THE railway services division of British Steel could soon be owned by Network Rail. If the deal went ahead, the rail business of BS would have been effectively renationalised.

Network Rail is hoping to acquire the production of rails, which are produced in Scunthorpe and where there is a workforce of 5,000.

Around 100,000 tonnes of rails are bought by Network Rail from British Steel each year, but as BS is in compulsory liquidation future production is now looking uncertain.

However, although it has made an approach, NR is anxious not to jeopardise any wider rescue deal, because the government would prefer the complete sale of all British Steel’s activities.

Network Rail said: ‘We have made an indicative offer for some railway critical assets although our overwhelming preference is that a purchaser for the entire business is found. We are very clear that our offer will not undermine that. Our role is to safely run the railway for the millions of people who rely on it every day and we are exploring all options to make sure we can continue to do that.’

A spokesman added: ‘We continue to support British Steel, working with the liquidator and any new owner of the company.’

The crisis at British Steel blew up after talks between its owner Greybull Capital and the government broke down. Greybull had been seeking a further loan of up to £75 million.

Around 10 bids were expected to be lodged with the Official Receiver.