Network Rail is to be reclassified as a central government body, it was revealed this week.
The Office for National Statistics (ONS) has announced a statistical change to its classification of Network Rail as a result of changes in European accounting guidelines.
As a result, Network Rail’s debt of around £30bn is to be reclassified as public sector debt for the purpose of government statistics. These new guidelines and the resulting reclassification come into effect on 1 September 2014.
Network Rail said its reclassification as a central government body was a statistical decision that does not alter the company’s structure as a not-for-dividend company, limited by guarantee, with members rather than shareholders.
“The business acts and operates today as it did yesterday, and its job of delivering a safe, reliable and improving railway for 4M daily users continues,” it added.
Network Rail and the Department for Transport have also published a Memorandum of Understanding (MoU) that outlines how they will ensure the company’s business continues as usual, it said.
The MoU also acknowledges that some small changes will be necessary as the company becomes accountable to Parliament for its finances.
At least initially, the company will continue to raise debt to fund its ongoing investment programme while the longer
term funding options are considered.
Critically, it said as an example, the company will retain commercial freedom to work collaboratively with train operators and suppliers in delivering improvements in the railway under the well established regulatory framework that provides stability of funding through the five year regulatory review process.