Britain's secretary of state for transport, Mr Patrick McLoughlin has asked Hendy to review NR's 2014-2019 capital investment programme, known as CP5, and report back in the autumn. He has also appointed Mr Richard Brown as a special director of NR with immediate effect to update McLoughlin directly on progress.
The government has also decided to simplify NR's governance by ending the role of the public members, who acted like shareholders. Dame Colette Bowe, an economist and regulator, has been asked to look at how future investment programmes can be implemented better.
"Important aspects of NR's investment programme are costing more and taking longer," says McLoughlin. "Electrification is difficult, the UK supply chain for the complex signalling works needs to be stronger, and construction rates have been slow. All of these problems could and should have been foreseen by NR." McLoughlin says he is taking action "to reset this programme and get it back on track."
"NR's spending should stay within its funding allowance," says McLoughlin. "Electrification of the Great Western Line is a top priority, and I want NR to concentrate its efforts on getting that right." As a consequence McLoughlin has decided to pause the electrification of the Midland Main Line from Bedford to Derby, Nottingham and Sheffield and the Trans-Pennine main line from Manchester to Leeds and York.
This follows what is described as a "frank assessment" of CP5 by NR's CEO Mr Mark Carne of what will be achievable in the remaining four years following NR's failure to meet several targets and "slippages in the major projects portfolio." NR says in a statement: "the total enhancement programme cost now exceeds the available five-year budget. Some projects are also delayed beyond the original dates."
"During my first year in the job I have looked closely at every aspect of our business and it has become clear that NR signed up to highly ambitious five-year targets set by the regulator," says Carne. "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."
Hendy succeeds Professor Richard Parry-Jones who ends his three-year term as chairman of NR in July. Hendy has been commissioner for Transport for London since 2006, and served as managing director of surface transport from 2001.
