Railtrack on course for watchdog row

Railtrack is facing a head-on clash with John Swift, the rail regulator, when the two parties hold a crunch meeting on Thursday concerning the company's proposed pounds 16bn, 10-year investment programme for Britain's railway network.

If the company does not make a U-turn by agreeing to alter its licence to include watertight promises to deliver on its spending commitments, then Mr Swift is intent on hauling Railtrack before the Monopolies and Mergers Commission.

"All we want to do is make Railtrack deliver on its promises and put its money where its mouth is. We are calling them in to explain why they do not want to change their licence. This is a crucial meeting. If their answers do not satisfy us then we will act quickly," said a spokesman for the rail watchdog.

Mr Swift believes tighter regulation is necessary to ensure Railtrack spends the pounds 2bn its receives a year from the public purse is spent judiciously.

But Railtrack shows no signs of giving a inch in the delicate negotiations and refuses to accept it has to increase its accountability to the Rail Regulator. "We have no intention of changing our position and changing our operating licence," a Railtrack spokesman said yesterday. Last week Railtrack's chairman, Sir Bob Horton, claimed that any changes to its licence would lead to "more bureaucracy, second- guessing of decisions and a loss of flexibility".

That argument got short shrift from Mr Swift. He said recently: "I remain of the belief that it is appropriate to increase Railtrack's accountability in the way I am proposing and do not believe that it would lead to the detriments suggested by Railtrack."

The Government is supportive of the rail regulator's stance and will probably summon Railtrack to explain its actions if it still refuses to accept his demands. John Prescott, Deputy Prime Minister, recently met Sir Bob to discuss his concerns over its investment shortfall. Mr Prescott is determined to make sure that Railtrack delivers on its promises. He told delegates at a conference for the Aslef train workers' union in Torquay last Friday that the regulation of the railways needed to be tightened.

"Railtrack is seemingly rejecting a voluntary improvement in its contract to give the regulator tighter powers with respect to providing investment. I would emphasise that unless a satisfactory agreement is reached then the whole question of how Railtrack is regulated will be opened up once more," he said.

"The Government has no specific plans to see Railtrack again at the moment. But we will be very interested in the feedback coming from that meeting," a Department of Transport spokesman said yesterday.