Gerald Corbett's reference to raising new share capital was not, of course, designed to spook the City, but rather to focus the minds of the politicians. Everyone is coming around to the idea that if rail traffic is indeed to rise by 50 per cent over the next 10 years, then a colossal amount of investment will be required - perhaps as much as pounds 40bn. But no one, least of all John Prescott, the Deputy Prime Minister, has worked out how that sort of money can be raised. A year ago, when Railtrack had just bailed out the Channel Tunnel Rail Link and its stock was riding high, a rights issue to raise, say pounds 1bn, would have been feasible. That, in turn, would have given Railtrack the scope to leverage another pounds 1bn-pounds 2bn of debt finance a year. With the business now worth pounds 4.3bn and not pounds 8.6bn, and heading south at a rate of knots, those calculations have become academic.
Unfortunately, the alternative funding routes do not look much better. There will, understandably, be resistance to more money being raised through fares when standards of service are still falling. The re-letting of the passenger franchises will raise extra money but even another pounds 1bn would remain a drop in the ocean.
The third alternative is public subsidy. But even for New Labour, it would stick in the craw to be channelling taxpayers' money into such a universally-loathed business as Railtrack. No wonder the shares are bombing.