Network Rail told by regulator to cut costs by £2bn

 
File photo dated 01/12/12 of a general view of level crossing at Wedgwood train station in Stoke-on-Trent, Staffordshire The rail regulator has approved funding to upgrade and close some level crossings

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Network Rail has been told by the rail regulator that it must find savings of £2bn over the next five years at the same time as improving punctuality.

But the Office of Rail Regulation (ORR) said the cost cuts must not come at the expense of safety.

It said at least nine out of 10 trains must run on time on all routes by 2019.

Network Rail, which is in charge of the UK's rail infrastructure, welcomed the plans and said it would respond in September after analysing the findings.

Last week the ORR said Network Rail had missed all of its punctuality targets for England and Wales last year. The figures came a day after it was revealed that the company's net debt had reached more than £30bn.

Analysis

Along with the price of a ticket, punctuality is the big issue for train passengers.

It has actually improved a fair amount under the stewardship of Network Rail but things have taken a turn for the worse recently. The company missed all of its passenger service punctuality targets for England and Wales last year.

It now has another year to improve significantly or face a fine from the regulator, which could run to about £75m. Ironically a fine could mean rail money going to the Treasury rather than being ploughed back into improving the network.

The regulator is about to set much tougher targets for punctuality, including a minimum standard for individual operators. It is easy to set targets; much harder to hit them.

Strike threat

The independent regulator set out its plans for 2014-19 after examining Network Rail's five-year business strategy, which was published in January.

During the 2014-2019 period, the ORR said Network Rail must:

  • Improve punctuality - an average of 92.5% of trains on all routes across the UK must arrive on time, compared with its target of just over 90% now
  • Complete projects to increase capacity and improve service as fast as possible
  • Give more say to rail users on how the railway is improved, putting passengers "at the heart of decisions"
  • Provide better and more up-to-date data on the condition of its tracks, bridges and other assets, so problems can be fixed before they occur
  • Improve safety for passengers and workers - the ORR has approved £67m of funding to upgrade and close level crossings in England and Wales
  • Give greater value for money - the ORR is encouraging train operators, Network Rail and the supply chain to make further savings

The ORR said its assessment showed that between next year and 2019, the cost of running the rail network should be £21.4bn - nearly £2bn lower than proposed by Network Rail.

The savings will be made through new technologies, improved management and more efficient ways of working but will not come at the expense of safety, the ORR said.

Anthony Smith, Passenger Focus, says people want "more trains, longer trains, more seats"

It added that it had approved a £12bn plan to enhance capacity to deal with the 14% anticipated increase in passengers by 2019.

Anna Walker, chairwoman of the ORR board, said regulators believed Network Rail could "do what it is promising to do for less money and more efficiently".

But Bob Crow, general secretary of the Rail, Maritime and Transport workers' union, said it would mean "massive cuts to renewals and maintenance, compromising safety and leading to more breakdowns, failures and delays".

He warned that any threat of compulsory job losses at Network Rail would lead to preparations for a national strike ballot.

Anthony Smith, chief executive of Passenger Focus, said the group was looking at the detail to see if the balance between cost cutting and efficiency was "about right".

"Passengers will judge it when the trains turn up on time," he told BBC Radio 4's Today Programme.

Mr Smith said: "We've had year after year of above-inflation fare rises that have led to money pouring into the rail industry and, in return for that, passengers expect the basics of the service - on time, clean train and more seats."

Facing fine

ORR chief executive Richard Price said the "industry must continue to improve its efficiency to reduce its dependence on public subsidy".

Anna Walker from the rail regulator: "We must have the improvements... but it must be done more efficiently."

A Network Rail spokesman said high levels of investment were needed to continue expanding the railways.

"Getting the balance right in making the choices between performance, growth and value for money is critical if we are to build on efficiency savings of around 40% achieved over the last two control periods," he said.

Michael Roberts, chief executive of the Association of Train Operating Companies, said the ORR plans were "an important opportunity to incentivise Network Rail and operators to work more effectively together".

A train is defined as on time if it arrives at the destination within five minutes of the planned arrival time for London and south-east England, or regional services, or 10 minutes or less for long distance services.

If Network Rail keeps missing punctuality targets, it faces a fine of up to £75m from the ORR.

The company is held responsible for delays caused by signal failures or relating to problems with train tracks.

 

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  • rate this
    0

    Comment number 158.

    132.Peter Lanky
    "Run for the benefit of London????"

    Are you having a laugh, I commute into London, my trains are frequently, late or cancelled and are always overcrowded with standing room only and thats if your lucky, occassionally you can't even get on them, thats despite paying over £300 a month for a ticket.

  • rate this
    +5

    Comment number 157.

    In the 80s the Tories literally 'Sold The Family Silver' to finance short term tax cuts & we are are still paying the price for it now.

