26 September 2003
Network Rail's projected £5bn savings package is some £3bn higher than the sum demanded by the sector's regulator, it emerged this week.
Public Finance has learnt that Tom Winsor, the rail regulator, had expected Railtrack's not-for-profit successor to submit proposals for around £2bn of extra savings this month.
Instead the network operator has published a £5.2bn 'efficiency package' that could mean severe cuts to rural train services and railway and station maintenance across Britain.
The situation was made all the more confusing for passengers when John Armitt, NR's chief executive, reportedly complained that the £5.2bn package was a direct response to the regulator's demands.
Network Rail had already published plans to reduce its spending over five years from 2004, from £34bn to £29bn. The new estimate would further reduce that to £24bn.
A spokesman for the Office of the Rail Regulator told PF: 'All these figures are provisional. But, in simple terms, after the spending plan was reduced to £29bn, we asked Network Rail to make a further £2bn in savings over the final year of the plan. What Network Rail has suggested is savings from year one. That has got to be looked at.'
A spokesman for the Rail Passengers Council said: 'All rail users want to know is how this will affect them. There is a feeling that the government is backing down on its transport commitments.'
The Department for Transport denied that ministerial pressure was responsible for the extent of the projected budget cuts: 'There's nothing clandestine at work here,' a spokesman said. 'Ministers have repeatedly warned that costs must come down.'
Winsor has the final say on NR's spending and is due to publish a draft estimate of what the organisation can invest – based on what it can charge train operating companies for the use of its tracks – in mid-October.
Steve Turner, a spokesman for NR, said: 'We're simply responding to the demand for more savings. There will not be any major cuts to services – we will still be investing heavily and all that these reductions mean is that vital work will not be undertaken as quickly.'
NR's figures, published on September 23, indicated savings would result in higher levels of broken rails, signal failures, temporary speed restrictions and stations needing major repairs.
PFsep2003
