LINING the Great Western Main Line (GWML), hundreds of half-driven piles for catenary masts are a very visible reminder that Britain's railway infrastructure modernisation programme is in trouble.
Electrification of the line from London to Oxford, Newbury, Bristol, and South Wales is running over a year behind schedule and costs have soared from £1.1bn to around £1.7bn. The problems are endemic of a wider crisis facing infrastructure manager Network Rail (NR) as it struggles to deliver a sizeable programme of enhancements and renewals within budget.
Problems within individual projects, such as the North West Electrification Programme, have been apparent for many months. With a general election in May this year, many have questioned how much the government actually knew in the run-up to the polls, although the manifesto of the Conservative party, which won the election, pledged that all electrification projects would go ahead as planned. Last month minutes were published from an NR board meeting which reveal modifications to the enhancement programme were being discussed as long ago as March, but ministers insist they were kept in the dark by NR on the full scale of the problems.
It took until June 25, when secretary of state for transport Mr Patrick McLoughlin informed parliament that electrification of the Leeds - Huddersfield - Manchester TransPennine route (IRJ May p22) and the Midland Main Line (MML) from Bedford north of London to Nottingham and Sheffield would be "paused," for the government to publicly acknowledge the full extent of the turmoil within NR.
According to McLoughlin, reducing the scope of the Control Period 5 (CP5) electrification programme will enable NR to focus its resources on completing work on the GWML. With the delivery of new rolling stock for this route under the Department for Transport's (DfT) Intercity Express Programme (IRJ December 2014 p16), a rapid conclusion to this project will be critical if the government is to avoid the embarrassment of new trains and no wires.
Underspending and performance targets laid down by rail regulator the Office of Rail and Road (ORR) in February 2014, NR was allocated £12bn for renewals and a further £12.8bn to implement its programme of infrastructure enhancements for CP5, 2015-2019 funding period. The ORR also stipulated that NR cut costs
by 19.4% compared with CP4 - significantly more than the 13.8% reduction NR had put forward in its funding proposal.
Just one year into CP5, NR is on decidedly shaky ground. On June 12 ORR published its Network Rail Monitor for the period from October 2014 to March 2015, a document that reveals just how far behind NR has fallen in only the first year of CP5. By the end of the 2014-15 financial year, NR had missed 30 out of 84 planned milestones in its Enhancements Delivery Plan. Electrification renewals were 77% behind schedule, while signalling was 63% behind, switches and crossings 37%, and plain line renewals 7%. Overall expenditure on renewals is 14% behind target, reflecting the level of work that has been completed, but this has cost 19% more than forecast.
ORR says this "significant under-delivery" raises questions about sustainability and reflects NR's new supply chain arrangements for CP5. The report suggests that as these arrangements "bed-in" NR may start to see improvements and there is evidence that this is happening in track and civil works. However, limited capacity in the signalling supply chain could cause longer-term problems in this sector.
The monitor also points to unsatisfactory data quality in a number of key areas including asset condition, volumes, and financial reporting, stressing that these issues "need to be addressed urgently." However, it notes that NR is on course to meet minimum asset data standards agreed with ORR by April 2017.
The report acknowledges that the enhancements programme for CP5 is significantly more ambitious and complex than the works carried out in CP4, but ORR warns that the high number of missed milestones raises serious questions about NR's ability to deliver future projects on time. Furthermore, it notes that some of these milestones, including elements of the GWML modernisation such as Swindon resignalling and Reading - Didcot electrification, were communicated to the regulator at short notice.
ORR lists four key concerns on enhancements:
- shortcomings in project design and development, including inadequate rigour in cost estimates
- late project delivery
- shortcomings in how NR delivers cross-industry programmes such as GWML modernisation (which is linked to the introduction of new trains under the Intercity Express Programme), and
- lack of evidence that NR is managing its CP5 investment portfolio to achieve the required efficiencies.
Overspend
A combination of higher than expected renewal costs and overspending on enhancements together with increased compensation payments to operators - a symptom of worsening network performance - propelled spending skywards and NR exceeded its budget by £230m.
Responding to the publication of the monitor, NR said in a statement: "NR has recognised the scale of the challenge and has been openly reporting performance data regularly. There are clearly opportunities to improve following decades of under investment in the railway network. However, it is worth highlighting that we operate the safest passenger network in Europe and the railway asset reliability is the best it has ever been."
"NR's new leadership team, under CEO Mark Carne, is committed to deliver the pace of change required to build a better, more modern network that passengers and businesses can rely on."
Such assurances are unlikely to placate ministers, particularly as NR is now a public body, which means the government is ultimately accountable for its financial performance. With plans for more significant cuts in spending and election pledges to deliver rail improvements still fresh in the minds of voters, there will be intense political pressure to ensure Network Rail both adheres to the enhancement programme and does so within its means.
Indeed, McLoughlin has already installed some much-needed railway experience to bolster the senior ranks of NR. Transport for London commissioner Sir Peter Hendy succeeds Mr Richard Parry-Jones as chairman, and his first task will be to review NR's enhancements and renewals programme. Hendy will be supported by former Eurostar chairman Mr Richard Brown, who has been appointed as a special director with immediate effect. Brown will also report directly to McLoughlin on progress as NR seeks to bring spending under control.
NR's governance structure will be simplified with the abolition of the public members, a role which was created to hold NR to account but in reality had little tangible impact on its behaviour. Dame Colette Bowe, an economist and former chair of communications regulator Ofcom, has been asked to look at how future investment can be implemented more effectively.
On July 8, the government also revealed that it had appointed Mrs Nicola Shaw, CEO of High Speed 1, to "advise the government on how it should approach the longer-term future shape and financing of NR."
This "future shape" is very much open to conjecture. Critics of NR argue the organisation's centralised structure places too much power at the core, giving those at the fringes little control over the issues that affect projects and the day-to-day running of the railway. There have also been calls to break NR up into regional infrastructure managers or transfer responsibility for infrastructure to (passenger) operators. Some politicians who clearly don't remember Railtrack have even called for privatisation. At this stage, nothing has been ruled out.
