The warning came just 24 hours after the Deputy Prime Minister, John Prescott, struck an agreement with Railtrack to rescue the 68-mile link and cast fresh doubt on whether construction of the line all the way into London's St Pancras station would be completed.
Railtrack has agreed to build and then acquire the first phase of the link to Fawkham Junction in Kent for pounds 1.5bn. But its chief executive Gerald Corbett said the option to complete the second stage into London at a cost of pounds 1.8bn would be contingent on the outcome of the regulatory review into its charging formula from 2001 onwards.
Mr Corbett denied that this was tantamount to blackmailing the Government and the Rail Regulator John Swift. "It is not blackmail at all. It is prudent financial management," he said.
Railtrack's financial director, Norman Broadhurst, added that if the Rail Regulator "decided to do a British Gas on us" then it would have to relinquish the second phase and concentrate on its core business.
Failure to build the second phase would be a severe blow as it would limit the saving on journey times to just 15 minutes and rob the Government of all the added economic benefits that a completed link would provide.
Under Railtrack's current pricing formula, the charges it levies on train operating companies for access to the rail network must fall by 2 per cent a year in real terms. Railtrack has easily met this target while making increased profits. Last year profits rose 12 per cent to pounds 388m on access charges of pounds 2.1bn.
Railtrack will argue that the forthcoming review of charges, covering a five-year period from 2001, must not be any harsher or it will not be able to afford its investment programme, now pounds 1.45bn a year.
Railtrack's access charges from Eurostar services are currently running at pounds 35m a year but they will rise to about pounds 120m a year when the first phase of the high-speed link enters service in 2003 and to about pounds 330m once the line is complete into central London.
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