DfT allots £48bn for CP6 alongside new major upgrade funding process

Transport secretary Chris Grayling has announced £48bn spending on railways from 2019 to 2024, including more maintenance and a promised increase in renewals.

The figure, quoted in the Statement of Funds Available (SoFA), is £10bn greater than the previous control period and has been greeted with relief from rail interest groups, who have been concerned about uncertainty surrounding ongoing funding.

However, just £35bn of this cash pot will come directly from government, with Grayling expecting the remainder to “be funded by income Network Rail receives from its customers (train operators, both passenger and freight) and its commercial activities”. 

“These amounts will be refined during the regulatory process, which will produce by summer 2018 detailed draft amounts for the 2019 to 2024 period for consultation. Budgets will be set at route level, as part of the devolution of more accountability and authority to Network Rail routes, driving change in the organisation,” added the transport secretary. “The regulatory process will conclude with a final determination in October 2018.”

New investment will also include a completely separate funding process for major upgrades designed to ensure value for money, which will be set out in greater detail later this year. The DfT hopes this new process will provide greater rigour in investment decisions.

The Railway Industry Association (RIA) has met the plans positively, specifically pointing to separation of funding as a key decision.

“We applaud the publication of the SoFA today, which sets out Network Rail’s infrastructure funding arrangements in respect of operations, maintenance and renewals for the five-year funding period beginning on 1 April 2019, known as CP6. An increase of £10bn has to be strongly welcomed,” said Darren Caplan, RIA chief executive. “The commitment to increased funding announced today is recognition of the need to counter the increasing backlog of renewals work.

“This settlement will help Network Rail and its supply chain to maintain the UK’s rail system to the greater benefit of the paying passenger, freight companies, UK PLC, and represents a good deal for the taxpayer.

“On NR’s major projects, or enhancements, we look forward to hearing what the government has to say later in the year.

“The industry is aware that efficiency savings are still required in CP6,” Caplan continued. “Through RIA’s Renewals Cost Working Group, we will continue to work with Network Rail and the Office of Road & Rail regulator, to improve renewals efficiency.

“By developing more collaborative working practices, investing in new technologies and innovations and working more closely with Network Rail and the government, the supply chain is confident it will deliver the maintenance and upgrades to the UK's railway infrastructure required to help meet the growing demand for railways from both passengers and freight.”

Poor renewals volumes towards the end of CP5 had caused widespread fear among rail groups after NR costs soared and productivity reportedly slumped.

However, Grayling previously said the rail network company would not receive any more loans and will meet the obligations it has to its bondholders.

Caplan explained RIA's fears: “To deal with the increased activity in CP6, it now becomes even more important to address the reduction in renewals volumes during the last 18 months of CP5, to March 2019.

“RIA continues to urge the government to bring forward £500m of CP6 funding into CP5 to bridge that gap, increase the level of design ‘Development Work’, and ensure our world-class supply chain can support the UK’s railway both now and in the future.”

Spending money effectively

The funding, which includes £34.7bn supported by direct government grants with the remainder coming from track access charges and other income, such as from property assets, comes on the back of the secretary of state’s controversial comments in the High Level Output Specification (HLOS) in July, where he promised to increase the level of renewals but did not comment on finances for the project.

Following today’s SoFA announcement, the secretary of state wrote to Parliament: “Given the need to spend public money wisely and to incentivise the industry to do so, I believe the funding envelope published today is stretching yet achievable.

“I will continue to push NR to improve its effectiveness and efficiency. In particular I support an ambitious approach to route devolution, so that Network Rail is more focused on its customers. I will also modernise the government’s oversight and assurance arrangements for NR to properly reflect its public sector status.

“I have taken steps to ensure that this money is spent more effectively and that the problems with cost and delivery which occurred during CP5 are not repeated. I will also continue to drive improvement across the wider industry, including the franchising system.”

Other rail organisations have also responded to the statement, most pointing to the additional upgrade funding as a positive direction for the industry.

Anthony Smith, chief executive of independent watchdog Transport Focus, said: “Passengers will welcome this ongoing high level of railway investment. Further investment through future major projects and franchises will boost the spending pot even more.

“We’re pleased to see that government is listening to what passengers want – better day-to-day reliability – and making that the main focus. Passengers tell us they want more reliable trains, a better chance of getting a seat or at least standing in comfort, and less delays. This investment will help underpin these improvements.

“The proof of the value of this spend will be when passengers start to see more reliable services and better value for money. Passengers now pump around £9bn a year into the industry. In return they should expect the basic promises made by the industry to be kept.”

