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Network Rail fined £53m for performance shortfalls

Network Rail has been fined a record £53.1m by the Office of Rail Regulation (ORR) for “shortfalls in performance” during CP4. 

The fine comes after ORR investigations into the company’s operational performance revealed that it failed to achieve funded targets, especially with regards to punctuality. 

During CP4, Network Rail committed to deliver average punctuality levels of 92% in the sector in 2013-14 and was funded to do so. But the company fell significantly short of this target, delivering just 86.9%. 

Additionally, it did not deliver all of its plans to improve performance and, particularly in the early years of the funding period, had insufficient knowledge of the condition of its key assets, such as earthworks, electrical equipment and drainage. 

Punctuality for London and the South East (LSE) passenger services was funded to achieve average punctuality levels of 93% in 2013-14. The company achieved punctuality levels of 89.6%. As a result of missing its funded obligations, the company has committed £25m in extra funds to improve the resilience of the rail network in LSE. 

Overall, for long distance services, ORR concluded that there were approximately 73,100 additional late trains over and above funded obligations between 2009 and 2014. For LSE, there were approximately 265,500 additional late trains over and above funded obligations in CP4. 

The government added that some of the fine would go towards improving Wi-Fi, with trackside equipment being put in place by Network Rail over the next three to four years to provide a faster service. Costing around £90m, the service is expected to be free for passengers and should increase broadband speeds by 10 times. 

ORR chief executive Richard Price said: “Punctuality is important to passengers. Network Rail committed to improve train punctuality between 2009 and 2014, and was funded to do so. But it did not deliver its commitments for passengers who travel on long distance and LSE services. 

“Network Rail fell significantly short of punctuality for long distance services, so it is right that money is returned to funders. The company will be undertaking extensive maintenance and renewal work to improve punctuality on long distance services between 2014 and 2019. It has committed extra funds to improve the resilience of the rail network in LSE for better reliability of services in the future.” 

However, the regulator did praise Network Rail for successfully modernising and improving Britain's railways over the past five years, during a period which has seen record rise in passenger numbers. 

It was highlighted that the company delivered a major rail enhancement programme largely on time and budget, bringing real benefits to passengers. Across 118 projects, 98 were delivered early or on time, with only one delayed in a way which had a notable impact on customers.  The company has also electrified railways in the North West of England to bring more reliable services to the region. 

Network Rail has also made significant investment in Britain's freight network through projects to improve capacity and reliability of freight services. This included schemes to enable the running of longer trains and the introduction of new routes on the East Coast corridor. And it has helped to improve safety at levels crossings, as more than 800 crossings across Britain have been upgraded or closed. 

Mark Carne, who joined as Network Rail chief executive in February, said: “We accept that we have fallen short of the regulatory targets for train punctuality and that this is, in part, down to our failure to reduce infrastructure faults quickly enough. At the same time, the sharp increase in passenger demand has led us to run more trains at peak times, even when we know this will lead to a more congested railway and that punctuality may suffer. 

“Passengers do want trains to run on time, but for many of them the more pressing priority is increased services with less crowding. The trade-off between congestion and punctuality is something we face every day. 

“The industry is now benefitting from significant funding but there remain challenges following many decades of underinvestment. Getting train reliability back on track is a key priority for us over the next three years in particular and we have good plans to improve the underlying reliability of our assets alongside significant investment to increase capacity and relieve congestion. 

“I am confident that by the end of this control period we will meet and indeed exceed the regulatory performance targets.” 

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