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Government failed to ensure Network Rail savings, say MPs

MPs yesterday heaped criticism on the Department for Transport for failing to induce substantial savings from Network Rail for this spending period.

At a commons meeting of the Public Accounts Committee to discuss a recent report on the department by public spending watchdog the National Audit Office, committee chairman Margaret Hodge said Network Rail had been let “off the hook” from government efforts to cut the deficit by £80bn over the current spending period.

Highways woes

The committee also tackled the DfT on the impact of spending cuts on highways maintenance. Senior DfT civil servants told MPs that standards would be affected by road maintenance spending cuts, but asserted that the network would not degrade under the plans. Read more here.


Just £250M is expected to be made in savings from Network Rail over the spending period to 2014/2015, which is equivalent to little more than 1% of its budget, said the committee, which was in stark contrast to the efforts of other companies in the government’s supply chain, said the committee. Hodge added that any company could find 3% in savings “without flinching”.

“It just seems outrageous to us given the proportion of your budget which is spent by Network Rail on behalf of the taxpayer and farepayer in any context letting them off the hook when the rest of the world is suffering massive cuts… just doesn’t make sense,” said Hodge.

DfT director general of the Corporate Group for Transport Clare Moriarty, who will soon become its interim permanent secretary, said there was a difficulty, and lack of assurance it would create additional savings, by reopening the regulatory review of the current control period, so the savings were what Network Rail had offered.

Hodge said that the DfT was “hamstrung by [its] inability to bring Network Rail into the landscape when deciding where to [make cuts]”, which was in large part because the firm has such independence from the government while being supported by taxpayers’ money. However, Hodge added that Network Rail chief executive David Higgins was a “very good guy” with a “very good track record”. “If anyone can sort [Network Rail] out he might be able to but it’s shocking that [DfT] didn’t seek proper savings from it,” said Hodge.

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