THE PUBLIC does not need telling that it got a bad deal out of rail privatisation - as late trains, higher fares, subsidy drains on their pockets and, now, even risky tracks all spell out the opposite of improvement.

But salt is really rubbed in the wound today with the disclosure that taxpayers lost hundreds of millions of pounds in the last Tory government's eagerness to privatise the railways.

For a damning report by the public spending watchdog, the National Audit Office, reveals that three train leasing companies, which were sold by the government for £1.8billion, were re-sold by their new owners within months for £2.65billion.

But it is not as if this was simply a case of poor valuation or failure to write in clawback clauses so taxpayers might have benefited from these windfalls that made multi-millionaires of some rail managers.

For it is also disclosed that the Department of Transport was, in one instance, accepting a bid £55million lower than the highest offer so the three companies could be sold to separate buyers and did not make any provision to share in any gains made through the purchasers selling on the companies afterwards because it did not want to depress the price of the companies it was privatising or to deter bids for them or undermine competition in the sale. In short, blind privatisation dogma - and, no doubt, the political need to complete as quickly and possible what was arguably the most difficult and controversial of all the state sell-offs - clearly got in the way of sound commercial considerations and mightily in the way of the taxpayers' interests.

But if there can be no financial reparation for that blunder, it behoves the new Labour government to mend as much as the mess as possible.

For rail privatisation was not intended to make millionaires out of managers snapping up under-priced bits of the country's rail system.

It was meant to benefit passengers. And the catalogue of complaint about rotten services shows that it has not. But if Labour is understandably chary about returning the railways to public ownership, it ought to do far more about making the rail companies much more accountable to the public - with stiff financial penalties being imposed on those who do not deliver decent services.

A government which is bent on reducing road use has a duty to improve rail services to further that aim - and to force the operators to do so if they are still on the slow track to the improvements that privatisation was supposed to have provided in the first place.

Converted for the new archive on 14 July 2000. Some images and formatting may have been lost in the conversion.