Outlook: Short-changed on Railtrack sale

THERE ARE two small but vital words missing from yesterday's National Audit Office report into the privatisation of Railtrack. One is Clare, the other is Short. Coming two-and-a-half years and a change of government after the original flotation in May 1996, the 83-page report may be thought of as largely irrelevant anyway. But what makes it a still more pointless exercise is the NAO's failure to mention the seminal role the then shadow transport secretary played in making sure Railtrack was flogged off at a rock-bottom price.

To recap, Railtrack was sold for an enterprise value, including debt, of pounds 2.5bn and has since risen in value threefold to pounds 7.7bn. The NAO chooses, however, not to rehearse Ms Short's role in ensuring the taxpayer was fleeced on such an epic scale. But it was there to read in black and white in the prospectus. "Dependent on availability of resources, and as priorities allow," wrote Ms Short, Labour would "seek by appropriate measures to extend public ownership and control over Railtrack".

Labour thought the statement would derail the privatisation. But all it did was convince a dying Conservative administration and its advisers that if it was going to get Railtrack away before the next election, it had better sell it for a song. And if it was to have any hope of deterring Labour from carrying out Ms Short's renationalisation threat once in power it had better sell 100 per cent of the company rather than, say, 60 per cent.

Apart from a fleeting reference to concern about investor confidence "in light of the forthcoming General Election", the NAO glosses over Ms Short's pivotal role. Bizarrely, it instead blames the failure to maximise proceeds on the decision not to sell Railtrack off in tranches. The NAO's back-of-a-fag-packet calculation is that had it been a phased sale, with the Government initially retaining a 40 per cent stake, the privatisation would have brought in an extra pounds 1.5bn.

In comparison to its investigation into the sale of the rolling stock leasing companies (a rip-off on an even grander scale), the Railtrack report is a slipshod and feeble piece of work. But there is at least a silver lining. The NAO reckons a more realistic valuation for Railtrack should have been pounds 4bn - compared to the pounds 2.5bn the regulator, egged on by Labour, thinks it should be allowed to earn a return on. Perhaps it is just as well that Clare Short ensured it was undersold after all.