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Rail: Electric Current

Plans for a £9.4bn cash injection into the rail industry have been described as the biggest investment in rail since Victorian times - but it comes with a caveat.

Last week prime minister David Cameron proudly unveiled plans for what he describes as the biggest investment in Britain’s railways since Victorian times (News last week). But this cash does not come without a caveat - namely that the rail industry must get considerably more efficient if the network come 2019 is to function as the government expects.

In fact, the rail industry must deliver its next five-year programme of work for £700M less than it had hoped, according to the government’s High Level Output Specification (HLOS) for the railway for 2014 to 2019.

The document sets out how the government wants the rail network to look in 2019, through outputs rather than specific schemes.

But it does provide what it describes as “illustrative schemes” on which it has based its cost calculations and which Network Rail may choose to adopt, or find a cheaper option that allows the desired train service option to operate.

Transport secretary Justine Greening is clear that these infrastructure improvements can - and must - be delivered for the £9.4bn

totted up by the Department for Transport’s bean counters.

£2.4bn drop

This cash is a £2.4bn drop on the £11.8bn being spent on enhancement projects in the current 2009-2014 control period and is £700M less than the £10.1bn asked for by the rail industry in its Initial Industry Plan (IIP), published last Autumn (NCE 6 October 2011).

The HLOS says that this £700M gap can be met by industry achieving the government’s stated ambition to see the rail industry reduce costs by £3.5bn by 2019, as set out in March’s Command Paper (NCE 15 March).

The IIP said that savings between £2.5bn and £3.5bn are achievable, but that the full £3.5bn saving could only be delivered if government suitably reforms train operating companies’ (Tocs) franchises to allow work on the railway to take place in a more cost effective way, with Network Rail and Tocs operating as partners. The IIP was written by Network Rail, train operators and industry suppliers.

But the HLOS statement says that the savings must be achieved regardless. “The total level of funds available is final,” says the HLOS. “It represents the maximum funding available for the industry.

“The secretary of state expects the industry and rail regulator continue to work together to ensure that actual industry costs are below those assumed in the Statement of Funds Available and that the maximum possible level of efficiency improvements are sought.”

“There are some tough targets. We will work alongside industry partners in the Rail Delivery Group to respond with a suitable plan”

David Higgins, Network Rail

Network Rail chief executive David Higgins says he does not “underestimate” the task: “There are some tough targets. We will work alongside industry partners in the Rail Delivery Group to respond with a suitable plan.”
Network Rail says it will make no further comment until it has formalised a business plan to deliver the programme and this is not likely to be until next January.

Industry welcomes the announcement, even if many of the schemes had been widely trailed ahead of the HLOS. “Any news that commits government to spending is good news, even if some of the schemes have been on the drawing board for a number of years,” says Turner & Townsend chief executive Vince Clancy.

WSP UK managing director Paul Dollin adds that the news will at least allow firms to invest in skills. “One of my objectives is getting our best people focused on the best opportunities,” he says. “We welcome the investment to improve the transportation network, which will ultimately support us in achieving this objective.”

Of the £9.4bn cash injection, £5.2bn has previously been committed to ongoing projects including Thameslink, Crossrail and electrification of the Great Western Main Line and other electrification projects in the North West and Yorkshire.

The additional £4.2bn is focused on creating what the government calls an “electric spine” through England and includes the electrification of the Midland Main Line and further targeted electrification alongside this; increased rail capacity for commuters; and over £900M investment in funding for smaller schemes to improve stations and the strategic rail freight network.

This includes £500M to link Heathrow airport to the Great Western Main Line to improve access to the airport from the South West.

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