Taxpayers face having to pay billions of pounds extra to fund the Government's ten-year £67bn plan to modernise the country's disastrous rail network.
The plan published yesterday by the Strategic Rail Authority envisages £33.5bn of funding from the public sector and £34bn from private sources. But the fine print of the document shows most of the initial investment will have to be provided from public funds, with the private sector only making a contribution once new rail schemes are in operation.
City investors also said the Government would pay at least £1.5bn more in "risk premiums" to raise finance from the private sector because of its decision to wind up Railtrack.
Unveiling the 116-page document, Richard Bowker, chairman of the SRA, declared an extra £4.5bn being allocated to the railways was "new money to the industry". But in truth it was simply part of a £9bn reserve fund that had already been given to the SRA.
The Rail Passengers Council said the plan, which provides for a 50 per cent increase in the number of rail journeys taken, offered a "glimmer of hope", but there were still "real worries that the industry remains underfunded".
Theresa May, the shadow Transport Secretary, said the plan was a mix of old schemes and "cosmetic gimmicks", such as the refurbishment of station waiting rooms. It offered "no new money, no new schemes and no hope for passengers", she said.
The Liberal Democrats and the RMT, the industry's biggest union, agreed that there was little new in the document.
In the Commons, Stephen Byers, the Transport Secretary said that after three decades of underinvestment and the "failed privatisation" of Railtrack, the plan provided an "agenda for action" to create a network fit for the world's fourth-largest economy in the 21st century. He said there would be "no more excuses".
Mr Bowker said the strategy constituted the first time in 50 years such a plan had been produced. It should be seen as "a line in the sand" as far as the industry was concerned. Everyone in the industry had to "raise their game". The document gave a view of short-term, medium and long-term improvements that could be achieved.
He said there would be a special £400m fund to pay for improvements in performance and that for the first time an SRA unit would be created that would seek to deliver improvements, "literally on a day-to-day basis".
Geoff Haley, chairman of the International Project Finance Association, a body that represents many of the private investors involved in public- private partnerships (PPPs), said there could be a "real problem" with investor confidence.
He also pointed out that virtually all of the projects in the SRA plans were designated as "still under development" and many would not be ready in 15 years' time. "There is an appetite for these projects but investors will expect them to be clearly defined, well thought- through with a fair allocation of risk. Otherwise they will not go ahead," Mr Haley said.
In what many colleagues saw as a clear reference to his predecessor at the Transport Department, the Deputy Prime Minister John Prescott, Mr Byers said there would be "no more vague aspirations or grand visions strong on rhetoric but weak on delivery".
One of Mr Byers' government allies said: "His problems are not of his own making. They stem from our record in the last Parliament. Prescott often resorted to calling rail summits which amounted to nothing more than hot air."Reuse content