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Past imperfect, future tense

Rail - With a period review looming, constant pressure to improve efciency and the Cumbria rail crash to deal with, Network Rail chief executive John Armitt has a lot on his mind. Antony Oliver reports.

The rail crash in Cumbria was certainly a major disappointment for Network Rail chief executive John Armitt - an event from which he accepts that the organisation has to learn.

Certainly in the four months before he hands over the reins to Ian Coucher, Armitt will be working hard to nd out just what went wrong at Grayrigg. Why did the last inspection start south of the Lambrigg 2B points? Who did remove the missing stretcher bar and when?

'We now need to understand how the points came to be in this condition. We will leave no stone unturned in our search for the facts behind this derailment, ' said Armitt speaking after the initial Rail Accident Investigation Branch report into the crash.

'Our key priority is to run a safe railway.'

At a higher level he will be determined to find out why, having spent so much time and energy bringing the maintenance regime in-house to ingrain local knowledge and instil consistent accountability, this critical set of points remained unchecked.

And while few in the industry would argue that the crash undermines the progress that has been made to boost safety and maintenance since the 2002 Potters Bar crash, there can be no doubt that this accident will have a bearing on Network Rail's current and projected expenditure.

Hence the importance of the Office of Rail Regulation's (ORR) report to ministers last week. In it we saw the rst marker laid down over the level of funding to be handed to Network Rail in the next regulatory control period (CP4) from 2009 to 2014.

It is already clear that the ORR intends to squeeze more and more value out of every pound spent on the rail network while simultaneously demanding increasing safety vigilance.

'We have assumed that Network Rail can make efciency savings of between 3.8% and 8% per annum during CP4 (without compromising safety or performance), based on Network Rail's assessment of what it can achieve in CP4, ' explains the ORR in response to the initial estimates put forward by Network Rail last summer.

'Network Rail needs to do a signicant amount of work to develop its Strategic Business Plan, ' says the ORR, referring to Network Rail's assessment of two strategies: a 'base-line' cost for a non-degrading railway and a 'base-case' cost to cope with predicted passenger and freight growth.

In particular it wants Network Rail to work harder to justify its asset policies, identifying efficiency improvements and improving its possessions strategy, and cutting the cost of proposed enhancements.

This need is reected in the ORR's estimate of the cost this week. It shows a worstcase scenario of 20% less than Network Rail's predicted spend to keep the rail network operating at a steady state and 30% less than the spending levels of the current regulatory period.

And when it comes to funding for an enhanced railway network capable of meeting predicted demand, the ORR's lower estimate of cost is some 30% less that Network Rail's in England and Wales and 15% less in Scotland.

'In recent years the company has made improvements in managing the network to deliver better performance (including safety) and efficiency, but we consider that there is signicant room for improvement, ' said ORR chief executive Bill Emery.

Armitt does not disagree and is clear that to meet this challenge he must continue to look to and work with his privatesector contractors to reduce costs substantially.

'Costs have got to come down quite some way to meet our targets, ' he says. Armitt has also made clear his desire to see contractors more focused on the challenge and the recent decision to cut the number of framework renewal contractors from six to four highlights this point.

Greater pre-assembly of track components will, he says, cut 50-hour possessions to eight and he will certainlybe putting more and more emphasis - and pressure - on his contractors to adopt innovative processes to help hit his ef ciency targets.

'We want quality and timeliness of delivery, ' Armitt says. 'We want good planning that avoids the Monday morning overrun, which is, for us, extremely embarrassing.

We are not absolutely sure that the contractors feel that embarrassment and pain in the same way we do.' Funding the baseline steady state level is just one part of the total equation. This summer the government's Comprehensive Spending Review will give more detail about what money will be made available for the railway going forward.

Crucially it is the government's High Level Output Strategy (HLOS) that will decide just how many extra passengers and how much extra freight the government wants to see put on the railway.

Once this figure is known Network Rail and the ORR will then thrash out precisely what can be built or enhanced for what amount of money between 2009 and 2014. Armitt already has his list of priorities.

'My most critical projects on the network are Thameslink, Reading station redevelopment and Birmingham New Street station upgrade, ' he says.

'Those are the three big ones.' The ORR is clear that for such enhancements to be affordable and economic 'it is essential for Network Rail to continue to make substantial improvements in efciency, thus reducing the cost of the existing railway while maintaining safety and performance'.

Armitt accepts that it will be a challenge to meet these twin goals, but insists that things are now moving in the right direction.

'We have created a safer and more reliable railway, ' says Armitt, speaking before the Cumbrian accident.

'Next, the rail system will become more and more reliable.

It will become more efficient. I see no reason why that cannot be delivered over then next five years, ' he says. .

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