Taxpayers' £10bn for railways

RAIL passengers face five more years of misery before the railways are back to pre-Hatfield conditions, the country's most senior rail chief has warned.

Rail regulator Tom Winsor said it would take until 2008-9 to get the railways back to that level because of the 'legacy of Railtrack's years of waste and neglect'.

His prediction came amid mounting furore over the financial cost of running and improving the national network.

In his draft report published today Winsor says the system needs up to an extra £10bn of taxpayers' money in the coming decade.

It threatens a major row between those responsible for running the railways and ministers at a time when passengers are having to travel in overcrowded trains - of which only four out of five arrive on time.

Winsor's recommendation is that Network Rail spends £22.76bn over five years, though this is almost half again what the Government budgeted for in its 10-year transport plan.

The rail regulator insisted that the amount was nowhere near what Network Rail would like but it would allow for a railway that is going to be 'performing better, going to be looked after effectively, economically, competently and well-managed'.

Under Network Rail's original spending plan, Winsor added, 'there was a considerable amount of waste, unnecessary work and inefficiency'. He said he had used a 'fine toothcomb' to cut out 'inappropriate work' and had resulted in pared-down spending in the next five years from £36bn to £24.5bn.

He said the problem now was to cope with Railtrack's mismanagement of the railways following the Hatfield disaster - three years ago today - when an express train careered off the track killing four people and injuring 34 when a rail shattered.

The subsequent programme of rail replacement launched by Railtrack was an 'enormous and massively inefficient rerailing programme', Winsor said, adding: 'Cost control basically disappeared altogether.'

He admitted that 2008-9 before the railways could now be brought back to pre-Hatfield standards 'is a long time but the legacy of Railtrack's years of waste and neglect has a long tail to it'.

He also highlighted the poor management of contractors and of assets which had been replaced but had 'not needed' to have been replaced.

The rail regulator's call for extra funding comes amid Transport Secretary Alistair Darling's repeated statements that the rail industry must get its own house in order, cut costs and improve train timekeeping. He said without that there would not be any extra money.

Financing the railways is now set to be a major issue for ministers. Earlier this week the Commons Transport Committee warned that overcrowding on the trains was so bad it threatened to destroy Government policy of persuading people to switch from their cars to the railways.

Meanwhile the train operators such as Stagecoach, National Express and Virgin face a much lower increase in rail access charges than previously feared, Winsor revealed.

The charges will increase by one third over the next five years, rising to an annual charge of £4.1bn in 2008-09. This is better than expected for the train companies, as the watchdog has identified annual cost savings of about £1.5bn at Network Rail, the network operator company.

Most of the access charges are likely to be recouped by the operators through above-inflation increases in rail fares.

In a review of Network Rail's funding requirements-Winsor said: 'Access charges that franchised passenger train operators pay will need to increase but by substantially less than the company had originally requested.'

Shares in Stagecoach dipped 1/2p to 79 3/4p and National Express was up 2p at 627p.

City analysts said the news has little impact for train companies. 'It is not relevant for the sector and higher access costs are covered by subsidies they receive,' said Mark McVicar at Dresdner Kleinwort Wasserstein.