Railtrack told not to expect more taxpayers' cash

The Government's 10-year plan for the railways is in tatters after ministers rejected demands for more money from Railtrack, the beleaguered infrastructure company.

The Department of Transport, Local Government and the Regions has been warned that the industry will need an extra £2bn to deliver the radical improvements sought by passengers. But Railtrack has been told there is no question of more taxpayers' cash. A senior Whitehall source said: "The rail regulator has told Railtrack to put away its begging bowl and the Government has reiterated that message."

Ministers are anxious not to pour cash into what they regard as a "financial black hole".

The Government has set aside a £29bn subsidy for the rail system, but is faced with reluctance from the private sector to invest in the network. Ministers and potential investors are concerned that a recession would end the growth in demand for rail travel.

The Cabinet also wants to see if John Robinson, the new chairman of Railtrack, can turn the company round as part of his fundamental review of its management structure before deciding whether to devote more resources to the industry.

Jonson Cox, Railtrack's former chief operating officer, sent out an internal letter saying that the summer timetable was "on a knife edge". While the company had slowly eliminated the emergency speed restrictions put in to cope with "gauge corner cracking", the phenomenon that caused the Hatfield railway disaster, fresh speed limits have had to be imposed due to other problems.

Mr Cox urged qualified engineers working for Railtrack to abandon their desk jobs and volunteer for the front line to help the company cope with the crisis. There are also growing doubts about the company's ability to upgrade the west coast main line on time. One of the sections of track giving rise to concern is just south of Manchester where Railtrack has commissioned the Italian company Ansaldo to fit state-of-the-art signals.

A trial of the new signal at one site led a rail inspector to declare that it was far more dangerous than SN109 – the much-criticised signal that caused the 1999 Paddington disaster. It has emerged that Railtrack insisted on using a lens for the trial signal that had been given official approval, but was the wrong kind for the purpose. There could be delays to the project while the correct lenses are given safety certificates for the British network.

A source close to the Manchester project said the signalling should be complete in time to allow Virgin trains to run at 125mph on that stretch of track in time for the Commonwealth Games next summer. However, the official said: "All it would take to delay the whole thing is something else to go wrong, and on past record that's highly likely to happen."

* Railtrack is thought to be reviewing its executive pay structure in a bid to avoid more "fat cat" accusations.

John Robinson, is believed to have called in an executive pay consultancy, William M Mercer, to review its pay and bonus scheme. Railtrack, which dropped out of the FTSE 100 index last June when more than £280m was wiped off its market value, is also said to be considering scrapping share options for its directors.

The move follows anger over former chief executive Gerald Corbett's £440,000 pay-off, as well as a further £900,000 in lieu of pension. Mr Corbett accepted a new job at retail group Kingfisher within months of leaving Railtrack.

Railtrackdeclined yesterday to comment on the review, but it denied reports that Mr Robinson was planning to axe hundreds of jobs in a shake-up of the management.