Network Rail fails to meet CP4 efficiency targets

Network Rail has failed to meet the required 23.5% efficiency savings in Control Period 4 (April 2009 – March 2014), the Office of Regulation reports.

Network Rail’s 15.5% savings fell 8.0% short of the target, largely due to additional work – mainly enhancements and renewals – the organisation was required to carry out (and which were not included in the PR08 determination, the periodic review of 2008). There have been increases in all categories of expenditure except maintenance and financing costs, which both fell.

Scotland performed better than England and Wales, and has met most of its designated outputs.

Actual total expenditure for Great Britain as a whole during 2013/14 amounted to £11.2bn (as against the budgeted £7.1bn); and the cumulative figure for CP4 came to £46.8bn (as against £43.8bn).

The actual figures (followed by the budgeted totals) for the whole control period were: controllable operating expenditure £5.1bn (£4.3bn); maintenance £5.5bn (£6.2bn); renewals £14.3bn (£13.5bn); non controllable operating expenditure £2.5bn (£2.2bn); enhancements £10.2bn (£8.9bn); Scheduled 4 & 8 costs £1.2bn (£0.9bn); financing costs £7.7bn (£7.8bn); and rebate payments £0.3bn (nil).

Schedule 4 & 8 costs refer to the payments made for planned and unplanned delays respectively.

Network Rail’s net debt increased by £11.4bn during CP4 and stood at £32.3bn by the end of the control period. This was £0.8bn more than expected largely due to additional enhancement works required by the government.

Network Rail’s RAB (regulatory asset base) ratio increased by £16.0bn and stood at £50.1bn at the end of CP4.

The net debt: RAB ratio increased from 61.0% at the start of CP4 to 64.5% at the end, though this falls well within the regulatory 75.0% limit.

The ORR says Network Rail must now deliver 19.4% efficiency savings during by 2019 (when the current CP5 control period ends.)

Office of Rail Regulation: Annual efficiency and finance assessment of Network Rail 2013-14

657/Oct 14



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