Network Rail urges smaller funding cut

5 Sep 13
Network Rail has warned that the Office of Rail Regulation’s demands on its finances as ‘unbalanced and unrealistic’.

By Mark Smulian | 5 September 2013

Network Rail has warned that the Office of Rail Regulation’s demands on its finances as ‘unbalanced and unrealistic’.

The row followed publication in June of the ORR’s draft determination for the period 2014-19, which set out a work programme for Network Rail in the context of a £2bn saving from the £23.4m budget proposed.

Network Rail, which is the owner and operator of Britain’s railways, yesterday published its response to draft determination, and called on the regulator to restore £1.4bn of this.

The firm, which is government-owned, said the ORR wanted it to go beyond the objectives stated in its business plan and deliver higher levels of performance and cost savings. However, this has been demanded with less money to operate and manage the railway.

Chief executive David Higgins said: ‘The regulator’s determination provides the opportunity for Network Rail and the industry to build on the progress and success of the last decade, but while there are many aspects of the draft which we welcome, taken as a whole we believe it is unbalanced and, therefore, unrealistic.’

Among Network Rail’s concerns is a further £594m cut in its renewals budget on top of the £2.2bn of savings it had already identified.

It also said the ORR’s expectation that it could deliver an additional £800m of property income was considered unrealistic by property experts. IT upgrade and research and development budgets were also among the cuts under the ORR’s determination.

Network Rail also objected to increased bureaucracy demanded by the rail regulator, which it said would require it to report on 3,700 measures.

‘The ORR’s response to our plans calls us to deliver too much, too quickly and is, overall, simply unrealistic,’ Higgins added.

‘It would be irresponsible for us not to be open and honest about the scale of the challenge that would pose for us as an organisation.’

An ORR spokesman said: ‘Governments, the rail industry and interested members of the public have been fully involved in the consultation process. We will now start assessing the responses and develop the final plan which is due to be published on October 31.’


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