Network Rail to wield axe on £38bn spending plan

Network Rail is to review its £38bn five-year spending plan after admitting it is falling behind with its programme of major projects.

Transport secretary Patrick McLoughlin said today that “aspects of Network Rail’s investment programme are costing more and taking longer”, and that he had drafted in Transport for London commissioner Peter Hendy to replace current chairman Professor Richard Parry-Jones. Hendy is to be charged with developing proposals by the Autumn for how the rail upgrade programme will be carried out.

The news follows a scathing report by regulator the Office of Rail and Road (ORR) earlier this month, which said Network Rail had missed programme delivery targets and that some projects were already facing delays.

According to the ORR, Network Rail has missed 30 of its 84 milestones on projects to enhance the network, with renewal work also behind schedule. It said 77% of overhead line renewals works were behind schedule.

Network Rail chief executive Mark Carne said the body had been “overly optimistic” about “the capacity of our company and our supplier base to step up several gears in order to achieve the plan,” and that costs have been higher than assumed. “As a result, the total enhancement programme cost now exceeds the available five-year budget.  Some projects are also delayed beyond the original dates.”

The government or Network Rail said how far above expectations costs had risen.

Making a statement to parliament, Mcloughlin said he was pausing work on the electrification of both the transpennine route between Leeds and Manchester and the Midland Mainline. He added that he was appointing Richard Brown, currently programme manager for change at the organisation, as a special director of Network Rail with immediate effect, as part of a drive to get spending “back on track”.

Mcloughlin said: “Important aspects of Network Rail’s investment programme are costing more and taking longer. Construction rates have been slow. It has taken longer to obtain planning consents from some local authorities than expected.

“But that is no excuse. All of these problems could and should have been foreseen by Network Rail.”

 Civil Engineering Contractors’ Association chief executive Alasdair Reisner said it was vital that all of the projects planned for CP5 are delivered as promptly as possible. “While it may be necessary to shift some works into the next control period, every effort must be made to ensure they are ready for delivery in 2019. A failure to do this will have a crippling impact on capacity for some of the UK’s vital rail lines.

“As an industry, we need to work with Network Rail to help it overcome these challenges, and continue the momentum of investing in UK rail.”

More to follow