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Government threatens to claw back Crossrail funds from Network Rail

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Ministers have warned that Crossrail funds earmarked for Network Rail projects could be reallocated to other parts of the government’s transport budget.

The Department for Transport has stated that it could reclaim £300M from Network Rail after it emerged that the track operator had failed to account for the cash in the spending application for its Control Period 6 investment programme. 

The controversial approach is in an official government response to the Office of Rail and Road’s draft determination for Network Rail’s Control Period 6 spending and delivery plans.

Published in June, the draft determination outlined how an extra £1bn could be made available to Network Rail in the five years to 2024. As well as efficiency savings, and the sale of property assets, this would come from diverting money from research and development and using up to £300M from allowing Crossrail to use Network Rail tracks.

The Crossrail charge was left out of Network Rail’s initial Strategic Business Plan with a Network Rail spokesperson saying “it was an oversight” while a spokesperson for ORR said that it had ”simply been forgotten”. 

But now the government has said that it would have reduced its grant to Network Rail had it been aware of the extra Crossrail cash. 

It added: “The final determination should recognise that the government may have a legitimate need to reallocate this funding from Network Rail to other areas of transport spending.

“While we have not formalised this requirement at this time, it is highly likely that we will do so. Accordingly, Network Rail should programme on the basis of this funding being used for contingent renewals, which could be cancelled readily and with few consequences.”

The DfT has also called for increased research spending at the rail body, a move which could further chip away at funds available for capital projects. 

Its consultation response said: “We would encourage the ORR to consider allowing Network Rail a slightly larger allocation than the £100M proposed in the draft determination, provided the company is able to present a better evidenced and supported business case for this spending.”

The regulator said in June that it did not consider that Network Rail research and development governance arrangements for the five years to April 2024 were likely to be effective. Recommendations for improvements in this area included clear processes for evaluating spending and high levels of public transparency.

Network Rail said it would be submitting its own response to the consultation, which closes next week.

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