Tunnel link would not let Railtrack off charges review

Railtrack is unlikely to escape a tough review of its track access charges at the hands of John Swift QC, the rail regulator, if it decides to build the Channel Tunnel Rail Link (CTRL)

Railtrack's directors said last week the company would only get involved in the 68-mile high speed rail link if it obtained assurances that the review was not too onerous.

But, in a letter dated 12 February, Michael Beswick, Mr Swift's director of regulation, wrote: "It is important that any involvement of Railtrack is without detriment to the interests of passengers and freight customers on the existing network.

"The regulator will seek to ensure that any arrangement is without detriment to Railtrack's commitments, reflected in its access charges."

A spokesman for Mr Swift's office also said that he remained "independent" although "mindful of Government decisions".

Railtrack is considering plans for a high-speed rail link for under pounds 1.5bn - less than one-third of the proposed link's cost.

The company receives more than pounds 2bn from the access charges and is keen to keep as large a chunk of this "guaranteed income" as possible.

"We think there could be some way of linking the review and the CTRL. A bit like BAA [the owner of London's airports] did in its last price review," said one Railtrack director. "We think they managed to get off lightly because of the investment required to build Terminal 5."

Rail campaigners view the regulator's letter as a victory. They are worried that money set aside for the renewal of the national rail network would be diverted for the CTRL.

"It would be unacceptable for Railtrack's already inadequate investment plans to be further reduced in order to cross-subsidise the link ... We are reassured the regulator shares our view," said Jonathan Bray, of the campaign group Save Our Railways.

Some City analysts believe a deal could be done. One option is for the CTRL assets to be placed outside Railtrack's tough regulatory framework. One analyst said: "There could be a significant premium over the regulated return ... which would be attractive to Railtrack."

More than pounds 400m was wiped off the company's market value in December after Mr Swift announced he was looking for "radical and innovative changes" to the current charging regime.