Tuesday 13 April 1999
Since Sir Alastair Morton, head of the still phantom Strategic Rail Authority, has long shared the view that the more appropriate use of subsidy is to pay it directly to the rail infrastructure company, then the switch stands some chance of happening.
The outgoing Rail Regulator, Chris Bolt, is expected to tell Mr Prescott formally this week that there is nothing to stop him making the change, even though he will have to wait until the expiry of existing operating franchises before doing so.
The attractions to Mr Prescott are obvious. In other respects, however, this would be a quite retrograde step, taking the railways back to the bad old days of British Rail, when they were run by the Government. The present system, whereby the subsidy is paid to the TOCs, who then pay a correspondingly high access charge to Railtrack, may have its drawbacks, but at least it is transparent and accountable. In the days of British Rail, no-one seemed to have any idea where the public subsidy was being spent - least of all ministers and managers.
Railtrack is openly hostile to the idea - again for the obvious reason that it will lead to increased Government meddling. Railtrack also believes it will deter City investors at a time when it needs all the support it can get to fund its pounds 27bn ten year investment programme.
This may be a trifle alarmist. The level of public subsidy in the railways is declining rapidly. By 2003/4, it will have fallen from the present level of pounds 1.5bn annually to little more than pounds 600m a year. It is open to question what degree of leverage such a small amount will give the Government, or indeed whether switching it from the TOCs to Railtrack, is really going to matter very much.
On one level, however, Railtrack is right to be concerned. The key issue for the railways right now is investment. Since the public sector is unprepared to provide it, Railtrack and the Government have to find some way of persuading the private sector to do the business instead. While so many regulatory issues remain up in the air, of which the debate over who should receive the subsidy is just one, there seems little chance of doing so. Indeed, shareholders might do well to instruct their board to cease all investment until they know precisely what it is they are dealing with.
Liam Neeson's Downton dreams
Thriller is set in the secret world of British espionage
Bomber jacket worn by Mary Berry sells out within an hour
- 1 Thailand beach murders: Thai PM suggests 'attractive' female tourists cannot expect to be safe wearing bikinis
- 2 Scottish independence: What you shouldn't tweet about if you want to avoid jail today
- 3 Scottish independence: Five reasons Salmond is secretly hoping for a 'No' vote
- 4 Isis plan to 'behead random member of the public' in Sydney thwarted by Australian police
- 5 Scottish independence: Andy Murray backs Yes campaign in eleventh hour decision
Thailand beach murders: Thai PM suggests 'attractive' female tourists cannot expect to be safe wearing bikinis
Scottish independence referendum live: Latest news as Scotland votes Yes or No
Scottish independence: Final opinion polls show undecided voters could swing result either way
Scottish independence: Almost half of No voters have felt 'personally threatened' by the Yes campaign
Isis plan to 'behead random member of the public' in Sydney thwarted by Australian police
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence referendum: A nation divided against itself
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
iJobs Money & Business
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...
Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...