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
    +2

    Comment number 418.

    401.Rob231231
    I agree, I would love to see managers salaries (and MPs) linked to the average worker payrise. If civil servants get 1% payrise (or 0%) so should MPs. The same for train drivers/engineers and management. But BR/NR pay rises are funded by the taxpayer/commuter who have already seen pay drop by 10%, hardly fair to clobber them evenmore.

  • rate this
    +2

    Comment number 417.

    You cannot even compare Scargill to Crow. Ma Thatcher was fortunate that north sea oil production started rolling in during her time in power. Thats the reason for her taking on the unions.

  • rate this
    0

    Comment number 416.

    Sensibly cost cutting would start at the top and work its way down but as the decisions are made at the top for those at the top we all know what is going to happen - further deterioration of services, even less clarity on responsibility and bigger bonuses for bosses who mess things up.

  • rate this
    -4

    Comment number 415.

    I'm sorry this is slightly off-subject but those criticising Bob Crow for continually living in a council house - why should he or anyone else be forced to give it up just because we now have too many people living in the UK?

    He did not ask for mass, uncontrolled immigration so I do not see why he or anyone else should be giving up their homes, especially as we had no say on immigration.

  • rate this
    0

    Comment number 414.

    I have just come back from Germany. 5 rail journeys, open platforms, one ticket inspection where the inspector told us we had slightly the wrong ticket and could have done better with a different one. UK - I am about to go to London on a day return where my ticket will be checked 6 times! The cost?

  • rate this
    +5

    Comment number 413.

    396.where am I "If Network Rail keeps missing punctuality targets, it faces a fine of up to £75m from the ORR"
    Its a public cmopany, does anyone else find that as stupid an idea as I do? If the company misses a target the taxpayer fines itself and gives it to the taxpayer.
    ==If this was a football team that lost 20 games in a row, the manager would be sacked. Sack the managers! Its an idea!

  • rate this
    +2

    Comment number 412.

    380.Cheddar George
    Is that better or worse than the sky high proces we aleady have under a virtual monopoly as there are no competing providers on lines? At least we'd know the true price of running our railway without shareholders syphoning out our taxes. It's a joke. Either take it back or give it to them fully (with all that entails).

  • rate this
    +2

    Comment number 411.

    404. Edward2010

    "I see unemployment in England has increased by 6000 - ooops!"

    ... but "seasonally adjusted" that'll be a drop!
    Just like the promised improvements as a result of privatisation tend to turn into worse services!

  • rate this
    -3

    Comment number 410.

    378 Roland Butcher - you say we are demonising Crow? So its ok to earn £100k plus and prevent someone deserving getting a council house is it? That's not demonising ,thats fact as Rafa B would say!

    Its a total disgrace that he doesn't give it up, council houses are for needy not 'fat cat' union leaders

  • rate this
    +2

    Comment number 409.

    394.George
    Following discussions with the ORR Network Rail has recently reduced it's Track Access Charges to both TOC's and FOC's. Network Rail cannot increase it's Track Access Charges without the agreement of the ORR.

  • rate this
    -3

    Comment number 408.

    Just been looking at Network Rails Accounts for 2012/13.

    Last year it had debts of over £30 Billion offset by assets of £46 Billion.

    Could it not meet the Target by reducing Assets?

  • rate this
    +1

    Comment number 407.

    Maybe the railways could save some money by firing those blokes who hang around the ticket barriers at Victoria Station all day having a chat and a laugh.

  • rate this
    0

    Comment number 406.

    This will mean a reduction in pay for staff and increase in fares.

    A true privatisation success story, lucky the NHS is not being privatised...oh wait.

  • rate this
    +5

    Comment number 405.

    Rail privatisation has been an unmitigated disaster.

    Re-nationalise.

    Now.

  • rate this
    -1

    Comment number 404.

    I see unemployment in England has increased by 6000 - ooops!

  • rate this
    +3

    Comment number 403.

    388.Rob231231
    "At least Bob knows how to negotiate the best rights for his members and not let them be had over" Of course he does, just the same way Arthur Scargill did.The miners lost their jobs, whole communities were destroyed but good old Arthur lives a life of a millionaire.There are already plans to introduce driverless trains/tubes in London to save money.Train drivers = miners in 10yrs.

  • rate this
    +4

    Comment number 402.

    Why fine 75m as that is a fine on the taxpayer. What have I or you done wrong. That fine should be paid by management of NR.

  • rate this
    +2

    Comment number 401.

    Jason, fair comment, but when you see these massive bonuses being dished out to senior managers, and your menial pay rise has just been rejected, you need someone like him to fight your corner.

  • rate this
    0

    Comment number 400.

    @ Johnboy 99 Atlee Nationalised the railways and he didn't have much choice because the 4 train companies went bust after the second world war

  • rate this
    +2

    Comment number 399.

    Thatcher should never have nationalised BR, what will the Tories nationalise next I wonder?

 

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