Network Rail reports further efficiencies

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Network Rail has made progress against its efficiency targets in 2010-11, but has more work to do to justify all of its claimed savings, said Office of Rail Regulation (ORR) chief executive Richard Price.

Network Rail has reported to the regulator that it has achieved efficiencies of 13.2% (£629m) since 2008/09, and is on course to meet its 23.5% target by 2013/14.

This target consists of a 21% efficiency challenge for the current funding period (2009-14) and also takes account of a 2.5% ‘catch up’ which Network Rail did not deliver in the previous control period.

In addition, the assessment – backed up by a report by independent engineering analysts Arup – raises question marks over the evidence for some of Network Rail’s efficiency claims.

As a result, the regulator has called on the company to improve its systems and processes for reporting efficiencies so as to justify that they are real sustainable efficiencies.

Until these deficiencies are rectified ORR considers that Network Rail can ‘more prudently claim efficiencies of around 11.3% (£539m)’.

Richard Price said:

“Network Rail has achieved significant efficiency improvements in recent years. I welcome that.

“But I am concerned that the company has not been able to fully pin down how it measures its delivery of levels of infrastructure renewals across the network. This throws doubt on nearly £100m of Network Rail’s claimed efficiency savings.

“Network Rail spends over £2bn a year on renewals, funded by taxpayers and rail users. It is up to the company to make sure its systems provide hard evidence on what it is getting for the money.

“The company is now working on a plan to put this right. But until it does so convincingly, we do not recognise the higher efficiency numbers the company is claiming.”

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