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Network Rail failed to deliver required efficiency savings for CP4

Network Rail has failed to deliver the 23.5% of efficiency savings in CP4 that were required, confirms a new efficiency and financial assessment from the Office of Rail Regulation (ORR).

The report from the regulator, released today, shows that Network Rail only achieved 15.5% efficiency savings, eight percentage points under its requirement.

The shortfall means Network Rail now faces a greater challenge to deliver the further 19.4% efficiency savings on operations, maintenance and renewals that the company has been funded to deliver by 2019 for CP5.

The lower efficiency savings was mainly due to additional costs incurred on work towards the end of the control period to improve train punctuality and reliability. The company also paid £500m to train operators for failing performance targets.

Network Rail is also criticised in the report for failing to be “sufficiently transparent” in its financial reporting. Although it has improved during the past five years it is “still not satisfactory”, the ORR said.

As part of its savings the track and infrastructure owner and operator reduced the number of maintenance staff by 12% (2,169) to 15,813 in 2013-14 compared with 2009-10. The ORR noted that engineering firm Arup had produced a report on Network Rail that raised concerns about the effect of this on the upkeep of the network.

While trying to make this next set of efficiency savings Network Rail has also been told it needs to improve services and achieve a target of 90% of trains in London and the south east running on time. The ORR are also planning tougher targets for cancellations and delays on long distance routes, as well as higher standards of infrastructure management and improved worker and passenger safety.

Mark Carne, chief executive of Network Rail, said: “While we are disappointed to have missed our regulatory target, many of the foundations to continue our drive for greater efficiency in the years ahead are now in place, as we strive to reduce costs further.”

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