Outlook: Committee heads off the rails

WHILE Gordon Brown has proved he can wear the hair shirt of austerity as well as any Tory Chancellor, the Conservatives are demonstrating that they too are not averse to stealing the clothes that were once worn only on the left of the People's Party.

One of the (unanimous) recommendations yesterday from the Commons Transport Select Committee, which includes a bevy of Conservative members, is that the Government should consider taking an equity stake in Railtrack, the owner of the nation's privatised railroads, signalling and stations.

Finished rubbing the disbelief from your eyes? Quite right, the last politician to air this harebrained idea was Clare Short when she was shadow Transport Secretary. Clare's idea was that once in power Labour would re-assert some form of state influence over the railways by converting the huge public subsidies the network receives into equity. Sort of like a disguised rights issue with the Government emerging as an important minority shareholder.

It was one of the reasons that the last government ended up getting such a lousy price for Railtrack and why the shares have since almost tripled in value. Investors panicked at the prospect of a Labour victory and drove the flotation price down. What on earth are they to make now of a similar proposition receiving all-party support? Ms Short never really explained how the Government or the taxpayer would benefit from taking an equity stake in Railtrack and nor does the Select Committee.

But the idea that investment decisions might in some way be second guessed by politicians or that the dead hand of Whitehall should be allowed to dictate the development of the railways should fill investors with dread. The Select Committee ought to know better and its madcap idea should to be stopped in its tracks before it gathers any momentum.