Our decisions for 2014-2019

Our main decisions are:

• delivering what matters to passengers – nine out of ten regional, Scottish, Southeast and London trains to run on time, with fewer serious delays and cancellations on mainline long distance services;
• reducing engineering works disruption to passenger trains by 8% and freight trains by 17%;
• running the network for £38bn from 2014-19;
• reduced day-to-day costs by £1.7bn less than Network Rail said it would cost;
• asking Network Rail to deliver efficiencies of nearly 20% compared to the end of CP4;
• investing over £12bn on improving the network and its facilities;
• investing over £21bn on day-to-day network running, including £17bn on maintenance and renewal of track and equipment
  (over £5bn on maintenance and over £12bn on renewals); and

• maintaining high safety standards, including investing £250m to improve worker safety and £109mn on improving safety at level crossings.

Our approach will focus on getting the basics right. We'll look closely at the issues which impact on performance – notably network maintenance, track renewals and asset management. Network Rail has delivered many improvements to the railway, but we've challenged the company to go further. We have introduced more effective incentives to encourage the company to expand network's capacity so that yet more people can travel safely and efficiently by train.

• Ensuring value for money
• Investing for the future
• Driving high performance
• Managing the rail infrastructure
• Making the railways safe for all
• Building a greener railway

Ensuring value for money

The Westminster and Scottish governments want Network Rail to be more financially sustainable – reducing the cost of running the network without compromising levels of performance or safety.

• ORR has examined Network Rail's plans right down to route level, focusing on the biggest spending areas such as improvement projects and investment in replacing infrastructure such as track, buildings and bridges.
• We will take a much closer look at how Network Rail continues to devolve its business to route level, not just for efficiency purposes, but also to ensure greater accountability to taxpayers and its customers at a more local level.
• Network Rail is unlikely to make its efficiency target of £23.5% by the end of the present CP4 control period (31 March 2014), so has more work to do in the next. We have asked it to make total efficiencies of nearly 20% in CP5 (2014-19) compared to the end of CP4.
• Although Network Rail's own plans identified savings, our analysis shows further savings of £1.7bn can be made on running costs for the railways over the next five years. There may also be additional potential savings to be made on railway improvement projects once the full costs are available.
• We also need to make sure it spends the money appropriately – and that efficiencies are genuine rather than just deferred spend.
• We'll require Network Rail to be more open about how taxpayers' money is spent and what it achieves. This will give us a much clearer view of exactly how much goes to each rail route, what it is spent on, and what the outcomes are. People are entitled to know where their money is going and whether they are getting value for it.
• We'll also report on how all parts of the industry are performing and what we've done to address poor performance.

If Network Rail can deliver the efficiencies we have asked for by the end of 2019, then it will have achieved the challenging targets set out by the government's independent consultantSir Roy McNulty in his 2011 report.

Investing for the future

• The governments expect up to 15% more rail traffic by 2019, much of it on commuter services. It wants Network Rail to increase capacity at major city stations, as well as electrifying more of the rail network in order to improve efficiency, increase capacity and reduce environmental impact.
• Network Rail will spend around £13bn to improve and enhance the network. We want train operators and passengers to have a bigger say in how that money is spent.
• Some projects are either committed or have been specified by government. This accounts for nearly £6bn, close to half the total amount. Examples include Crossrail, the electrification of the Welsh Valleys line and the Edinburgh-Glasgow Improvement Project.
• The remaining £7bn of the projects proposed by Network Rail, such as the East-West rail programme and the Highland Mainline in Scotland, are in the early stages of planning. Before we approve these projects, we're asking Network Rail to work up the details of their plans with the train operating companies – and to consult with passengers and other stakeholders. We'll then agree the costs once the benefits to the network and the increase in capacity are clear. That way we can protect the interests of customers and taxpayers – and ensure value for money.

