The Office of Rail and Road (ORR) has approved Network Rail’s 43.1 billion GBP plans for Control Period 7 (CP7).
These plans span five years from 1 April 2024 and will see 38.5 billion GBP invested in England and Wales and 4.6 billion GBP invested in Scotland to deliver “a safe and customer focussed railway.”
ORR initially released its draft determination for this investment in June. Network Rail has since revised its plans to respond to its challenges, including an increase in spending on core railway infrastructure.
The key points from ORR’s final determination are:
ORR has set out specific train performance requirements that aim to reduce cancellations and maintain punctuality, even as passenger numbers increase. To meet them, Network Rail will have to work closely with operators.
These targets are more challenging than originally proposed by Network Rail. ORR recognises the difficulties in accurately forecasting train performance and will therefore reassess the targets for England & Wales ahead of year three of CP7.
ORR’s targets require Network Rail to reduce freight cancellations from current levels.
For the first time, it has also set freight growth targets across Great Britain. These targets mandate Network Rail to play its role in supporting a 7.5% growth in rail freight for England & Wales and 8.7% for Scotland.
ORR supports Network Rail’s plans to upgrade its structures to better support freight and is calling for effective collaboration with the industry to deliver the conditions for growth.
In addition, ORR is continuing to cap track access charges for freight operators.
ORR has approved Network Rail’s increase in spending on renewing core assets such as track, structures and earthworks. This will help improve asset sustainability, safety and performance while combating the challenges presented by climate change.
Uncertainties such as inflation and climate change undoubtedly impact Network Rail’s plans. Effective risk management and funding is therefore crucial throughout the Control Period.
As a result, ORR requires Network Rail to maintain sufficient levels of risk funding of 1.5 billion GBP in England & Wales and 225 million GBP in Scotland.
Network Rail’s plans have been developed in a tight fiscal context. ORR therefore recognises the importance of building on recent efficiency initiatives to help secure a financially sustainable railway and deliver value for money.
It has reviewed Network Rail’s efficiency targets and finds them to be “stretching but achievable.” This would see Network Rail deliver efficiencies of 3.2 billion GBP in England & Wales and 0.4 billion GBP in Scotland.
ORR is holding Network Rail accountable for delivering a more than 20% reduction in its carbon emissions to support the move to a low-emissions railway.
It has also set targets for Network Rail to conserve and enhance biodiversity.
“I’m pleased to see that Network Rail has responded well to our challenges to its initial plans and the result is more robust and customer focussed plans which we believe will deliver better outcomes for passengers and freight. The plans are challenging but achievable. Our five-year funding and regulatory settlement provides stability and a platform for the industry to plan and invest. This is important not just for Network Rail, but also for passenger and freight operators and the supply chain.
“Network Rail must now set out how it will deliver on our final determination.”
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