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Labour called Railtrack shareholders 'grannies'
By Alistair Osborne, Associate City Editor
(Filed: 29/04/2005) More than 250,000 private shareholders who lost millions of pounds when the Government put Railtrack into administration were dismissed as "grannies" in internal Whitehall documents, The Telegraph can reveal. The documents include e-mails between officials and advisers at the Treasury, the Transport Department and the No 10 policy unit. They undermine the Government's assertion that it did not provoke the collapse of Railtrack four years ago, replacing it with the Government-backed Network Rail. Advisers' e-mails, which speak of "triggering" and "engineering" Railtrack's insolvency, pose fresh questions about the honesty and integrity of Tony Blair's Government - a major issue for next Thursday's election. They also undermine its claims to have become "the party of modern wealth creation", which it made yesterday while launching its business manifesto. In one e-mail, Ian Kemsley, a Treasury civil servant, weighed up whether the Government could get away with reimbursing lenders to Railtrack but not shareholders. "If lenders are seen to have been bailed out by Government in dealing with Railtrack's administration, this will make it harder to refuse to help out the shareholders: fat cat City bankers get 100p in the pound and grannies (who probably invested at privatisation) lose their blouses." The handwritten minutes for one Whitehall meeting end with the question: "What can we do with grannies - compensation? eg travel pass?" When Railtrack was privatised in May 1996 the share issue attracted huge numbers of private investors, including former British Rail employees taken by the idea of rebuilding the railways. However, after the Hatfield rail crash in October 2000, the company faced mounting criticism and financial problems. A year later, Stephen Byers, who was then transport secretary, took one of the most controversial decisions of the present Government, putting Railtrack into administration, saying he would not write it "a blank cheque". The chain of events leading to administration has not been revealed by the Government before. However, it is partially disclosed in court documents for the country's biggest group action case being brought by 55,000 Railtrack shareholders who want more compensation. Some £2.4 million has been raised to bring the case against the Government for abuse of power and breaches of human rights. About £900,000 is still needed. The case starts on June 27.
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