06.02.09
Green light for multi-billion pound investment programme as Network Rail accepts regulator's budget
£28.5 billion is to be spent on Britain's rail infrastructure over the next five years as Network Rail today accepted the Office of Rail Regulation's (ORR) rail spending budget for 2009 to 2014.
From 1st April 2009 to 31st March 2014 (control period 4, CP4), Network Rail will invest almost £7.6bn on projects designed to relieve crowding by lengthening platforms and increasing capacity to enable more trains to run. £10.8bn will be invested in renewals - replacing older parts of the network (rail, signalling, bridges) with new.
A further £10bn will be spent on day-to-day maintenance and the costs of operating and running the network over the period.
Iain Coucher, chief executive, said: "The next five years will see unprecedented investment in expanding the network and improving services for passenger and freight users. The task the ORR has set us is a tough one with ambitious savings to be made and further service improvements to deliver, but we are determined to succeed."
The ORR, in its final determination issued in October, set some challenging targets including:
• Delivering £7.6bn worth of rail expansion projects
• Increasing train punctuality to record levels - an average of 92.6% of trains on time over a 12 month period by 2014
• Cutting costs by a further 21% - on top of the 27% savings Network Rail has already achieved since 2004
The nature of the final determination and its challenges, coupled with current market conditions, has meant that Network Rail's plan to raise around £6bn of corporate debt (debt without the support of a Government indemnity) has had to be postponed. The money will still be raised through the bond markets but with the government indemnity attached. The company believes it is still in its best interest to raise totally independent finance and will continue to review the prospects of going to the market in its own right, later in CP4.
Bill Emery, ORR chief executive, said: "I know that Network Rail has looked very carefully at our determination and I am pleased it has accepted it. Network Rail can now work with industry partners to deliver, over the next five years, the required improvements to safety and reliability and continue to expand network capacity for the long-term benefit of passengers and freight customers.
"Network Rail will be making these improvements with less funding than it has received in the current five-year period and the company recognises that it will need to implement new technologies and find better ways of working. We are confident the company, building on its good performance in the current five-year period, will successfully rise to the challenge laid down by our determination.
"We will continue to actively monitor Network Rail, to check that it delivers the improvements required by our determination and that its actions to live within its means are not at the expense of long-term sustainability of the railway infrastructure."
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