'A vote of confidence'

Network Rail boss Mark Carne, who wrote for the latest edition of RTM about his ambition of acting like a business, said the increased funds would allow millions of passengers to “experience significant improvements to their services” over the next 12-18 months.

Meanwhile, Paul Plummer, chief executive of the Rail Delivery Group, commented: “Sufficient funding of today's railway is essential to sustaining its reliability and safety so we welcome this important milestone. This decision recognises the importance of our railway to the economy and to the communities and customers it serves and it represents an important vote of confidence in the industry's ability to deliver while providing greater certainty for jobs and investment in the supply chain.

“By working together, freight and train companies, Network Rail’s routes, and their supply chains will ensure that every pound is well spent to deliver real improvements to customers, communities and the country.

“We will continue to work with government to make compelling cases for further funding to enhance the network so that it can meet increasing levels of passenger and freight demand and deliver for Britain.”

The news comes just days after a report from the Urban Transport Group labelled rail investment as “high value for money”, citing transformative improvements in surrounding areas and a potential increase in jobs and housing.

Top image: David Mirzoeff, PA Wire

Have you got a story to tell? Would you like to become an RTM columnist? If so, click here.


Jerry Alderson   13/10/2017 at 13:49

I'm pleased to see that this announcement refers to *spending* rather than *investment*. All of this spending essentially preserves the state of the railway that we have today and does the day job (OMR). Any investment that is provided will improve the railway. Many government ministers and even senior people in the rail industry, especially at Network Rail, have in the past failed to understand the two terms, and have described every penny that NR spends as "investment".

Add your comment


rail technology magazine tv

more videos >

latest rail news

Workers who narrowly avoided death had no one in charge and ‘ineffective’ safety arrangements

18/12/2018Workers who narrowly avoided death had no one in charge and ‘ineffective’ safety arrangements

“Ineffective” safety arrangements and a number of unofficial working practices contributed to a group of track workers narrowly avoid... more >
Structural steelwork begins on Glasgow Queen Street transformation

18/12/2018Structural steelwork begins on Glasgow Queen Street transformation

The transformation of Glasgow Queen Street has been revealed as engineers have finished the installation of the west truss and have begun buildin... more >
Rival operators to run on same rail routes in bid to drive up competition

18/12/2018Rival operators to run on same rail routes in bid to drive up competition

Passengers will have the choice of choosing which train operators they travel with under new plans to allow rival TOCs to operate on the same rou... more >

editor's comment

23/01/2018Out with the old...

Despite a few disappointing policy announcements, especially for the electrification aficionados amongst us, 2017 was, like Darren Caplan writes on page 20, a year generally marked by positive news for the rail industry. We polished off the iconic Ordsall Chord (p32), hit some solid milestones on Thameslink (p40), progressed on ambitious rolling stock orders (p16), and finally started moving forward on HS2 (p14) ‒ paving the way for a New Ye... read more >

last word

Encouraging youngsters to be safe on the railway

Encouraging youngsters to be safe on the railway

This summer, Arriva Group's CrossCountry and the Scout Association joined to launch a new partnership to promote rail safety among young people. Chris Leech MBE, business community manager at the... more > more last word articles >

'the sleepers' daily blog

Spotlight on Coventry Very Light Rail

27/11/2018Spotlight on Coventry Very Light Rail

Olivia Brown, business development officer at Warwick Manufacturing Group (WMG), an academic department of the University of Warwick, outlines the four exciting projects currently taking place as part of the Coventry Very Light Rail (VLR)  programme. In RTM’s June/July issue, readers were introduced to the concept of VLR and th... more >
read more blog posts from 'the sleeper' >


Passenger safety: Respect the edge

27/11/2018Passenger safety: Respect the edge

Claire Coward, communications lead at the RSSB, discusses her organisation’s latest passenger safety campaign. Incidents at the platfo... more >
Night Tube: The twilight economy

27/11/2018Night Tube: The twilight economy

Dr David Lutton, executive director of economy and tax at London First, argues that the capital’s night-time economy is just starting its j... more >
Monitoring the performance of earthworks

27/11/2018Monitoring the performance of earthworks

Dr Joel Smethurst, associate professor in geotechnical engineering, and Professor William Powrie, professor of geotechnical engineering, both of ... more >
Introducing iPort

20/11/2018Introducing iPort

Steve Freeman, managing director of iPort Rail, introduces the UK’s newest inland freight terminal. The UK’s newest inland rail ... more >

rail industry focus

View all News


HS2 train race: making the case

20/11/2018HS2 train race: making the case

Bombardier and Hitachi’s commitment to providing the best HS2 rolling stock pitch to the government was signified with the launch of their ... more >