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Network Rail chief reveals Great Western upgrade costs have soared to £2.8bn

Published 21/10/2015

NR chief executive Mark Carne told MPs the latest figure for the cost of electrification of the Great Western route is £2.5-2.8 billion
NR chief executive Mark Carne told MPs the latest figure for the cost of electrification of the Great Western route is £2.5-2.8 billion

The boss of Network Rail (NR) has admitted the cost of electrifying the Great Western railway line between London and South Wales could reach £2.8 billion.

Previous estimates for the project were £874 million in January 2013 and £1.6 billion in September last year.

NR chief executive Mark Carne told MPs the latest figure is £2.5-2.8 billion, based on 2012 prices.

Meg Hillier, chair of the House of Commons Public Accounts Committee (PAC), said the increase was "unbelievable", and claimed he had fallen "asleep on the job".

PAC member Stephen Phillips added: "I'd say it's pretty disgraceful. That is taxpayers' money."

Mr Carne told the committee one of the reasons for the cost increase was that NR has not carried out significant electrification work for 20 years and its cost base was " out of date", while another issue was "inadequate planning and scope definition of the project in the early stages".

The NR boss, who joined the firm in January last year, said previous cost estimates " represented a range of possible outcomes".

But when Ms Hillier asked him if he admitted the cost increase in the space of a year was "not acceptable", he replied: "I fully accept that this is extremely disappointing to everybody involved.

"I don't think it represents the kind of project performance Network Rail is delivering on so many other projects across the portfolio."

Ms Hillier put it to him: "It's unbelievable and it's unacceptable that there was such poor planning."

Mr Carne went on to say he was "not guaranteeing" the final cost would be no more than £2.8 billion.

Asked by Mr Phillips if "heads will roll" at NR in the wake of the failure to meet previous budgets, Mr Carne said: "The team of people that are delivering the Great Western railway electrification are some of the best people that I've got in Network Rail."

He added: "These are great people doing a fantastic job under very difficult circumstances and frankly going in and saying you're going to fire some of them, I don't think is the right solution."

Ms Hillier claimed Mr Carne "fell asleep on the job" along with Richard Price, chief executive of the Office of Rail and Road (ORR), which is the economic regulator for Britain's railways.

Mr Price said the ORR agreed last year's cost figure because it would have been accurate if the project had been "delivered in an efficient way".

Asked why he had not resigned, he replied: "It would be the wrong thing at this stage... to let (NR) off the hook."

Ms Hillier commented: "We're not quite sure why you resigning would let the company off the hook."

Speaking after the hearing, Ms Hillier said the cost rise of the project since September 2014 was "shocking".

She told the Press Association: "It shows there's a problem both with project planning at Network Rail and also with how the regulator agrees the costs.

"It's just a fiction, what came up last year."

NR issued a statement which described the project as " an extremely complex task that is being delivered whilst continuing to run an operational railway".

The PAC is due to issue its report into the electrification project by the end of the year.

It was announced last month that electrification of the Midland Mainline and the TransPennine routes will go ahead a fter being halted in June.

Ministers were accused of deceiving the public over its intentions for the rail network when the projects were put on hold just weeks after the general election.

But Transport Secretary Patrick McLoughlin ordered the work to resume following a review by NR chairman Sir Peter Hendy.

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