RAILTRACK shares rose by more than a third last week after the regulator proposed an unexpectedly generous fee structure for the company, which owns Britain's railway track and stations. The Rail Regulator, Tom Winsor, said Railtrack should be entitled to a pre-tax rate of return of 7 per cent. That compares with the 5 to 6 per cent return analysts expected.

The proposal also requires the company to make 5 per cent annual efficiency gains, up from 3 per cent, and assumes property income of pounds 1bn. Gerald Corbett, Railtrack's chief executive, told the Financial Times he will seek a 77 per cent increase in funding from the Government over the next five years to pay for modernisation of the railways.