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24.02.16

DfT not ruling out any options for Network Rail in Shaw report

The Department for Transport has admitted that it is not ruling out any potential recommendations HS1 boss Nicola Shaw could make in her upcoming report into the future of Network Rail.

Answering a Parliamentary question from Lord Berkeley, who sits on RTM’s editorial board, transport minister Lord Ahmad of Wimbledon said Shaw’s work will look at all the possible options – which the interim report has already revealed could be anything from full privatisation to continued public sector ownership.

And he admitted: “Government has no pre-determined view of the right outcome and will not be dogmatic about the future shape of Network Rail as we want the right outcome for passengers and taxpayers.

“Government looks forward to receiving the final report and will respond in due course.”

The report, which could lead to the biggest shake-up of Network Rail in over a decade, is expected to be published in March.

But the head of the Shaw Report team, Emil Levendoğlu, is to give an early update on the report in the beginning of March at a conference centred on the next steps of the rail network in England.

It is still unclear what the report’s headline recommendations will be, but it is unlikely that Shaw will endorse keeping Network Rail entirely under public control.

Just this week, for example, Network Rail admitted that it hired bankers from Citigroup to look into the potential of selling off all or parts of its major stations to plug its debt, set to hit £50bn by the end of the decade.

Major leaders in the rail industry have also pointed towards foreign investment and private cash as fundamental sources of funding going forward.

Northern Rail boss Alex Hynes recently told RTM that Network Rail will not be able to get by with its £38.5bn budget for CP5 unless it leverages in private sector money, while National Infrastructure Commission chief Lord Adonis said looking at wider sources of funding will be “quite important” for bigger projects.

Comments

Lutz   25/02/2016 at 00:13

It looks like there will further break-out of existing NR functions; my thoughts are the major projects. They do not fit well with the structure and mechanisms built-up around the five-year Control Periods, and they demand skills that NR really does not have, nor should probably aspire to retain. However, any break-up of NR is probably not what we want to be most concerned about. The big issue is the financing of major projects going forward. Most of the low hanging fruit of relatively cheap fixes for quick wins has been done. The projects are going to be sharply more expensive as the scale and complexity of future projects increases. What's more, the number of big projects need to just keep up with projected demand is going to increase when the capacity of all those suburban lines in London become saturated.

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