Darling deal points way to rail renationalisation

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The Independent Online

Transport Secretary Alistair Darling is working on radical new ways of financing Network Rail, leaving the Government open to the charge that it is re-nationalising the railways through the back door.

The Department for Transport is considering two separate proposals, to be presented to the rail regulator, Tom Winsor, at the end of February.

The first would allow the track operator to increase its borrowings by £2bn over two years, to help fund the backlog of maintenance and renewals. The second would see the Government dramatically increase the subsidies paid directly to Network Rail.

The department is working up the confidential plans with the Strategic Rail Authority and Network Rail.

Both options, which would involve Network Rail spend- ing £22.2bn over five years, would see planned increases in track access charges - fees paid by train operators to Network Rail - deferred.

In reality, any large increases are borne by the Strategic Rail Authority.

If either funding option is accepted by Mr Winsor, the Government will be accused of bringing the railways back into public ownership.

The Government pulled the plug on Railtrack because it was asking for ever more state handouts, which appeared on the Government's balance sheet.

If Network Rail was to borrow more money then it would need to come up with a cast-iron guarantee from the Government to preserve its investment-grade credit status.

If this was provided by the department, then, again, it would have to appear on the Government's balance sheet.

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