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Thursday, May 23, 2024

ORR proposes £2bn savings in CP5

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The Office of Rail Regulation has suggested cutting the projected cost of running Britain’s railway network over the next five years by £2 billion.

In January, Network Rail published its strategic business plan which set out a budget of £21.4 billion to cover the cost of major projects and maintenance work throughout CP5.

Setting out its draft determination for the period, the ORR has identified £2 billion worth of savings that it believes need to be made if Network Rail is going to “reduce its dependence on public subsidy”.

The ORR thinks the cuts can be found through the use of “new technologies, better management of the railways and more efficient ways of working”.

The funding of some projects has been approved in full and Network Rail’s maintenance costs have also been largely protected at £4.65 billion – £24 million less than Network Rail estimated.

Around £12.2 billion has been set aside for infrastructure projects in the draft determination. However, £7 billion has been allocated to projects in the early planning stage and the ORR has said it needs further information about the projects before confirming the figure.

ORR chief executive Richard Price said: “Britain’s railway is a success story and it has made significant progress over the last decade. In order to sustain this progress and retain support and confidence, the industry must continue to improve its efficiency to reduce its dependence on public subsidy.

“We have set out what Network Rail and its industry partners will need to deliver between now and 2019 for passengers, freight customers, train operators, and taxpayers.

“Passengers will benefit from increases in capacity through a major programme of enhancements and improvements in punctuality, tackling in particular the worst-performing lines. Not only that, we are proposing that rail users should have more say in what enhancements to the railways are delivered and how.

“This determination is stretching but achievable and it gives Network Rail incentives to build on past successes, and do even better than the challenges we have set.”

Responding to the Office of Rail Regulation’s draft determination for control period 5 (2014-19), a Network Rail spokesperson said: “A decision of this significance, which will be important not only for the railway’s four million daily passengers and freight users, but also the economic prosperity of the country and the future sustainability of the network, needs careful and detailed thought.

“We will take the time necessary to analyse our regulator’s initial findings before giving our formal response in September.”

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