Unlimited fines if Railtrack misses investment targets

The rail regulator, John Swift, will be able to impose unlimited fines on Railtrack if it fails to implement its pounds 16bn programme of investment in the rail network under new powers announced yesterday.

The modifications to Railtrack's network licence place a new general duty on the company to maintain, renew and develop the rail network and give Mr Swift powers of investigation and enforcement if it fails to deliver the improvements without good reason.

Under Railtrack's existing licence, the company is under an obligation to publish its investment plans but it is not required to deliver on them.

Mr Swift stressed yesterday that he did not intend to second-guess Railtrack or prejudice its ability to fund and implement its own investment programme.

But it is clear the new powers go far beyond anything the regulator possessed before, entitling him to hold Railtrack to its investment targets and force it to carry out specific improvements unless there are good commercial reasons why they have not been carried out.

Mr Swift will also be entitled to take action if Railtrack fails to consult properly with the train operating companies and the Government.

Two particular target areas for the regulator are likely to be Railtrack's pounds 1bn programme to upgrade stations and the pounds 1.2bn modernisation of the West Coast Mainline.

The modifications to Railtrack's licence were mutually agreed last month after the company backed down in the face of warnings from the regulator that it would otherwise be taken to the Monopolies & Mergers Commission.

The new powers are expected to become effective by the autumn following a 28-day consultation period. Within the following three months Railtrack will then have to publish details of how it plans to comply with its obligations, including the priority it attaches to work on different parts of the network.

Officials said that Railtrack would not necessarily have to spend the full pounds 16bn earmarked for investment over the next 10 years if it could meet its obligations more cost-effectively. But in that case the regulator would want the option of passing on some of those cost savings to its customers - the train operating companies - and ultimately passengers.

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