Network Rail told to save £2bn in efficiency drive

The rail regulator has called on Network Rail to increase efficiency, cut its spending by around £2 billion a year and to suspend modernisation work on the West Coast Mainline in its interim report published today.

In his third consultation document – 'The interim review of track access charges: Third consultation paper' – published today, Rail Regulator Tom Winsor highlighted maintenance and work delivery as areas which could see the most potential savings.

The report also invited Network Rail to suspend work and "evaluate options" for improving the efficiency of the West Coast route modernisation project.

Mr Winsor said: “The document that I am publishing today identifies a series of areas where I believe that Network Rail should be spending significantly less money over the next five years than the company has set out in its latest business plan."

“My analysis suggests that Network Rail’s management should be able to achieve more than their latest plan suggests to address the inefficiencies introduced into the business before and during the period that its predecessor, Railtrack, spent in administration," he said.

"A key issue for the coming months, as flagged up in my consultation document, is the need to identify the pace at which improvements can be delivered."

Network Rail Chairman, Ian McAllister, said the not-for-profit company was in agreement with the regulator over the need to deliver "better efficiency from our business".

He added: "Since the publication of our Business Plan in March we have announced plans to deliver annual efficiencies of 20% by 2006/07, with a further 10% over the following three years."

Rail & Maritime Trade union general secretary Bob Crow said that the announcement was "sad news indeed".

"It is barely a few weeks since Alistair Darling pointed out that £9 billion was being spent on improving the West Coast Mainline - now we're told it's to be put on the back-burner again," he said.

"It would be mad to see millions 'saved' by suspending vital work only to see the cash paid out in compensation to Virgin again.

"The Rail Regulator's job is to deliver a better rail network - seeking to lop a third off the budget is a rum way of going about doing it," he added.

Network Rail owns and maintains the tracks, signals, tunnels, bridges, viaducts, level crossings and stations of Britain’s railway.

The regulator's interim review began in November 2002 and is due to complete in December 2003, with any revision of access charges found necessary coming into effect from April 2004.

(GMcG)