Outlook: Railtrack springs its trap

THERE IS, as they say, no such thing as a free lunch. Yesterday John Prescott discovered the hidden extras that come with the bill when you sit down to dine with Railtrack. The deal to rescue the Channel Tunnel Rail Link already looked a mite generous to its new private developers. They get the benefit of the Government's lower cost of borrowing. And the taxpayer picks up the tab if the CTRL fails to live up to expectations.

Now Railtrack has added another dish to the menu. Without resorting to anything as coarse as blackmail, Railtrack has made it clear that it will only complete the CTRL if it gets an easy ride in the forthcoming review of its access charges.

The Deputy Prime Minister presumably saw this man-trap coming. Even so, Railtrack's chairman Sir Bob Horton has sprung it with impeccable timing. Railtrack will guarantee the first phase of the link to Fawkham Junction in Kent. But it will not have to decide on its option to build the second and more important phase into central London until the new price controls take effect in 2001.

The instinct of all regulators is to look at the efficiency gains made during the initial price control period and then impose a large one-off price cut at the start of the next period to compensate consumers.

If the rail regulator does this, then Railtrack has intimated that the Government will have to find someone else to build the remainder of the link. The alternatives do not look very appetising. Either the Government will be left with a half-built railway line just as it is preparing to go to the polls. Or it will have to settle for a soft set of price controls that could translate into fare increases for the travelling public. Not a choice to relish.