Network Rail steams into more trouble as it's told to cut costs by £2bn

The rail operator has been told to slash costs without compromising punctuality or passenger safety. Surely something's got to give?

by Emma Haslett
Last Updated: 21 Nov 2013
Last week rail operator Network Rail admitted that its debts had risen above £30bn – and now the Office of Rail Regulation has had enough.

In a document outlining its funding provisions over the next five years, the rail watchdog has told Network Rail execs in no uncertain terms that they must cut costs by £2bn before 2019.

Last week, the ORR threatened to downgrade the value of the company’s assets (bridges, tracks, points etc) because of the poor state of repair they’re in – so despite cost-cutting, it’ll have to make sure that they’re fixed.

On top of that, it must still meet five-year targets set out by the ORR in January, which includes improving punctuality to 92.5%, completing projects to increase capacity, improving safety and providing better data on the condition of tracks, bridges and other assets so it knows in advance when trouble’s on the way.  

How to cut costs? The ORR reckons (accident-free) savings can be made through investing in new technologies, improving management and managing the network more efficiently.

The idea of all this is to reduce Network Rail’s dependence on public subsidy. At the moment the rail industry receives £4bn of government money a year, while the government has committed to inject a total of £18bn over the five years of the ORR’s five-year programme.  

Network Rail’s response wasn’t exactly positive. While it said it welcomed the ORR’s thoughts, ‘a decision of this significance… needs careful and detailed thought,’ said a spokesperson.

‘We will take the time necessary to analyse our regulator’s initial findings before giving our formal response in September,’ he added. Sounds decidedly non-committal to us.

MT can’t help but think Network Rail could do worse than drafting in Ryanair chief exec Michael O’Leary to contribute a few of his hare-brained schemes. Rail commuters will have standing-up seats and pay-per-use toilets before they know it. Hang on…

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events

Subscribe

Get your essential reading delivered. Subscribe to Management Today