    The sooner someone finds a way of getting the railways back into public ownership, but without having to handover yet more cash to the parasites currently running them, the better.

    Our Railways are an embarrassment, both the worst run & most expensive in Europe!

  • rate this
    +1

    Comment number 156.

    Fair enough, its not a private company, but with a net debt of 30 billion, you wouldnt be able to re-float it on the stock exchange as no one would buy the shares.Well apart from the chinese maybe. WOW theres a thought !

  • rate this
    0

    Comment number 155.

    #upgrade and close level crossings#
    How is that going to work? Close all road crossings with rail intersections? Vast bridges or road tunnels all to achieve absolutely nothing at astronomical expense? Like locally foot pedestrian rail crossing a monstrosity of a foot bridge, all because 2 youths failed to obey the lights. Never been a problem in a century, waste money for ultra idiot level safety.

  • rate this
    +1

    Comment number 154.

    @138. ichabod

    I'm appalled at the ignorance of the top rated entries on this HYS and those voting for them. Network Rail is NOT a private company. It is basically a government quango set up as a 'not for profit' entity by Labour in about 2001

    --

    More than that, it was set up by them to hide billions of pounds of debt from the government's books.

  • rate this
    +46

    Comment number 153.

    At what cost to the fare & tax paying public? lower standards of safety, cleaniness, service? or what about scrapping that monster HS2 or firing some of the freebooters at the top? or is that too simple?

  • rate this
    +4

    Comment number 152.

    Time to run a quality public transport service that is just that, a SERVICE, not subject to political whims, company profiteering, bonuses, etc. Britain's railways are the worst in Europe - not because of hard-working railwaymen or equipment but due to privatization. When will Brits see that the private car and roads are not sustainable - railways and public transport are!

  • rate this
    +4

    Comment number 151.

    @124 Mycroft Holmes
    Network Rail is also a re-nationalised Railtrack which failed!
    ............................

    A statutory corporation is still a private company, and re-nationalisation is a different concept.

    So NR has not been ' re-nationalised.'

  • rate this
    +6

    Comment number 150.

    Network Rail has said it 'welcomed the plans', which probably means that they think they have gotten off lightly. Trebles all round in the Boardroom!

  • rate this
    +3

    Comment number 149.

    81 miket
    "stop the world I want to get off"

    excuse me sir, before you jump off, can we check you have a valid ticket. oh you dont. thats a criminal offence sir and a heavy fine. why? executives need bonuses have to be paid for you know

  • rate this
    +4

    Comment number 148.

    I used to use the rail service but now I don't...it became too expensive. Then I decided working was too expensive, and took early retirement...now I sometimes use off peak trains along with my Rail Card...which is just about value for money!!

  • rate this
    -2

    Comment number 147.

    Go left, go right, go straight ahead and you'll get there in the end, but not on a train, I'd guess.

  • rate this
    +2

    Comment number 146.

    124.Mycroft Holmes

    "This country has been failed by the so-called private sector. Re-nationalisation works well on the East Coast but is let down by condem. govt. failing to invest in improving the services."

    ... and aren't the Tories smarting from a publicly run organisation running effectively and turning in a profit?

    Can't pass it to their mates fast enough...!

  • rate this
    +3

    Comment number 145.

    16. Mister Point
    57 MINUTES AGO
    £2bn in 5 years? That's £400,000 per year. Surely getting rid of a couple of non-execs off the board would cover that cost.

    Your math is dreadful. Did you train with Gordon Brown?

  • rate this
    +1

    Comment number 144.

    They can save that much now by just abandoning the HS2 system. Who needs it anyway?

  • rate this
    +4

    Comment number 143.

    I'd love to use public transport but it's useless either because of poor timing or over crowding. Sometimes there's no service at all when you need it.

    But it's not public transport is it?, it's privately run transport where the companies just use it as a cash cow.

  • rate this
    +3

    Comment number 142.

    How did network rail run up £30 bn in debt? They - i.e. us - are likely to be paying close to £2bn in debt interest. Where did the money go?

  • rate this
    +1

    Comment number 141.

    30 billion in debt. That would pay for loads of cycle lanes and get arses on bikes rather than on filthy trains. Get the nation fit as well.

  • rate this
    +2

    Comment number 140.

    If the regulator can tell NR to cut costs, surely it can also put conditions on those cuts (e.g. no more than X% reduced frontline staff or infrastructure investment). Then the cuts will have to come from other areas (back office, executive pay, shareholder dividends).

    Or we could just do the simple thing and re-nationalise.

  • rate this
    +3

    Comment number 139.

    I wonder how many who have commented use the Railways - actually, a record number of people do (highest since the 1920s), fares go up once year - how often does petrol go up - the media just report that one increase every few weeks. Although many European railways are better, everyone complains about their trains. Europe does prove State owned railways don't cost anything like as much though!

 

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