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Government shake-up for rail plans

Published 25/06/2015

Electrification work is being
Electrification work is being "paused" on the Midland mainline and on the Transpennine route between Leeds and Manchester
Transport Secretary Patrick McLoughlin said the plan is "costing more and taking longer"
Transport Secretary Patrick McLoughlin said the plan is "costing more and taking longer"

The Government has taken a firm grip on Network Rail (NR) after the rail infrastructure company admitted it had been "overly optimistic" about completing a five-year, £38 billion plan.

Transport Secretary Patrick McLoughlin responded by announcing that the plan was being "reset" because it was "costing more and taking longer".

He told MPs that electrification work was being "paused" on the Midland mainline and on the Transpennine route between Leeds and Manchester.

He also announced a shake-up of NR management with chairman Richard Parry-Jones being replaced by London's Transport Commissioner Sir Peter Hendy.

Mr McLoughlin also said that none of NR's executive directors would receive a bonus for the past year and that he was intending to end the role of the not-for-dividend company's "members", who in the absence of shareholders hold the company to account.

In addition, Mr McLoughlin said he was appointing former Eurostar chief Richard Brown, who oversaw a review of rail franchises recently, as a special director of NR who would update Mr McLoughlin on the company's progress.

The Transport Secretary also said he was asking economist Dame Collete Bowe "to look at the lessons learned".

His statement came after NR chief executive Mark Carne said: "During my first year in the job I have looked closely at every aspect of our business and it has become clear that Network Rail signed up to highly ambitious five-year targets set by the regulator.

"Based on historic improvements from a low base, we were overly optimistic about the capacity of our company and our supplier base to step up several gears in order to achieve the plan, especially given the complexities of a network that is at full capacity much of the time."

Mr Carne went on: "On the big items like electrification and capital projects, it was always part of the regulatory process that the costs and programme would be revisited as projects became properly defined.

"Unfortunately when these reviews have occurred, the more detailed project costs have been higher than assumed at the earliest stages of definition. As a result, the total enhancement programme cost now exceeds the available five-year budget. Some projects are also delayed beyond the original dates."

Mr Carne added "I recognise that these delays will cause disappointment for some passengers, for which I can only apologise."

Today's announcements have come as rail customer watchdog Transport Focus published a survey showing that train passenger satisfaction levels are dipping.

The Office of Rail and Road Regulation had already announced it was investigating NR's performance levels.

Mr McLoughlin said the problems that NR have faced "could and should have been foreseen" and that in parts of its improvement programme the company's performance had "not been good enough".

Much of the work needed on the railway should have been done decades ago, Mr McLoughlin said. He went on: "Successive governments failed to invest the sums necessary in our rail network and that is why we find ourselves in the situation we are in today."

He said NR's spending should stay within its funding allowance, that electrification of the Great Western line was a top priority and that better services could be delivered on the Midland mainline before electrification.

A spokesman for NR said about £2 billion worth of projects had been paused and about 20% of the company's overall expenditure plans were being reviewed.

He added: "The vast majority of our work and hundreds and hundreds of projects across the country to improve and expand the railway continue."

Transport Focus chief executive Anthony Smith said: "Passengers will be disappointed by this announcement, which follows years of above-inflation fares increases, crowded carriages and engineering works.

"Long-term plans and investment are important and welcome, and passengers have put up with much inconvenience in the expectation of a better, more reliable, and more comfortable rail service."

He went on: "What passengers will want now is a clear plan of action, setting out exactly when NR will start to deliver some of the promised improvements. They want to know that somebody is getting to grips with this."

Michael Roberts, director general of the Rail Delivery Group, which represents train operators and NR, said: "Britain's railway is carrying record numbers of passengers and freight and in some places is virtually full to capacity, making continued investment crucial.

"In delivering a better railway, NR signed up to some highly ambitious targets and improvement plans which we now know have proved too optimistic.

"People and businesses rely on rail and some will be disappointed by the news that certain planned improvements will be delayed. The majority of proposed enhancements will still go ahead, and it is important that the industry, government and regulator learn from this situation to ensure we do better in delivering the future improvements the railway needs."

David Cameron's official spokeswoman said that the Prime Minister shared Mr McLoughlin's concerns, adding: "Frankly, Network Rail's performance hasn't been good enough. Many of the problems that have been identified should have been foreseen by Network Rail. That's why the Transport Secretary has been setting out a number of steps to get this programme back on track.

"I think the Prime Minister is clear that there are some huge problems here that Network Rail needs to get a grip of and in the coming months that is what we will be working on achieving."

The spokeswoman declined to comment on reports that the Prime Minister was aware of the problems at Network Rail before last month's election.

Leader of Sheffield City Council Julie Dore said: "Electrification of the Midland main line is vital for improving transport connectivity for Sheffield and an integral part of building the economic growth we all want to see in the region.

"It is essential that the Government honour the promises that they made on electrification and today's announcement is a blow for those of us committed to building a stronger North of England. We call for this decision to be reversed immediately."

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