Although the proposed rate is less than the current 7.5 per cent, it is substantially more than Mr Winsor’s predecessor had proposed and above those granted to either the electricity or water utilities.
Railtrack will also be required to make efficiency gains of 5 per cent a year – equivalent to a reduction of £100m a year in its cost base. They calculated that access charges would only need to increase by a maximum of 18 per cent if Railtrack improved efficiency levels and achieved its investment programme for less money.
The rail regulator also claimed that Railtrack could fund most of the increased cost of the West Coast Mainline upgrade – now expected to total £5.8bn – with a rise in access charges of just 2 per cent.
But Gerald Corbett, chief executive of Railtrack, insisted that subsidies would need to increase by around £1bn and perhaps more even if additional money was raised from the train operating companies by lengthening their franchises and fare income rose sharply.
“A bigger and better railway is going to cost more and it cannot all be funded from the farebox,” added Mr Corbett.
Shares in Railtrack soared another 13 per cent yesterday after Mr Winsor confirmed that his proposed formula for setting the company’s charges for the five-year period from 2001 would be more lenient than expected. Public subsidies for Britain’s rail network may have to rise by as much as £1bn a year to fund the industry’s ambitious investment programme, Railtrack warned yesterday. The Paribas group is expected to sell about 20 per cent of UB’s assets to Danone if it wins.
UB shares, which have underperformed the UK market by 64 per cent in the past five years, yesterday closed up 5.5p at 260p..

Public subsidies for Britain’s rail network may have to rise by as much as £1bn a year to fund the industry’s ambitious investment programme, Railtrack warned yesterday.

This would result in taxpayers’ support rising from the current level of £1.3bn to £2.3bn a year rather than falling to £700m by 2004 as is currently envisaged.
The new estimates for the amount of subsidy the Government may need to pump into the rail network to help support Railtrack’s investment plans – now estimated at £40bn – came as the rail regulator, Tom Winsor, published his initial proposals for the company’s access charges from 2001.
These show that Railtrack is forecasting a need for a 47 per cent increase in the charges it levies on the train operating companies from £2bn now to £3bn from 2001 to fund its 10-year investment programme, which includes £16bn of maintenance and renewal expenditure and £11bn of enhancements.
The bulk of Railtrack’s access charges are funded through subsidies paid to the train operators by the franchising director.
However, officials at the rail regulator’s office said Railtrack’s figures “beggared belief”. But its offer, the level of which was not confirmed, was “not sufficient to get the recommendation of the board”, according to a source familiar with the negotiations.
UB employs 22,500 people worldwide, including 19,000 in the UK who are based at the group’s head office in West Drayton, west London and at factories and plants at Ashby-de-la-Zouch in Leicestershire, Consett in Co Durham, Rotherham in South Yorkshire, Teesside, Halifax, Carlisle, Cumbria and Manchester.
Under the Burlington proposal, UB would be merged with some of Hicks’ and Nabisco’s European operations. Finalrealm urged UB shareholders to “take no action at this stage”. A further announcement is expected today.
Burlington learnt late on Tuesday night that Finalrealm intended to present a counter-offer to the UB board. John Muse, Hicks’s co-founder who heads the group’s European operations, and Jim Kilts, chief executive of Nabisco, spent much of the night putting in place additional financing to enable Burlington to raise its own offer.
Finalrealm is understood to have met with the UB board yesterday morning. The other side seem to have been caught off guard.”
Finalrealm, the rival consortium led by Paribas Affaires Industrielles, the venture capital arm of France’s BNP-Paribas, has yet to make a bid but said it was “actively considering whether to make a higher cash offer”.

Burlington said it would “shortly increase its cash offer to not less than 254p a share”, valuing UB at about £1.2bn.
Michael Landymore, an analyst at Investec Henderson Crosthwaite, said: “So far, it’s two-nil to the Americans. The highest price at which it bought shares was 254p, obliging it, under the City Takeover Code, to raise its offer for the group to at least that level. A US consortium yesterday looked close to winning the tug of war over United Biscuits, the struggling UK snack maker, after it raised its offer for the company to “at least” 254p a share, topping its initial agreed offer of 245p.

Burlington Biscuits, the US contender comprising Hicks, Muse, Tate & Furst, the specialist buyout firm, and Nabisco, the food giant, announced that it had acquired a total of 29.9 per cent of UB’s share capital from institutional investors, including Phillips & Drew, Prudential and Mercury Asset Management. However, profits this year are only expected to reach around £96m – half the level forecast – because of an industrial dispute and a price war.. A US consortium yesterday looked close to winning the tug of war over United Biscuits, the struggling UK snack maker, after it raised its offer for the company to “at least” 254p a share, topping its initial agreed offer of 245p. It can also withdraw if the link up fails to gain European Commission approval.
Iberia has recently returned to profit after years of heavy losses. The carrier is expected to be valued at between £1.6bn and £2bn.
Under the deal signed yesterday BA and American Airlines will buy a combined 10 per cent stake and become industrial partners in the Spanish carrier.

Iberia will also join the Oneworld airline alliance led by BA and American.
BA, American and five Spanish companies yesterday paid half their combined £700m investment with the balance due when the Spanish government clears the sale, probably before the end of the year.
The biggest single shareholder in Iberia will be Caja Madrid, Spain’s second biggest savings bank, which will take a 10 per cent stake. However, BA will have more boardroom votes than any of the Spanish partners and the biggest say in the running of the airline.
BA has the right to sell its shareholding in Iberia back to the state holding company Sepi if the flotation has not taken place by the end of next year. British Airways yesterday agreed to pay £160m for a 9 per cent stake in Iberia, the state-owned Spanish flag carrier, paving the way for the privatisation of the airline early next year.

BA is one of seven corporate investors who have agreed to acquire 40 per cent of Iberia with the remainder of the airline due to be floated through a public share offer. British Airways yesterday agreed to pay £160m for a 9 per cent stake in Iberia, the state-owned Spanish flag carrier, paving the way for the privatisation of the airline early next year.