Regulator expects Network Rail to improve efficiency

20 July 2017

ORR has today published its annual report on Network Rail’s performance. We have also issued documents to support the company and governments’ planning for the 2019-2024 spending period.

ORR’s annual review of Network Rail for 2016/17 shows that:

  • it delivered a safe railway causing no passenger fatalities on its infrastructure or stations. Britain’s railway remained one of the safest in Europe;
  • the overall reliability of assets improved over the year;
  • train performance declined, with 87.4%* of trains in England & Wales arriving on time (compared to 88.9% in 2015-16);
  • it met 13 out of 19 of its completion milestones for enhancing the railway; and
  • it is carrying out its core work 5% less efficiently than it did three years ago.

Network Rail is under increased financial pressure, with its borrowing facility over the next two years leaving it little room to protect against any unforeseen cost pressures that emerge. To remain within its budget, the company has deferred work to renew the railway from the current five year spending period into the next (2019-2024). This will have implications for the future performance and sustainability of the railway and the service passengers and freight customers receive unless it is addressed in the next spending period.

This year, train performance continued to decline. A high proportion of delays on some routes were attributed to Network Rail, including in the south east which we investigated. However, we consider that Network Rail now has good processes in place to deliver the improvement plans which it has set out, and we will continue to monitor its performance closely and assess the need for further action.

Network Rail recognises the challenges it faces. It has started to transform its business by creating eight regional route businesses and a national system operator. ORR considers early completion of these reforms essential if Network Rail is to meet the needs of passengers and freight customers, today and in the future and to do so efficiently.

ORR is also changing its approach to monitoring and regulating Network Rail. It will more closely scrutinise leading indicators of efficiency, such as quality of delivery and how renewals plans are being progressed. ORR will also monitor and compare Network Rail’s performance on a route-by-route basis rather than at national level. This will highlight good practice and focus attention on routes that are not improving.

Good quality plans by the route business are a vital starting point to efficient delivery in the future and they will take time to construct. As part of future planning, ORR has extended the deadline for Governments to set out the funding available between 2019-2024 from 20 July to 13 October 2017.

ORR has taken further steps to support the planning process by Network Rail. This includes:

  • setting out our view and consulting on the causes of Network Rail’s renewals inefficiency, and what ORR is doing differently to assess the company’s plans, drawing on lessons learnt; and
  • commissioning a further study by an independent consultant into Network Rail’s progress developing its proposals on the efficient level of maintenance and renewals spend needed.

The results of the efficiency consultation and study will inform the decision by the UK and Welsh and Scottish Governments about the future funding available to Network Rail.

Joanna Whittington, ORR’s chief executive said:

"Network Rail’s performance over 2016-17 has been mixed. The railway continued to be safe and the reliability of some assets has increased. However, these benefits have been overshadowed by continued inefficiency and poor train performance.

"We’re changing the way we regulate Network Rail to sharpen its focus on efficiency and performance. Network Rail must do its part and press on with its transformation programme, demonstrating that this will start to address inefficiency and meet performance expectations of passengers and freight customers now and into the spending period starting in 2019."

Notes to editors

  1. *Train performance is currently measured using the Public Performance Measure (PPM) - the percentage of trains arriving at their final destination within 5 minutes of their scheduled arrival time (within 10 minutes for long distance services).
  2. Network Rail Monitor, England and Wales 2016/17
  3. Annual health and safety report
  4. ORR investigation into Network Rail’s performance delivery to Southeastern
    ORR looked more deeply into Network Rail’s performance for Southeastern services due to its track record over the last two years coupled with the sharp increase in delays it caused within the year. We found evidence that it has a sustained focus on getting the basics right, from planning to day-to-day operations. We also found that the different parts of Network Rail: those that upgrade the infrastructure (such as installing new points at London Bridge) and those that run the railway in real time are now working more closely together.
  5. About the next price control, PR18
  6. Consultation on improving Network Rail’s renewals efficiency
  7. ORR protects the interests of rail and road users; improving the safety, value and performance of railways and roads, today and in the future. Follow us @railandroad.