November 09, 2012

Network Rail on course for efficiency savings, says ORR

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NETWORK Rail (NR) has achieved efficiencies of £775m over the last three years and is on target to achieve the targets set for the remainder of the current five-year funding period, according to the Office of Rail Regulation's (ORR) annual assessment of the British infrastructure manager, which was published on November 8.

The ORR notes that the savings in controllable operational expenditure, maintenance and renewals are ahead of the targets set prior to the start of the 2009-14 funding period.

According to the report, NR's position has been improved by a range of measures, including a reduction in the number of signalling and control centres; reorganisation of maintenance activities with reduced dependence on subcontractors; and reduced track renewals following a change in asset policy prioritising work on high-usage track sections.

However, the regulator expressed concern in the report at a rise in infrastructure-related train delays and aspects of NR's asset management, in particular the long-term sustainability of civil structure renewals.

The McNulty Rail Value for Money study estimated that compared with 2008-09, the annual cost of operating Britain's railways could be reduced by £2.5-3.5bn by 2018-19, and estimated that around 70% of the efficiencies should come from NR.

The ORR ruled in 2008 that NR should deliver a 21% improvement in efficiency during the 2009-14 funding period, equivalent to a saving of £1bn per year compared with the start of the period. If it is able to achieve this objective, NR will have achieved around a third of the savings identified by McNulty by the end of the 2013-14 financial year.

The ORR says closer collaboration between NR and train operators will be essential to delivering further efficiencies.

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