£21bn required to get Network Rail up and running

Headline figures proclaiming the government offer of a £21bn package to rescue Railtrack should not be interpreted as being an increased spend on either maintenance or major projects. In fact as far as contractors are concerned, it's "business as usual".

Most of the £21bn represents guarantees to cover the money that Network Rail, the not-for-profit successor to Railtrack, will have to raise to get up and running.

Network Rail still has three hurdles to get over: an extraordinary general meeting of Railtrack shareholders at Alexandra Palace must give it the thumbs up on July 23; the EU Commission must be persuaded that the development doesn't amount to state aid by the back door; and the administrator must apply to the High Court to get Railtrack out of administration.

The hurdles should be surmounted and it is expected final approval will go through on the nod by late August. Before that date John Armitt, chief executive of Railtrack in Administration, can expect to be offered a new post, Network Rail being keen to have him and Armitt said to be keen to continue.

Six months ago, Railtrack's role changed. It continued to manage railway maintenance and track renewal work as before, but major projects were to be funded and taken forward by the Strategic Rail Authority.

The exception was the West Coast Route Modernisation, already underway, which stayed with Railtrack. Bechtel costings, revealed last week, lifted the price of WCRM by £3bn to a new high of £13bn.