Earlier this week, deputy prime minister John Prescott put responsibility for funding new rail safety systems squarely on the shoulders of the rail industry - whether he forces it to implement the £1bn APT system or a cheaper alternative.But experts have told Accountancy Age that the complicated subsidy system introduced in the wake of privatisation means the taxpayer will end up picking up part of the bill for any improvements even if there was no up-front government subsidy.Chris Angell, a committee member in ACCA's public sector society, said that Railtrack was likely to take the biggest capital hit if the enquiry requires it to upgrade signals and reinstate track protections.Train operating companies would therefore end up with greater public subsidies or smaller payments into the Treasury as their franchises were renegotiated. 'That's a possibility if the inquiry mandates train-borne systems,' warned Angell.He added, however, that the government could mitigate the level of subsidy. 'Train operating companies could be expected by government to absorb [these costs] in their operating margins,' he said.
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