Hello and welcome to ORR's November's newsletter.
Hello and welcome to the November Newsletter. Today we have published our final determination of Network Rail’s five-year plans totalling £43.1bn (£38.5bn in England and Wales, £4.6bn in Scotland) to deliver a safe and customer-focussed railway. The plans cover the five years from 1 April 2024, known as Control Period 7 (CP7).
Since we published the draft determination in June, Network Rail has revised its plans, responding positively to our challenge in a number of areas. This includes Network Rail increasing spending on core railway infrastructure by approximately £600mn to bolster asset sustainability, safety and performance. Our decisions are set out in the final determination.
A summary of the key points are:
- Train performance – we have set specific train performance requirements that protect the interests of passengers and freight. Meeting these targets will require Network Rail to work with operators to ensure that cancellations are reduced and that punctuality is maintained across Great Britain, even as passenger numbers increase.
- Freight growth – we have set challenging targets for what Network Rail delivers for freight operators. Network Rail will be required to reduce freight cancellations from current levels. We have also set rail freight growth targets across Great Britain for the first time and are continuing to cap track access charges for freight operators below cost.
- Renewing the railway – we welcome Network Rail’s increase in spending on renewing core assets (such as track, structures and earthworks). This is particularly important with the challenges presented by climate change.
- Managing risks effectively – we require Network Rail to maintain sufficient and well-managed levels of risk funding. We conclude that Network Rail should retain provisions for risk funding of £1.5bn in England & Wales and £225m in Scotland.
- Delivering value for money – we have carefully reviewed Network Rail’s efficiency targets for the next five years and, drawing on a range of evidence, found these to be stretching but achievable. This would see Network Rail deliver at least £3.2bn in England & Wales and £0.4bn of efficiencies in Scotland.
- Protecting the environment - to support the move towards a low emissions railway, we will hold Network Rail to account for delivering a more than 20% reduction in its carbon emissions. ORR has also set a target for Network Rail’s efforts to conserve and enhance biodiversity.
Our five-year funding and regulatory settlement provides stability, and a platform for the industry to plan and invest. This is important not just for Network Rail, but also for passenger and freight operators and the supply chain. Network Rail must now set out how it will deliver on our final determination.
My thanks to all of you who responded to our consultations, participated in workshops or otherwise contributed to this important process.
Director, Economics, Finance and Markets at ORR
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In October we have published the following statistics: