THE Office of Rail Regulation and Network Rail look set to be heading for a major clash over how much money should be invested in Britain’s rail network in the next five years.

Announcing its ‘draft determinations’ for Network Rail’s business plan and the charges it will make to train operators from April 2009 until March 2014, the ORR said it was setting “a challenging and achievable target for Network Rail to reduce operating, maintenance and renewals costs by 21 per cent by 2014.”

The Regulator reckoned that Network Rail would need £26.5bn over the five-years “t0 deliver significant improvement in reliability, capacity and safety.” 

But this is almost £3 billion less than Network Rail had planned for — and it prompted a sharp response from chief executive Iain Coucher who warned that the ORR’s proposed settlement “puts at risk much need improvements for passengers and freight users.”

He said: “On the face of it, the proposed funding settlement is insufficient. I am extremely concerned that the funding settlement outlined today will put our plans to meet rising demand at risk.

“In the coming months, Network Rail will use everything in its power to secure the funding necessary to build a bigger and better railway. Passengers and freight users would expect nothing less.”

But the ORR said that it had “collected strong evidence that there is significant potential for Network Rail to improve its efficiency by more than the company proposes.

“ORR expects Network Rail to reduce its operating, maintenance and renewals costs by 21 per cent during 2009-14, compared with the 13 per cent
improvement the company has proposed.”

Bill Emery, ORR chief executive, said: “Our draft determinations are the result of three years hard work across the industry. We have carefully reviewed Network Rail’s plans, and produced determinations that are challenging and achievable.”

He added: “The scale and pace of change will require Network Rail to strengthen its capabilities, look to introduce new technologies and ways of working, and develop more effective partnerships with its direct customers and suppliers.”

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