04 July 2003
Network Rail has announced plans to cut £1.3bn off its spending by 2006/07 through efficiency savings equivalent to 20% of its costs.
The company issued its business plan in March, in which it admitted that 'the resulting cost levels were unacceptable and unaffordable in the longer term'.
It also hopes that after spending reaches a £6.1bn high point in 2006, it will fall to £4.3bn in 2012.
Network Rail took over the system last November from the now-defunct Railtrack, and its new spending cuts programme reveals a catalogue of inefficiencies dating from the previous regime.
By 2006/07, the company intends to have slashed 2,000 jobs, and to have saved £246m in operating costs. It also aims to save £804m from more efficient renewals and £266m from maintenance.
Deputy chief executive Iain Coucher said: 'We are absolutely determined to drive down costs. Our key objective remains unchanged – to deliver safe, reliable and efficient rail infrastructure.'
Contractors incur up to 80% of maintenance and renewals spending, with the remainder controlled directly by Network Rail. The company said it 'needed to gain greater control of the work done by our contractors'.
Earlier attempts to improve efficiency in the £1.5bn maintenance budget had been stymied, it admitted, by a combination of 'conflicting priorities, crisis management following serious accidents and existing maintenance contracts'.
This meant most efficiency schemes had never got beyond the planning stage and 'the lack of visibility of asset condition or understanding of the factors that affect asset deterioration limited our ability to develop robust optimised whole-life cost strategies', the company said.
A significant amount of the maintenance budget is wasted in repeating work not done correctly the first time, and at least one-fifth was unnecessarily expensive through a lack of proper planning.
Maintenance staff worked productively only 30-40% of the time available, with the rest lost through travelling, set-up, poor working methods and planning, and sickness absence, Network Rail added.
Short-term contracts gave contractors little incentive to invest in plant with the result that much of it was obsolete and unreliable, the company said.
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