Outlook: The strings on Railtrack's deal

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The Independent Online
THE TWO LINES to plot on any graph of Railtrack's performance since privatisation are improvements in the rail network against share price movement. You do not need a trainspotter's eye for detail to see that the latter has outstripped the former by a country mile.

Shareholders have enjoyed a rollicking good ride unlike passengers as the figures for punctuality, reliability and quality of service are starting to show.

Now Railtrack is offering to make amends by increasing its 10-year rolling investment programme to pounds 17bn and straighten out the bottlenecks. But the offer comes with strings attached - turn the regulatory screw further and the extra spending will be in jeopardy. The timing is no coincidence since the Rail Regulator, John Swift, wants to make life tougher for Railtrack when access charges - the amount the train operating companies pay to use the network - are reviewed for the five-year period up to 2006.

Railtrack has another cavil - that the current formula does not allow it to reap benefits from any growth in the market, the Conservatives having privatised the railways on the assumption that they would then stagnate. Rather than doing ad hoc deals, such as the revenue sharing deal struck with Virgin Trains on the West Coast Mainline, Railtrack wants some mechanism built into the regime to reflect what it says could be 30 per cent passenger growth and a trebling of freight traffic over the next decade.

All in all, the regulator and his political master John Prescott are in an awkward spot. Their hearts may tell them to punish Railtrack's shareholders for having enjoyed a free ride but their heads will conclude this is not the best means of achieving a modern railway. The clincher may be Mr Prescott's dependence on Railtrack to rescue the Channel Tunnel Rail Link and modernise the Tube. No wonder Sir Bob Horton's beaming features are even more noticeable on the footplate than usual.

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