RAILTRACK'S REVENUES will be boosted by £800M a year for the next five years following the Rail Regulator's periodic review of track access charges last week.
However, the track operator described the detail of the review, particularly demands that it improve its efficiency, as 'extremely challenging' and warned that it would not be easy to balance against the need for improvements in safety.
Regulator Tom Winsor has allowed Railtrack to raise charges to the train operating companies by 40%, increasing revenue from £1.8bn to £2.6bn over the next five years.
But the increased revenue is coupled with a requirement to improve efficiency to 4.2%. Railtrack argues that it is unreasonable to expect a growing and improving company to cut its cost base and overheads.
Railtrack chief executive Gerald Corbett said that despite the increase cuts would have to be made to its spending plans, adding that the new efficiency targets 'sit uncomfortably against the background of the Ladbroke Grove inquiry'.
However, other industry insiders thought Winsor's targets were kind to Railtrack, believing 7-8% to be quite achievable. A recent statement from the Rail Freight Group claimed that Railtrack costs are three times best international practice.
In the review Winsor also instructed Railtrack to produce a supplement to its 2000 Network Management Statement to clarify certain points. The revised document, effectively a written commitment from Railtrack outlining its new targets, has to be completed by September before Winsor hands over the money.