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 638.

    Cut £2billion but do not affect safety!! Which planet do these people live on?Network Rail is a mess of private money and state-funding, all with chinless rich-boyOsbourne breathing down its neck with his austerity"hobby".
    Another sector of our Society and life that is being attacked and eroded by a ruthless Tory-led Govt which has no ideas about how ordinary people live!!
    Roll on 2015 Election

  • rate this
    -1

    Comment number 637.

    628 Anmemi Some of us remember the disaster of British Rail and people actually placed bets on when trains would arrive as even staff didn't know. And that is when they weren't on strike which was common. Punctuality today is far higher than back in the public owned days, it's not perfect but far better.

  • rate this
    -1

    Comment number 636.

    457 dibbler88 The reason the trains are overcrowded is because they won't extend train platforms. Train companies want to put on longer trains, but are told they cannot do this. So you continue to be packed into trains like sardines and platforms remain the same length.

  • rate this
    +1

    Comment number 635.

    East Coast train line recently told me that they actively increase their ticket prices to meet demand! As such, I know try to use every method other than trains to travel. Still can't understand how there is such a monopoly of British Rail. I went to Japan - took the bullet train: extremely affordable and incredibly cheap; comfortable too! How come Britain is so far off this?

  • rate this
    +2

    Comment number 634.

    I've seen it from the inside. The worst is subsidies to buy gold plated off shore massive bundles of kit to exclude starving local suppliers. The rest is all the usual suspects: Cronyism, tribalism, exploitation of red tape, standards, inspections (except where it really counts); and it's all confidential, NDAs; no whistleblowers guaranteed. Can I get a job with the rail regulator?

  • rate this
    0

    Comment number 633.

    Where do they expect these savings to come from? A second rate rail service, robbing passengers, outdated practices and procedures led by individuals who lack the know how or even common sense to provide an efficient, cost effective service. Not too happy with the next suggestion, but nationalise the service and include no strike action in the agreement.

  • rate this
    +1

    Comment number 632.

    perhaps we are taking the wrong approach,maybe we should invest heavily on a long lasting network rather than cutting off the money and makeing low cost temorary repairs and soloutions.

    long term fix over short term = less money in the long run

  • rate this
    +2

    Comment number 631.

    They'll cut the £2 billion...pass it on the the train companies who will pass it onto the passengers..."its magic".

    Rail, like "green" power and soon to be Royal Mail will soon or already are well on the way to be a luxury for the majority of people in this country. Only the well off or desperate with no choice will use them.

  • rate this
    +1

    Comment number 630.

    Passenger Focus says people want "more trains, longer trains, more seats"
    Some of us would just like a station, to replace the one that was demolished by Dr Beeching in 1966. Nothing fancy, a slab of concrete with a shelter on it will do. At least then we can actually board one of the trains that currently thunder through our town every 30 mins, instead of having to drive 15 miles or catch a bus.

  • rate this
    -1

    Comment number 629.

    A lot of stick for Network Rail but the train operating companies are the real villians here. They fleece the government every day yet will drop a franchise to save money, only to return later for more profits. Consider this next time you miss your connection by a few minutes or even seconds...why was it not held? Performance is more important than passengers, that is why.

  • rate this
    -1

    Comment number 628.

    Isn't this another example of the complete failure of Thatcher's obscene rush to privatise everything that was the owned by us. Lets not forget the debacle that was Railtrak. This and all the wasted by the current Tory regime belies the myth held by their supporters that they are to be trusted with the economy.
    Agree with others on here that they smokescreen their record by rubbishing everything.

  • rate this
    +2

    Comment number 627.

    So Bob Crow's reaction is to threaten to go on strike. So immature, so puerile, so 1970s, waaaaahhh!!!! They're cuttting my pocket money and the jobs for the boys so I'm throwing my toys out the pram!!!! Look at me!!! WAAAAAHHHHHH!!!!!!!

  • rate this
    +4

    Comment number 626.

    I lived next to a railway near Bristol, lined with trees. Network Rail cut them all down. Then it rained hard, and the embankments collapsed onto the track. They spent 6 months, and considerable taxpayers money, trying to rectify the problem they'd created. Did they learn from this?
    No, they just did exactly the same further along the line.
    About time this obscene gravy train hit the buffers.

  • rate this
    +3

    Comment number 625.

    Trains are great for moving huge numbers of people or goods but suffer from a lack of flexibility.
    I use the train for some longer journeys as it is cheaper, advance fares only, than the cost of diesel travelling alone.
    Sadly the concept of rail travel is a Victorian idea as then it was the only way of moving overland efficiently. Today though the motor vehicle has flexibility and is cheaper.

  • rate this
    0

    Comment number 624.

    @622 Saying that rail technology isn't rocket science because it has been around for 200 years is like saying that medicine must be simple because it's been around for over 2000 years. In fact, rail technology pushes the boundaries of science.

  • rate this
    +1

    Comment number 623.

    This another government project being used to distract voters from the real issues like lower incomes,bedroom tax and agenda 21.

  • rate this
    +3

    Comment number 622.

    @60..BFG.....a railway track is comprised of 2 steel rails, laid parallel to each other upon a bed of stone ballast. A technology 200 years old and nowhere near rocket science. Same goes for the overhead electrics. The only justification for that to require "vast sums of money" would be to 'cost in' vast sums of profit for the fat cats in this layer cake of "consultants".

  • rate this
    0

    Comment number 621.

    The fact is, the railways are more popular than ever.

    The rail operators don't wish to lower prices or improve service because that means more customers - customers they do not want.

  • rate this
    +4

    Comment number 620.

    Only in the UK could we have a privitised industry, heavily subsidised by the British taxpayers.

    We must be mugs!!

  • rate this
    +2

    Comment number 619.

    I haven't traveled by train for ages, I wonder why!

 

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