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Focus on renewals in £47·9bn Network Rail funding plan for 2019-24

13 Oct 2017

UK: The Statement of Funds Available for Network Rail’s infrastructure operations, maintenance and renewals in England and Wales during Control Period 6 from April 1 2019 to March 31 2024 was announced by Transport Secretary Chris Grayling on October 12. Scotland is covered under a separate process.

The SoFA would support delivery of the High Level Output Specification published on July 20, which set out what the government expects the rail network to deliver in CP6.

Under the SoFA, the government would provide Network Rail with direct grant worth up to £34·7bn in CP6, while income from other sources including track access charges and commercial activities would take the infrastructure manager’s total funding to around £47·9bn.

These amounts will now be refined under the remaining stages of the Period Review being undertaken by the Office of Rail & Road. ORR is due to publish its final determination in October 2018.

The SoFA includes funding for maintenance, renewals and the early stages of developing new projects. ‘We have some of the most intensively used railways in Europe, and this investment focuses on the essential work needed to ensure their safety and reliability’, said Grayling. The SoFA includes ‘funding to support a significant increase in renewals activity compared to the current period, and increased maintenance spend to allow Network Rail to meet the challenges of a busier network.’

However, in a change to the approach taken in previous control periods, funding for major upgrades is to be allocated under a new process. To be set out in detail later this year, this would be designed to ensure that schemes are deliverable and provide the best value for money for taxpayers; the decision to separate funding for major upgrades follows significant cost over-runs on projects during the current CP5.

Responding to the SoFA, Chief Executive Mark Carne said Network Rail was ‘transforming into devolved businesses to better respond to its local customers and communities’. This local focus, combined with plans to enable third parties to participate in the financing and delivery of investment projects, would ‘help to drive efficiencies and value for the taxpayer’, he said.

Gordon Wakeford, Managing Director of the Mobility Division at Siemens UK, welcomed the government’s ‘apparent willingness to find new and innovative ways to deliver major rail upgrade projects’, saying ‘there’s no reason why major electrification and resignalling projects can’t be delivered and financed with more private sector involvement, and Siemens would be happy to play its part’.

Darren Caplan, Chief Executive of the Railway Industry Association, said ‘the commitment to increased funding announced today is recognition of the need to counter the increasing backlog of renewals work’, adding that ‘on Network Rail’s major projects, or enhancements, we look forward to hearing what the government has to say later in the year. The industry is aware that efficiency savings are still required in CP6.’

He said RIA ‘continues to urge the government to bring forward £500m of CP6 funding into CP5’ to support the supply chain.