Network Rail fails to meet expenditure and investment targets
Network Rail is struggling to meet stringent financial targets imposed under the new CP5 regime.
The new control period commenced in April 2014, but a Network Rail quarterly monitor reveals that the organisation has already recorded an overspend of £40m in the first six months on its £7bn annual budget, which is forecast to reach £112m by the first financial year end (31 March 2015). It also forecasts missing 25 of its 87 regulatory investment milestones during the same period.
The forecast £110m overspend is due to a number of factors: £34m is attributed to Schedule 8 payments (compensation to train operating companies for unplanned service disruptions/ possessions), and a further £10m for Schedule 4 payments (for planned ones). £35m savings in network operations are not expected to be realised, and £30m is for additional expenditure to tidy up the railway and remove vegetation.
The regulatory investment milestones refer to the key GRIP 3 (option selection) & 6 (construction, teat and commission) stages only.
NR GRIP plans – Guide to Railway Investment Projects – are subject to a stringent and mandatory eight-stage selection process, of which these two stages are the most important.
£25bn has been set aside for renewals and enhancement projects during CP5 (2014-2019). Of the 25 regulatory milestones which may not be reached by the year end, 14 are at the GRIP 3, and 11 are at the GRIP 6 stages.
LTT approached Network Rail for a more detailed breakdown of the schemes involved but had received no response at the time of going to press.