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ORR confirm £14M fine for Network Rail New Year overruns

The Office of Rail Regulation (ORR) today confirmed that Network Rail will be fined a penalty of £14M for severe overruns at Liverpool Street, Rugby and Shields Junction over the New Year.

The ORR say the penalty has been confirmed because systemic weaknesses were found in Network Rail's planning and execution of engineering work, which represent a serious continuing breach of its licence, exposed in ORR's investigation into the New Year overruns.

ORR Chief Executive Bill Emery said: "The Board considered the representations very carefully. We remain convinced that the systemic weaknesses we have found in Network Rail's approach to the planning and execution of its engineering work are a serious and continuing breach of its licence meriting a financial penalty.

"We consider that to accept Network Rail's proposal to mitigate the fine in its entirety would reduce the effectiveness of the incentive that penalties place on the company to secure compliance with its licence. We are therefore confirming the penalty of £14M," he said.

The ORR also said that Network Rail had petitioned them, saying problems were not systemic, and the proposed penalty was unnecessary and excessive.

Network Rail also proposed to commit the £14M on a series of improvements if ORR mitigated fully the proposed penalty. Passenger Focus, train operators and others, supported Network Rail's proposed alternative to a fine.

Passenger Focus chief executive Anthony Smith said: "Passengers will be extremely disappointed that the Office of Rail Regulation and Network Rail could not come to a sensible comprise.

"Passenger Focus brokered a package of passenger improvements, mainly focused on boosting the quality of passenger information, which would have meant some benefit reached passengers from this regulatory action.

"Now £14M of extra investment has been lost to passengers. Instead of a sensible discussion the posturing by the Office of Rail Regulation and Network Rail has resulted in the Treasury benefiting not passengers. This is not the joined up railway and thinking that passengers expect and deserve," he said.

Network Rail must now outline how it will make changes to its structure by 30 June, and implement these changes by 31 December 2008.

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