City 'willing to fund upgrade'

Private investors will be prepared to stump up the extra £23 billion needed to help rescue Britain's rail network, the chairman of the Strategic Rail Authority told Tony Blair today.

Richard Bowker told the Prime Minister he was "encouraged" by assurances from the private sector. Companies had told him they recognised rail was a "growing sector" that they wanted to be involved with.

Mr Bowker met Mr Blair, Transport Secretary Stephen Byers and transport minister John Spellar for a 45-minute briefing at 10 Downing Street. Mr Blair's official spokesman said the overall tone of Mr Bowker's assurances about private sector investment was "very upbeat".

There are persistent fears, however, that private companies had their fingers so badly burned by the Railtrack fiasco that they will be reluctant to return to the fray.

Chris Tarry, rail analyst for Commerzbank, said on Radio 4's World At One: "After putting Railtrack into administration, confidence between the government and the City was completely shattered. It's going to take time to restore confidence and it's going to cost the government more than it would have done before. The City has clearly reevaluated the risks of any railway project and the more the risk, the higher the cost."

Mr Blair's spokesman said the SRA report's message was that improvements would "take time" and problems arising from decades of under-investment could not be solved immediately. He added: "Nevertheless, we are focusing on delivering short-term improvements and sustained changes over time."