Lib Dems would reverse rail sale

The renationalisation of Railtrack, the company running the rail network, will be proposed today by the Liberal Democrats in a move which will outflank Labour and cause more trouble for Tony Blair with the left wing of his party.

The Liberal Democrats will announce they are prepared to buy back a controlling stake in Railtrack at a cost of about pounds 1bn with the minimum of compensation to shareholders. They would do so at the market rate or the issue rate, whichever is the lowest cost to the taxpayer.

A policy document, leaked to the Independent, also proposes that passenger services should be run by regional private companies, reviving the spirit of the old steam age. The Liberal Democrats would create a new national railway authority to take over the responsibilities of Railtrack, the franchise director and British Rail.

The commitment to take Railtrack back into public ownership is certain to cause Labour's left wing to demand a similar pledge from Mr Blair for a future Labour government. Liberal Democrat leaders believe it could reopen the dispute within the Labour Party about the abandonment of the traditional Clause Four commitment to public ownership.

It goes further than Labour's public pledges on its plans for retaining public control of British Rail services. A working party under John Prescott, the deputy leader of the Labour Party, has been given the task of ensuring that Labour will restore the railways to public control and public accountability, but Labour leaders are keen to avoid any commitments about buying back a controlling stake in the network.

The policy document, Towards a Working Railway, says that splitting British Rail into many different parts under privatisation will cause operational inefficiencies and confusion among rail users. But it says the Liberal Democrats believe a return to the British Rail of the past is not a solution to these problems. The Liberal Democrats propose the creation of a small number of regional companies. This would keep all aspects of service delivery in each region, including timetabling, signal control, station management and day-to-day track maintainance within the control of a single company, and retain some diversity in the supply of services.

This echoes John Major's original plans for a regional network, which he was forced to abandon by his policy advisers, who said it would not work. They argued it could not be done without breaking up the money-spinning InterCity services into the regions, which would be counter-productive.

Under the Liberal Democrat plans, InterCity services would be developed as a national express network. Local communities would be closely consulted before local services were franchised to regional companies.

There would be a tough regime of regulation to guarantee service to the passenger, the document says. Railway rights of way which had fallen out of use as transport corridors would be protected, and potential development sites would be safeguarded to encourage rail-and-ride schemes and the placing of industries near stations. The Liberal Democrats see their transport plans as part of a strategy for environmental protection.

The plans amount to a compromise between Labour's out-right opposition to the privatisation and encouragement to the private sector to put entrepreneurial spirit into running passenger services. The Liberal Democrats would stop the privatisation going ahead and buy back a controlling stake in the national network.