NAO urged to probe Network Rail 'loan'
Demands have been made for the National Audit Office to investigate how the government could avoid showing a massive debt on its books after Network Rail takes over Railtrack.
Amid accusations of ‘Enron-style’ accounting policies, the government has been asked to explain how a £9bn bridging loan to Network Rail could appear on the balance sheet of the Strategic Rail Authority, a government agency, but not on the government’s own accounts.
The row erupted as Railtrack Group prepared to announce the transfer of Railtrack plc to Network Rail and relist its shares.
It is understood the loan, which would ensure Network Rail could continue to run the railways when it took over from Railtrack, would be treated as a debt on the SRA as a government agency but not on the government itself.
The SRA said it supported the £9bn debt when Network Rail published its proposals, but refused to make any further comment until after final details of the deal had been announced.
The Office of National Statistics, which is responsible for government accounting classification decisions, also refused to comment.
As it emerged how the £9bn cost of bringing Railtrack out of administration would not be shown on the government’s books, opposition parties accused the government of ‘disgraceful’ accounting practices.
Michael Howard, Conservative shadow chancellor, said: ‘People are rightly concerned about the declining performance of the railways since the government decided to renationalise them; there is now a danger of Enron-style accounting being added to the charge sheet.’
And Liberal Democrat Treasury spokesman Matthew Taylor MP called for a National Audit Office investigation into the affair, adding: ‘If anyone in the private sector tried this, they would be called crooks.’
Taylor said the money was welcome but that the accounting policy was ‘disgraceful’.