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Network Rail funding gap puts brake on five-year plan, ministers admit Network Rail funding gap puts brake on five-year plan, ministers admit
(about 2 hours later)
The catalogue of delay, missed targets and overspending at Network Rail is set to force ministers to admit that the vaunted biggest investment in the railway since Victorian times will not deliver the projects promised in a £38.5bn five-year plan.The catalogue of delay, missed targets and overspending at Network Rail is set to force ministers to admit that the vaunted biggest investment in the railway since Victorian times will not deliver the projects promised in a £38.5bn five-year plan.
The electrification of the Midland mainline linking London to Sheffield, described as “critical to maintaining a reliable railway”, is likely to be axed from the schedule as ministers attempt to get to grips with Network Rail’s soaring costs.The electrification of the Midland mainline linking London to Sheffield, described as “critical to maintaining a reliable railway”, is likely to be axed from the schedule as ministers attempt to get to grips with Network Rail’s soaring costs.
The transport secretary, Patrick McLoughlin, is expected to announce on Thursday that the dramatic spending increase for projects such as the electrification of the Great Western line has made pledges in the five-year plan untenable.The transport secretary, Patrick McLoughlin, is expected to announce on Thursday that the dramatic spending increase for projects such as the electrification of the Great Western line has made pledges in the five-year plan untenable.
The funding gap between the original estimates, which were submitted before a full detailed assessment of the work was carried out, and the forecast final bill for the railway upgrades runs into billions.The funding gap between the original estimates, which were submitted before a full detailed assessment of the work was carried out, and the forecast final bill for the railway upgrades runs into billions.
Related: Network Rail's five-year plan way off track in first year, regulator warnsRelated: Network Rail's five-year plan way off track in first year, regulator warns
Where Network Rail has previously borrowed relatively freely, it is now coming under pressure to reduce its liabilities since these were added to the government balance sheet last September, effectively nationalising the company.Where Network Rail has previously borrowed relatively freely, it is now coming under pressure to reduce its liabilities since these were added to the government balance sheet last September, effectively nationalising the company.
Last month, it published accounts showing its debt had risen almost £5bn in a year to £37.8bn. A critical report from the regulator said Network Rail had missed more than a third of its targets in the first year of its five-year plan, raising “serious questions about its ability to deliver future projects”.Last month, it published accounts showing its debt had risen almost £5bn in a year to £37.8bn. A critical report from the regulator said Network Rail had missed more than a third of its targets in the first year of its five-year plan, raising “serious questions about its ability to deliver future projects”.
The Treasury is understood to have sought ways to restructure Network Rail, something McLoughlin refused to rule out in the House of Commons, although the government has backed the company’s chief executive, Mark Carne, to improve Network Rail’s performance.The Treasury is understood to have sought ways to restructure Network Rail, something McLoughlin refused to rule out in the House of Commons, although the government has backed the company’s chief executive, Mark Carne, to improve Network Rail’s performance.
Network Rail has said it has “recognised the scale of the challenge” but argues that it operates the safest passenger network in Europe and that the railway is now more reliable than ever following previous underinvestment.Network Rail has said it has “recognised the scale of the challenge” but argues that it operates the safest passenger network in Europe and that the railway is now more reliable than ever following previous underinvestment.
The Department for Transport said in a statement: “We have seen passenger numbers double over the past 20 years. Our railways are carrying more passengers than ever before. Network Rail is delivering £38bn of investment in the network.
“The government has overseen a massive programme of work on the railways over the past five years and is committed to ensuring passengers get a railway they can rely on.”
There was some relief for Network Rail on Wednesday as the threat of a nationwide rail strike was lifted when unions finally agreed on a pay deal. Two scheduled strikes were postponed at the 11th hour last month after an improved offer. Members of the RMT, TSSA and Unite unions have now all voted to accept a two-year deal that will include a 2% pay rise this year and guarantees against job losses.There was some relief for Network Rail on Wednesday as the threat of a nationwide rail strike was lifted when unions finally agreed on a pay deal. Two scheduled strikes were postponed at the 11th hour last month after an improved offer. Members of the RMT, TSSA and Unite unions have now all voted to accept a two-year deal that will include a 2% pay rise this year and guarantees against job losses.