Higher train fares and bigger subsidies from the taxpayer will be needed to fund £18bn worth of investment by Railtrack over the next five years, it said yesterday.
The infrastructure company estimated it needs an extra £2bn over that period to maintain the network and pay for improvements. That money would have to come either from the Treasury or from passengers, senior Railtrack executives said.
The Government had expected that, under present franchise arrangements, state aid to the privatised industry would decrease from the present £1.3bn to £700m, by 2004.
However Gerald Corbett, the chief executive argued that, while Railtrack receives £2.4bn a year in access charges from train-operating companies for their use of the system, it would need a £1bn more than that every year by 2006.
Mr Corbett also disclosed that Railtrack was examining new ways of raising money to pay for improvements to the network, such as issuing bonds securitised against its revenue streams, leasing rather than buying equipment and doing leaseback deals on its property portfolio.
He said "access charges" set for train operating companies when the industry was privatised were based on a shrinking industry and were too low.
However, Railtrack now forecasts that passenger demand will grow by 4 per cent a year, rising by a half in the next decade. Commenting on the company's annual Network Management Statement, Mr Corbett said Railtrack needed to spend £10bn in the next five years to maintain and renew the infrastructure and an additional £8bn to enhance the network through projects such as the upgrading of the West Coast and East Coast main lines to take 140mph trains, improvements to the Stansted Express and extra capacity around Manchester, Coventry and Birmingham.
According to Railtrack, a total of £52bn would be needed over 12 years if all the suggested improvements were to come to fruition. The £52bn compares with a 10-year £27bn spending plan outlined by the company last year.
Jonathan Bray, of the pressure group Transport 2000, welcomed the increased spending plans, but urged the Government to put more money into the railways so passengers will not have to foot the bill. "The problem has been in recent years that the Government has been talking up the railways but actually spending less," he said.
George Muir, director general of the Association of Train Operating Companies, said the improvements identified by Railtrack were "by no means all commercially fundable" and also urged the Government to make a contribution.
"Passenger train companies have consistently contributed £200m a year to the Treasury's coffers. We would like to see that sum, and more, ploughed back into investment in the industry to the benefit of new and existing passengers."
Bernard Jenkin, the Tory spokesman for transport, and for London, said that either ticket prices would rise substantially or the Government would have to come up with big tranches of cash, or both.
He accused the rail regulator of wrecking Railtrack's share price - down from £18 to £7 - with his "publicity campaign" against the company: "The result is that Railtrack is far less able to raise the money that the railway needs."Reuse content