The Transport Bill, to be published within the next fortnight, will give John Prescott, the deputy Prime minister, power to stop the money pouring into Treasury coffers and being used like any other tax. Instead, he will be able to transfer cash to the Shadow Strategic Rail Authority (SSRA) for spending on projects to improve the network.
Senior sources at the Department of the EnvironmentTransport and the Regions said Mr Prescott would use his new power to keep the money away from central government.
Originally, as part of privatisation, train companies received state subsidies, which were to be replaced by payments to government as the businesses became profitable. Now those payments, and any financial penalty levied against Railtrack by Tom Winsor, the rail regulator, will go to the SSRA.
The arrangements over surpluses and fines mean that Mr Prescott has won a considerable victory over the Treasury, which was concerned that a precedent would be created for regulated industries. It also means last month's Paddington crash has boosted the already high political profile of transport issues.
The news emerged yesterday on the eve of an admission by Railtrack that its present investment plans were inadequate and must be increased from pounds 27bn over the next 10 years to pounds 35bn. Gerald Corbett, the company's chief executive, will tell BBC's Panorama programme tonight that he had planned for a 30 per cent growth in the use of the network over the next decade, but Sir Alastair Morton, of the SSRA, wanted the company to allow for a 50 per cent increase.Reuse content