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Regulator says railway improvements for 2009-14 are likely to be affordable within committed public funds

20 December 2007
ORR/35/07

The Office of Rail Regulation (ORR) has today informed the Department for Transport and Transport Scotland that it is likely their respective output specifications for the railways can be afforded with the public funds they have committed for the five years from April 2009.

This is based on ORR’s initial assessment of the industry strategic business plan (SBP) which Network Rail submitted to ORR at the end of October. At this stage of its assessment of the SBP, ORR has established a range for Network Rail’s costs and required revenues. It has also taken account of the cost of government support to franchised passenger train operators.

Bill Emery, ORR Chief Executive, said: “These are exciting but also challenging times for the mainline railway in Great Britain. Having started our detailed review of the industry plan for 2009-14, we are satisfied on the basis of the work we have carried out to date that it is likely that the requirements of the governments in England & Wales and Scotland can be accommodated within the public funding they are each making available.

“We consider that Network Rail’s plans significantly overstate the revenue it will require for 2009-14. We believe the company could achieve greater efficiency improvements than assumed in the strategic business plan.

“For England & Wales we consider that the total public funding required to deliver the government’s output requirements lies between £10.2bn and £13.5bn, compared to £13.3bn of public funding available. For Scotland, we consider that the total public funding required lies between £3.1bn and £3.6bn, compared to £3.6bn of public funding available.”

Notes to editors

  • Governments in England & Wales and Scotland published their respective high level output specifications (HLOSs) and statements of funds available (SOFAs) in July 2007. Network Rail responded to the HLOSs by producing an industry strategic business plan at the beginning of November. ORR has spent the last six weeks assessing that plan.
  • ORR’s work on assessing Network Rail’s strategic business plan continues. It will provide greater detail on its analysis of the plan in February 2008, along with further decisions on the framework for setting access charges, including the definition of outputs and the financial framework for Network Rail. Network Rail will then be providing an update of its strategic business plan in April 2008 and ORR will publish its draft determinations on Network Rail’s access charges and outputs for 2009-14 in June 2008.
  • Copies of the letters sent to the Department for Transport and Transport Scotland are available at http://www.rail-reg.gov.uk/upload/pdf/pr08-hlosdif-TS-201207.pdf and http://www.rail-reg.gov.uk/upload/pdf/pr08-hlosdif-DfT-201207.pdf.

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