Rail passenger numbers are expected to grow further

Some �400m of that is new money from cost savings, business growth and government investment, Network Rail (NR) said in its annual report.

The railway infrastructure company, said punctuality was at its best level for six years.

Ministers welcomed the figures, but the Conservatives said NR had no plan to deal with increasing passenger numbers.

Transport Secretary Alistair Darling said Britain's railways were in an "improving state" as a result of "record government investment and better management".

"More services arriving on time, backed by continued investment, will result in more passengers choosing rail," he said.

'Bleak reading'

Since 1996 there has been a 42% rise in passengers, NR's report said, with further growth of another 30% over the next 10 years predicted.

But Shadow Transport Secretary Stephen Hammond said the report made "bleak reading" for passengers.

RAIL SPENDING March 2006-09: �9.9bn To be spent on projects including the expansion of London's Euston, Victoria and Waterloo stations March 2004-06: �7.5bnAbout 720 miles of new rail, more than 530 miles of new ballast and 650 new sets of points were replaced between 2005 and 2006 - a third more than in the previous 12 months

"The extra spending on enhancements is welcome but will go very little way to coping with the number of extra passengers predicted," he said.

Mr Hammond was also unimpressed with NR's claim that over 86.4% of trains ran on time over the past year, compared with 78.6% in 2002.

He called this a "small improvement" in punctuality, but claimed it was below 1997 levels, when Labour came to power.

And NR's target of 87.6% of trains running on time by March 2007 found little favour with the trade unions.

Bob Crow, of the RMT, welcomed the extra investment but said the punctuality target was "still a lower figure than that achieved in the final days of the publicly-owned network under British Rail".

'Strong performance'

Network Rail operates as a commercial business but reinvests its profits into maintaining and upgrading tracks, signalling and other facilities.

It said its operating and maintaining costs had gone down by �355m over the last three years and the firm hopes this figure will reach a total of �600m by March 2009.

Half of the new money available for investment in the railways comes from a special government fund and the remainder is a result of savings and business growth.

Network Rail chief executive John Armitt praised the company's "strong performance".

"We look forward to working with train and freight operators, and other stakeholders, to determine how [the new money] can be best spent."