Media centre

Thursday 13 May 2004

NETWORK RAIL WELCOMES NAO REPORT

Region & Route:

National

‘NETWORK RAIL: MAKING A FRESH START’ Network Rail today welcomed the National Audit Office report, ‘Network Rail: Making a fresh start’. The report highlights the scale of the challenge Network Rail inherited when it acquired Railtrack and details the steps the company has taken to date on the twin challenge of controlling costs and improving performance. Network Rail has already made substantial progress addressing the concerns identified by the NAO, especially the need for the rail industry to reduce costs. Network Rail agrees with the NAO, that under Railtrack "rail infrastructure costs rose steeply in the period following the Hatfield crash" and that "Network Rail has introduced controls and incentives to enable it to bring costs better under control". As part of the Regulatory Review, the Company has already committed to improve its efficiency by 31% over the next five years. Cost reduction must be achieved across the business. Maintenance expenditure, for instance, is scheduled to reduce from £1.3bn in 2003/04 to £0.9bn in 2008/09. Costs are under control and falling but it is important to distinguish between expenditure and costs.  Network Rail has substantially increased its expenditure because it is doing an a lot more work on the railway to make up for past under-investment (see graph on page 2). John Armitt, Chief Executive, said: “We are pleased that the NAO has recognised the progress Network Rail has made in its first 18 months. They are right to identify further challenges ahead, but the path is clear. Train performance is improving steadily, the condition of the assets continues to improve and costs are being brought under control. We are determined that this improvement continues in the months and years ahead.”