Rail `shambles' as cuts start to bite

A British Rail plan to introduce deep cuts in services in the face of a £400m cash shortfall has been torn up by transport ministers, provoking a fierce row over the organisation's future.

BR managers say that they have been put in an impossible position as the Government has cut funding by £400m, around 10 per cent of BR's budget, but is refusing to allow any reduction in services.

Sir Bob Reid, chairman of British Rail, has privately called the affair "a shambles" and some BR managers have pressed ahead with cuts because they see no other way of avoiding a financial crisis.

In Scotland, Scotrail's director, Chris Green, has already warned that to meet a 5 per cent budget cut he would have to increase fares, run fewer trains and cut staff by up to 600, 15 per cent of the workforce. A source at Scotrail said that the 10 per cent cash cuts which might be needed if an agreement with the Government cannot be reached would "be impossible to meet".

One London commuter network, Great Eastern, has already announced a 4 per cent cut in train mileage, mainly at weekends and on branch lines, while yesterday South Eastern revealed that 44 of its cleaners, one in eight of the workforce that looks after its trains, are to go in an effort to cut costs.

The withdrawal of sleeper services on several routes and the end of the Motorail service have already been announced.

Suggestions by BR managers included shutting down sections of the network between midnight on Saturday and Sunday lunchtime, closing some commuter lines except at peak times, withdrawing Saver tickets on some InterCity routes and withdrawing all sleeper services. The cuts plan was drawn up before Christmas at the request of British Rail's chief executive, John Welsby, after the £400m shortfall in BR's finances had been confirmed in the Chancellor's November Budget. He asked the heads of the 25 train operating companies being prepared for franchising out to the private sector to assess the effects of 5 per cent and 10 per cent reductions in their subsidy.

Brian Mawhinney, the Secretary of State for Transport, met Mr Welsby and Sir Bob just before Christmas to discuss the cuts and told them he did not want any reductions in services. Ministers feared that the cuts would be politically unpalatable in the run-up to privatisation and might put the sell-off in jeopardy. However, Dr Mawhinney refused to say how BR could meet the shortfall. A BR insider said: "We've been put in an impossible situation. We've been told not to cut trains but they're not giving usthe money to run them."

Negotiations between BR and the Government continued yesterday. Dr Mawhinney, is desperately seeking ways other than service cuts to make up for the projected shortage of money, including extra grants. Meanwhile, Mr Welsby has written to the 25 train operating companies telling them to hold off any cuts in services but to keep on looking at other ways of increasing revenue or reducing costs. One angry Midlands train operator who had suggested cutting services on a rural line from four a day to one said:"We've no way of seriously reducing costs. We're now looking at cutting the number of cleaners and of taking every other lightbulb out at stations."

The traditional way of meeting cash crises in the rail industry was to cut investment but this is now the responsibility of Railtrack, a separate organisation due to be privatised next March.

A solution needs to be found quickly because a series of events over the next couple of weeks will put the railways in the spotlight again. On Monday, the rules for track-access charges will be announced by the rail regulator, John Swift, and will give an indication of how much the privatisation of Railtrack will bring in. Later in the week, Labour is initiating a Commons debate on rail privatisation, which is becoming an increasingly sensitive issue for the Government.