PRIME Minister Tony Blair and his deputy John Prescott bluntly ruled out renationalising Railtrack as too expensive today as the Labour leadership faced the prospect of a triple conference defeat.

They said the £4.5 billion needed to take the firm back into public ownership could only come at the expense of schools, hospitals, pensioners and passenger safety.

Mr Blair said in a radio interview that while he would listen to conference on the issue, if it demanded the cash to buy back Railtrack: "It ain't going to happen".

Mr Prescott gave the same message direct to the conference as party power brokers desperately tried to persuade union barons to back the Government on this issue.

He flatly rejected the renationalisation in a passionate speech that promised a six point plan to ensure the railways were more responsive to passenger needs.

He had agreed tough new controls on Railtrack with its regulator, adding: "We estimate that renationalising Railtrack would cost £4.5 billion in compensation to directors and shareholders.

"I can't go to my colleagues in Government arguing the case for using that money for renationalisation ahead of spending it on schools, hospitals, pensioners or even rail safety."

But he did hold out the possibility of the passenger and freight franchises being returned to public ownership when their contracts come to an end.

Mr Prescott said the franchise director would become a "passenger's champion" with instructions to ensure better services for customers, not higher profits for operators.

But there was also concern that the leadership could face defeats this afternoon over plans to cut benefits for single mothers and to charge university students.

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