 

Driving high performance

• We will require Network Rail to ensure that an average of 92.5% of passenger trains arrive on time by 2019.
• We will also require Network Rail to keep the proportion of cancellations and significantly late trains (CaSL) to an average of 2.2% of passenger services by the end of 2019.
• Punctuality targets are measured on a public performance measure basis (PPM). PPM is a measure of the percentage of trains arriving at their final destination within ten minutes of the advertised time for long distance trains, and within five minutes for London and South East trains.
• Cancellation and significant lateness (CaSL) is measured as a percentage of trains that are cancelled or arrive at their final destination over 30 minutes late.
• We decided to give Network Rail and the franchised train operators some flexibility to decide reliability targets, so long as the government's overall targets were met.
• To take account of this, we've slightly adjusted our original performance plans, based on what the train companies have told us they and their passengers want from Network Rail.
• First Great Western long distance trains will have a separate minimum PPM of 88%.
• East Coast and Virgin West Coast trains will also have a PPM floor of 88%, with correspondingly more stretching CaSL target of 2.9% for Virgin (down from 4.3%) and 4.2% for East Coast (down from 6%). That means only 3 in 100 Virgin trains arriving significantly late, and around 4 in 100 East Coast trains.
• For all other passenger train operators, we're setting a minimum target of nine out of ten trains (90% PPM) arriving on time by 2019. The focus will be on improving services in the worst performing areas.

• To make sure that the industry stays on track to achieve these targets by the end of CP5, we'll monitor performance closely and step in early to prevent things from going wrong. We will act immediately if any train operator's punctuality dips more than 2 percentage points below its PPM target.
• Although the Government has not set targets for freight, we have developed a new Freight Delivery measure in agreement with the industry, which looks at the percentage of commercial trains arriving within 15 minutes of the scheduled time. We'll require Network Rail's minimum performance to be 92.5% of freight trains arriving within 15 minutes.

Managing the rail infrastructure

• The Westminster and Scottish governments have asked Network Rail to improve rapidly its understanding of all the assets it owns – including around 30,000 bridges, 2,500 stations and 20,000 miles of track. This is vital to managing the network efficiently, reducing delays and costs and improving safety.
• Up to date accurate data about the health of assets enables Network Rail to carry out proactive maintenance to prevent disruption and delays and ensure the network's safety. We're setting clear targets for Network Rail about the way it manages its assets because we want to see fast progress in this area.
• It is a much more specific approach than before, but the governments, passengers and train operators expect us to give close attention to this issue as it is fundamental to the network's performance.
• In order to speed up the improvements, we're proposing a number of targets at the national level covering areas such as:
  • the company's overall capability in asset management (from track and signalling to structures like bridges and tunnels);
  • the quality of the data it gathers;
  • the success of its internal asset management programmes; and
  • the condition, performance and failure of each asset type.

This will help Network Rail to increase renewals activity, improve planning activity to predict and reduce delays, and improve drainage and other schemes to make the network less prone to disruption from severe weather.

Making the railway safe for all

• Network Rail is legally required to do everything reasonably practical to continue to improve safety on the railways. We expect the company to take a proportionate, risk-based approach that does not put the public or workers in harm's way.
• Since 2002, there have been considerable improvements in safety. The UK now has one of the safest railway networks in Europe for passengers and workers, but there is more to be done and we can't be complacent.
• We will not allow the efficiency drive to compromise safety standards in any way – and have made this clear to Network Rail.
• We've provided additional funding for safety-critical maintenance and renewals work to ensure a safer and more resilient network.
• We've provided around £109m for improving safety at level crossings (these account for half of the potentially catastrophic risks on the current network). This includes closing around 500 level crossings by the end of CP5.
• We've provided £250m to help improve track worker safety.
• We will require more clarity from Network Rail on how progress on safety will be measured and tracked. For example, how it will cut train accident risk by 50% – and what it is doing to improve the occupational health and the safety of rail industry employees.
• We'll continue to monitor Network Rail's safety performance using a wide range of indicators and through our rail safety management maturity model, called RM3.

Building a greener railway

The Westminster and Scottish governments want the railway to become more environmentally sustainable and have asked Network Rail to measure and reduce the amount of carbon embedded in new infrastructure and to publish regular, accurate data on carbon emissions and energy efficiency for both traction (train-related) and off-track operations such as offices and stations.

• To ensure Network Rail sets stretching carbon reduction targets – and achieves them – ORR will subject each aspect of the company's programme to independent review.
• We'll check that Network Rail's improvement works, including electrification projects, maximise reductions in the amount of carbon embedded in the rail infrastructure.
• We'll oversee implementation of Network Rail's delivery plan to ensure that it reports regularly on both train-related and off-track carbon emissions and energy efficiency.
• We'll review Network Rail's progress on climate change adaptation and the company's wider environmental impacts on a project by project basis.>
• We'll check how well Network Rail is doing at making the network more resilient to climate change.