Outlook: Corbett's train finally emerges from the tunnel

WHAT'S THIS? Another 13 per cent rise in Railtrack's share price? At this rate, Gerald Corbett will start to think he is in charge of some go-go Internet stock and not a dull old utility with the combined weight of a feisty regulator and Two Jags Prescott permanently on its back.

Unfortunately, the spurt in the share price is only relative and much depends on where you started from. Even after a 25 per cent uplift in the last three days, Railtrack is still only worth two-thirds of what it was before the Rail Regulator Tom Winsor and the Deputy Prime Minister began slapping Mr Corbett about the face on a regular basis.

Thankfully, even they had to conclude sooner or later that it served no-one's interests, least of all long-suffering train passengers, to see Railtrack in permanent free-fall. The regulator and his political masters cannot blame Mr Corbett and Richard Branson for ever for the grim state of the train service to Birmingham. The confession that upgrading the West Coast Mainline will cost twice as much as first thought has focussed minds in Downing Street about where the extra pounds 3bn is going to come from.

Even as things stand, Gordon Brown will have to dig deep into either his warchest or the taxpayer's pocket to finance the required investment in the country's rail infrastructure. With Railtrack's capacity to borrow and its ability to pay the interest being whittled away, there was a danger of Mr Winsor killing the only goose capable of laying any kind of egg for the rail industry.

Hence, yesterday's lighter-touch regulatory settlement for Railtrack. It is a little tougher than the present one but it is a good deal better than that dished out to either the water or electricity companies. Furthermore, it recognises that Railtrack's investment programme turns it from a plain utility stock into a business which carries a good deal more risk than a water or electricity supply monopoly, and deserves a rate of return to match. There may be light at the end of the tunnel for Mr Corbett after all.

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