Media centre

Thursday 5 Feb 2004

NETWORK RAIL ACCEPTS FINAL CONCLUSIONS OF INTERIM REVIEW

Region & Route:

National

Network Rail today formally accepted the Office of the Rail Regulator’s final conclusions of the Interim Review of track access charges.  The Rail Regulator has determined that Network Rail’s expenditure on operations, maintenance and renewals over the next five years (Control Period 3) should be £22.2 billion.  The settlement will provide Network Rail with secure, predictable revenues and put railway finances on a stable long-term footing.  The final conclusions are based on extremely challenging targets for improvements in efficiency and performance.  Network Rail recently announced the best quarterly performance for four years – a 26% reduction in delay minutes in the final three months of 2003.  Total delay minutes for October – December 2003 were 3.3 million compared to 4.4 million in the same period the previous year.   The future performance trajectory implies significant additional improvements in order to meet the overall targets in the next control period. In terms of cost savings, the ORR has assumed efficiencies of more than 30% by 2008/09, and savings of 37% and 43% for 2007/08 and 2008/09 in respect of the West Coast Route Modernisation project.  Network Rail is determined to deliver these targeted efficiency savings and is working to identify all the actions necessary to deliver the full savings. - more - Review - 2 The company is continuing its discussions with the SRA and ORR on the balance between grant and track access charges that make up its income. Network Rail’s accountability to its customers and the Regulator, which have been clarified and reinforced through the review, would not be changed as a result of any proposed unconditional grant. Network Rail is also discussing proposals to reprofile an element of its revenue over the next two years. The company will submit its proposals to the Regulator around the end of February. Commenting on the Board’s decision to accept the final conclusions, Ian McAllister, Chairman, said:  “By accepting the Regulator’s final conclusions, Network Rail has committed itself to unparalleled improvements in performance and efficiency.  In return we have gained certainty, stability and visibility regarding our future income. “We face a significant challenge to deliver the scale of efficiencies demanded by this settlement.  This will require change in every aspect of our activities.  We have already begun this process and there can be no turning back.  “Network Rail’s performance is already showing welcome signs of improvement.  We must now build on these visible signs of improvement and achieve sustained high levels of punctuality.”