Finsbury, owned by the WPP Group and run by Roland Rudd, a friend of Byers, had been retained by investment bank Schroder Salomon Smith Barney to help with its work on the administration of Railtrack. The agency has a brief to improve the rail company's relationships with the City and financial journalists.
Schroders has been paying Finsbury's fees since autumn. However, the bank has now told the Department of Transport Local Government and the regions that it no longer wanted to pay the retainer out of its fee, according to press reports. The newspaper said that Byers had ordered transport officials to find a way of keeping the agency employed, by having the department pay the fee.
The department has said that Finsbury offers specialist expertise that does not exist in-house, and that the retainer is in accordance with the code on hiring consultants. However, with the fees reportedly adding up to around £1m a year, rail passenger groups have complained that these funds would be better used to improve the railways.
When Finsbury was appointed to the account in October, the Department of Transport was in the middle of a scandal over Jo Moore's September 11 email, about burying bad news. Ignoring calls for her resignation, Moore remained at the department until last month, when she quit amid yet another scandal, which also claimed the scalp of Martin Sixsmith, head of communications at the DTLR.
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