Regulator calls for Network Rail to spend more on reliability and safety in the next five years

Rail Regulator, the Office of Rail and Road (ORR), has today set out its initial view of Network Rail's five year plans to spend more than £34bn (£30bn in England and Wales and £4bn in Scotland) to 2024 (known as Control Period 6 or CP6).

Railway performance has failed many passengers in recent months. Strong planning is central to improving Network Rail’s performance and therefore the service passengers receive. Network Rail’s route-based plans are better than the plans for the previous five years and provide a foundation for improvement which passengers and freight customers rightly demand.

In its assessment of the five year plans (known as the Draft Determination), ORR has identified greater scope for Network Rail to do more than it proposed to boost reliability and safety, for the benefit of both passengers and freight customers. ORR has said that Network Rail should amend its plans to:

• Deliver around £1bn of additional renewals work to replace worn out assets, funded through changes including greater efficiency and other savings. This will bring the total renewals budget to £18bn across Britain.
• Include an extra £80m for additional safety-related expenditure. This will include spending on level crossings and worker safety initiatives.
• Reallocate £0.9bn of the £1.7bn England & Wales funding, currently held centrally to manage financial risks to Network Rail’s routes so that they can develop their own plans to spend this money efficiently.
• Make sure that it works effectively with all passenger train companies and that they fully engage in the process to finalise passenger performance targets. ORR has directed Network Rail to review its performance measures for the Wessex, South East and Anglia routes, to ensure they are robust and set consistently with other routes.
• Create a £10m performance innovation fund to support testing and implementing new ideas across Britain.
• Review the profile of its spending to smooth it over the five years of CP6, addressing concerns from the supply chain about the impact that fluctuation in spending can have on efficiency.
• Strengthen the monitoring and financial controls on the Network Rail System Operator function, which manages the timetabling process for the industry. This is important so that we provide greater assurance given the significant increase in funding (from £145m in CP5 to £272m in CP6), which is designed to provide a step change improvement in CP6.

In addition, ORR has today set out that:

• Variable access charge increases for freight and charter operators are to be capped.
• Freight services carrying biomass for the electricity supply industry will be subject to charges which recover some of Network Rail’s fixed costs in CP6.
• New open access operators will pay charges that recover some fixed network costs, where the demand is sufficiently strong that the operator is able to pay, and the terms on which they can access the network will change accordingly.

Joanna Whittington, Chief Executive, ORR, said:

"The entire rail industry, including passengers, freight customers and train operators, relies on Network Rail to deliver a high-quality service.

"ORR’s initial assessment of Network Rail’s five year plans shows that the transition from a centrally run company to one structured round eight geographic routes has improved the quality of the plans but we want to see £1bn more spent on renewing the railway to improve reliability and boost safety.

"ORR will be monitoring and enforcing delivery by each of the routes, so that passengers and freight customers will be able to rely on the railway for the essential service it provides."

To reflect the increased responsibility of route teams, ORR is restructuring Network Rail’s licence to make routes more accountable for their plans. ORR will monitor and hold to account each route as well as the new System Operator, which will focus on system planning and timetabling, throughout CP6.

ORR will publish its final determination at the end of October.