Efficiency and finance assessment of Network Rail
This document provides our Efficiency and finance assessment of Network Rail for 2015-16 , the second year of control period 5 (CP5), which runs from 1 April 2014 to 31 March 2019. PDF, 2,048 Kb
Our annual assessments are intended to help customers, funders and other interested parties gain a better understanding of Network Rail's financial performance compared with the CP5 financial assumptions that we set out in our PR13 determination. Our assessments provide a snapshot based on the best available information at a point in time.
This 2016 publication covers the second year of CP5, 1 April 2015 to 31 March 2016. It presents financial information on Great Britain, Scotland, and for the first time, Wales, as well as the ten Network Rail operating routes set out in our determination. It contains information and commentary on Network Rail's expenditure and its efficiency compared to our PR13 determination, its income, borrowing, debt, regulatory asset base (RAB), financing costs and financial indicators.
We also assess the value of Network Rail's RAB because it reflects the extent to which Network Rail has spent money to renew or improve its network, as well as other adjustments in accordance with our PR13 determination.
The report highlights: PDF, 2,048 Kb
- Network Rail’s expenditure in 2015-16 was £287m higher than our PR13 determination and £479m higher than in 2014-15.
- The backlog of work is increasing. Work to the value of £953m (compared to our PR13 determination) was delayed from 2015-16 to a later date including £579m on renewals work, £340m on enhancements work and £34m on associated schedule 4 compensation payments for track possessions
- In Great Britain, for the control period to date Network Rail reported a decline in efficiency on its core business (i.e. excluding enhancements) of -8.0%, compared to our PR13 determination assumption of a 10.1% efficiency improvement. In other words, costs have risen but we expected them to fall.
- The financial underperformance of the whole business, was £679m for 2015-16. This is largely due to renewals and the operation of Network Rail’s business costing more than expected. In Scotland, financial underperformance was £51m.
- We have expanded the section on routes this year to include comparisons by route both to our PR13 determination and to income and expenditure in 2014-15.
We also monitor Network Rail's operational performance, including in respect of safety risk, train performance, asset performance, asset sustainability and planning. These assessments were included in our Health and Safety Report 2016 and our Network Rail Monitor Q3-4 2015-16 publications. Monitoring operational performance is important in helping us to verify that Network Rail has delivered its obligations in return for the money it has received from train operators and the governments, and that it only retains the benefit of the savings that it has genuinely achieved, which is the focus of this document.
The information contained within this document has been compiled from Network Rail's 2015-16 regulatory and statutory financial statements, our PR13 determination, Network Rail's CP5 Delivery Plans and updates to those plans, and the conclusions of independent reporters and other sources as specified.
We will comment on Network Rail’s financial performance under the route level efficiency benefit sharing (REBS) mechanism in a letter to be published in Autumn 2016.
On 31 March 2016 we published an addendum to our annual efficiency and finance and finance assessment of Network Rail 2014-15, which sets out the Route-level efficiency benefit sharing payments (REBS) 2014-15 PDF, 153 Kb.
- Efficiency and financial assessment of Network Rail for 2014-15 PDF, 860 Kb
16 Oct 2015
- Efficiency and financial assessment of Network Rail for 2013-14 PDF, 2,430 Kb
- Annual efficiency and finance assessment of Network Rail 2012-13 PDF, 1,532 Kb
12 Sep 2013
- Annual efficiency and finance assessment of Network Rail 2011-12 and PDF, 775 Kbannex to the 2012 report
8 Nov 2012
- Annual efficiency and finance assessment of Network Rail 2010-11 PDF, 2,266 Kb
30 Sep 2011
- Annual efficiency and finance assessment of Network Rail 2009-10 PDF, 1,455 Kb
8 Sep 2010
- Annual efficiency and finance assessment of Network Rail 2008-09
2 Oct 2009
- Annual assessment of Network Rail 2007-08 PDF, 1,117 Kb
17 Sep 2008
- Annual assessment of Network Rail 2006-07 PDF, 603 Kb
17 Sep 2007
- Annual assessment of Network Rail 2005-06
29 Sep 2006
- Annual Assessment of Network Rail 2004-05 PDF, 441 Kb
29 Sep 2005
Underspend and efficiency
It is important for the viability and development of the railway that Network Rail delivers its outputs at the least possible cost in order to minimise the financial burden on both its customers and funders.
In order to facilitate this, in 2006 we published our policy on monitoring underspend and efficiency.
- Monitoring and treatment of Network Rail's underspend and efficiency: policy statement PDF, 112 Kb
- Independent Reporter: Audit of Network Rail's Roll Out of Cost Analysis Frameworks and Maintenance Unit Cost Measures - Final Report by Halcrow PDF, 291 Kb
- Responses to Monitoring and treatment of underspend and efficiency: consultation on proposed policy statement
- How our PR13 efficiency assumptions for Network Rail were derived PDF, 186 Kb
21 October 2015
- Network Rail 2013/14 Regulatory Accounts Year-end review, final report by Ove Arup
PDF, 1,517 Kb
- Enhancement project spend efficiency assessment: investment schemes - independent report by CH2MHILL PDF, 703 Kb
7 August 2014
- Network Rail 2012/13 Regulatory Accounts Year-end review, Final report by Ove Arup PDF, 1,331 Kb
- Network Rail 2011/12 Regulatory Accounts Year-end review, Final report by Ove Arup PDF, 3,038 Kb
- Efficiency benefit sharing mechanism letter to the industry PDF, 142 Kb
22 March 2012
- Efficiency benefit sharing mechanism letter PDF, 78 Kb
11 November 2011
- Network Rail regulatory accounts data assurance - Final report by Ove Arup PDF, 2,635 Kb
- Network Rail's unit cost framework - Letter to Network Rail PDF, 94 Kb
9 May 2011
- Audit of the robustness of the Network Rail unit cost framework - Report by Ove Arup & Partners Ltd PDF, 2,978 Kb
Arup's report on the robustness of Network Rail's unit cost framework
- Network Rail annual return MUC and CAF audit 2009/10 - Report by Ove Arup & Partners Ltd PDF, 1,043 Kb
Arup's report on Network Rail's 2009-10 maintenance and renewals unit costs.