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Media briefing from Campaign for Better Transport: Network Rail, what next?

9 November 2015

Rapidly increasing passenger numbers and ageing infrastructure have created a £35bn programme of improvement works on our railways, but recently delays and cost overruns have led to a number of these projects being suspended.  

The body responsible - Network Rail – is currently the subject of three reviews into its future operations. Collectively these will recommend which rail improvements schemes should go ahead, how they will be prioritised and paid for, and the future of Network Rail itself. With the Shaw Review Interim Report due for publication this Wednesday (11 November), this briefing explains the state of play.

Background

Network Rail is responsible for the management of the country's rail network including 10,000 miles of track and 2,500 stations. Rapidly increasing passenger numbers and ageing infrastructure has combined to create a large programme of planned improvement works. Since 1996, these have been set out in five-year ‘Control Periods’.

The current Control Period (2014-19) was heralded by the Government as the biggest investment in the railways since Victorian times. In contains a £35bn programme of improvements including a number of ambitious electrification and signalling projects. 

From 2002-14, Network Rail was structured to allow it to borrow money. In September 2014, with debts around £34bn, Network Rail was moved onto the Government balance sheet with the Secretary of State responsible for its spending.

On 12 June, Network Rail's regulator, the Office of the Rail Regulator (ORR), issued a highly critical report highlighting that many projects were well-behind schedule. On 25 June the Department for Transport (DfT) acted, 'pausing' a large number of projects (this included two major electrification schemes - Midland mainline from Sheffield to London TransPennine Express between Manchester, Leeds and York – which were subsequently ‘unpaused’ on 30 September following extensive public campaigning). Secretary of State, Patrick McLoughlin announced there would be no additional funding for the current Control Period and that three inquiries would be undertaken into Network Rail's future.

The three reviews:

  1. Hendy review - Sir Peter Hendy was appointed chair of Network Rail on June 25, moving from Transport for London. His review looks at progress with the Control Period objectives and will set out the projects to be taken forward immediately, postponed until the next Control Period (2019-24) or abandoned altogether.
  2. Bowe review - Colette Bowe, also chair of the Banking Standards Review Council, is undertaking a review of how the Control Period process works. Her report is due to be released this autumn, potentially alongside the Hendy Review.
  3. Shaw review - Nicola Shaw, chief executive of HS1, is looking at how Network Rail should be funded in future. This will build on changes already announced with public money directed through the Train Operating Companies, so that Network Rail is, in effect, contracted by them receiving more in track access charges.

 

Contentious points

Northern Powercut

The publication of the Hendy review is likely to be met with accusations of a southern bias in spending with the Chancellor's 'northern powerhouse' little more than pre-election window dressing. The priority given to Great Western electrification will be compared to the delays and possible shelving of Midland Mainline and TransPennine electrification schemes. More fuel to the fire may come from support planned for Crossrail 2 (an estimated £27bn). Government will hope to counter criticism with the announcement of new franchises for Northern and TransPennine Express, which are likely to include better services and new trains. This is due by the end of the year.

Just as important will be the fate of a large number of smaller improvements. Train operators have identified schemes to fill in gaps in the network (for example, short stretches of electrification to link existing electrified routes), support planned development, improve local journey times and increase capacity and resilience. Offering high value for money, these smaller schemes could be postponed en masse to ensure maximum attention is given to larger priority projects.

Future oversight

Network Rail has been criticised for an inability to deliver the programme of works it had agreed to. It is important, however, to highlight the role both DfT and the ORR had in signing off an apparently unachievable plan.

While Government-set Control Periods are likely to be retained, more scrutiny of progress with projects is needed. This could be achieved through a strengthened ORR or a team within DfT able to plan and manage the whole railway, dealing directly with Network Rail and train operators to meet Control Period objectives.

Re-privatisation of the tracks?

Network Rail represents a renationalisation of stations and track after their initial privatisation as Railtrack in 1994. Some have suggested Network Rail's current travails may open the door to re-privatisation. Any enthusiasm for this will be tempered by Railtrack's toxic legacy, characterised as prioritising profit over passenger satisfaction and safety, and the outsourcing of technical skills needed to run the railways.

Given their experience in the rail industry, it is highly unlikely that either Hendy or Shaw would recommend the recreation of an organisation similar Railtrack. There are, however, plans to increase Network Rail's income generation. This will be through efforts to increase retail income, with stations having more shops and building high density housing around railway stations, a move likely to benefit sustainable transport.

Devolution

Decentralisation is a strong theme of the current Government. Regionalising more of Network Rail's planning and decision making would address criticisms that the industry exists in a bubble and help integrate rail investment with strategic land-use planning on housing, jobs and other public transport. Such an approach would address concerns about fragmentation of the railways, where those maintaining the tracks have little stake in passenger satisfaction, as exemplified by the 2014 Christmas fiasco Kings Cross and Finsbury Park.

With a Comprehensive Spending Review under way, some have raised concerns that devolution could be used by central Government to duck responsibility for cuts to services resulting from severe and ongoing cuts to public expenditure.

Conclusion

Britain's railways are a success story but changes are needed:

  • Central Government should maintain high levels of investment in future Control Periods to update infrastructure and to support economies across the country
  • Network Rail must improve its internal planning and capacity to ensure the projects are delivered on time and to budget
  • More integrated oversight is needed with a single body able to plan and manage the railway, dealing directly with Network Rail and train operators
  • More devolved decision making is needed to link rail with strategic land-use planning and the needs of passengers.

ENDS

Spokespeople are available for interview. For further information please contact Alice Ridley on 020 7566 6495 / 07984 773 468 or alice.ridley@bettertransport.org.uk

Notes to Editors

  1. Network Rail is the central government body which owns and manages the country's rail network including 10,000 miles of track and 2,500 stations. Its work is managed through five year Control Periods agreed with government and regulated by the Office of Road and Rail (ORR).
  2. Campaign for Better Transport is the UK's leading authority on sustainable transport. We champion transport solutions that improve people's lives and reduce environmental damage. Our campaigns push innovative, practical policies at local and national levels. Campaign for Better Transport Charitable Trust is a registered charity (1101929).