Rail costs study to report early

15 Jun 10
An independent review charged with improving value for money in the rail industry is to report its initial findings early

By Vivienne Russell

15 June 2010

An independent review charged with improving value for money in the rail industry is to report its initial findings early.

Transport Secretary Philip Hammond today said he wanted Sir Roy McNulty’s team to speed up its work so that its preliminary findings could be reported in time to inform the autumn Spending Review.

An early scoping study for the review, also published today, revealed that the overall costs of running Britain’s railways had risen but income from users had not kept pace, resulting in increased reliance on the taxpayer.

The study cites international benchmarking exercises carried out by the Office of Rail Regulation. These have suggested that Network Rail, which owns and operates Britain's rail infrastructure, is 30%–50% less efficient in terms of maintenance and renewals spending than comparable European railways.

Civil engineering costs were typically up to twice those elsewhere  in Europe, the study found. In countries such as Germany and Sweden, franchising of trains had reportedly reduced costs by between 20% and 40%, but train operating costs in Britain had remained above their 1996/97 levels.

It concluded that the way forward must not be just to focus on cutting costs, but to identify ways in which the rail industry could work more innovatively and begin to do things differently.

Hammond said: ‘Better value for money is the only way we are going to protect train services and avoid very high rises in train fares.’

Bill Emery, chief executive of the ORR, added: ‘In recent years there has been significant growth of passenger and freight traffic on the railway, while performance has improved considerably. However, the current cost of running the railway is too high, and the burden on the taxpayer too great.’

The value-for-money review, established in December 2009, is jointly sponsored by the Department for Transport and the ORR. Its final report is expected by the end of March 2011.

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