Rail chief warns over revamp cash

Sir Alistair Morton: Funding is a "black hole"

Sir Alistair Morton, chairman of the Strategic Rail Authority, has questioned whether private investors will be prepared to stump up the cash needed to turn the UK rail network around.

The government is banking on £31bn ($45bn) investment in the rail network from the private sector over the next 10 years.

The government needs to recreate the confidence of the private sector

Sir Alistair Morton

But Sir Alistair thought it unlikely that the City would be prepared to invest this amount of cash. "The government has .... done a lot to sow doubt into every lender's mind," he told BBC Radio Four's Today programme.

And speaking on the same programme shortly afterwards, Transport Secretary Stephen Byers would not confirm that the Treasury would underwrite the loans.

Restoring trust

Sir Alistair's doubts echo the comments of Conservative transport spokesman Eric Pickles who has also said the private investment built into the government's 10-year plan was now at risk.

Stephen Byers: the private sector will stump up the cash

"Who will trust the government again? Not the City institutions. They will run a mile," said Mr Pickles.

But Mr Byers has stuck to his guns.

"We are confident that we will be able to lever in money from the private sector, it will be attractive as far as the private sector is concerned...there is an enormous amount of interest in the City," Mr Byers told the BBC.

Railtrack was put into administration earlier this month, after the government refused to prop up the debt-ridden company with more cash.

The government then proposed to set up a new, not-for-profits company to run the nation's rail and signal network.

Mr Byers has maintained that the City is aware that that Railtrack's fate and the government's proposals for private-public partnership are very different.

Three black holes

Despite Sir Alistair Morton's doubts about the future funding, he denied that the railways would grind to a halt altogether.

Pickles: "City institutions will run a mile"

But he did say that services would not be satisfactory without more funding.

"We may grind on in a rather helpless way, but it is not likely to be satisfactory if there is not enough money," he said.

"The rail sector needs private sector capital investment. The government needs to recreate the confidence of the private sector."

Sir Alistair also confirmed that the industry's regulatory bodies, including his own, need to be sorted out.

"There are several black holes in the rail set up and they all need to be addressed.

Railtrack is the first and most obvious black hole. Second blackhole is the overlapping and not entirely effective regulation of the industry. Third black hole is 'where's the money going to come from'," he concluded.

The Strategic Rail Authority is responsible for the regulation and development of the UK's railways, but is now likely to be rolled into one body with the Office of the Rail Regulator.