Rail deal curbs Bowker's powers

The Rail Regulator, Tom Winsor, yesterday succeeded in clipping the wings of the Strategic Rail Authority in return for approving a deal which will ease the burden on its budget.

The Rail Regulator, Tom Winsor, yesterday succeeded in clipping the wings of the Strategic Rail Authority in return for approving a deal which will ease the burden on its budget.

Mr Winsor has agreed to allow Network Rail, the state-backed operator of the railways, to fund £3bn of its requirements over the next two years through borrowings rather than subsidies paid by the SRA.

In return, the SRA's chairman, Richard Bowker, has been forced to give up some of his powers over Network Rail to remove "unnecessary duplication of the regulatory regime". Mr Winsor said this had amounted to "inappropriate double jeopardy" for the company which could have blurred lines of accountability.

Under the new formula, Network Rail will still get its £22.2bn of funding over the next five years - a £7bn increase on the amount its predecessor, Railtrack, was to be allowed.

However, in the early years, just under half of this will be financed through borrowings, and overall a bigger proportion of the total will be met by direct grants from the SRA to Network Rail, rather than in subsidies to train companies to enable them to pay access charges.

The effects of this will be two-fold. Firstly, it will ease the pressure on the SRA's budget in 2004 and 2005. Secondly, because grants count as investment and not current expenditure, it will help the Chancellor of the Exchequer, Gordon Brown, stick to his "golden rules" and avoid the Department of Transport having to make cuts elsewhere in its budget.

Mr Winsor said an example of one of the powers that the SRA would no longer have was once requiring Network Rail "to facilitate and implement" the SRA's strategies.