20.07.17
ORR: Network Rail 5% less efficient than three years ago
The Office of Rail and Road (ORR) has today stated that there has been a significant decline in efficiency from Network Rail during CP5, as the infrastructure owner is carrying out its work 5% less efficiently than it did three years ago.
In its annual report on Network Rail’s performance, the regulator revealed that while a safe railway was delivered, and the overall reliability of assets improved over the year, there was work to do in a number of other areas.
It also comes as transport secretary Chris Grayling said that Network Rail had “fallen short” of his expectations on improving its own efficiency in recent years. The Railway Industry Association also warned that the future of rail renewals work was in doubt after the infrastructure owners had experienced a poor CP5 for renewals.
The ORR noted that Network Rail has delivered good safety management in 2016-17, in some cases reaching a higher level than predicted at the start of CP5. However, rate of improvement has slowed and the regulator “needs to see that the company has the building blocks in place” to continue to deliver improved safety performance in the future.
“There has been no further improvement in Network Rail’s management maturity as measured by the RM3 maturity model,” it added. “We have seen a plateauing in performance indicators on asset condition (for example on track geometry) and in the course of our inspections, we continued to find instances where Network Rail staff did not comply with the company’s rules, procedures and engineering standards.”
Train performance also declined considerably during the year, with only 87.4% of trains in England and Wales arriving on time compared to 88.9% the previous year. The regulator attributed a high proportion of these delays to Network Rail, including in the south east, although the report stated that it accepted that the infrastructure owner now had good processes in place to deliver improvement plans which it had set out.
There were gaps identified in reaching milestones for projects. It was noted that Network Rail delivered 13 of the 19 GRIP Stage 6/EIS milestones it planned to deliver since the March 2016 enhancements delivery plan was published. In the second half of the year, this includes the completion of works originally planned for CP4 on the Midland Main Line to improve journey times between Sheffield and St. Pancras.
ORR added that these difficulties came against the backdrop of considerable financial pressure, as the organisation’s borrowing facility left “little room” to protect against unforeseen circumstances.
The regulator also said it was changing its approach to monitoring and regulating Network Rail, and will more closely scrutinise leading indicators of efficiency such as quality of delivery and how renewal plans are being progressed.
“Network Rail’s performance over 2016-17 has been mixed,” said Joanna Whittington, the ORR’s chief executive. “The railway continued to be safe and the reliability of some assets has increased. However, these benefits have been overshadowed by continued inefficiency and poor train performance.
“We’re changing the way we regulate Network Rail to sharpen its focus on efficiency and performance.
“Network Rail must do its part and press on with its transformation programme, demonstrating that this will start to address inefficiency and meet performance expectations of passengers and freight customers now and into the spending period starting in 2019.”
The ORR added that it was taking further action to support the planning process by Network Rail, including setting out its view and consulting on the causes of the company’s inefficiency, as well as commissioning a study by an independent consultant into the infrastructure owner’s progress.
“Network Rail still needs to address the problems arising from cost escalation and delays across both renewals and enhancements projects. There is continuing underperformance in these key areas of the business,” it stated.
The company’s efficiency in 2016-17 for the core business was -5% for the control period to date, the regulator noted, and its forecast efficiency for the whole of CP5 is -1.5%. However, this is significantly below the ORR’s PR13 assumption of a 13.7% improvement by the end of the third year and a 19.4% improvement by the end of the fifth year of CP5.
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