Network Rail hit by £2.4bn funding shortfall

Network Rail has received a blow after regulators ruled it will receive 13% less money than it asked for in the period 2009-14.

The Office of Rail Regulation (ORR) said that the company will have a total budget of £28.5bn for the five years from next April – some £2.4bn less than was demanded.

Around £27bn is to come from government subsidies, train operators and freight companies. The rest will be funded from sources such as property rents.

Network Rail has also been told it must significantly improve its service in return for the money. It will have to improve train safety and punctuality and must pump £7.74bn into boosting capacity through projects such as the Thameslink upgrade.

Paul Plummer, planning and regulation director at Network Rail, said: “We will now take away today's determination and carefully study and consider the implications it will have on both passengers and freight users and on the industry as a whole.

“We must satisfy ourselves that what is proposed can be delivered and that it will be enough to solve the issues of capacity and deliver the much-needed investment we need to build a bigger, better railway.”

We must satisfy ourselves that… it will be enough to solve the issues of capacity and deliver the much-needed investment we need

Paul Plummer, planning and regulation director at Network Rail

ORR chief executive Bill Emery said that the funding was sufficient for Network Rail to meet its targets.

The news came as it emerged that a proposal for a high-speed rail network linking major UK cities will be published by Easter as part of the government's plans to relieve rail congestion.

Transport minister Lord Adonis said that express services on new tracks operating at up to 320kmph would link cities such as London, Birmingham and Manchester.

He added that there is a strong case for linking Heathrow to the new high-speed network to provide airline passengers with more convenient transfers to connections across the country and to the Continent. The proposals will include a rail hub with 12 platforms built north of the M4 near Heathrow, with access to a 24km tunnel linking the hub to High Speed 1, the Eurostar route at St Pancras.

Meanwhile, shadow transport secretary Theresa Villiers has promised that a Conservative government would begin the construction of a line between Birmingham, Manchester and Leeds to be completed in 2017.