05 June 2008

ORR Suggests Budget Cuts for Network Rail

The Office of Rail Regulation has said that Network Rail needs to become more efficient and manage with less money over the next few years than it has asked for.

They have said Network Rail must reduce costs by 21% by 2014 and should get by on £26.5 billion for the period 2009/14. NR, which reckons it needs £29.5 billion for the five-year period, said the ORR proposal appeared "insufficient" and could put plans to meet rising demand "at risk".

Outlining "draft determinations" on NR's plans and charges for 2009/14, the ORR backed the Government's already-stated target of raising the number of trains that run on time to 92.6% across England and Wales by 2014 and at least 92% in Scotland. This compares with current figures of around 90%.

The ORR also said NR must deliver a major programme of work across the networks, including the Thameslink scheme, rebuilding Reading station in Berkshire, a major development of Birmingham New Street station, work on the East Coast line from Peterborough to Doncaster, a new Glasgow Airport rail link and a new line from Airdrie to Bathgate in Scotland.

NR must also improve safety and work to deliver a 3% reduction in the risk of death or injury to passengers and rail workers, the regulator said, as well as carrying out increased levels of engineering work while keeping disruption to passengers and freight to a minimum.

It must reduce operating, maintenance and renewal costs by 21% during 2009/14, compared with NR's proposed figure of a 13% reduction.

ORR will make its final determinations at the end of October.

ORR chief executive Bill Emery said: "Britain's railway network has seen impressive growth over the last few years, and has achieved significant improvements in performance and efficiency. There are major opportunities to build on this progress over the next five years; and for NR, working with its industry partners, to deliver much more for passengers and freight customers for less money. We will monitor NR's progress in delivering all of its obligations and the improvements required. We look forward to reporting on its success. However, if it is failing or appears likely to fail, we will not hesitate to take action to require the company to address its shortcomings."