covering track, passenger traffic and freight, which will become independent by early next century.

Dr Frank Ludwig, the German railway's transport policy director, said the government wants to test these new businesses before privatising them, so the DBAG will start life without debts and will not be responsible for capital investment costs, a position BR would love to be in. A great advantage will be the removal of civil servant status from employees, enabling the railway to shed staff.

In France there are no plans to privatise but there is widespread use of private capital. Jean Pierre Loubinoux, managing director of French railways, said: 'For big projects, we have to put in 33 per cent of our own resources and find the rest from wherever money is cheap, even if that involves going to Japan or the UK.'

The big difference between all three networks and the UK is the level of investment. In Sweden, the division of the state railway was accompanied by a tripling in the level of investment over the past four years. In Germany, the government has said that rail investment will equal the level of major road investment; DM20bn ( pounds 8bn)between now and the year 2012. And in France, the third high-speed line, from Paris to Lille, will be completed next year.

The French and Swedish representatives were asked what would be the result of the British model of privatisation would be. Their answers will send a shiver down the spines of all rail users as they both said there would be line closures, a transfer of freight and passengers to rail, and competition on some well-used lines. But even these services might become more unreliable because of under investment in the infrastructure. The core problem they identified was the years of under-investment in the UK network. As Mr Lundberg put it: 'You must first invest, then you can privatise.'

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