£10bn a year to be spent on UK rail

Richard Furlong - City Surveys Group

Home » £10bn a year to be spent on UK rail

Published: 26th October 2017

This Article was Written by: Richard Furlong - City Surveys Group


During Network Rail’s (NR) next five-year funding period (Control Period 6), close to £48 billion is expected to be spent on improving and maintaining the country’s rail network.

Chris Grayling, Secretary for Transport, confirmed that £34.7 billion would come from the government in the form of a direct grant to Network Rail between 2019 and 2024, with an additional £13.2 billion funded from NR itself, from sources including track access charges and its property portfolio.

The Statement of Funds Available (SoFA) – a document detailing funding available from the government for road and rail projects – was originally due over the summer but was postponed when the Transport Secretary requested further assurances from NR on the likely costs of the work programme for CP6 before publishing the SoFA for the period.

The majority of CP6’s funding will cover the operations, maintenance and renewal of the existing railway but some funds will also be allocated for NR to undertake network enhancements.

However, the majority of network enhancement projects will be funded from outside the SoFA allocation and will be financed on a project-by-project basis directly from NR revenue streams.

A similar investment was provided by Grayling’s predecessor, Patrick McLoughlin, back in 2013. He pledged £38 billion for Control Period 5 (2014-2019) – the single biggest investment in the UK’s railway network since the Victorian era.

Unfortunately, CP5 has been beset with delays and cost overruns. These can be largely attributed to nationwide multi-billion-pound electrification projects, including a £2 billion overspend on electrifying the Great Western Main Line.

Grayling confirmed that the funds promised would include provision for some projects that had originally been scheduled for CP5, but would now be carried out in CP6.

He stated the projects would be ‘subject to ongoing consideration to ensure they deliver the best results for both rail users and taxpayers’.

Rail regulator, the Office of Rail and Road, voiced concerns over the level of funds available to Network Rail in May last year, sending a wave of alarm through UK contractors worried over the future of rail investment.

Grayling hopes this statement reassures contractors, claiming the latest funding envelope was ‘stretching yet achievable’ but that the department had taken steps to ensure money was ‘spent more effectively’.

The Railway Industry Association, the body that represents rail contractors, welcomed the proposed funding figures.

Darren Caplan, RIA Chief Executive, said: “This settlement will help Network Rail and its supply chain to maintain the UK’s rail system to the greater benefit of the paying passenger, freight companies, UK plc, and represents a good deal for the taxpayer.”

To mitigate the possibility of overspend in CP6, the government plans to make funding available for early-stage development of new enhancement schemes. The Department for Transport said it would reveal more details on a new processes for taking forward these schemes by the close of 2018.

The Office of Rail and Road will now put the government’s proposed funding figure through the regulatory process and a final draft will be published next year. The exact figure will be announced in October 2018.

Mark Carne, Network Rail’s Chief Executive said: “Network Rail is transforming into devolved businesses to better respond to its local customers and communities.

“This local focus, combined with opening up the funding, financing and delivery of investment projects to third parties, will help to drive efficiencies and value for the taxpayer.”

Transport Focus, a body that represents rail passengers, is also cautiously optimistic about the proposed investment in CP6.

Speaking on behalf of the watchdog, Anthony Smith Chief Executive said: “Passengers will welcome this ongoing high level of railway investment. Further investment through future major projects and franchises will boost the spending pot even more.

“The proof of the value of this spend will be when passengers start to see more reliable services and better value for money. Passengers now pump around £9bn a year into the industry. In return they should expect the basic promises made by the industry to be kept.”

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